Tu v. Wong

Filed 8/25/08 Tu v. Wong 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEAL from judgments of the Superior Court of Los Angeles County,

Joseph DeVanon, Judge. Affirmed in part, reversed in part and remanded with directions.

Walter R. Huff for Plaintiffs and Appellants.

Case, Knowlson, Jordan & Wright and Patrick Walsh for Defendants and Respondents Van Khanh Bui and Lan Ly.

Severson & Werson, Eric J. Troutman and Jan T. Chilton for Defendant and Respondent Bank of America, N.A.

Law Office of Lawrence M. Burek and Lawrence M. Burek for Defendants and Respondents Jennifer Tran Vu and Le Xuan Nguyen.

Rob D. Cucher for Defendant and Respondent Henry Suh.

Jeffrey S. Benice for Defendants and Respondents Kenny Wong, Kimberly Wong and Thuan My Lam.

_________________________

Plaintiffs and appellants Robert Tu, David Tu and Ly Bich Tu (plaintiffs) appeal judgments in favor of defendants and respondents Jennifer Tran Vu (Vu), Le Xuan Nguyen (Nguyen), Kenny Wong, Kimberly Wong, Thuan My Lam (Lam), Henry Suh (Suh), and defendants, cross-complainants and respondents Bank of America (Bank), Van Khanh Bui (Bui) and Lan Ly (Ly).

The issues presented relate to the validity of four deeds purportedly executed by decedent Hoa Le Wong (Mrs. Wong) shortly before her death conveying two parcels of real property to her husband, Kenny Wong.

For the reasons set forth below, the judgments in favor of Ly and the Bank, relating to title to the Ashmont property, are affirmed. The judgments in favor of the remaining defendants are reversed and the matter is remanded for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

1. Facts.

In 1996, Kenny Wong married plaintiffs mother, Hoa Le Wong (Mrs. Wong). The three plaintiffs are Mrs. Wongs children by a prior marriage.

a. The Lexington property, owned by Mrs. Wong before the marriage.

Prior to the marriage, Kenny Wong and Mrs. Wong entered into a written prenuptial agreement. The prenuptial agreement identified real property on Lexington Gallatin Road in El Monte, California (hereafter the Lexington property) to be kept as her sole and separate property.

b. The acquisition of the Ashmont property during the marriage.

During the marriage, in 1999, Kenny Wong and Mrs. Wong were looking for an investment property. Kenny Wong, who was a real estate and mortgage loan broker, located a property on Ashmont Avenue in Arcadia (the Ashmont property) and they decided to buy it. Kenny Wong wrote an offer to buy the Ashmont property, listing Hoa Le Wong as the buyer. He did so because he thought he would have a conflict of interest if he acted both as real estate broker and buyer in the transaction. Also, he put his wife on the title because she could get a loan on the property. Kenny Wong could not qualify for a loan because he was a broker on the deal and because of his poor credit rating.

Before they bought the property, Kenny Wong and Mrs. Wong discussed the fact that title to the Ashmont property would be taken in Mrs. Wongs name alone, but that the property would be community property.

The deed conveying the Ashmont property to the purchaser states the grantee is Hoa Le Wong, an unmarried woman. (Italics added.) Hoa Le Wong was the buyers name given in the purchase agreement prepared by Kenny Wong. The words an unmarried woman were added later by the title company, without Kenny Wongs knowledge.

Kenny Wong paid the $17,200 down payment on the Ashmont property with savings from his business income. Mrs. Wong obtained a loan of $155,000 to finance the purchase. Kenny Wong made all the monthly payments on the Ashmont mortgage, applying rental income from the Ashmont property toward the loan payments. The Wongs never lived in the Ashmont property.

c. The transfers of the Lexington and Ashmont properties to Kenny Wong.

Mrs. Wong was diagnosed with cancer in 1998 and died on July 6, 2001. Apparently, she died intestate because no will was found.

On June 2, 2001, about one month before Mrs. Wongs death, Kenny Wong purportedly signed his wifes name to a grant deed as well as a quitclaim deed to the Lexington property, conveying said property from Mrs. Wong as her sole and separate property to Kenny Wong, a married man, as his sole and separate property.

