Filed 9/23/26 Singh v. Kaur CA3
NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
THIRD APPELLATE DISTRICT
(Yolo)
GURDEV SINGH, C096916
Plaintiff, Cross-defendant and Respondent,
(Super. Ct. No. CV-2015-1143)
v.
BALJINDER KAUR,
Cross-defendant and Respondent;
AMARJIT SINGH SANGHA,
Defendant, Cross-complainant and
Appellant;
RENO’S MEGA MART CHEVRON,
Defendant and Appellant;
G & S GASOLINE, INC.
Defendant, Cross-defendant and
Respondent.
This appeal seeks to overturn a judgment after bench trial finding that plaintiff
Gurdev Singh and defendant Amarit Sangha entered into an oral partnership agreement,
pursuant to which each owns one-half of a gasoline station business, including the
underlying real property.
The gas station was purchased in 2008 for approximately $5 million, financed in
part by a $4 million loan. Although both Singh and Sangha contributed funds towards
the purchase, the loan and grant deed were recorded in Sangha’s name alone. In addition,
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the parties prepared a lease that, “on paper,” identified Sangha as the sole owner of the
property. However, from 2008 through 2015, the lease was not enforced, the business
and property were reported on a combined basis on the gas station’s tax returns, and the
loan was paid using funds from the gas station’s bank account.
By 2015, the relationship between Singh and Sangha had deteriorated, and Singh
filed a lawsuit against Sangha for breach of contract, quiet title, and other claims. Sangha
filed a cross-complaint. The primary dispute between the parties concerned whether
Singh was a 50 percent owner of the entire gas station business, including the real
property, or limited to a 50/50 split of the profits.
At trial, Sangha argued the applicable two-year statute of limitations barred
Singh’s claims for breach of contract and quiet title. The trial court disagreed; it found
that Singh’s claims were not barred because Singh did not discover or have reason to
discover the factual basis for his claims until just before filing suit.
Sangha appeals, arguing that Singh’s claims are barred on their face and that Singh
failed to meet his burden of proving equitable tolling applies. Sangha contends that the
trial court erred in concluding otherwise. We disagree and therefore affirm.
BACKGROUND FACTS AND PROCEDURE
Following the well-established rule of appellate review, we present the facts in the
light most favorable to the judgment. (Stuard v. Stuard (2016) 244 Cal.App.4th 768,
774.)
Singh and Sangha first met about 40 years ago and subsequently became very
good friends. At some point, the two men also became relatives when Sangha married
Singh’s cousin. After the marriage, Singh referred to Sangha as a “brother-in-law,”
which he described as a relationship of deep trust and respect in the Indian culture.
Beginning in or around 2006, Sangha proposed that he and Singh partner together
in owning and operating a gas station business. At the time, Sangha was a resident of
California, while Singh was a resident of England, United Kingdom. Sangha suggested
2
to Singh that operating a business in the United States could help Singh obtain a visa by
way of the “E-2 Treaty Investor Visa” program.
The E-2 Treaty Investor Visa program allows foreigners from countries that have a
qualifying treaty with the United States to live in the United States to “develop and
direct” a business in which they have invested a “substantial amount of capital.”
(8 U.S.C. § 1101(a)(15)(E)(ii); 8 C.F.R. § 214.2(e)(2), (12), (14), (16); 9 U.S.
