Filed 6/24/26 The Colony at Cal. Oaks etc. v. Majestic Asset Management CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
THE COLONY AT CALIFORNIA D085140
OAKS HOMEOWNERS
ASSOCIATION,
Plaintiff and Respondent, (Super. Ct. No. MCC2000132)
v. ORDER MODIFYING
OPINION
MAJESTIC ASSET MANAGEMENT
LLC et al.,
NO CHANGE IN JUDGMENT
Defendants and Appellants.
THE COURT:
It is ordered that the opinion filed on June 18, 2026, be modified to add
pagination.
There is no change in the judgment.
MCCONNELL, P. J.
Copies to: All parties
Filed 6/18/26 The Colony at Cal. Oaks etc. v. Majestic Asset Management CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
THE COLONY AT CALIFORNIA D085140
OAKS HOMEOWNERS
ASSOCIATION,
Plaintiff and Respondent, (Super. Ct. No. MCC2000132)
v.
MAJESTIC ASSET MANAGEMENT
LLC et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Riverside County,
Eric A. Keen, Judge. Affirmed as modified.
Reid & Hellyer, Michael G. Kerbs, Douglas A. Plazak; Estavillo Law
Group and Ignacio J. Lazo for Defendants and Appellants.
Berding & Weil, Anne L. Rauch, Trinette Sachrison; Epsten and Joseph
A. Sammartino for Plaintiff and Respondent.
Majestic Asset Management, LLC (Majestic), and its members, Jen and
Hai Huang, own and operate a golf course within a community of many
single-family homes governed by The Colony at California Oaks Homeowners
Association (the Association). During the pendency of a prior case the
Association obtained a foreclosure decree to remedy Majestic’s breaches of
maintenance obligations. The performance of those responsibilities was
secured by a deed of trust to the golf course in favor of the Association. In
another transaction, Majestic gave Tso Jen Chu a deed of trust to the golf
course as security for repayment of loans Chu made to Majestic.1
In the current case attacking the validity of the deed of trust given to
Chu, the trial court entered a judgment declaring that deed void as based on
fraudulent and fictitious loans, declaring the deed of trust to the Association
to be the senior lien on the golf course, and giving preclusive effect to the
finding in the prior case that the Huangs and Majestic were alter egos.
Appellants claim the trial court erred by using principles of preclusion to
impose alter ego liability, by granting leave to the Association to amend the
complaint to add a fraud count, and by voiding the deed of trust to Chu based
on fraud. We agree with the first claim but not the other two. We modify the
judgment to strike the portion concerning alter ego liability and affirm the
judgment as modified.
I.
BACKGROUND
A. Prior Case
The parties have been litigating over the use and maintenance of the
golf course for more than a decade. We summarize that litigation based on
1 Chu is described by appellants as an “acquaintance[ ] unrelated to the
Huangs” and by the Association as “as an old family friend of Jen Huang’s
whom the trial court found illegally participated in Appellants’ dishonest
scheme.”
our opinion in Majestic Asset Management LLC v. The Colony at California
Oaks Homeowners Assn. (2024) 107 Cal.App.5th 413, 417–422.
Majestic bought the golf course from the prior owners in 2007. The
grant deed restricted use of the property to golf course only and obligated
Majestic to maintain the golf course in as good a condition as that of other
local golf courses and to maintain the landscaped extensions that created
open spaces among the residences. To secure observance of the use
restriction and performance of the maintenance obligations, Majestic
executed a performance deed of trust (PDOT) by which it granted in trust for
the prior owners’ benefit its interest in the golf course. The PDOT was also
subordinated “to a security interest in the [golf course] in favor of a third
party lender securing one or more promissory notes for one or more loans of
up to a maximum principal amount of $1,250,000.” The prior owners
assigned their interest in the PDOT to the Association in 2012.
After appellants took over the golf course, they began using it as a site
for events of which the Association disapproved. Appellants also stopped
paying their portion of shared maintenance expenses. Grass and trees died, a
lake dried up, and the landscaped extensions deteriorated.
Litigation commenced in 2013. Majestic sued the Association for
interference with prospective economic advantage, misrepresentation,
promissory estoppel, declaratory relief, and quiet title. The Association
countersued for breach of contract, common counts, declaratory relief, quiet
title, and foreclosure under the PDOT. The Association alleged the Huangs
were alter egos of Majestic.