On June 2, 2001, Kenny Wong also purportedly signed his wifes name to a grant deed as well as a quitclaim deed with respect to the Ashmont property, conveying title, which had been held by Hoa Le Wong, an unmarried woman, to Kenny X. Wong, a married man as his sole and separate property.

Kenny Wong testified he signed the deeds in the master bedroom of their home, in his wifes presence. The two of them were there alone. He then took the signed deeds to the notarys office. The deeds bear the official notarial seal of Henry J. Suh Comm. #1278497.^[1]

d. In 2002, Kenny Wong sells the Lexington and Ashmont properties.

In February 2002, Kenny Wong sold the Ashmont property to Ly, and in July 2002, he sold the Lexington property to Bui.

2. Proceedings.

a. Pleadings.

Plaintiffs commenced this action in 2004 and filed the operative third amended complaint in June 2006. The named defendants included: Kenny Wong; his current spouse, Kimberly Wong; Suh, the notary who allegedly notarized the deeds in issue; Bui, the purchaser of the Lexington property; Ly, the purchaser of the Ashmont property; Bank, which holds a promissory note secured by a deed of trust on the Ashmont property; as well as Lam, Vu and Nguyen.^[2]

Plaintiffs pled causes of action to set aside fraudulent transfer of real property and sought damages and a judicial declaration the transfers of the Lexington and Ashmont properties by Kenny Wong were effected by a forged deed and that the purported conveyances were void as a matter of law.

b. Phase one of the trial; statement of decision.

Phase one of the trial lasted two days and dealt with whether the Ashmont property was Mrs. Wongs separate property or community property. Phase one resulted in a nonsuit in favor of Ly, the subsequent purchaser of the Ashmont property, and Bank, the lender on the mortgage to Ly secured by the Ashmont property.^[3]

In essence, the trial court found the Ashmont property was acquired by Kenny Wong and Mrs. Wong as community property, and because Mrs. Wong died intestate, all of her community property interest in the Ashmont property passed to her husband, Kenny Wong, at the time of her death, by operation of law. The statement of decision sets forth the following findings:

1. The Court finds that Mr. and Mrs. Wong were married at the time they acquired the Ashmont Property;

2. The Court finds that the form of title by which Mr. and Mrs. Wong took Ashmont is vague and confusing and does not bear, one way or the other, upon the couples determination to hold Ashmont as separate or community property;

3. The Court finds that the only evidence in the record is that Mr. Wong paid for the Ashmont property, both in terms of its down payment and all monthly payments with his community property income;

4. The Court finds that the only evidence in the record with regard to the parties intent is Mr. Wongs testimony that he and Mrs. Wong had discussed, the purchase of the property and intended that it be held as community property;

5. The Court finds that the Ashmont property was intended by Mr. and Mrs. Wong to be a community property asset at the time of its purchase;

6. The Court finds that the lender providing the loan by which the Wongs purchased the Ashmont Property relied upon that property as collateral and security for the loan;

7. The Court finds that, notwithstanding the prenuptial agreement entered into in 1996, Mr. and Mrs. Wong engaged in a course of conduct by which they did not intend to treat their earnings as separate property during the marriage;

8. The Court finds that Mr. and Mrs. Wong were married in 1996 and did not separate or divorce before Mrs. Wongs death in 2001;

9. The Court finds that Mr. Wong used his community property labor and expertise to locate the Ashmont property and determine that it would be a good investment for the couple;

10. The Court finds that no separate property assets of Mrs. Wong were used to purchase the Ashmont Property, as Plaintiffs failed to introduce any evidence as to the source of the funds used to purchase the property, other than Mr. Wongs testimony that he paid for the Ashmont Property, as well as all utility bills and tax obligations from his own earnings;

11. As a matter of law, the form of title by which the couple held Ashmont does not shift the burden of proof or production onto the Defendants to prove the characterization of the property the title does not state that the property is Mrs. Wongs separate property and is false and misleading in its statement that Mrs. Wong was unmarried at the time title was taken, even though Mrs. Wongs married name appears on the title. There is no evidence in the record that the parties intended the form of title to reflect their intent with respect to characterization. However, even if the burden had shifted to Defendants, the evidence introduced during Plaintiffs case in chief established, by clear and convincing evidence, that the property had been purchased during marriage, with community property funds, for a community property purpose and with the intent that the property be held as community property by Mr. and Mrs. Wong.