Department of State, Foreign Affairs Manual (FAM) § 402.9-6.)1 To qualify for an E-2
visa, applicants must (1) be a national of a country with which the United States
maintains a treaty of commerce and navigation; (2) have invested, or be in the process of
investing, a “substantial amount of capital” in a bona fide enterprise in the United States;
(3) be seeking entry to the United States solely to “develop and direct” the investment
enterprise.2 (8 C.F.R. § 214.2(e)(2), (12), (14), (16); FAM § 402.9-6(A), (B), & (F).) A
“substantial amount of capital” is defined as an amount which is “(1) Substantial in a
proportional sense, as determined through the application of the proportionality test….;
[¶] (2) Sufficient to ensure the treaty investor’s financial commitment to the successful
operation of the enterprise; and [¶] (3) Of a magnitude to support the likelihood that the
treaty investor will successfully develop and direct the enterprise.” (FAM § 402.9-6(D);
8 C.F.R. § 214.2(e)(14).) “The proportionality test determines whether an investment is
substantial by weighing the amount of qualifying funds invested against the cost of the
1 The U.S. Department of State, Foreign Affairs Manual: Public, is available at
<https://fam.state.gov/Volumes/Details/09FAM> (last visited Sept. 23, 2026). The
manual is not binding, but courts may rely on it as a persuasive tool in reading the
relevant statutes and regulations. (Öztürk v. Trump (D.Mass. 2025) 819 F. Supp. 3d 45,
50, fn. 1; Ahmed v. Rubio (W.D.Va. Mar. 31, 2026, Civil Action No. 5:26-cv-00020)
2026 U.S.Dist.LEXIS 69675, at p. *5, fn. 2 [memo. opn.].)
2 An “investment” involves the placing of capital “at risk” in the commercial sense
with the objective of generating a profit. The capital must be subject to partial or total
loss if the investment fails. (8 C.F.R. § 214.2(e)(12); FAM § 402.9-6(B).
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business…. The proportionality test can best be understood as a sort of inverted sliding
scale. The lower the cost of the business the higher a percentage of investment is
required.” (FAM § 402.9-6(D)(c); 8 C.F.R. § 214.2(e)(14)(iii).)
The discussions between Sangha and Singh culminated in a verbal agreement to be
50/50 partners in a gas station located at 1590 and 1592 East Main Street, Woodland,
California. The gas station business was comprised of real property, a building
(convenience store), and furniture, fixtures, and equipment. Singh testified that the
verbal agreement was for 50/50 ownership of “the property and the business,” with each
party contributing approximately $300,000 of personal funds.
In October 2007, Sangha entered into an Asset Purchase Agreement to purchase
the gas station property and business. The stated purchase price was (approximately)
$5.5 million. Singh personally contributed approximately $300,000 toward the purchase.
Sangha personally contributed approximately $760,000.3 In addition, the sale was
partially financed through a $4 million loan from Valley Community Bank. The loan
was in Sangha’s name because Singh, as a citizen of the United Kingdom, lacked a credit
history in the United States and therefore could not qualify for a loan. Separating the
property from the business “ ‘on paper’ ” also theoretically would help Singh meet the
proportionality test for an E-2 visa.
Escrow for the transaction closed in February 2008, and a grant deed transferring
the property title to Sangha, individually, was recorded on February 14, 2008.
A few months later, in May 2008, Sangha and Singh met with Shiekh Idrees, a
Certified Public Accountant (CPA), about setting up a corporation (G&S Gasoline, Inc.)
to run the business. The parties agreed that the business would be incorporated as an “S
corporation” even though Singh could not be a shareholder in the corporation, at least for
3 The seller also partially financed the sale by carrying back a $500,000 note, but
subsequently “tore up” the note, thereby reducing the purchase price by $500,000.
4
taxation purposes, until his immigration status changed.4 (26 U.S.C. § 1361(b)(1)(C).)
Thus, when the incorporation documents were filed in May 2008, Sangha was the only
shareholder. Later, after Singh obtained a visa, G&S Gasoline, Inc.’s tax returns were
changed to reflect that Singh was a 50 percent shareholder.
After incorporation, G&S Gasoline, Inc. signed a 15-year lease to rent the gas
station property from Sangha. Singh admitted that he signed the lease on behalf of G&S
Gasoline, Inc., as tenant, with Sangha, as landlord.5 However, Singh testified that the
lease was a fictional device created solely to assist him in meeting the proportionality test
for an E-2 visa. In other words, the lease was merely “ ‘on paper’ ” and was not a real
lease.
