Chen v. Berenjian
Chen v. Berenjian
Opinion of the Court
*814INTRODUCTION
After obtaining money judgments against Shazad Berenjian, Pang Yen Chen sued him and his brother Sharmad Berenjian
The primary issue presented by this appeal is whether, on the face of Chen's complaint, the litigation privilege of Civil Code section 47, subdivision (b) ( section 47(b) ) barred the cause of action for fraudulent transfer under the UVTA. Exercising de novo review ( McCall v. PacifiCare of Cal., Inc. (2001)
ALLEGATIONS
We accept as true all of the material allegations of Chen's complaint and facts that reasonably can be inferred from those expressly pleaded. ( King v. CompPartners, Inc. (2018)
Chen alleged:
Shazad and Sharmad are brothers. Shazad owns and operates a business called Digital Ear, Inc. In September 2012, Chen paid Shazad $32,952.22 for goods which Shazad did not deliver. Chen filed a lawsuit against Shazad and obtained a judgment against him for that amount.
In August 2014, Shazad became indebted to Chen for an additional $50,000 for goods that were never delivered. In September 2015, Chen filed a second lawsuit *382against Shazad and obtained a judgment against him for $57,997.26.
In June 2015, after the judgment in the first lawsuit was entered and before the second lawsuit was filed, Shazad and Sharmad entered into an agreement by which Sharmad would file a lawsuit against Shazad and Shazad would allow a default judgment to be taken. The agreement enabled Sharmad to obtain title to or a lien against all of Shazad's assets. Sharmad and Shazad intended "to create a shield against claims of other creditors, including [Chen]."
Pursuant to this agreement, Sharmad filed a lawsuit against Shazad. The allegations of Sharmad's complaint were false. In October 2015, Sharmad *816and Shazad entered into a stipulated judgment against Shazad in the amount of $199,900. There were no "genuine grounds" for that amount.
"The stipulated judgment was not followed by any effort to actually enforce the judgment or obtain assets from [Shazad] in satisfaction of the judgment. Instead, [Shazad] continued to operate his business called Digital Ear, Inc., as he had done previously. However, when an attempt was made to enforce the above mentioned claims and judgments by [Chen], or any other creditor, [Sharmad] would levy on the property subject to the claim, pursuant to the sham judgment mentioned above, solely in order to defeat the attempts by [Chen] to enforce his own judgments."
When Chen filed his second lawsuit against Shazad, Sharmad levied on two stereo speakers that were owned by Shazad through Digital Ear and which were being stored in a warehouse. The speakers had been previously sold to Chen and were the basis of his second lawsuit against Shazad. Sharmad levied on the speakers to defeat Chen's claims. Shazad has transferred other assets to Sharmad without reasonable consideration in order to conceal them from Chen.
PROCEDURAL HISTORY
Chen filed a complaint against Shazad, Sharmad, and others asserting two causes of action: (1) fraudulent transfer under the UVTA; and (2) common counts. The common counts are irrelevant to this appeal.
The trial court sustained Sharmad's demurrer to the first cause of action with leave to amend. The court concluded the fraudulent transfer cause of action was barred by the litigation privilege of section 47(b) and was uncertain because it alleged Shazad transferred assets other than the speakers but did not identify those assets.
Chen did not amend the complaint but allowed the first cause of action to be dismissed as to Sharmad. Chen filed a request for dismissal of the second cause of action. After Chen filed a notice of appeal, he obtained a signed order of dismissal of Sharmad.
*817DISCUSSION
I.
The Litigation Privilege Does Not Bar Chen's Cause of Action for Fraudulent Transfer.
A. The UVTA
Claims for fraudulent transfer are governed by the UVTA. The purpose of the UVTA is to prevent debtors from placing, beyond the reach of creditors, property that should be made available to satisfy a debt. ( Lo v. Lee (2018)
The UVTA applies on its face to all transfers. ( Mejia v. Reed (2003)
*818B. The Litigation Privilege
"The litigation privilege of [ section 47(b) ] 'applies to any publication required or permitted by law in the course of a judicial proceeding to achieve the objects of the litigation, even though the publication is made outside the courtroom and no function of the court or its officers is involved.' [Citation.] '[T]he privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that ha[s] some connection or logical relation to the action.' [Citation.] Section 47 [ (b) ], is intended to 'afford litigants and witnesses free access to the courts without fear of being harassed subsequently by derivative tort actions, to encourage open channels of communication and zealous advocacy, to promote complete and truthful testimony, [and] to give finality to judgments.' [Citation.] The privilege is broadly applied to promote effective judicial proceedings by encouraging full communication, and applies to civil actions based upon perjury." ( Optional Capital, Inc. v. DAS Corp., supra , 222 Cal.App.4th at p. 1404,
As Chen posits, if Shazad had simply transferred his assets and those of Digital Ear, Inc. to Sharmad, there would be little question the transfer could be voided as fraudulent. But because the assets were transferred by means of execution of a stipulated judgment in a sham lawsuit, the litigation privilege potentially bars the fraudulent transfer claim.