12. Because the Ashmont property was purchased during the marriage of Mr. And Mrs. Wong, and as no evidence was presented that a statutory exception applies, the Ashmont property was community property at the time the property was acquired. (Cal. Fam. Code Section 760.)

13. No evidence exists in the record that Mr. Wong transmuted his community property share of the Ashmont Property to Mrs. Wong and the Court finds that no such transmutation took place. Accordingly the Court finds that the Ashmont Property was a community property asset of Mr. and Mrs. Wong from the time of its acquisition to the time of Mrs. Wongs death.

14. The Court finds that Plaintiffs were given ample opportunity to cross-examine Mr. Wong and that Plaintiffs waived their request for further examination of Mr. Wong under CCP Section 631.8(a) at the hearing. The Court also finds that even if Plaintiffs had undertaken to further cross-examine Mr. Wong, no amount of impeachment of Mr. Wongs credibility would change the result that no evidence existed in the record that the property was intended to be Mrs. Wongs separate property asset or that any statutory exception applies to establish that Ashmont was not a community property asset of Mr. and Mrs. Wong.

15. The Court finds that Plaintiffs have failed to introduce any evidence of a will and hence finds that Mrs. Wong died intestate.

16. The Court finds that as Mrs. Wong died intestate, all of her community property interest in the Ashmont property passed to her husband, Mr. Kenny Wong, at the time of her death. (California Probate Code Section 6401 (a.)) Mr. Wong possessed full right, title, and interest to the Ashmont property upon his wifes death.

17. Plaintiffs have failed to introduce any evidence of any other gift, devise, or succession scheme by which they would receive any interest in the Ashmont

Property upon Mrs. Wongs death. Accordingly, the Court finds that Plaintiffs are without any interest in the Ashmont Property and have never held any such interest following the death of Mrs. Hoa Le Wong.

18. The Court finds that it is undisputed in this action that Mr. Wong transferred his interest in the Ashmont Property, for valuable consideration, to Defendant Lan Ly in 2002. The Court also finds that it is undisputed in this action that Defendant Lan Ly encumbered her interest in the Ashmont Property with Deeds of trust in favor of Defendant Bank of America. The Plaintiffs being without any interest in the Ashmont Property, the Court finds it appropriate to enter Judgment in favor of Defendant Bank of America both as to (a) its Cross-Complaint for Declaratory Relief against Plaintiffs, and (b) Plaintiffs action for declaratory relief and cancellation of forged deeds against Bank of America. The Court also finds it appropriate to render Judgment in favor of Defendant Lan Ly on Plaintiffs action for declaratory relief and cancellation of forged deeds on the same grounds.

c. Phase two of the trial; statement of decision.

Phase two of the trial addressed whether Kenny Wong conspired with notary Suh to forge the deeds to the Lexington and Ashmont properties and whether said deeds were in fact forged.

At the conclusion of phase two, the trial court made findings of fact from the bench. In essence, the trial court found plaintiffs failed to prove that Kenny Wong intended to defraud plaintiffs mother when he signed her name to the deeds. The trial court found for Kenny Wong, Suh as well as Bui, who purchased the Lexington property from Kenny Wong. The statement of decision sets forth the trial courts ruling as follows:

1. Forgery of a document is a broader act than the mere signing of someone elses name; forgery requires a specific intent to defraud.

2. In a civil matter involving a claim of forgery, the burden of proof is not a mere preponderance of the evidence; the evidence must be clear and convincing in order to sustain a finding of forgery.

3. In this case, there was evidence of activity by the defendant Kenny Wong sufficient to raise some suspicion; the evidence showed that Kenny Wong signed the name of his wife, Hoa Le Wong, to the challenged deeds. However, the practice of signing a spouses name to a document is not so unusual or irregular as to establish, by itself, fraudulent conduct.

4. In this case, there was evidence indicating that defendant Henry Suh may have in fact notarized the challenged deeds. However, the act of notarizing a fraudulent document does not in and of itself establish a conspiracy to commit fraud without a further specific intent to commit such fraud. It was not proven by clear and convincing evidence that Henry Suh had any intent to commit fraud or forgery.

5. The record does not reflect that Kenny Wong took money from Hoa Le Wong; the evidence was that Mr. Wong liquidated certain assets and used the proceeds to pay outstanding debts of the marital community.