The evidence at trial showed that, prior to March of 2015, the payments due under
the lease were not collected and (all or most) payments on the $4 million loan were paid
directly from G&S Gasoline, Inc.’s bank account. In addition, G&S Gasoline, Inc.’s tax
returns from 2008 to 2015 showed no separation of the underlying property from the gas
station business.
In July 2012, Singh exchanged a series of emails with G&S Gasoline, Inc.’s CPA
(Idrees) regarding his efforts to obtain an E-2 visa. On July 13, 2012, Singh wrote to
Idrees: “We have been speaking to our [immigration] lawyer re the visa application and
we are … ready to apply however we have a little problem. When [Sangha] and [Singh]
purchased the gas station initially[,] [Sangha] purchased[,] then they created a
corporation and took out a lease to run the business as the investment that [Singh] made
4 At the time, Singh believed his immigration status would change within two to
three months. In fact, Singh was unable to obtain a visa until about October 2012 and did
not move to the United States until January 2013.
5 The lease is dated June 1, 2008, but it is not clear from the record precisely when
it was signed; a signed copy of the lease is not part of the record on appeal.
5
would not have been proportional to the purchase price of the business. This way the
land … would be owned separately by [Sangha]. However, the tax returns are showing
that [G&S Gasoline, Inc.] [is] paying interest payments of around $250,000 per year and
also that there are buildings and other depreciable assets of $2.4 million and Intangible
assets of $1.8 million. [¶] The solicitor has asked whether it would be possible that
amendments could be made to the tax returns to reflect that the land is owned by
[Sangha] and not [G&S Gasoline, Inc.]?…. [¶] It[’]s just that the officers at the embassy
may pick up on this….”
Idrees responded that separating the real property from the operating business
would require splitting the loan and the value of the land and business, which “can create
a property tax nightmare” and “will kill any future refinancing” by the bank. G&S
Gasoline, Inc.’s prior tax returns were not amended, and the tax returns for 2012, 2013,
and 2014, continued to report the land as owned by G&S Gasoline, Inc., with loan
payments being paid by G&S Gasoline, Inc.
In or around the Summer of 2015, disputes arose between Singh and Sangha
regarding alleged misappropriation of funds from G&S Gasoline, Inc. In August 2015,
Singh filed a complaint against Sangha in Yolo County Superior Court for, among other
things, breach of contract, breach of implied covenant of good faith and fair dealing,
breach of fiduciary duty, accounting, and quiet title. In October 2016, Sangha filed a
cross-complaint against Singh for, among other things, conversion, breach of fiduciary
duty, director liability for unlawful distributions, and accounting.
The trial court held a bench trial, beginning in July 2021. Testimony was taken
from numerous witnesses over multiple months, with the close of evidence occurring on
December 3, 2021. At trial, Singh testified that, despite the loan and grant deed being in
Sangha’s name, Singh at all times believed he was a 50 percent owner of the entire
business, including the real property. He testified that it was only after litigation
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commenced, in 2015, that he learned Sangha was claiming sole ownership of the
property.
In April 2022, the trial court issued its tentative decision. Sangha requested a
statement of decision. After considering Sangha’s objections to the proposed statement
of decision, the court issued its final statement of decision and judgment in July 2022.
