Filed 5/29/13 Yuan v. Wang CA2/3 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
XIAO YAN YUAN, B233178
Plaintiff and Respondent, (Los Angeles County Super. Ct. No. GC041277) v.
ANDY WANG, et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Los Angeles County,
Jan A. Pluim, Judge. Affirmed as modified.
Law Offices of Edward C. Tu, Edward C. Tu; Law Offices of
Gary Hollingsworth, Gary Hollingsworth; Law Office of Philip C. Law and
Philip C. Law for Defendants and Appellants.
Law Office of Steven P. Scandura and Steven P. Scandura for Plaintiff and
Respondent.
_______________________________________ INTRODUCTION
Defendants Andy Wang and Jenney Wang (collectively, defendants) appeal
from a judgment entered in favor of plaintiff Xiao Yan Yuan (plaintiff) following
a bench trial on her breach of contract action. The judgment awarded plaintiff
$865,593.69 in damages and held that plaintiff was entitled to one half of the proceeds
from the sale of certain real property in California. Defendants contend that (1) the trial
court committed reversible error in failing to defer to the Chinese courts and (2) there is
no substantial evidence to support the judgment.1 We affirm.
FACTUAL BACKGROUND
Plaintiff met defendant Andy Wang (Andy)2 in Shanghai, China in 1995.
Plaintiff, a Chinese citizen, had recently graduated from The Textile University of
China. Andy, an American citizen who resides in California, was in the business of
selling software used to design clothing. Plaintiff and Andy started dating that year. At
all relevant times, defendant was married to Jenney Wang (Jenney) who also resides in
California.
In 1996, plaintiff and Andy went into business together. They formed
a company called Shanghai PGM to act as a distributor for software sold by Andy.
1 Defendants raise a number of new arguments in their reply. We ordinarily will not consider an argument raised for the first time in a reply brief because to do so would deprive the respondent of an opportunity to counter the argument in its respondent’s brief. (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764-765.) Defendants have shown no reason for us to deviate from that rule here, so we will not consider these arguments. 2 For simplicity and clarity, we use their first names to refer to the individual defendants. We intend no disrespect or undue familiarity.
2 Andy was physically present at the company’s office every other month, and admitted
that, at all other times, plaintiff ran the company.
In 1999, plaintiff became pregnant with Andy’s child. They decided that the
baby should be born in the U.S. After plaintiff traveled to the U.S., she asked Andy to
go to China to purchase a property for her and their child to live in (Shanghai Property),
and they agreed that the property would eventually belong to their child. He purchased
the Shanghai Property on June 22, 2000, with Shanghai PGM’s money. Their son,
Steven Wang (Steven), was born on July 22, 2000. When plaintiff returned to China
several weeks later, she moved into the property with her son. Andy purchased a house
in Arcadia, California (Arcadia Property) in August 2001 and title was placed in Andy’s
and plaintiff’s names as joint tenants.
In February 2002, the parties ended their romantic and business relationship.
Andy withdrew from his role at Shanghai PGM. Plaintiff and Steven continued to live
at the Shanghai Property and Andy agreed to maintain the Arcadia Property.
In 2005, Andy sent plaintiff a letter stating as follows: “In regard with the
[Shanghai] property . . . I don’t feel appropriate for you to continue to occupy and
use. . . . [¶] Please move out from the property within forty five days upon receipt of
this letter, and return the real property back to me. [¶] In addition, please think about
the half of the property in the United States . . . . Let me [know] what your thoughts are
on the disposition.” Plaintiff did not respond to the letter.
In July 2007, Andy sought to obtain custody of Steven. His request was rejected
by the Chinese court. Andy was “unhappy” he “lost that lawsuit,” and therefore, sought
3 to evict plaintiff and Steven out of the Shanghai Property. He prevailed in the eviction
proceedings. The Chinese court found that because he was the titleholder, he was
entitled “to possess, to use, to make profits and to disposition [sic] of the real property
in question.” Plaintiff and Steven were evicted from the property in 2008. Since the
eviction, Andy has placed a $1,000,000 mortgage on the Shanghai Property.
PROCEDURAL HISTORY
Plaintiff filed this action on August 6, 2008 alleging causes of action for breach
of contract, breach of fiduciary duty, unjust enrichment, partition and sale, accounting
and dissolution of partnership. The Second Amended Complaint alleged that plaintiff
and Andy had entered into an oral agreement to purchase and maintain the Shanghai and
Arcadia properties and that he had breached this agreement by evicting plaintiff and
their son from the Shanghai Property and retaining all the rents from the Arcadia
Property. Plaintiff sought damages consisting of half of the value of the Shanghai
Property, half of the costs of maintaining the Shanghai Property, half of the income
derived from the rental of the Arcadia Property, and partition and sale of the Arcadia
Property.