6. Plaintiffs demonstrated inconsistencies in Mr. Wongs testimony concerning his wifes consent to his signing her name to documents, but the Court was not convinced that this established any fraud. The Court notes that the evidence established that Mr. Wong appointed Mr. Vincent Nguyen, the husband of Plaintiff Ly Bich Tu, to act as the sales agent on the sale of the Lexington Gallatin property to defendant Van Khanh Bui, and that, upon completion of the sale, Mr. Wong paid a brokerage fee to Mr. Nguyens company and divided the remaining proceeds equally with the Plaintiffs.

7. Considering the evidence as a whole, the Court finds the Plaintiffs evidence to be insufficient to find an intent to defraud by Mr. Wong.

8. The Court finds that the prenuptial agreement between Mr. and Mrs. Wong appears to show Mrs. Wongs intent to hold the Lexington Gallatin property as her separate property; however, this does not change the Courts determination that the evidence presented by the Plaintiffs was insufficient to establish an intent to defraud on the part of Mr. Wong.

9. Because there was no forgery, the deed executed by Mr. Wong in his wifes name, transferring title to the Lexington Gallatin Property from Mrs. Wong to Mr. Wong, was not void, and was sufficient to pass title to Mr. Wong.

10. The Court finds that because there was no forgery on the deed itself, then there can be no act of forgery committed by the notary. The Court finds that there was no connection established between Defendant Wong and Defendant Suh, no intent on behalf of Defendant Suh to commit any wrongful act against the Plaintiffs, and as such no finding of conspiracy.

11. Upon completion of Phase 2, Defendant Henry Suh moved for judgment on the basis of the Courts findings on the forgery issue. The Court further finds that Mr. Suh is entitled to judgment with respect to all of the Plaintiffs claims against him.

12. Upon completion of Phase 2, Defendant Van Khanh Bui, a bona fide purchaser for value with respect to the Lexington Gallatin property, also moved for judgment on the basis of the Courts findings on the forgery issue. The Court finds that Van Khanh Bui is entitled to judgment with respect to the Plaintiffs claims against him.

13. Upon completion of Phase 2, defendants Kenny Wong, Thuan My Lam, and Kimberly Wong also moved for judgment on the basis that, in light of the Courts findings on the forgery claim, there were no remaining viable claims of the Plaintiffs against Mr. Wong. Defendant Jennifer Tran Vu separately moved for judgment on those grounds. The Court determines that this issue requires further consideration, and will render a decision after review of briefs to be submitted by the parties.

d. Subsequent proceedings.

After reviewing the post trial briefs, the trial court ruled that inasmuch as plaintiffs were unable to prove a forgery of the deeds by Kenny Wong, judgment must be entered on behalf of the defendants as a matter of law on all remaining causes of action in the third amended complaint.

e. The various judgments and the appeal therefrom.

Following resolution of phase one of the trial pertaining to the Ashmont property, the trial court entered judgment in favor of Bank (June 14, 2007) and Ly (July 26, 2007).

Following resolution of phase two of the trial, the trial court entered judgment in favor of: Bui (July 23, 2007); Vu and Nguyen (September 6, 2007); Suh (October 4, 2007); Kenny Wong, Kimberly Wong and Lam (January 24, 2008).

On August 23, 2007, plaintiffs filed notice of appeal from the judgment entered on or about June 26, 2007, and from those judgments entered subsequent thereto.^[4]

CONTENTIONS

Plaintiffs contentions with respect to the Ashmont property are as follows: the fact that Mrs. Wong was married at the time she took title to the Ashmont property as an unmarried woman does not preclude application of the form of title presumption and the Evidence Code section 662 (section 662) presumption in her favor; the form of title presumption should apply and shifts the burden of proof onto Kenny Wong to prove, by clear and convincing evidence, that ownership of the Ashmont property should be other than as stated on the title; section 662 applies to the Ashmont property, so as to shift the burden of proof onto Kenny Wong, to prove by clear and convincing evidence, that ownership of said property is other than as stated on the title; and case law has acknowledged that where a husband and wife transferred property to wife as an unmarried woman, the transfer triggers the rebuttable presumption that the parties intended to hold the property according to its record title.