The court found, among other things, that: (1) Singh’s testimony was credible; (2) the
parties entered into an oral partnership agreement regarding the purchase of the gas
station; (3) Singh owns a 50 percent interest in the partnership with Sangha; (4) the
partnership owns the entire G&S Gasoline, Inc. business, including the real property; (5)
separating the gas station property from the business “ ‘on paper’ ” was done because of
Singh’s status as a non-resident and to assist Singh in obtaining an E-2 visa; (6) the
parties conducted themselves as equal partners; (7) Sangha used Singh’s initial
contribution of approximately $300,000, to purchase the gas station; (8) the G&S
Gasoline, Inc.’s tax returns for the period in question (2008-2015) show no separation of
the business from the underlying property and the property was never reported on
Sangha’s individual returns; (9) the testimony of both the court-appointed CPA and G&S
Gasoline Inc.’s CPA is that all payments made on the $4 million loan came from a G&S
Gasoline bank account, not Sangha’s personal account; (10) Sangha’s own expert
testified that the business and real estate were reported on a combined basis on G&S
Gasoline, Inc.’s tax returns during the period in question; (11) Sangha’s claim that the
partnership agreement was limited to a 50/50 split of the business profits was not
credible; (12) not long after discovering, in 2014 or 2015, that Sangha was actually
claiming Singh was not a 50 percent owner of the property, Singh initiated this lawsuit.
In reaching its decision, the trial court rejected Sangha’s statute of limitations
defense to the quiet title and breach of contract causes of action. The court specifically
found that the defense had “not been established” and that “[n]umerous equitable
exceptions to any potential limitations defense” had been developed, including the
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“ ‘discovery rule.’ ” Based on the evidence in the record, the court found that Singh had
not “ ‘discover[ed], or had reason to discover,’ ” the ownership dispute prior to the
expiration of the two-year statute of limitations period.
Among other relief, the trial court granted declaratory relief to the effect that
Singh owns a 50 percent interest in the partnership with Sangha and that the partnership
owns the entire gas station, including the real property. The court imposed a constructive
trust for the benefit of Singh requiring Sangha to convey legal title to the real property to
the partnership.
Sangha filed a timely notice of appeal from the judgment.
DISCUSSION
Sangha’s sole argument on appeal is that the two-year statute of limitations under
Code of Civil Procedure section 339(1) bars Singh’s breach of oral contract and quiet title
causes of action. We disagree.
A. Standard of Review
Resolution of a statute of limitations issue is ordinarily a question of fact. (Pearce
v. Briggs (2021) 68 Cal.App.5th 466, 474.) When an issue involving the statute of
limitations has been tried, we review the record in the light most favorable to the
judgment to determine whether it contains substantial evidence to support the findings of
the trier of fact. (Id. at p. 473; Richardson v. City and County of San Francisco Police
Com. (2013) 214 Cal.App.4th 671, 692.)
B. Analysis
“Generally speaking, a cause of action accrues at ‘ “the time when the cause of
action is complete with all of its elements.” ’ ” (Eisenberg Village etc. v. Suffolk
Construction Co., Inc. (2020) 53 Cal.App.5th 1201, 1212; accord, Martin v. Kehl (1983)
145 Cal.App.3d 228, 240.) In this case, the relevant cause of action is the claim for
breach of oral contract. (Reuter v. Macal (2020) 57 Cal.App.5th 571, 578 [since there is
no statute of limitations governing quiet title actions as such, courts refer to the
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underlying theory of relief to determine the applicable period of limitations].) The statute
of limitations for breach of oral contract is two years. (Lucioni v. Bank of America, N.A.
(2016) 3 Cal.App.5th 150, 164.)
Sangha argues that because Singh’s claims relate to ownership of the gas station
property, the statute of limitations began to run when the grant deed transferring title to
Sangha was recorded in February 2008. Thus, absent tolling, Singh needed to file suit on
his claims by February 2010. Because Singh did not file suit until August 2015, and
because Sangha contends there are no grounds for equitable tolling, Sangha contends that
Singh’s claims are barred by the statute of limitations.
In opposition, Singh argues that his claims are not time barred because the
recording of the grant deed was not a breach of the oral partnership agreement. Rather, it
was part of the agreed-upon arrangement between the partners. Singh argues that it was
not until 2015 that he had reason to suspect that Sangha did not intend to honor their
50/50 partnership agreement. Therefore, Singh contends there was no “breach” until
2015.