Jenney was also named as a defendant. The complaint alleged that Jenney had
“converted to herself funds deposited by Plaintiff which were intended for the benefit of
the partnership. . . . ” The complaint further alleged that “as the spouse of Defendant
ANDY WANG who was actively engaged in the above alleged acts of misconduct,
Defendant JENN[E]Y WANG is liable to Plaintiff pursuant to [] Family Code
sections 910, et seq.”
4 Andy filed a cross-complaint against plaintiff alleging causes of action for breach
of written agreement, breach of oral agreement, reimbursement and contribution, and
unjust enrichment. The trial court dismissed the cross-complaint, finding that (1) Andy
never produced a written agreement, (2) the trial court did not have jurisdiction over an
oral agreement entered into solely in China, (3) Andy had admitted that his claim for
costs to be reimbursed by plaintiff was exceeded by the income owed to her, and (4) the
fourth cause of action was predicated on the other three causes of action which failed.
At the bench trial, plaintiff testified that she was responsible for forming
Shanghai PGM. Andy testified that the company was his idea and that he appointed
plaintiff to serve as its representative. Andy acknowledged that plaintiff was listed as
the owner of the company in government records, but claimed that, as a foreigner, he
was not allowed to be the legal representative of the company.
Plaintiff also testified that it was her idea to buy the Shanghai Property. When
she returned to China after her son’s birth, she discovered that only Andy’s name was
on the property title. She testified that he told her that, irrespective of the title, the
house was hers and would eventually belong to Steven when he grew up. Plaintiff did
not seek to transfer the title to her name because of the high taxes levied on such
a transfer.
According to Andy, he purchased the Shanghai Property without plaintiff’s
knowledge for her and the child to live in. He testified that he also decided on his own
accord to buy the Arcadia Property “for” plaintiff. According to plaintiff, she and Andy
decided together to buy the Arcadia Property as an investment for their child.
5 Plaintiff further testified that, when she and Andy ended their relationship in
2002, they reaffirmed their agreement that the Shanghai and Arcadia properties would
be transferred to Steven when he reached 18 years old. Per this agreement, plaintiff and
Steven would continue living in the Shanghai Property and Andy would manage the
Arcadia Property until that time.
Andy’s account of the agreement differed. He testified that he did not give the
Shanghai Property to plaintiff or Steven, but only let them live there until Steven was
18 years old. He stated that he gave plaintiff the company, Shanghai PGM, as well as
other assets in China, and, in exchange, plaintiff had agreed (1) not to seek child support
from him, (2) to allow him to visit Steven, and (3) to give her interest in the Arcadia
Property to Jenney. Andy testified that after his relationship with plaintiff ended, she
prevented him from visiting Steven. Plaintiff testified that Andy had never attempted to
visit Steven.
The court entered judgment in favor of plaintiff. The court found that Shanghai
PGM was “a joint enterprise between Plaintiff and Defendant with each entitled to
50 percent equitable ownership in Shanghai PGM,” and that the Shanghai Property was
purchased with company money. The court accepted plaintiff’s testimony that Andy
had told her the Shanghai Property was hers and would eventually be Steven’s when he
turned 18 years old. The court awarded plaintiff half of the value of the Shanghai
Property, half of the value of the Arcadia Property, and half of the income generated by
the Arcadia Property. Judgment was entered on March 11, 2011 and Andy filed
a timely appeal.
6 DISCUSSION
1. Standard of Review
A trial court’s decision based on undisputed facts is subject to de novo review by
the appellate court. (Ermoian v. Desert Hospital (2007) 152 Cal.App.4th 475, 501.)
“The substantial evidence standard of review applies to both express and implied
findings of fact made by the court in its statement of decision.” (Ibid.) “Under the
substantial evidence standard of review, our review begins and ends with the
determination as to whether, on the entire record, there is substantial evidence,
contradicted or uncontradicted, which will support the trial court’s factual
determinations.” (Ibid.) We apply a de novo standard of review to that part of the trial
court's decision based on undisputed facts and a substantial evidence standard of review
to the court’s factual findings based on testimony and evidence at trial.
2. China As the Proper Forum
Defendants raise three arguments with respect to this issue. They contend that
(1) plaintiff should have brought suit in China, (2) the court lacked subject matter
jurisdiction over this action, and (3) the Chinese court’s judgment in the eviction
proceeding barred the court from ruling on the question of ownership of the Shanghai
In support of the argument that plaintiff should have brought suit in China,
defendants cite to the maxim that “questions relating to control of real property are to be
determined by the law of the jurisdiction in which the property is located.” (Wong v.