The trial court held a bench trial in 2015. It found the Huangs were
alter egos of Majestic and ruled in favor of the Association. The court entered
a judgment that included a permanent injunction directing appellants to
repair the golf course and its landscaped extensions and to abide by
maintenance standards attached to the judgment. The court retained
jurisdiction to order foreclosure under the PDOT if appellants disobeyed the
injunction. Appellants appealed, and we affirmed the judgment.
Later the Association moved the trial court to enforce the judgment by
directing a foreclosure sale of the golf course or, alternatively, by appointing a
receiver to take over the golf course and bring it into compliance with the
judgment. The court appointed a receiver, but it became clear by September
2022 that he could not rehabilitate the golf course. The Association then
moved the court to order foreclosure under the PDOT. The court held an
evidentiary hearing, set the value of the PDOT for purposes of the foreclosure
sale at $2,748,434.37, and in 2023 entered a foreclosure decree and issued a
writ of sale. On appellants’ appeal, we modified the decree by reducing the
value assigned to the PDOT to $2,503,500 and affirmed the decree as
modified.
B. Current Case
While the prior case was pending, Majestic granted Chu a deed of trust
to the golf course to secure payment of indebtedness evidenced by a
promissory note for $3,468,012. The deed was recorded in September 2019.
In January 2020, the Association filed the current case against
appellants and Chu challenging the validity of the deed of trust that Majestic
had given to Chu. The Association alleged the Huangs were alter egos of
Majestic and gave Chu the deed of trust to hinder or delay the Association in
its efforts to enforce the judgment in the prior case. The Association asserted
counts under the Uniform Voidable Transactions Act (UVTA; Civ. Code,
§ 3439 et seq.), for declaratory relief, and for quiet title.2 The Association
sought a judgment declaring the deed of trust from Majestic to Chu void and
setting it aside, declaring the PDOT superior to any other conveyance of the
golf course by appellants, and again declaring the Huangs to be alter egos of
Majestic.
The trial court held a bench trial over the course of four days in
September 2023. Chu testified he and other investors made four loans to
Majestic between 2007 and 2019, an initial loan of $2.2 million to purchase
the golf course and three subsequent loans totaling $1.1 million. Chu said a
promissory note for $3,468,012 represented the amount of principal and
interest Majestic owed him and the other investors as of January 25, 2019.
Hai Huang testified the promissory note was for all the loans Chu and the
other investors had made to Majestic. Hai Huang said Majestic gave Chu a
deed of trust because he and the other investors became aware of the
litigation with the Association and requested “something to protect their
benefits and interests throughout this whole matter.” On cross-examination,
Hai Huang testified about Majestic’s managers and members, meetings and
records, funding sources, and other topics relevant to alter ego liability. The
parties jointly introduced the deed to the golf course the prior owners gave
Majestic and the related purchase agreement, the PDOT, the deed of trust
Majestic gave Chu, promissory notes Majestic gave to Chu, tax forms
Majestic filed, Majestic’s bank statements, and other documents.
During the bench trial, appellants filed a motion for judgment. (Code
Civ. Proc., § 631.8.) They argued the Association could not recover under the
UVTA because it had no “right to payment” from them and therefore was not
2 The parties resolved the quiet title count by stipulation. That count
will not be discussed further.
a “creditor” under the statute. (Civ. Code, §§ 3439.01, subds. (b), (c) [defining
“creditor” as “a person that has a claim” and “claim” as “a right to payment”],
3439.07 [specifying remedies available to “a creditor”].) Appellants also
argued the deed of trust to Chu did not injure the Association because the
PDOT contained a subordination clause in favor of third-party lenders to
secure loans totaling up to $1.25 million.3
In opposition to the motion, the Association argued it was a “creditor”
under the UVTA, and even if it were not, other remedies were available to
the Association in addition to those provided by the UVTA. The Association
argued that on its declaratory relief count the trial court could declare void
and set aside the deed of trust that Majestic gave to Chu. The Association
also argued the court could grant those remedies based on a common law
fraud count, which the Association could amend its pleading to assert.
The trial court agreed with appellants that the Association was not a
“creditor” under UVTA, because the PDOT gave it a right to performance, not
a right to payment. The court stated that because the Association’s theory
under the UVTA was that the deed of trust Majestic gave Chu was
fraudulent, allowing the Association to amend its pleading to assert a fraud
count based on the same conveyance would not prejudice appellants. It thus
denied appellants’ motion for judgment and granted the Association leave to
amend.
