Zuo v. Lu CA2/3
B321608
Cal. Ct. App.Mar 9, 2023Background
- Plaintiff Jing Zuo used an underground currency-exchange/money-transfer arrangement and paid defendant Yue Lu to convert and transfer U.S. dollars to RMB in a China bank account.
- After a successful $10,000 transaction, Zuo gave blank checks for a larger transfer; one $120,000 check was filled out payable to co-defendant Shi Qiang Zhang, deposited into Zhang’s account, and the funds were diverted and not credited to Zuo.
- Zuo sued Lu, Zhang, and L&L Flying Holding, Inc. for fraud, civil conspiracy, money had and received, and open book account.
- After a six-day bench trial, the trial court found Lu not liable on any claims; it found Zhang liable on fraud and money had and received and awarded Zuo monetary recovery against Zhang.
- Zuo appealed but failed to provide reporter’s transcripts or a settled statement from the bench trial; the Court of Appeal relied on the statement of decision and presumption that the record supports the trial court’s findings.
- The Court of Appeal affirmed the judgment for Lu and held Lu entitled to costs on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lu is liable for fraud / civil conspiracy (intent to steal or defraud) | Zuo argues evidence shows Lu induced her to use his service, withheld critical information, and must be liable for fraud and conspiracy | Lu argued he acted as intermediary in good faith, referred Zuo to Zhang, and attempted to stop payment when problems arose | Court affirmed: no reversible error; presumes substantial evidence supports trial court’s finding that Lu lacked intent to defraud or conspire |
| Whether Zuo’s unclean-hands defense to recovery is incorrect | Zuo contends she did not act with unclean hands despite using an illegal transfer system | Lu and court treated the illegal transaction as relevant to equitable defenses | Court affirmed trial finding of unclean hands (presumed supported by the record) |
| Whether the appellate record was adequate to review trial findings | Zuo relied on documents in the appendix and the statement of decision to show error | Lu pointed out absence of reporter’s transcripts/settled statement; urged affirmance under record-presumption rules | Held: appellant’s failure to supply trial transcripts (or suitable substitute) is fatal; appellate court resolves issues against appellant and affirms |
| Whether Zuo may recover costs from Lu | Zuo argued Lu should bear costs | Lu argued he is prevailing party as to Zuo and thus entitled to costs under CCP §1032 | Held: Lu is prevailing party as to Zuo; Zuo cannot recover costs from Lu; Lu may recover costs on appeal |
Key Cases Cited
- Maria P. v. Riles, 43 Cal.3d 1281 (1987) (failure to provide trial record requires presumption the record supports the judgment)
- Dietz v. Meisenheimer & Herron, 177 Cal.App.4th 771 (2009) (appellant bears burden to affirmatively show error)
- Curcio v. Pels, 47 Cal.App.5th 1 (2020) (review of bench-finding for substantial evidence; resolve conflicts in favor of judgment)
- Nautilus, Inc. v. Yang, 11 Cal.App.5th 33 (2017) (intent and good-faith of transferee are questions of fact)
- Kendall-Jackson Winery, Ltd. v. Superior Court, 76 Cal.App.4th 970 (1999) (application of unclean-hands doctrine is a factual question)
- Foust v. San Jose Construction Co., Inc., 198 Cal.App.4th 181 (2011) (courts refuse to reach merits when no reporter’s transcript or suitable substitute is provided)