Tenneco, Inc. (1985) 39 Cal.3d 126, 136.) Defendants’ argument fails to point out how
7 the court erred but only faults plaintiff for filing this action in California. Moreover, the
principle that realty is exclusively subject to the law of the state within which it is
situated does not support the argument that this case should have been brought in China
but only speaks to what law applies to questions relating to the control of real property.
Defendants also argue that China had a greater interest in the subject oral
agreement, and that where “only one state ‘has a legitimate interest in the application of
its law and policy . . . the law of the interested state should be applied.’ [Hurtado v.
Superior Court (1974) 11 Cal.3d 574, 580.]” Defendants appear to be arguing that
China was the proper forum for this action because Chinese law governed the dispute.
Under the principle cited, “the forum state will generally apply the substantive law of
a foreign sovereign to causes of action which arise there. [Citations.]” (Wong v.
Tenneco, Inc., supra, 39 Cal.3d at p. 134.) If, as defendants appear to believe,
plaintiff’s causes of action arose in China, then the conclusion is not that the Chinese
courts had exclusive jurisdiction over the dispute but that the trial court should have
applied Chinese law to the dispute.
Defendants also argue that the trial court did not have subject matter jurisdiction
over this action because the subject oral contract was entered into primarily in China,
the contract was to be performed in China, and plaintiff was a Chinese citizen. “Subject
matter jurisdiction is the court’s power to hear and resolve a particular dispute or cause
of action . . . . ” (Donaldson v. National Marine, Inc. (2005) 35 Cal.4th 503, 512.)
“The California Constitution confers broad subject matter jurisdiction on the superior
court. [Citation.] The subject matter jurisdiction of the superior court is limited in
8 certain circumstances, however, such as in areas of exclusive federal jurisdiction
[citation], matters within the exclusive jurisdiction of an administrative agency
[citation], and where jurisdiction is vested in a reviewing court as a result of the filing of
a notice of appeal [citation].” (Serrano v. Stefan Merli Plastering Co., Inc. (2008)
162 Cal.App.4th 1014, 1029.) None of those circumstances are present here.
Moreover, the evidence clearly supports the conclusion that the contract involved an
interest in California property. Therefore, defendants have not shown that the court
lacked subject matter jurisdiction over this action.
Furthermore, the court clearly had personal jurisdiction over both parties and was
capable of awarding damages. While plaintiff is a Chinese citizen, Andy is
a U.S. citizen. Defendants both reside in California. (Burnham v. Superior Court of
California, County of Marin (1990) 495 U.S. 604, 619.) In addition, defendants’ failure
to object based on personal jurisdiction at the outset of the case constitutes a waiver of
the issue. (Code of Civil Procedure section 418.10(e)(3).)
Defendants point out that the Chinese court in the eviction proceedings
determined that Andy was the proper owner of the Shanghai Property. Defendants
appear to imply that the Chinese court’s judgment should have operated as res judicata
with respect to the question of who owned an interest in the Shanghai Property. The
court in its Statement of Decision, however, stated that “[a]ll attorneys hereto agree that
ownership was not decided by the Chinese Court.” The record also reflects that
defendants’ attorney did not argue that the Chinese court had decided the ownership of
9 the Shanghai Property.3 Defendants therefore forfeited this argument on appeal.
(Kaufman & Broad Communities, Inc. v. Performance Plastering, Inc. (2006)
136 Cal.App.4th 212, 226.)
3. Statute of Limitations
Defendants contend the trial court erred by finding in favor of plaintiff on the
breach of contract cause of action because the applicable statute of limitations had run.
Code of Civil Procedure, section § 339 provides for a statute of limitations of two years
for an action brought on the breach of an oral contract. “ ‘Resolution of the statute of
limitations issue is normally a question of fact.’ ” (Cleveland v. Internet Specialties
West, Inc. (2009) 171 Cal.App.4th 24, 31.) “As a general rule, the statute of limitations
‘cannot run before plaintiff possesses a true cause of action, by which we mean that
events have developed to a point where plaintiff is entitled to a legal remedy, not merely
a symbolic judgment such as an award of nominal damages.’ [Citation.] A wrongful
act . . . ‘causing only nominal damages, speculative harm, or the threat of future harm—
not yet realized—does not suffice to create a cause of action . . . .’ [Citation.] Instead,
3 “The Court . . . are you suggesting to this court that there’s more than an eviction in this judgment or what? Mr. Tsay [Defendants’ counsel]: Well, I think I’ll reserve for the court to make any judgment. The Court: No, I’m not going to make any judgment. I don’t know. I’m just asking you. Mr. Tsay: In the judgment it stated that it evaluated the evidence in China. The Court: Sir, I don’t understand what you guys are talking about. . . . [¶] . . . What is this document going to show me? Is it going to show me something about if the Chinese court said he owns it? Is this his personal property - - I might be interested, but I don’t even have a certified copy here. Mr. Tsay: All right. Your honor, we’ll move on to the next subject. And you’re - - the court’s points are taken - - well-taken.”