The Association amended its pleading to add a count labeled “fraud” in
which it alleged appellants created a “sham” deed of trust to Chu “in an effort
to fraudulently hinder, delay or prevent the Association from being able to
3 Paragraph 10 of the PDOT states: “The Beneficiary hereby agrees to
subordinate this Deed of Trust to a security interest in the Trust Estate in
favor of a third party lender securing one or more promissory notes for one or
more loans of up to a maximum principal amount of $1,250,000.”
foreclose on the [golf course].” It alleged the foreclosure decree it had
obtained in the prior litigation would be “effectively meaningless if the [golf
course] is incumbered by the sham [d]eed of [t]rust.” For relief on the new
count, the Association sought a judgment canceling the deed of trust given to
Chu “as a sham and a fraud.”
After the parties filed written closing arguments, the trial court issued
its statement of decision. The court found the testimony of Hai Huang and
Chu about the loans to Majestic was not credible and promissory notes dated
August 1, 2007 ($2.2 million), and January 25, 2019 ($3,468,012), were not
authentic. The court credited discovery responses and testimony of Jen
Huang in the prior case and “found that the source of the funds for the
purchase, maintenance and attorney fees costs was from the Huangs and Jen
Huang’s family and that there were no deeds of trust securing any loaned
amounts.” The court was “convinced by a preponderance of the evidence that
no deed of trust was executed in the purchase or maintenance of the golf
course.” The court found the promissory notes were “fraudulent and
fictitious” and the deed of trust given to Chu to secure repayment of the notes
was “based on fraud” and ruled those documents were “void.” The court ruled
the finding in the prior case that the Huangs and Majestic were alter egos
was entitled to preclusive effect. The court dismissed the Association’s UVTA
claim with prejudice.
On August 21, 2024, the trial court entered a judgment. Under the
heading, “ALTER EGO LIABILITY,” it declared that under the doctrine of
collateral estoppel appellants were bound by the alter ego finding in the prior
action. Under the heading, “FRAUD/DECLARATORY RELIEF,” the court
declared the deed of trust from Majestic to Chu was “based on fraud” and
therefore “VOID,” and the PDOT was “senior and superior to any conveyance
of the [golf course] by [appellants] up to and including the time of entry of
this [j]udgment.” The court also declared the Association was “the prevailing
party for all purposes in this action.”
II.
DISCUSSION
Appellants claim the trial court committed three prejudicial errors:
(1) giving preclusive effect to the alter ego finding in the prior case;
(2) granting relief based on fraud when the Association sustained no damages
or injury; and (3) allowing the Association to amend its pleading to assert a
fraud count. They ask us to reverse the judgment in its entirety or,
alternatively, to modify the judgment by striking the portion concerning alter
ego liability.4
4 Eleven days before the appeal was set for oral argument, appellants
filed a motion to postpone argument based on a recent substitution of
attorneys. Appellants claimed their new attorneys needed more time to
prepare because they “were only recently advised” that the attorney who
handled their prior appeals had retired and his firm refused to release the
client files to the new attorneys. Our investigation revealed that appellants’
former attorney (Michael G. Kerbs of Reid & Hellyer) had retired in
November 2025. After his retirement, another attorney in the same law firm
(Douglas A. Plazak) filed appellants’ reply brief and opposition to
respondent’s motion to dismiss the appeal. Notices setting the appeal for oral
argument on April 13, 2026, and continuing argument to May 12, 2026, were
served, respectively, on February 24, 2026, and April 6, 2026. Appellants
filed substitution of attorney forms on April 22 and 30, 2026, and filed the
motion to postpone oral argument on May 1, 2026. We issued a tentative
ruling to deny the motion and invited comments at argument. Appellants’
new attorney (Ignacio J. Lazo of Estavillo Law Group) appeared and stated
he was prepared to argue the legal issues in the appeal but not any issues
related to the factual record. We have substantial doubts about appellants’
claims that they only recently learned their prior attorney had retired and
could not be ready to argue the appeal by May 12. We find no good cause to
postpone oral argument and deny the motion.