Singh has the better argument. The trial court found that the parties entered into
an oral partnership agreement for 50/50 ownership of the entire gas station business,
including the real property. The trial court also found that placing the title and loan in
Sangha’s name alone was part of their agreement. In other words, the trial court found
that the land was beneficially owned by the partnership even though, “on paper,” the land
was purchased and held in the name of one of the partners. Substantial evidence supports
these findings.
Under such circumstances, the owner of the legal title holds the property in trust
for the partnership. (Swarthout v. Gentry (1943) 62 Cal.App.2d 68, 78; Perelli-Minetti v.
Lawson (1928) 205 Cal. 642, 648; see Corp. Code, §§ 16203, 16204, subd. (c); 48 Cal.
Jur.3d (2026) Partnership, §§ 44, 49, 50.) And the statute of limitations does not begin to
run until the beneficiary has notice or should know of the repudiation of the trust, i.e.,
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that the defendant is holding the property adversely to plaintiff in violation of their
agreement. (Martin v. Kehl, supra, 145 Cal.App.3d, at p. 240; see Strasberg v. Odyssey
Group (1996) 51 Cal.App.4th 906, 917; see also Matter of Steinberg (N.Y. App. Div.
2020) 183 A.D.3d 1067 [distinguishing wrongfully acquired property from wrongfully
withheld property].) Applying that principle here, we conclude that Singh’s claims were
timely.6 As the trial court found, Singh did not discover or have reason to discover that
Sangha repudiated their agreement—by claiming Singh was not a 50 percent owner of
the property—until just before Singh initiated his lawsuit.
Sangha argues there was “not a scintilla of evidence” at trial to show that the
ownership dispute arose in late 2014 or 2015. Not so. Singh testified that the first time
Sangha claimed sole ownership of the gas station property was around the time the
lawsuit was filed. Singh’s testimony, although lacking in detail, is nonetheless
substantial evidence to support the trial court’s finding that Singh learned of the
ownership dispute “in 2014 or 2015.”
Sangha also argues that Singh’s 2012 emails demonstrate his understanding that
Sangha was the sole owner of the gas station property. Sangha contends that to the extent
Singh disputed his ownership, Singh had two years—until 2014—to file suit for Sangha’s
alleged breach of contract. However, as Singh points out, the 2012 emails are “entirely
consistent” with the trial court’s finding that the parties had agreed to place the title and
loan in Sangha’s name for loan and visa reasons. Thus, acknowledging that Sangha was
6 In our view, the cause of action did not commence to run until Singh had notice or
should have known of Sangha’s repudiation of the agreement. But even if the statute
could be said to have accrued earlier, the discovery rule would have postponed the
running of the statute of limitations until Singh suspected or should have suspected
Sangha’s wrongdoing. (Eisenberg Village etc., supra, 53 Cal.App.5th at p. 1213; Fox v.
Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.)
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the sole owner “ ‘on paper’ ” did not mean that Singh understood Sangha was repudiating
their agreement and claiming sole beneficial ownership.
Sangha additionally argues that it is inequitable to toll the statute of limitations
because of Singh’s “[u]nclean [h]ands.”7 This argument fails because, as we have found,
the claims were timely filed without the benefit of any tolling or equitable exceptions to
the statute of limitations. But even if we were to take such equitable considerations into
account, we are not persuaded that reversal is required.
Generally, under the doctrine of in pari delicto, courts will withhold relief to a
party who has entered into an illegal contract or bargain which is against public policy.
(Tri-Q, Inc. v. Sta-Hi Corp. (1965) 63 Cal.2d 199, 216.) This doctrine, a variant of the
unclean hands defense, dictates that “ ‘when a participant in illegal, fraudulent, or
inequitable conduct seeks to recover from another participant in that conduct, … the law
will aid neither, but rather, will leave them where it finds them.’ ” (Casey v. U.S. Bank
Nat. Assn. (2005) 127 Cal.App.4th 1138, 1143, fn. 1; 13 Witkin, Summary of Cal. Law
(11th ed. 2026), Equity, § 9.) “By refusing to entertain the enforcement of illegal
contracts, courts maintain their integrity while at the same time deterring the formation of
such contracts.” (Aghaian v. Minassian (2021) 64 Cal.App.5th 603, 622.)