Plaintiffs further contend: the prenuptial agreement clearly states the Lexington property is the separate property of Mrs. Wong, and Kenny Wong conceded at trial that said property was his wifes separate property; the clear and unambiguous terms of the premarital agreement precludes the existence of community property and thus the Ashmont property can only be Mrs. Wongs separate property; the trial court erroneously held plaintiffs to the higher clear and convincing evidence standard on their claims for forgery and conspiracy to commit forgery; and the trial court erred in failing to rule on plaintiffs motion for leave to file an amended pleading to conform to proof at the close of trial.

DISCUSSION

1. Trial court properly found the Ashmont property was acquired as community property.

a. General principles.

The Ashmont property was acquired during the marriage. Therefore, we begin with the premise that generally, all property acquired by a spouse during marriage before separation is community property. (In re Marriage of Lehman (1998) 18 Cal.4th 169, 177.) Family Code section 760 provides: Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.

b. Trial court properly found the language of the deed conveying the Ashmont property to Hoa Le Wong, an unmarried woman, did not give rise to a presumption of separate property status.

Plaintiffs contend that because the grant deed conveyed the Ashmont property to Hoa Le Wong, an unmarried woman, they are entitled to a presumption under the form of title presumption and section 662 presumption that Mrs. Wong held the Ashmont home as her separate property.^[5] Therefore, according to plaintiffs, the burden shifted to Kenny Wong, to prove by clear and convincing evidence, that ownership of the Ashmont property was other than as stated on the title.

In this regard, the trial court found the form of title by which Mr. and Mrs. Wong took Ashmont is vague and confusing and does not bear, one way or the other, upon the couples determination to hold Ashmont as separate or community property. The trial court ruled [a]s a matter of law, the form of title by which the couple held Ashmont does not shift the burden of proof or production onto the Defendants to prove the characterization of the property the title does not state that the property is Mrs. Wongs separate property and is false and misleading in its statement that Mrs. Wong was unmarried at the time title was taken, even though Mrs. Wongs married name appears on the title. There is no evidence in the record that the parties intended the form of title to reflect their intent with respect to characterization. (Italics added.)

We agree with the trial court that the form of title did not give rise to a presumption the Ashmont property was acquired as Mrs. Wongs separate property. The deed does not state the conveyance is to Hoa Le Wong, a married woman, as her sole and separate property. Rather, the deed states the conveyance is to Hoa Le Wong, an unmarried woman. The reference to an unmarried woman is clearly erroneous because it is undisputed Hoa Le Wong was married at the time. Thus, the deed was made to Hoa Le Wong, using her married name, but describing her incorrectly as unmarried. As the trial court found, this was vague and confusing and did not aid in determining whether Ashmont was acquired as community property or as Mrs. Wongs separate property.

Therefore, the trial court properly found the conveyance of the Ashmont property to Hoa Le Wong, an unmarried woman did not give rise to a rebuttable presumption that the Ashmont property was acquired by Mrs. Wong as her sole and separate property.^[6]

c. Even assuming plaintiffs were entitled to a rebuttable presumption the Ashmont property was acquired by Mrs. Wong as her sole and separate property, the trial court properly found the presumption had been rebutted.

Although the trial court initially found the presumption was inapplicable, the trial court further found even if the burden had shifted to Defendants, the evidence introduced during Plaintiffs case in chief established, by clear and convincing evidence, that the property had been purchased during marriage, with community property funds, for a community property purpose and with the intent that the property be held as community property by Mr. and Mrs. Wong. (Italics added.)

An appellate court is bound by the trial courts findings regarding the separate or community character of assets if those findings are supported by substantial evidence. (Stitt, supra, 147 Cal.App.3d at p. 586.)

Here, there is substantial evidence to support the trial courts determination any presumption of separate property status with respect to the Ashmont property was rebutted by clear and convincing evidence the property was acquired by Kenny Wong and Mrs. Wong as community property. As set forth above, the evidence showed that during the marriage in 1999 Kenny Wong and Mrs. Wong were looking for an investment property. Kenny Wong, who was a real estate and mortgage loan broker, located the Ashmont property and they decided to buy it. Kenny Wong wrote an offer to buy the Ashmont property, listing Hoa Le Wong as the buyer. He did so because he thought he would have a conflict of interest if he acted both as real estate broker and buyer in the transaction. Also, he put Mrs. Wong alone on the title because she could get a loan on the property. Kenny Wong could not qualify for a loan because he was a broker on the deal and because of his poor credit rating.