A. Jurisdiction
Before we may address the merits, we must decide a jurisdictional
challenge the Association raises by a motion to dismiss. We have jurisdiction
to consider an appeal only by a party with standing to appeal (Estate of
Bartsch (2011) 193 Cal.App.4th 885, 890), and only a party “aggrieved” by a
judgment has standing (Code Civ. Proc., § 902; Estate of Kempton (2023)
91 Cal.App.5th 189, 202). The Association argues appellants are not
aggrieved because the trial court determined that the promissory notes and
the deed of trust given to Chu were void as fraudulent and fictitious,
benefiting appellants by effectively discharging their obligations under those
documents. The Association maintains that only Chu was aggrieved by the
judgment voiding the documents, but Chu did not appeal, his time to appeal
expired, and appellants may not assert his interests. We disagree.
The judgment does more than merely void the promissory notes and
deed of trust that Majestic gave Chu. It declares the Association the
prevailing party and the Huangs alter egos of Majestic. Appellants are thus
liable for the Association’s costs. (See Code Civ. Proc., § 1032, subd. (b)
[prevailing party entitled to recover costs]; Kao v. Joy Holiday (2020)
58 Cal.App.5th 199, 205–208 [alter egos personally liable for costs].) A party
liable for costs under a judgment is “aggrieved” by the judgment and has
standing to appeal it. (Code Civ. Proc., § 902; Cheveldave v. Tri Palms
Unified Owners Assn. (2018) 27 Cal.App.5th 1202, 1221; Serrano v. Stefan
Merli Plastering Co., Inc. (2008) 162 Cal.App.4th 1014, 1026–1027.) We
therefore deny the motion to dismiss the appeal and proceed to the merits.
B. Alter Ego Liability
Appellants complain the trial court prejudicially erred by giving
preclusive effect to the finding in the prior case that the Huangs were alter
egos of Majestic. They contend, “Given the passage of time, the difference in
parties, and the factually specific inquiry required to find alter ego liability,
the issue of alter ego was not identical to the issue decided in [the prior case]”
and “issue preclusion should not have been applied.” Appellants say the
policies underlying collateral estoppel and alter ego liability do not support
application of collateral estoppel to the issue of alter ego liability. They also
say the alter ego doctrine did not apply because the Association sought only
to void the deed of trust Majestic had given Chu and offered no evidence it
would suffer an injustice if Majestic were treated as a legal entity distinct
from the Huangs for purposes of that conveyance. Appellants ask us to strike
the portion of the judgment concerning alter ego liability.
A trial court’s application of collateral estoppel presents a question of
law we review de novo. (Angel Lynn Realty, Inc. v. George (2025)
114 Cal.App.5th 655, 664 (Angel Lynn).) Collateral estoppel (also called issue
preclusion) generally bars relitigation of an issue that was necessarily
decided in a prior case between the parties that proceeded to a final judgment
on the merits. (Samara v. Matar (2018) 5 Cal.5th 322, 327; Angel Lynn, at
p. 664.) “ ‘[T]he estoppel effect of a judgment extends only to the facts in
issue as they existed at the time the prior judgment was rendered. [Citation.]
Some issues are not static, that is, they are not fixed and permanent in their
nature. When a fact, condition, status, right, or title is not fixed and
permanent in nature, then an adjudication is conclusive as to the issue at the
time of its rendition, but is not conclusive as to that issue at some later
time.’ ” (Angel Lynn, at p. 665.) Collateral estoppel does not “prevent a re-
examination of the same question between the same parties where, in the
interval between the first and second actions, the facts have materially
changed or new facts have occurred which may have altered the legal rights
or relations of the litigants.” (Hurd v. Albert (1931) 214 Cal. 15, 26; accord,
Angel Lynn, at p. 664.)
“[T]he issue of alter ego liability is one of those issues that is not static
and can change over time.” (Angel Lynn, supra, 114 Cal.App.5th at p. 665.)
The issue “arises when a plaintiff comes into court claiming that an opposing
party is using the corporate form unjustly and in derogation of the plaintiff’s
interests.” (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300
(Mesler).) When an entity with limited liability (e.g., a corporation or limited
liability company) has committed a wrongful act, the alter ego doctrine
sometimes permits a court to disregard the entity’s separate legal identity
and to impose personal liability on the individuals who own or operate the
entity. (Ibid.; Angel Lynn, at p. 663.) There are two requirements for
application of the doctrine: (1) the entity and the individuals have not
observed a distinction between their respective ownership and other interests
sufficient to maintain separate personalities; and (2) an injustice would
result if the wrongful act were treated as that of the entity alone. (Mesler, at
p. 300; Angel Lynn, at pp. 662–663.)5 “The plaintiff has the burden of
establishing both requirements.” (Angel Lynn, at p. 667.) “Whether a party
is liable under an alter-ego theory is normally a question of fact” (Zoran Corp.