10 the cause of action does not accrue, and the statutory period does not commence to run,
until the plaintiff sustains actual and appreciable harm.” (Garver v. Brace (1996)
47 Cal.App.4th 995, 999-1000.)
The court concluded that the two-year statute began to run in 2007 when
defendant commenced the eviction proceeding in China. Defendants argue that the
statute of limitations began to run in 2000 when plaintiff discovered that title to the
Shanghai Property was in Andy’s name. In the alternative, defendants argue that the
statute of limitations was triggered in 2005 when defendant sent a letter to plaintiff
indicating his intent to evict her.
Substantial evidence, however, supports the trial court’s determination that the
statute of limitations began to run in 2007 when Andy took steps to evict plaintiff from
the Shanghai Property. At that point, plaintiff had suffered “actual and appreciable
harm.” (Garver v. Brace, supra, 47 Cal.App.4th at p. 1000.) Both plaintiff’s and
Andy’s testimony established that, prior to that time, Andy had not taken any concrete
action to deprive plaintiff of her interest in the Shanghai Property. Therefore, the court
did not err by finding that plaintiff timely filed this action in 2008.
4. Statute of Frauds
Defendants also contend that the statute of frauds invalidated plaintiff’s oral
contract with defendant.4 “Under the statute of frauds, contracts ‘for the sale of real
4 Defendants devote one sentence to the argument that plaintiff did not have standing to allege breach of contract because only Steven was injured by the alleged breach. Prior to trial, plaintiff sought to amend her complaint to designate herself as guardian ad litem for her son on the grounds that he was the intended third party
11 property, or of an interest therein’ (Civ. Code, § 1624, subd. (a)(3)) ‘are invalid, unless
they, or some note or memorandum thereof, are in writing and subscribed by the party
to be charged or by the party’s agent’ (Civ. Code, § 1624, subd. (a)).” (Lee v. Lee
(2009) 175 Cal.App.4th 1553, 1556.) However, “[p]art performance allows
enforcement of a contract lacking a requisite writing in situations in which invoking the
statute of frauds would cause unconscionable injury. [Citation.] ‘[T]o constitute part
performance, the relevant acts either must “unequivocally refer[]” to the contract
[citation], or “clearly relate” to its terms. [Citation.] . . . In addition to having partially
performed, the party seeking to enforce the contract must have changed position in
reliance on the oral contract to such an extent that application of the statute of frauds
would result in an unjust or unconscionable loss, amounting in effect to a fraud.
[Citations.]” (Secrest v. Security National Mortgage Loan Trust 2002-2 (2008)
167 Cal.App.4th 544, 555.)
The court found that the subject contract was exempt from the statute of frauds
because it had been partially performed. The Statement of Decision explained that
“[p]artial performance of the oral agreement(s) is an exception [to the statute of frauds].
Plaintiff did nothing to change title to the Shanghai property and continued to live in
that property believing what Andy Wang had told her. She obviously did what she did
beneficiary of his parents’ oral agreements. Defendants successfully opposed the motion but now argue that Steven was, in fact, the party injured by the breach of contract. Defendants are estopped from asserting this contrary position as a ground for reversal on appeal. (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 403.) Furthermore, issues to which an appellant provides no argument or discussion are deemed waived and are properly disregarded. (Huntington Landmark Adult Community Assn. v. Ross (1989) 213 Cal.App.3d 1012, 1021.)
12 to her detrimental reliance. She gave up any legal rights she had believing in his oral
agreements.”
Substantial evidence supports the trial court’s finding. Plaintiff testified that she
and Andy had agreed that the Shanghai Property was hers to raise their son in and that it
would go to Steven when he turned 18. It was undisputed that plaintiff and Steven had
lived at the Shanghai Property from 2000 until their eviction in 2008. In addition, it was
undisputed that plaintiff did not attempt to transfer title to the property into her name.
Accordingly, there was substantial evidence that plaintiff and Andy had partially
performed the contract, and that plaintiff relied on the contract to her detriment by
failing to take action to change the title.