Before they bought the property, Kenny Wong and Mrs. Wong discussed the fact that title to the Ashmont property would be taken in Mrs. Wongs name alone, but that the property would be community property. The deed conveying the Ashmont property states the grantee is Hoa Le Wong, an unmarried woman. (Italics added.) Hoa Le Wong was the buyers name given in the purchase agreement prepared by Kenny Wong. The words an unmarried woman were added later by the title company, without Kenny Wongs knowledge.

Kenny Wong paid the $17,200 down payment on the Ashmont property from savings from his business income. Mrs. Wong obtained a loan of $155,000 to finance the purchase. Kenny Wong made all the monthly payments on the Ashmont mortgage, applying rental income from the Ashmont property toward the loan payments.

In view of the above, the trial court properly found that even assuming there were a presumption of separate property with respect to the Ashmont property, the presumption had been rebutted by clear and convincing evidence Ashmont was acquired by Kenny Wong and Mrs. Wong as community property.^[7]

d. Because Ashmont was community property and Mrs. Wong died intestate, plaintiffs challenges to the validity of the deeds conveying the property from Hoa Le Wong to Kenny Wong are immaterial.

Plaintiffs contended below, and on appeal, that the deeds executed by Kenny Wong on behalf of his wife were forgeries and thus void. The trial court rejected plaintiffs claims, finding Kenny Wong did not fraudulently sign Mrs. Wongs name to the deeds. Although plaintiffs have raised some cognizable issues on appeal, any error with respect to the Ashmont property is harmless. Even assuming plaintiffs were to prevail on their claim to set aside the conveyance of Ashmont to Kenny Wong as his sole and separate property, the end result would be the same. If the conveyance to Kenny Wong were set aside, the Ashmont property would have been restored to its former status as the community property of Kenny Wong and Mrs. Wong. As indicated, Mrs. Wong died intestate. Therefore, upon her death, her community property share of the Ashmont property would have passed to Kenny Wong by operation of law. (Probate Code,  100,  6401, subd. (a).)^[8] In other words, irrespective of whether the deed conveying Ashmont to Kenny Wong were valid, Kenny Wong would have ended up with the entire Ashmont property.

Therefore, there was no reversible error in the trial courts entry of judgment as to title to the Ashmont property in favor of Ly, the purchaser of that property, and the Bank, Lys secured lender.

In view of the above, it is unnecessary to discuss any further plaintiffs arguments with respect to the Ashmont property. We confine the balance of our analysis to the trial courts determinations with respect to the Lexington property, which was Mrs. Wongs separate property until it purportedly was conveyed to Kenny Wong.^[9]

2. Trial court applied an incorrect legal standard in determining plaintiffs failed to prove by clear and convincing evidence Kenny Wong forged Mrs. Wongs name to the Lexington deeds; even assuming Kenny Wong signed said deeds as an amanuensis, because he was an interested amanuensis, the deeds are presumptively invalid, shifting the burden to him to show the transaction was free from fraud and undue influence.

Plaintiffs contend the trial court erred in holding them to prove by clear and convincing evidence, rather by than a preponderance, their claims of forgery and conspiracy to commit forgery by Kenny Wong and notary Suh. The contention has merit.

a. Standard of proof applicable to plaintiffs forgery claim.

To reiterate, section 662 provides: The owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof. (Italics added.)

Section 662 does not apply, however, when title itself is challenged as not genuine. In Murray v. Murray (1994) 26 Cal.App.4th 1062, 1067, . . . the Court of Appeal held that section 662 did not apply when the plaintiff in a quiet title action challenged as fraudulent a deed in another persons name. Evidence Code section 662, the Court explained, has application, by its express terms, when there is no dispute as to where legal title resides but there is question as to where all or part of the beneficial title should rest. (Murray v. Murray, supra, at p. 1067.) We are unaware, however, of a single reported case in which Evidence Code section 662s presumption and burden were applied when the legal title itself was in dispute. Nor can we see anything in the language of section 662 requiring such application. (Murray v. Murray, supra, at p. 1068.) This interpretation of section 662 appears self-evidently correct. Otherwise, the section would encourage fraud by permitting a dishonest person, simply by creating false documents of title, to shift to an innocent owner the burden of proving ownership by clear and convincing evidence. (People v. Semaan (2007) 42 Cal.4th 79, 88-89.)