5 “The factors which may show the ‘unity of interest’ issue vary according
to each case and are fact specific. [Citation.] Among the facts which can be
considered are financial issues (e.g., was the corporation adequately
capitalized?); corporate formality questions (e.g., was stock issued, are
minutes kept and officers and directors elected, are corporate records
segregated?); ownership issues (e.g., what is the stock ownership picture?);
commingling issues (e.g., are corporate assets commingled . . . ?); etc.
[Citation.] If these factors show a unity of interest, and it is also shown that
honoring the corporate shell would promote a fraud or injustice, the third
party may be permitted to ‘pierce the corporate veil’ and hold the
[individuals] liable for the corporate activities.” (Tomaselli v. Transamerica
Ins. Co. (1994) 25 Cal.App.4th 1269, 1285, fn. 13.)
v. Chen (2010) 185 Cal.App.4th 799, 811 (Zoran Corp.)) and “depend[s] on the
circumstances of each particular case” (Mesler, at p. 300).
We conclude the Association could not rely on the preclusive effect of
the judgment in the prior case to establish alter ego liability in this case. The
decision to impose such liability depends on “ ‘whether in the particular case
presented and for the purposes of such case justice and equity can best be
accomplished and fraud and unfairness defeated by a disregard of the distinct
entity of the corporate form.’ ” (Mesler, supra, 39 Cal.3d at p. 301, italics
added.) Such equitable considerations differed in the two cases between the
parties. In the prior case, the Association obtained a permanent injunction
requiring Majestic to perform its obligations under the PDOT to maintain the
golf course. On appeal from the judgment, we upheld the trial court’s implied
finding it would be unjust not also to enjoin the Huangs, as Majestic’s alter
egos, personally to perform the obligations. In the current case, the
Association obtained a judgment setting aside Majestic’s conveyance to Chu
of a deed of trust to the golf course, a transaction that occurred more than
three years after entry of judgment in the prior case and had nothing to do
with maintenance of the golf course. Because the issue of imposing personal
liability on the Huangs for the sham conveyance to avoid injustice was not
“actually litigated and determined in the [prior] action” (McCready v. Whorf
(2015) 235 Cal.App.4th 478, 482), the prior judgment did not collaterally
estop appellants from contesting alter ego liability in the current case. (See
Favila v. Pasquarella (2021) 65 Cal.App.5th 934, 946 [no collateral estoppel
when second case challenged conduct that occurred after judgment in first
case]; United States Golf Assn. v. Arroyo Software Corp. (1999)
69 Cal.App.4th 607, 611 [no collateral estoppel when prior judgment rested
on factual and legal foundation different from that of current case].)
The Association also did not sustain its burden of proof to establish
alter ego liability in the current case. At trial, the Association elicited
testimony from Hai Huang about whether Majestic held annual meetings,
whether it kept minutes and other records, whether it maintained a separate
office, its funding sources, its managers and members, and other topics
relevant to the unity-of-interest requirement for alter ego liability. But the
Association presented no testimony or other evidence on the avoidance-of-
injustice requirement of alter ego liability. “Without such evidence, the alter
ego doctrine cannot be invoked.” (Sonora Diamond Corp. v. Superior Court
(2000) 83 Cal.App.4th 523, 539.)
It is no answer to say, as the Association does, that “[a]ppellants point
to exactly zero evidence in the record demonstrating that they have ceased
abuse of the corporate form” and “made no offer of proof as to what changed
between the prior finding and the fraudulent conveyance action that would
have been important in the identification of a new and improved distinction
between the Huangs and Majestic.” It was the Association’s burden, not
appellants’, to establish the requirements for imposition of alter ego liability.
(Angel Lynn, supra, 114 Cal.App.5th at p. 667; Zoran Corp., supra,
185 Cal.App.4th at pp. 811, 815.) Where, as here, the plaintiff had a full
opportunity to present its case and the evidence is insufficient to support a
ruling in its favor on an issue on which it had the burden of proof, no new
trial is allowed, and the defendant is entitled to a ruling in its favor.
