GREENFIELD v. COLLINS (1990)

We address here the question of whether an action to set aside a fraudulent transfer of real property is an action which “affect[s] title to or right of possession of” real property within the meaning of Code of Civil Procedure section 409.1, subdivision (a).   If the action does affect title or right of possession, lis pendens may be recorded against the property.   We conclude that the action does affect title for purposes of lis pendens.

Joel Greenfield is the plaintiff in an action against Michael and Maria Collins for injuries sustained in a highway accident.   Michael and Maria Collins, brother and sister, are joint owners of the truck driven by Michael.   While settlement negotiations were underway, Michael Collins transferred his only major asset, a one-half interest in a fourplex in Benicia, to Maria, who now owns the whole property.   Plaintiff alleges that the transfer was fraudulent and has filed a separate action to set it aside (hereafter the “fraudulent transfer action”).

The fraudulent transfer action was filed under the authority of the Uniform Fraudulent Transfer Act (Civ.Code, § 3439 et seq.), which permits a “creditor” to bring an action to obtain “[a]voidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim.”  (Civ.Code, § 3439.07, subd. (a)(1).)   A “ ‘[c]reditor’ means a person who has a claim․” and a “ ‘[c]laim’ means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.”  (Civ.Code, § 3439.01, subds. (b) & (c);  see Ataka America, Inc. v. Crateo, Inc. (1973) 30 Cal.App.3d 315, 319, 106 Cal.Rptr. 280, interpreting similar terms in an earlier version of the statute.)

Plaintiff's fraudulent transfer action alleges that Michael Collins transferred the property to Maria to secure a disproportionately small debt between the two and that Michael's purpose was to defraud his creditors, including plaintiff.   Plaintiff sought to set aside the conveyance to the extent necessary to satisfy plaintiff's claim for damages and to restrain Maria Collins from disposing of the property.   Plaintiff recorded “lis pendens” against the Benicia property giving notice that the fraudulent transfer action was pending.

Michael and Maria Collins moved to expunge lis pendens (Code Civ.Proc., § 409.1) on the ground that the action did not affect title or right to possession of the property.   They cited Urez Corp. v. Superior Court (1987) 190 Cal.App.3d 1141, 235 Cal.Rptr. 837, and Wardley Development, Inc. v. Superior Court (1989) 213 Cal.App.3d 391, 262 Cal.Rptr. 87, for the proposition that lis pendens is not intended as a means of securing real property during the pendency of an action when the property is sought solely as a collateral means of securing payment of money damages.   They also demurred to the fraudulent transfer action, claiming that it was premature because plaintiff did not have a judgment against them.   After hearing, the court overruled the demurrer and granted the motion to expunge lis pendens.   This petition challenges the order expunging lis pendens (Code Civ.Proc., § 409.4).   We grant a writ of mandate to vacate the court's expungement order.

If an action is filed “for a proper purpose and in good faith” (Code Civ.Proc., § 409.1, subd (b)), the remaining question on a motion to expunge is whether the action affects “title to or right of possession of the real property” described in the lis pendens.  (Code Civ.Proc., § 409.1, subd (a).)   Relying upon a growing body of constructive trust and equitable lien cases, the court here ruled that the action did not affect title because “plaintiff claims no present interest in the property.   Plaintiff is merely attempting to secure payment of a potential money judgment.”   We conclude that the court erred in analogizing plaintiff's action to an action seeking to impose a constructive trust or an equitable lien.

The parties have directed us to the line of constructive trust and equitable lien cases beginning with Coppinger v. Superior Court (1982) 134 Cal.App.3d 883, 185 Cal.Rptr. 24.   There the plaintiffs claimed that the defendant defrauded them in selling plaintiffs their home.   They sought a constructive trust in defendant's new home, bought with the proceeds from the sale.   The Coppinger court held that lis pendens on the new home was proper because the constructive trust cause of action affected title or right to possession of the seller's new home.  (Id., at p. 891, 185 Cal.Rptr. 24.)