In Rusheen v. Cohen (2006)
Cohen, as the clients' attorney, filed a lawsuit against Rusheen for property damage and other torts. Cohen filed a declaration of service signed by a process server who declared under penalty of perjury that he personally served Rusheen with the summons, complaint, and orders declaring Rusheen *819a vexatious litigant. ( Rusheen, supra , 37 Cal.4th at p. 1053,
Meanwhile, Rusheen moved to vacate the default judgment and the vexatious litigant orders on the ground of lack of service. ( Rusheen, supra , 37 Cal.4th at p. 1054,
On remand, Rusheen filed a cross-complaint against Cohen for abuse of process arising from his legal representation of the clients. ( Rusheen, supra , 37 Cal.4th at p. 1054,
*385The Supreme Court addressed two issues: "(1) whether action taken to collect a judgment, such as obtaining a writ of execution and levying on the judgment debtor's property, are protected by the litigation privilege as communications in the course of a judicial proceeding; and (2) whether a claim for abuse of process based on the filing of an allegedly false declaration of service is barred by the litigation privilege on the ground the claim is necessarily founded on a communicative act." ( Rusheen, supra , 37 Cal.4th at p. 1055,
The court explained the litigation privilege protects only acts that are communicative, and, therefore, the threshold issue in determining whether the *820litigation privilege applies is whether the defendant's alleged conduct is communicative or noncommunicative. ( Rusheen, supra , 37 Cal.4th at p. 1058,
The gravamen of Rusheen's abuse of process cause of action was not the act of levying on the judgment, "but the procurement of the judgment based on the use of allegedly perjured declarations of service." ( Rusheen, supra , 37 Cal.4th at p. 1062,
The Supreme Court held: "[I]f the gravamen of the action is communicative, the litigation privilege extends to noncommunicative acts that are necessarily related to the communicative conduct, which in this case included acts necessary to enforce the judgment and carry out the directive of the writ. [Citations.] Stated another way, unless it is demonstrated that an independent, noncommunicative, wrongful act was the gravamen of the action, the litigation privilege applies." ( Rusheen, supra , 37 Cal.4th at p. 1065,
C. The Gravamen of the Fraudulent Transfer Cause of Action Is Noncommunicative Conduct.
As Rusheen instructs, we first determine whether the gravamen of Chen's fraudulent transfer cause of action is communicative or noncommunicative conduct. The term gravamen has been defined as "the 'material part of a grievance, charge, etc.' " ( Lindros v. Governing Bd. of the Torrance Unified School Dist. (1973)
In Rusheen, the California Supreme Court concluded the communicative conduct of procuring a judgment based on the use of allegedly fraudulent declarations of service, and not the noncommunicative act of executing on the judgment, was the gravamen of the abuse of process cause of action. ( Rusheen, supra , 37 Cal.4th at p. 1062,
Levying on property is essentially a taking, a physical act that is not communicative. ( Drum v. Bleau, Fox & Associates (2003)
Sharmad argues that permitting a creditor, such as Chen, to "circumvent the litigation privilege" by alleging a sham lawsuit and conspiracy "would frustrate the purposes of the litigation privilege." We disagree. The litigation privilege's purposes are "to encourage open channels of communication and zealous advocacy, to promote complete and truthful testimony," and "to promote effective judicial proceedings by encouraging full communication." ( Optional Capital, Inc. v. DAS Corp., supra , 222 Cal.App.4th at p. 1404,
The UVTA serves the valuable purpose of protecting creditors from schemes to place assets beyond their reach. ( Lo v. Lee,
II.
The Trial Court Erred by Sustaining the Demurrer for Uncertainty.
We also conclude the trial court erred by sustaining Sharmad's demurrer for uncertainty to the first cause of action. Demurrers for uncertainty under Code of Civil Procedure section 430.10, subdivision (e) are disfavored. ( Lickiss v. Financial Industry Regulatory Authority (2012)
Sharmad argues the first cause of action was uncertain because it alleged the stereo speakers that were the object of Chen's levy were the property of Digital Ear, Inc., which is not a party to this lawsuit. Chen's complaint alleged that Sharmad "levied upon property owned by Shazad Berenjian under the title to his company named Digital Ear, Inc., namely two Focal Maestro Utopia Speakers." (Italics added, some capitalization omitted.) This allegation sufficiently alleges the stereo speakers belonged to Shazad. Any ambiguity can be clarified through discovery, and the owner of the speakers is presumptively within Sharmad's knowledge.
*823DISPOSITION
The judgment is reversed and the matter is remanded. Appellant shall recover costs on appeal.
WE CONCUR:
O'LEARY, P. J.
MOORE, J.
Shazad Berenjian is not a party to this appeal. For clarity and concision we refer to Shazad Berenjian and Sharmad Berenjian by first names.
Civil Code section 3439.04, subdivision (a) states: "A transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation as follows: [¶] (1) With actual intent to hinder, delay, or defraud any creditor of the debtor. [¶] (2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either: [¶] (A) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction. [¶] (B) Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor's ability to pay as they became due."
Case-law data current through December 31, 2025. Source: CourtListener bulk data.