(Copenbarger v. Moris Cerullo World Evangelism, Inc. (2018) 29 Cal.App.5th
1, 15–16; Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 289.)
We thus strike from the judgment the portion concerning alter ego liability.
C. Fraud as Basis for Relief
Appellants next challenge the trial court’s reliance on fraud as the
basis to grant the Association relief. Appellants contend the Association had
no valid fraud claim because the Association: (1) stipulated it was not
seeking any damages, which appellants say are an essential element of fraud;
and (2) suffered no injury from Majestic’s conveyance of the golf course in
trust to Chu, which appellants say did not put the golf course totally out of
the Association’s reach as a creditor but only reduced its lien priority in
accordance with the subordination clause of the PDOT. Appellants complain
the presence of an invalid fraud claim “tainted” the trial by causing the court
to focus on the “badges of fraud at the time of the purchase of [the golf course]
rather than the evidence of proper antecedent debt which occurred
thereafter” and was secured by the deed of trust to Chu. Appellants ask us to
reverse the judgment.
Appellants’ challenge is based on a mischaracterization of the claim on
which the trial court granted the Association relief. We determine the nature
of a claim from the facts pleaded and remedy sought, not from the label
assigned by the pleader. (Cox v. Superior Court (2016) 1 Cal.App.5th 855,
859.) Although the Association’s operative pleading included a count labeled
“fraud,” it was not a common law claim for actual fraud, which would have
required pleading and proof of a definite amount of damages incurred from
reliance on a misrepresentation. (See, e.g., Anderson v. Deloitte & Touche
(1997) 56 Cal.App.4th 1468, 1474; Nagy v. Nagy (1989) 210 Cal.App.3d 1262,
1268–1269.) Rather, to conform to the proof at trial, the Association alleged
appellants recorded a “sham” deed of trust to Chu “in an effort to
fraudulently hinder, delay or prevent the Association from being able to
foreclose on the [golf course]” and sought “a judgment cancelling the [deed of
trust] as a sham and a fraud.” Based on the same allegations, the
Association also sought a judgment declaring the deed of trust to Chu was
“void as a fraudulent conveyance” and the PDOT was “senior and superior to
any conveyance of the [golf course].” The trial court found the deed of trust
was “based on fraud” and granted the Association the declaratory relief it had
requested.
The trial court properly awarded that relief even though the
Association neither pleaded nor proved any damages. “[I]n California a suit
to have an instrument canceled or adjudged void is akin to a common suit in
the old chancery practice and is purely equitable.” (Corrigan v. Stiltz (1965)
233 Cal.App.2d 381, 387.) The remedy has been codified6 and is available
when an instrument is void or voidable due to fraud. (U.S. Bank National
Assn. v. Naifeh (2016) 1 Cal.App.5th 767, 778 (U.S. Bank).) “ ‘[T]he use of the
term fraud has been wider and less precise in the chancery than in common-
law courts’ ” and “ ‘includes all acts, omissions, or concealments by which one
person obtains an advantage against conscience over another, or which equity
or public policy forbids as being to another’s prejudice.’ ” (Black’s Law Dict.
(12th ed. 2024) pp. 798–799; accord, Dawson v. Martin (1957) 150 Cal.App.2d
379, 383 [defining “fraud in equity”]; see Butler America, LLC v. Aviation
Assurance Co., LLC (2020) 55 Cal.App.5th 136, 148 [“The foundation of
equity is good conscience”].) Conveying the golf course in trust to Chu as
purported security for repayment of $3.3 million in loans the trial court found
he never made was an unconscionable act prejudicial to the Association and
constituted a fraud in equity.
6 “A written instrument, in respect to which there is a reasonable
apprehension that if left outstanding it may cause serious injury to a person
against whom it is void or voidable, may, upon his application, be so
adjudged, and ordered to be delivered up or canceled.” (Civ. Code, § 3412.)