However, this rule is not absolute. (Aghaian v. Minassian, supra, 64 Cal.App.5th
at p. 622.) There are well-recognized exceptions. (Kashani v. Tsann Kuen China
Enterprise Co. (2004) 118 Cal.App.4th 531, 541 [although courts continue to recite that
the law will leave the parties to an illegal contract where it finds them, the better
7 Sangha’s reply brief raises a different, but related argument that the trial court
lacked power to grant Singh relief because his claims rely (to some extent) on an
unlawful agreement undertaken for the purpose of deceiving federal immigration
officials. We have no duty to respond to contentions that are raised for the first time in a
reply brief. (Planning & Conservation League v. Department of Water Resources (2024)
98 Cal.App.5th 726, 751, fn. 11; In re Marriage of Carlisle (2021) 60 Cal.App.5th 244,
256.)
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authorities immediately qualify such statement by acknowledging the lengthy and
intricate list of exceptions].) For example, courts have held that the rule should not apply
when: “(1) the public cannot be protected because the transaction has been completed; (2)
no serious moral turpitude is involved; (3) the defendant is the one guilty of the greatest
moral fault; and (4) to apply the rule will permit the defendant to be unjustly enriched at
the expense of the plaintiff.” (Aghaian, at p. 622.) In other cases, courts have found that
effective deterrence of illegal contracts is best realized by enforcing the plaintiff’s claim
rather than allowing the defendant to receive an unfair windfall. (See Tri-Q v. Sta-Hi
Corp., supra, 63 Cal.2d at p. 220, citing Lewis & Queen v. N. M. Ball Sons (1957)
48 Cal.2d 141, 151; see Asdourian v. Araj (1985) 38 Cal.3d 276, 292, superseded by
statute on other grounds as stated in Eisenberg Village etc. v. Suffolk Construction Co.,
Inc. (2020) 53 Cal.App.5th 1201, 1212, fn. 10 [in compelling cases, illegal contracts will
be enforced to avoid unjust enrichment to a defendant and a disproportionately harsh
penalty upon the plaintiff].) “The fundamental purpose of the rule must always be kept in
mind, and the realities of the situation must be considered.” (Tri-Q, at p. 219.)
In considering whether the trial court erred by failing to apply the doctrine of in
pari delicto, we apply an abuse of discretion standard. (Dickson, Carlson & Campillo v.
Pole (2000) 83 Cal.App.4th 436, 447; see Farahani v. San Diego Community College
Dist. (2009) 175 Cal.App.4th 1486, 1496.) Under that standard, we resolve all
evidentiary conflicts in favor of the judgment and determine whether the court’s decision
was within the bounds of reason. (Dorman v. DWLC Corp. (1995) 35 Cal.App.4th 1808,
1815.) The burden is on the complaining party to establish an abuse of discretion, and
unless a clear case of abuse is shown, a reviewing court will not substitute its opinion for
that of the trial court. (Denham v. Superior Court (1970) 2 Cal.3d 557, 566.) Here, we
see no abuse of discretion.
Sangha argues that the parties’ agreement to place the title and loan in Sangha’s
name alone and to sign the (fictional) lease was part of a scheme to defraud federal
12
immigration officials by falsely claiming Singh had no ownership interest in the gas
station property—presumably to better his chances of meeting the E-2 visa
proportionality test. Sangha contends that courts refuse to enforce claims arising from
unlawful agreements in order to discourage such transactions. To grant Singh relief here,
he contends, is to reward Singh for his misconduct.
We acknowledge that the in pari delicto rule serves important public purposes
and, consequently, the parties to an illegal contract generally should be left where the
court finds them. (See, e.g., Lala v. Maiorana (1959) 166 Cal.App.2d 724, 733.)