Accordingly, the trial court erred in requiring plaintiffs to prove by clear and convincing evidence that Kenny Wong forged Mrs. Wongs name to the Lexington deeds. On the forgery claim to set aside fraudulent transfer of real property, the applicable standard was proof by a preponderance.

b. Trial courts error in applying a heightened standard of proof to plaintiffs forgery claim was prejudicial.

On this record, we cannot say the trial courts error in applying a heightened standard of proof to the forgery claim was harmless. The trial court found, inter alia, In this case, there was evidence of activity by the defendant Kenny Wong sufficient to raise some suspicion. The trial court also found Plaintiffs demonstrated inconsistencies in Mr. Wongs testimony concerning his wifes consent to his signing her name to documents. Given these findings by the trial court, we cannot say with confidence the trial court would have found the Lexington deeds were not forged had it merely applied a preponderance of the evidence standard to plaintiffs forgery claim.

Therefore, the issue of whether the Lexington deeds were a forgery must be retried on remand pursuant to the proper standard of proof.

c. Assuming arguendo the Lexington deeds were not forged and that Kenny Wong acted as a mere amanuensis, because he was an interested amanuensis, the deeds are presumptively invalid, shifting the burden to him to establish their validity.

Even assuming the deeds to the Lexington property were not forged, it does not follow that said deeds are valid. As discussed, the defense disputed the plaintiffs forgery claim. The defense theory was that Kenny Wong was authorized by Mrs. Wong to sign her name to the deeds.

The amanuensis rule provides that where the signing of a grantors name is done with the grantors express authority, the person signing the grantors name is not deemed an agent but is instead regarded as a mere instrument or amanuensis of the grantor, and that signature is deemed to be that of the grantor. (Estate of Stephens (2002) 28 Cal.4th 665, 670-671 (Stephens).)

Stephens was the first California decision to address the issue of an interested amanuensis. (Stephens, supra, 29 Cal.4th at p. 676.) Stephens recognized [o]bvious concerns arise, namely, whether the transfer was the product of fraud, duress, or undue influence. Accordingly, if the amanuensis will directly benefit from the transfer of title, the validity of the transfer must be examined under a heightened level of judicial scrutiny. (Id., at pp. 676-677.)

Stephens held the signing of a grantors name by an interested amanuensis must be presumed invalid. In such a case, the interested amanuensis bears the burden to show that his or her signing of the grantors name was a mechanical act in that the grantor intended to sign the document using the instrumentality of the amanuensis. (Stephens, supra, 28 Cal.4th at pp. 677-678, italics added.) Stephens reasoned, [i]ndeed, as seen in undue influence cases [citation] upon which our rule is patterned, the presumption of invalidity effectively acts as a safeguard against unscrupulous relatives who would otherwise seek to take advantage of an aging and infirm relative. (Id. at p. 678, fn. 7.)

In the instant case, Kenny Wong clearly was an interested amanuensis in that he was the sole beneficiary of the deeds conveying Lexington to him as his sole and separate property. By asserting he was a mere amanuensis, Kenny Wong put in issue the validity of said transfer. Pursuant to Stephens, the conveyance of Lexington to Kenny Wong as a mere amanuensis was presumptively invalid. Therefore, Kenny Wong bears the burden of establishing by a preponderance that the transfer of Lexington to him was free of fraud, duress or undue influence, and that he signed Mrs. Wongs name to the deeds as a mere mechanical act. (Stephens, supra, 28 Cal.4th at pp. 676-678.)

The trial court did not assign any burden to Kenny Wong and therefore failed to conduct the proper inquiry. On remand, the burden will rest upon Kenny Wong to establish the validity of the transfer of Lexington to him in accordance with these principles.^[10]

3. Denial of leave to amend.

At the conclusion of phase two of the trial, plaintiffs orally moved for leave to amend the complaint to conform to proof at trial. Plaintiffs thereafter filed a motion for leave to amend and a proposed fourth amended complaint, to add causes of action for undue influence, breach of fiduciary duty and an accounting. Plaintiffs theory was that a rebuttable presumption of undue influence arises when one spouse obtains an advantage over another in an interspousal property transaction. (Fam. Code, 721, subd. (b); see, e.g., In re Marriage of Mathews (2005) 133 Cal.App.4th 624, 630.) Apparently, the trial court did not rule on plaintiffs motion for leave to amend.