The Coppinger court extended its rationale to an equitable lien cause of action in Okuda v. Superior Court (1983) 144 Cal.App.3d 135, 141, 192 Cal.Rptr. 388, but the court now stands alone in its views.   At first other courts leveled only mild criticism and distinguished the Coppinger/Okuda court's rulings.  (See Moseley v. Superior Court (1986) 177 Cal.App.3d 672, 677, 223 Cal.Rptr. 116;  Deane v. Superior Court (1985) 164 Cal.App.3d 292, 296–297, 210 Cal.Rptr. 406;  Burger v. Superior Court (1984) 151 Cal.App.3d 1013, 1018, 199 Cal.Rptr. 227.)   Then in Urez Corp. v. Superior Court, supra, 190 Cal.App.3d at pp. 1146–1149, 235 Cal.Rptr. 837, and Wardley Development, Inc. v. Superior Court, supra, 213 Cal.App.3d at pp. 394–397, 262 Cal.Rptr. 87, another appellate court emphatically rejected the Coppinger/ Okuda reasoning.  (See also Elder v. Carlisle Insurance Co. (1987) 193 Cal.App.3d 1313, 1320, fn. 8, 238 Cal.Rptr. 897.)  Urez concluded that “allegations of equitable remedies, even if colorable, will not support a lis pendens if, ultimately, those allegations act only as a collateral means to collect money damages.”  (Urez v. Superior Court, supra, 190 Cal.App.3d at p. 1149, 235 Cal.Rptr. 837.)   More recently, La Paglia v. Superior Court (1989) 215 Cal.App.3d 1322, 1326–1329, 264 Cal.Rptr. 63, joined the chorus criticizing Coppinger.

We need not take sides in this debate, as we are faced with a situation quite different from that confronting the other courts.   In the typical constructive trust or equitable lien claim of the kind involved in those cases, the plaintiff is seeking to recover money and has traced the money to an asset the defendant purchased with it.   Concerned that a money judgment will not be satisfied by the defendant, plaintiff seeks an equitable remedy against the property.   An equitable cause of action is appended to an action for money damages.   Lis pendens gives notice of the entire action and, unless expunged earlier, will remain until the entire action is resolved.

Our case is different because the lis pendens gives notice only of the fraudulent transfer action, whose sole purpose is to set aside the conveyance.   Lis pendens will remain only until the fraudulent transfer action is resolved.   Because that action is limited in scope, it should be resolved more quickly.

The fraudulent transfer action here seeks to set aside a conveyance of real property.   We can imagine no action with a greater effect on “title to or right of possession” of real property.   Granted, the plaintiff seeks to set aside a transfer between the two defendants, not to compel transfer of title to himself.   But the Uniform Fraudulent Transfer Act authorizes his action.   The plain wording of the lis pendens statute governs (See Cal. Lis Pendens Practice (Cont.Ed.Bar 1983) Preparation and Recording, § 2.7, p. 31, Expungement, § 3.12, p. 63, where the authors assume, without discussion, that fraudulent transfer actions support lis pendens).   The purposes behind the lis pendens statutes are served by permitting plaintiff to record notice to warn potential purchasers of the fraudulent transfer action.

Michael and Maria Collins contend that plaintiff's purposes are adequately served by the remedy of prejudgment attachment, specifically allowed by the Uniform Fraudulent Transfer Act.   They suggest that the Legislature's failure to include lis pendens as a remedy for fraudulent transfers shows that it is not available here.

This argument derives from the cases criticizing Coppinger.   Much of the criticism of Coppinger centers around the unfairness of permitting lis pendens to accomplish without a hearing what a prejudgment attachment could accomplish only after compliance with due process requirements (secure plaintiff against the risk of an insolvent defendant).  (See La Paglia v. Superior Court, supra, 215 Cal.App.3d at p. 1329, 264 Cal.Rptr. 63;  Burger v. Superior Court, supra, 151 Cal.App.3d at p. 1018, 199 Cal.Rptr. 227.)   To prevent abuse of lis pendens, the courts have warned against an overbroad definition of “ ‘an action ․ affecting the title or the right of possession of real property.’ ”  (Ibid.)

The courts faced with constructive trust and equitable lien causes of action found latitude for interpreting their actions narrowly as not “affecting” title or right to possession.   We have no such latitude.   However reasonable it might seem to restrict a plaintiff to prejudgment attachment, we cannot in good conscience say that a fraudulent transfer action seeking to set aside a conveyance does not affect title.   The Legislature has provided for lis pendens under the circumstances of our case.   We find no significance in the Legislature's failure to mention lis pendens in the fraudulent transfer act;  it may have concluded that the wording of the lis pendens statutes adequately answered the question raised here.  (Cf. Okuda v. Superior Court, supra, 144 Cal.App.3d at p. 140, 192 Cal.Rptr. 388.)

We conclude that the court erred in expunging lis pendens.   It therefore erred as well in awarding attorney fees to Michael and Maria Collins.   We issue a peremptory writ of mandate in the first instance (Code Civ. Proc., § 1088;  Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 177–180, 203 Cal.Rptr. 626, 681 P.2d 893).

Let a peremptory writ of mandate issue directing the Marin County Superior Court to vacate its order expunging lis pendens and awarding attorney fees.

WHITE, Presiding Justice.

MERRILL and CHIN, JJ., concur.