Under the subordination clause of the PDOT, the effect of the sham
conveyance was to make the Association’s lien on the golf course junior to
Chu’s to the extent of $1.25 million. (See fn. 2, ante.) Although loss of lien
priority is not loss of money, to have an instrument adjudged void “[i]t is not
necessary to allege or prove any pecuniary loss so long as the record indicates
there was injury or prejudice resulting from the fraud. [Citation.] It is
sufficient to show that the plaintiff is in a worse position than he otherwise
would have been.” (Turner v. Turner (1959) 167 Cal.App.2d 636, 641
(Turner).) Here, a golf course was purchased in 2007 for $2.2 million but its
condition is now greatly deteriorated. The asset was later encumbered with a
sham lien for $1.25 million. That lien would have to be paid before the
Association’s lien of more than $2.5 million could be paid in a foreclosure sale
of the golf course. Given the reduced value of the golf course because of its
decay from lack of proper maintenance by appellants, appellants put the
Association in a worse position than it would have been in absent the fraud.
That change of position was an injury sufficient to allow the trial court to
exercise its equitable power to declare the deed of trust to Chu void.7
7 We reject appellants’ argument the Association failed to prove the
required “specific injury” because no property it was entitled to reach “was
placed beyond [its] reach.” Appellants cite the rule from cases applying
UVTA’s predecessors that a debtor’s transfer does not injure a creditor unless
the transfer puts beyond reach property the creditor could use to pay the
debt. (Costa v. Neves (1938) 12 Cal.2d 121, 125; Fidelity National Title Ins.
Co. v. Schroeder (2009) 179 Cal.App.4th 834, 845; Mehrtash v. Mehrtash
(2001) 93 Cal.App.4th 75, 80.) Even if the rule applied to this case
notwithstanding the dismissal of the UVTA count (cf. PGA West Residential
Assn., Inc. v. Hulven Internat., Inc. (2017) 14 Cal.App.5th 156, 170–171
[UVTA statute of repose applies whether attack on fraudulent transfer is
brought under UVTA or otherwise]), it would not defeat the Association’s
right to relief. As we explained in the text, the sham deed of trust to Chu
The trial court’s decision to grant relief in the form of a declaratory
judgment under Code of Civil Procedure section 1060 was also proper. “An
action brought under this section of the code for declaratory relief is an
equitable proceeding. The remedies therein provided for are cumulative.
[Citation.] The powers of a court acting under this section in granting
declaratory relief are as broad and extensive as those exercised by such court
in any ordinary suit in equity.” (Adams v. Cook (1940) 15 Cal.2d 352, 362.)
The statute authorizes a court to resolve an actual controversy between
parties concerning a written instrument by issuing a judgment determining
the validity of the instrument or declaring the parties’ rights and duties
thereunder. (Code Civ. Proc., § 1060.) In particular, in a proceeding for
declaratory relief a court may determine the validity of a deed of trust (R.G.
Hamilton Corp. v. Corum (1933) 218 Cal. 92, 95; Lomanto v. Bank of America
(1972) 22 Cal.App.3d 663, 667–668) or the priority of a lien (First Bank v.
East West Bank (2011) 199 Cal.App.4th 1309, 1312; Sasaki v. Kai (1942)
56 Cal.App.2d 406, 407–408). The trial court thus had the power to issue a
declaratory judgment resolving the parties’ dispute over the validity of the
deed of trust Majestic gave Chu and whether and to what extent that deed of
trust subordinated the Association’s security interest under the PDOT.
effectively placed beyond the Association’s reach $1.25 million of equity in a
wasting asset the Association could use to satisfy its lien.
We also reject appellants’ related arguments the Association “suffered
no damage” because it “contractually assumed the risk that its interest under
the [PDOT] would become junior to a $1.25 million loan” and because
“undisputed evidence” showed “loans made in 2015 and 2019 were proper
antecedent debts under California law and the subordination clause.” Those
arguments assume there were bona fide loans from Chu to Majestic. But the
trial court “disbelieve[d]” the testimony of Chu and Hai Huang about the
loans, “distrust[ed]” the authenticity of the related documents, and
determined the promissory notes were “fraudulent and fictitious.”
D. Leave to Amend
Appellants’ final challenge is to the trial court’s decision to let the
Association amend its complaint to conform to proof by adding a fraud count.
Appellants contend the court should have denied leave to amend because that
count was a “disguised UVTA claim[ ]” that “suffer[ed] from the same fatal
flaws” as the UVTA claim (i.e., the conveyance to Chu caused the Association
no damages or other injury). We review the court’s decision for abuse of
discretion (Trafton v. Youngblood (1968) 69 Cal.2d 17, 31; Espejo v. The
Copley Press, Inc. (2017) 13 Cal.App.5th 329, 359 (Espejo)) and find none.