5. Breach of Fiduciary Duty
Defendants argue there was no substantial evidence that defendant breached his
fiduciary duty to plaintiff because after they “terminated their relationship around
February, 2002 [they] thereafter could no longer be said to be in any confidential or
fiduciary relationship.” “[T]he existence of a confidential relationship is a question of
fact . . . . ” (Barbara A. v. John G. (1983) 145 Cal.App.3d 369, 383.) “ ‘[F]iduciary’
and ‘confidential’ have been used synonymously to describe ‘ . . . any relation existing
between parties to a transaction wherein one of the parties is in duty bound to act with
the utmost good faith for the benefit of the other party. Such a relation ordinarily arises
where a confidence is reposed by one person in the integrity of another, and in such
a relation the party in whom the confidence is reposed, if he [or she] voluntarily accepts
or assumes to accept the confidence, can take no advantage from his [or her] acts
13 relating to the interest of the other party without the latter’s knowledge or
consent. . . . ” ’ [Citations.]” (Id., at p. 382.)
Here, title to the Arcadia Property was placed in Andy’s and plaintiff’s names as
joint tenants. Plaintiff testified that Andy agreed to manage the Arcadia Property until
Steven turned 18 years old. Therefore, there was substantial evidence that Andy had
voluntarily accepted plaintiff’s confidence to manage the property for both of their
benefits, and thus, owed a fiduciary duty to plaintiff.
6. Unfair Enrichment
Defendants argue there was no substantial evidence that Andy unjustly retained
the rents from the Arcadia Property because it was undisputed that plaintiff had agreed
to allow him to manage the property and had never discussed the allocation of rents and
expenses with him. However, there was substantial evidence that both plaintiff and
Andy owned the Arcadia Property and were each “entitled to one-half of the value of
the Arcadia property.” Therefore, the court did not err by finding that defendant’s
retention of all the income generated by that property was unjust as the evidence
established he was only entitled to one-half.
7. Defendant Jenney Wang
Defendants also contend there was no evidence that Jenney engaged in any
wrongful act. The complaint alleged that Jenney converted plaintiff’s funds. Jenney
did not testify at trial and there was no evidence presented as to her receipt of funds
belonging to plaintiff. Plaintiff contends that the record established that Jenney had
14 received money from Shanghai PGM and controlled the income generated by the
Arcadia Property. Plaintiff’s citations to the record, however, do not support this.
In the alternative, plaintiff argues that Jenney is liable to plaintiff pursuant to
Family Code section 910 which provides that “the community estate is liable for a debt
incurred by either spouse before or during marriage . . . . ” Under Family Code
section 910, a non-wrongdoing spouse may be named as a defendant in a civil action for
purposes of determining community property liability. (11601 Wilshire Associates v.
Grebow (1998) 64 Cal.App.4th 453.) Here, Jenney was liable, to the extent of her share
in the community property based on Andy’s wrongful conduct. The court found that
Andy had breached his oral contract with plaintiff by retaining all of the income
generated by the Arcadia Property and evicting plaintiff from the Shanghai Property.
Therefore, although defendants are correct that there was no evidence that Jenney had
engaged in any wrongful act, the trial court did not err in entering judgment against her
to the extent of her interest in the community estate.
The judgment, however, does not distinguish between Jenney’s individual
liability and her community responsibility. When a non-debtor spouse is named solely
in her capacity as co-representative of the community estate “any judgment that issued
[is] limited to their community responsibility.” (Reynolds and Reynolds Co. v.
Universal Forms, Labels (C.D. Cal., 1997) 965 F.Supp. 1392, 1396.) Accordingly,
“judgment against the non-debtor spouse” should be “ ‘specifically limited with
a direction that it be satisfied only out of’ such property made liable by statute, and not
as a general judgment against the individual spouse.” (Ibid. citing Credit Bureau of
15 Santa Monica Bay Dist., Inc. v. Terranova (1971) 15 Cal.App.3d 854, 857.) Therefore,
the judgment should be modified to reflect that Jenney’s liability is limited to her
community responsibility.
8. Admission of the Appraisal Into Evidence
Defendants finally argue that the court erred in admitting the appraisal of the
Shanghai Property into evidence because Andy never authorized the performance of this
appraisal. Although defendants’ counsel argued during trial that Andy did not authorize
the appraisal, Andy did not provide any testimony on the subject. Moreover, defendants
do not argue that the appraisal was inaccurate. Therefore, the court did not err in
overruling defendants’ objection.
16 DISPOSITION
We modify the judgment to reflect that Jenney’s liability is limited to her
community responsibility and the extent of her interest in the community estate and
affirm the judgment as so modified. Plaintiff shall recover her costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
CROSKEY, Acting P. J.
WE CONCUR:
KITCHING, J.
ALDRICH, J.