However, as we have discussed, the in pari delicto rule “ ‘ “is not an inflexible one to be
applied in its fullest rigor under any and all circumstances,” ’ and ‘ “[a] wide range of
exceptions has been recognized” ’ to enforce contracts ‘to “avoid unjust enrichment to a
defendant and a disproportionately harsh penalty upon the plaintiff.” ’ [Citation.] ‘The
effect of illegality on a transaction depends on the facts and equities of the particular
case.’ [Citation.] In each case, the extent of enforceability and the type of remedy
granted depend upon a variety of factors, including the nature of the illegality, the
policies to be served by enforcing or denying enforcement of the agreement, and the
relative culpability and equities of the parties. [Citations.] The ‘appropriate remedy
would depend upon a weighing of these factors.’ ” (Dunkin v. Boskey (2000)
82 Cal.App.4th 171, 196-197.)
We believe this is a case in which special circumstances weigh in favor of
allowing Singh’s claim to proceed. We reach this conclusion for several reasons.
First, this is not a case where the plaintiff (Singh) is asking the trial court to
enforce an illegal agreement. Singh is seeking to enforce a legitimate partnership
agreement. It is Sangha, not Singh, who is seeking to enforce the parties’ “ ‘on paper
scheme’ ” by claiming that it demonstrates his sole ownership of the property.
Admittedly, Singh can renounce the scheme only because he no longer benefits from it,
having obtained the desired E-2 visa. But this does not alter the fact that the courts are
13
not being asked “to stultify themselves” by lending aid to the enforcement of an illegal
agreement. (See Bacall v. Shumway (2021) 61 Cal.App.5th 950, 958; see also
Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 123,
abrogated in part on other grounds by AT&T Mobility LLC v. Concepcion (2011)
563 U.S. 333, 337-338 [courts may sever the illegal portion of a contract from the rest of
the agreement]; Keene v. Harling (1964) 61 Cal.2d 318, 320-321 [same]; cf. Homami v.
Iranzadi (1989) 211 Cal.App.3d 1104, 1112 [the test is whether the plaintiff can establish
his case otherwise than through the medium of an illegal transaction].)
Second, the decision to place the title and loan in Sangha’s name was not done
solely for improper purposes. It also was done for the innocuous reason that Singh was
not a U.S. citizen and could not qualify for the loan. (Bovard v. American Horse
Enterprises, Inc. (1988) 201 Cal.App.3d 832, 839 [the power to nullify an otherwise
enforceable contract for public policy reasons should be exercised with great caution].)
Third, to the extent there was fraud on the government, both parties were equally
at fault. Both Singh and Sangha agreed to the “on paper scheme” because securing a E-2
visa for Singh was deemed mutually beneficial to both parties. Indeed, it was Sangha
who initially suggested that operating a business could help Singh secure a visa.
Fourth, even if the trial court was to deny relief and leave the parties where it
found them—i.e., with Sangha as the sole owner of the property—the transaction still
would be tainted with fraud because (1) the “on paper scheme” to circumvent the
immigration laws already has been completed, and (2) G&S Gasoline, Inc.’s federal tax
returns from 2008 to 2015 reported no separation of the business from the underlying
property.
Finally, Sangha would receive an unfair windfall if the in pari delicto rule were
applied to negate Singh’s interest in the property. (Dunkin v. Boskey, supra,
82 Cal.App.4th at p. 196.)
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Under the circumstances, it was not an abuse of discretion for the trial court to
grant Singh relief even though he may have benefitted from the “on paper scheme” to
defraud the federal government.
DISPOSITION
The judgment is affirmed. Singh shall recover his costs on appeal. (Cal. Rules of
Court, rule 8.278(a)(1) & (2).)
\s\
KRAUSE, J.
We concur:
\s\
RENNER, Acting P. J.
\s\
MESIWALA, J.
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