Luo v. Lu

Here, Plaintiff first alleges a voidable transfer made with actual fraud – that is, fraudulent transfer under Civil Code section 3439.04(a)(1).

Such a voidable transfer is one made (1) by the “debtor” (one who is liable on a claim) (2) with actual intent to hinder, delay or defraud any creditor of the debtor. Civ. Code §§ 3439.01(e), 3439.04(a)(1). “Actual intent” may be determined from a number of factors enumerated by statute, commonly referred to as “badges” of fraud. (Civ. Code §3439.04(b)(1)-(11); Filip v. Bucurenciu (2005) 129 Cal. App. 4th 825, 834.)

The Complaint alleges that the Subject Property was transferred by Defendant Lu to the Moving Defendants shortly before trial was to commence in Plaintiff’s underlying action against Lu. (Compl. ¶¶ 12-13.) The transfer was made to avoid paying debt to Plaintiff. (Compl. ¶ 18.) Lu subsequently lived in the Subject Property despite having transferred it to Moving Defendants. (Compl. ¶ 15.)

Whether the debtor retained possession or control of the property transferred after the transfer and whether the transfer occurred shortly before or shortly after a substantial debt was incurred are both “badges” of fraud enumerated in Civ. Code §3439.04(b).

Where a voidable transfer is shown, the “creditor may recover judgment for the value of the asset transferred, as adjusted under subdivision (c), or the amount necessary to satisfy the creditor’s claim, whichever is less. The judgment may be entered against the following: (A) The first transferee of the asset or the person for whose benefit the transfer was made. (B) An immediate or mediate transferee of the first transferee, . . . ” (Civ. Code, § 3439.08(b)(1).)

Here, Plaintiff has alleged a voidable transfer under the statute based on actual fraud.

As to constructive fraud, the Complaint alleges that “Lu did not receive a reasonably equivalent value in exchange for the transfer” and that “Lu intended to

incur debts beyond their ability to pay as they became due.” (Compl. ¶21(e) and (f).) Moving Defendants contend that these are conclusory allegations, which are insufficient to meet the heightened pleading standard for a fraud-based allegation. However, “[l]ess specificity should be required of fraud claims when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy; even under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party.” (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.)

The Court finds that Plaintiff has sufficiently pled a voidable transfer based on constructive fraud.

Accordingly, the demurrer to the first and second causes of action is OVERRULED.

Third and Fourth Causes of Action for Money Had and Received and Open Book Account

“In the common law action of general assumpsit, it is customary to plead an indebtedness using “common counts.” [Citation.] In California, it has long been settled the allegation of claims using common counts is good against special or general demurrers. [Citation.] The only essential allegations of a common count are “(1) the statement of indebtedness in a certain sum, (2) the consideration, i.e., goods sold, work done, etc., and (3) nonpayment.” [Citation.] A cause of action for money had and received is stated if it is alleged the defendant “is indebted to the plaintiff in a certain sum ‘for money had and received by the defendant for the use of the plaintiff.’ ” [Citation.]” (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460.)

Here, although the Complaint contains conclusory allegations that “Defendants” have money that belongs to Plaintiff, the specific factual allegations of the Complaint only state that Defendant Lu transferred the Subject Property to the Moving Defendants (Compl. ¶

13.) There is no allegation that any money was transferred to Moving Defendants. There is also no allegation showing that Moving Defendants are indebted to Plaintiff, or that Plaintiff provided any form of consideration to Moving Defendants.

The demurrer as to the third and fourth causes of action is SUSTAINED with 20 days leave to amend.

Motion to Strike Defendants Quan Nguyen and Johanne Tsui’s (together, “Moving Defendants”) motion to strike portions of Plaintiff Fanzhou Luo’s Complaint is DENIED without prejudice.

Moving Defendants did not comply with CRC 3.1322: “A notice of motion to strike a portion of a pleading must quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count, or defense. Specifications in a notice must be numbered consecutively.”

Accordingly, the Court is unable to ascertain exactly what Moving Defendants seek to strike from the Complaint.

Moving Parties to give notice.

111 O’Kane v. Radovich, 2022-01276312 MOTIONS TO BE RELIEVED AS COUNSEL – GRANTED AS TO TWO PARTIES, MOOT AS TO THE THIRD PARTY

The unopposed motions of attorney W. Michael Hensley of FBT Gibbons LLP to be relieved as counsel for (1) Defendant R&R Holdings, I.B., LLC, a Nevada limited liability company, and (2) Defendant Kevin J. Prendiville are GRANTED.

Service on the clients and on all other parties who have appeared in the case was proper and all required forms containing the requisite information were filed pursuant to California Rules of Court, rule 3.1362.