Because this matter must be reversed and remanded for a new trial in any event, there is no good reason at this juncture to preclude plaintiffs from amending their pleadings as against the remaining defendants.

DISPOSITION

The judgments in favor of Ly and the Bank are affirmed. The judgments in favor of the remaining defendants are reversed and the matter is remanded for further proceedings consistent with this opinion. The trial court is directed to accept the proposed fourth amended complaint for filing.

The clerk is directed to forward a copy of this opinion to the California Secretary of State, Notary Public Section, for possible discipline of notary Henry J. Suh, Commission No. 1278497. (Gov. Code, 8214.1.)

Plaintiffs shall recover their costs on appeal as against the defendants other than Ly and the Bank.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

KLEIN, P. J.

We concur:

CROSKEY, J.

ALDRICH, J.

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^[1] Kenny Wong testified he physically signed Hoa Le Wongs name to the four deeds executed June 2, 2001, with her consent. The signatures that were notarized were the signatures of Hoa Le Wong. Because it is undisputed that Mrs. Wong was not the actual signatory, these circumstances raise a question as to whose signature Suh was in fact authenticating. We also note Kenny Wongs testimony that he signed the deeds before he arrived at the notarys office.

^[2] The conduct of Lam, Vu and Nguyen would have been an issue in phase three of the trial. However, phase three was rendered moot by the trial courts ruling in phase two that Kenny Wong did not sign his wifes name to the deeds to the two properties with fraudulent intent.

^[3] Although the trial court characterized its ruling as a nonsuit, because this was a bench trial, the ruling was a grant of a motion for judgment pursuant to Code of Civil Procedure section 631.8. Therefore, we review the trial courts ruling for substantial evidence. (People ex rel. Dept. of Motor Vehicles v. Cars 4 Causes (2006) 139 Cal.App.4th 1006, 1012.

^[4] With respect to the June 14, 2007 judgment in favor of the Bank, the August 23, 2007 notice of appeal is timely because notice of entry of judgment in favor of the Bank was served on June 26, 2007. The appeal is also timely with respect to all the other judgments. As for the judgments in favor of Vu and Nguyen, Suh, and Kimberly Wong, Kenny Wong and Lam, which judgments were entered after the notice of appeal was filed, the notice of appeal was premature and therefore timely. (Cal. Rules of Court, rule 8.104(e).)

^[5] Section 662 provides: The owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof.

^[6]In re Marriage of Stitt (1983) 147 Cal.App.3d 579 (Stitt), cited by plaintiffs in support of their argument the language of the Ashmont deed gave rise to a presumption of separate property status, is distinguishable. There, a husband and wife transferred the property to wife as an unmarried woman, triggering the rebuttable presumption that the parties intended to hold the property according to its record title. (Id. at p. 585.) In Stitt, because the deed was executed by both spouses in favor of one of the spouses, it was appropriate to apply a rebuttable presumption that the property was intended to be the wifes separate property.

^[7] Plaintiffs reliance on the prenuptial agreement is misplaced. The prenuptial agreement did not preclude Kenny Wong and Mrs. Wong from acquiring the Ashmont property during the marriage as community property. The prenuptial agreement related to their premarital assets, such as Mrs. Wongs Lexington property.

^[8] Probate Code section 100 provides at subdivision (a): Upon the death of a married person, one-half of the community property belongs to the surviving spouse and the other half belongs to the decedent.

Probate Code section 6401, pertaining to intestate succession, states at subdivision (a): As to community property, the intestate share of the surviving spouse is the one-half of the community property that belongs to the decedent under Section 100.

^[9] As to separate property, the intestate share of the surviving spouse is one-third of the intestate estate where the decedent leaves more than one child. (Prob. Code, 6401, subd. (c)(3)(A).) Therefore, absent the purported transfer of the Lexington property from Mrs. Wong to Kenny Wong as his sole and separate property, he would have received only one-third of said property upon her death.

^[10] At oral argument, Kenny Wongs attorney asserted there was an oral settlement agreement between plaintiffs and Kenny Wong regarding the distribution of the proceeds of the sale of the Lexington property. That issue was not raised in his respondents brief and therefore is not properly before this court.