A proceeding under the UVTA is not the exclusive way to attack a
fraudulent conveyance. (Civ. Code, § 3439.12; Optronic Technologies, Inc. v.
Celestron Acquisition, LLC (2025) 108 Cal.App.5th 770, 785.) Remedies
under the UVTA “are cumulative to the remedies applicable to fraudulent
conveyances that existed before the uniform laws went into effect.” (Cortez v.
Vogt (1997) 52 Cal.App.4th 917, 929.) One such remedy is a suit in equity to
adjudge a conveyance void as fraudulent (Civ. Code, § 3412; U.S. Bank,
supra, 1 Cal.App.5th at p. 778; Richardson v. Michel (1941) 45 Cal.App.2d
188, 196), and as we have explained the Association suffered an injury
sufficient to allow it to maintain such a suit (Turner, supra, 167 Cal.App.2d
at p. 641). Because the fraud count merely changed the legal theory by which
the Association sought to void the conveyance to Chu and was based on the
same set of facts that underlay the dismissed UVTA count, the amendment of
the pleading to add the fraud count did not prejudice appellants and the trial
court did not abuse its discretion by allowing it. (Espejo, supra,
13 Cal.App.5th at pp. 359–360; Glaser v. Meyers (1982) 137 Cal.App.3d 770,
776–777; Nelson v. Gaunt (1981) 125 Cal.App.3d 623, 636–647.)
E. Attorney Fees and Other Costs
The Association asks us to award the attorney fees and other costs it
incurred in this appeal. In its brief, it relies on an attorney fee provision in
the purchase agreement between Majestic and the prior owner of the golf
course and on statutes authorizing recovery of attorney fees and other costs
incurred to enforce a judgment (Code Civ. Proc., §§ 685.040, 685.070; Civ.
Code, § 1717). At oral argument, the Association’s attorney referred to the
attorney fee provision of the PDOT. Appellants argue the request is not
properly before us and should be made in the prior action in which the
judgment sought to be enforced was entered.
When, as in this case, we modify a judgment, “the opinion must specify
the award or denial of costs.” (Cal. Rules of Court, rule 8.278(a)(3).) We have
discretion to award or to deny costs as we deem proper. (Id., rule 8.278(a)(3),
(5); 9 Witkin, Cal. Procedure (6th ed. 2021) Appeal, § 988, pp. 982–983.) The
results of this appeal are mixed. Appellants prevailed on the motion to
dismiss the appeal and on their challenge to the trial court’s imposition of
alter ego liability. The Association prevailed on appellants’ challenge to the
trial court’s award of relief declaring Majestic’s deed of trust to Chu void and
the PDOT senior and superior to other conveyances of the golf course.
Because the Association achieved its main objective in the litigation, we find
it is the prevailing party on appeal and is entitled to recover costs, including
reasonable attorney fees as authorized by the PDOT. (Code Civ. Proc.,
§§ 1032, subd. (b), 1033.5, subd. (a)(10)(A); see Schaffter v. Creative Capital
Leasing Group, LLC (2008) 166 Cal.App.4th 745, 759 [attorney fees
authorized by parties’ contract are available for services at trial and on
appeal].)
“[A]n appellate court by its judgment determines the final award of
costs on appeal (who shall recover the same), and the trial court determines
the specific judgment (what items of costs the entitled party may recover
under the general award).” (Wilson v. Sharp (1959) 175 Cal.App.2d 691, 693–
694.) Upon issuance of the remittitur and timely filing of a memorandum of
costs and motion for attorney fees, the trial court shall award the Association
its costs and reasonable attorney fees incurred on appeal. (Cal. Rules of
Court, rules 3.1700(a)(1), 8.278(c)(1).) In determining that amount, the court
shall apportion fees among the issues on appeal and award fees only for those
on which the Association prevailed.
III.
DISPOSITION
The judgment is modified by striking the portion concerning alter ego
liability (page 2, lines 13–20), and, as so modified, is affirmed. Respondent is
entitled to costs and reasonable attorney fees incurred on appeal.
RUBIN, J.
WE CONCUR:
MCCONNELL, P. J.
DATO, J.
