Canela v. Gonzalez

Filed 6/27/06 Canela v. Gonzalez CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

Appellants Juan S. and Teresa Y. Gonzalez (collectively "Gonzalez") are the parents of respondent Jesus Gonzalez Canela. Gonzalez appeals the trial court's judgment imposing a constructive trust on real property. Gonzalez's sole argument is that the action is barred by the statute of limitations in Code of Civil Procedure section 338, subdivision (d). We affirm.

STATEMENT OF FACTS AND PROCEDURAL HISTORY

On September 3, 1992, Gonzalez, Canela and other parties purchased a home on Doris Street in Oxnard as joint tenants.

Prior to the purchase, Gonalez agreed to lend Canela $28,000 as a down payment. They orally agreed that Gonzalez would have no financial obligations regarding the house; and Canela and his brother, Sergio, would live in the house, make all mortgage payments and pay all maintenance expenses, taxes and insurance. They agreed that the house belonged to Canela. Pursuant to their agreement, Canela lived in the house and paid all expenses.

In March 2001, Gonzalez decided to refinance the property to take advantage of lower interest rates. Gonzalez was advised by a mortgage broker that obtaining a new loan would be easier if only Gonzalez were on title to the property. To accomplish this, Canela and the other co-owners signed a quitclaim deed on March 23, 2001, releasing their interests in the property to Gonzalez.

Sometime after the refinance occurred, Canela asked his father to sign the necessary documents to put his name back on title. Gonzalez failed to do so and Canela did not pursue the matter further. Canela continued to live in the property and pay all expenses until March 2004.

In March 2004, Gonzalez demanded that Canela repay the $28,000 loan plus an additional 5 percent interest from 1992. Canela and his father subsequently orally agreed that if Canela would repay the loan plus reasonable interest, Gonzalez would reconvey the property to Canela.

Despite the agreement, Gonzalez sent Canela a written eviction notice in May 2004. Gonzalez claimed that Canela did not own the home but was merely a tenant and refused to reconvey the property to Canela.

In July 2004, Canela filed a complaint to quiet title and cancel a deed, and for specific performance, declaratory relief, constructive trust and damages. An amended complaint was filed February 5, 2005. Gonzalez answered the complaint asserting, among other defenses, the statute of limitations.

After a court trial, the trial judge issued a statement of decision finding that Canela's constructive trust claim was not barred by the statute of limitations because he was not on notice of the need for legal action until receiving the eviction notice in May 2004. The court also found insufficient evidence of a fraudulent intent on the part of Gonzalez either at the time of the original purchase of the house or when the mortgage was refinanced in 2001.

In addition, the court found that there was an enforceable agreement that Gonzalez would purchase the house, Canela and his brother would live in it while paying reasonable rent, and the house would eventually be sold to one or more of the sons for a price that would allow Gonzalez to recoup the original investment along with a reasonable profit. The court found Gonzalez's attempt to evict Canela, despite his continued performance, violated the original agreement as well as the later agreement to sell Canela the house if he qualified for sufficient financing.

The court concluded that there was clear and convincing evidence that Gonzalez's continued ownership of the house was wrongful and imposed a constructive trust on the property. The court directed Gonzalez to convey to Canela whatever interest in the property that was necessary for Canela to obtain financing to enable him to buy out Gonzalez. The court fixed the price of the buyout at $28,000 plus 5 percent per year interest from the time of the original purchase to the completion of the buyout.

DISCUSSION

Gonzalez's sole argument on appeal is that the three-year statute of limitations in Code of Civil Procedure section 338, subdivision (d) bars the action. Gonzalez claims that Canela was put on notice sufficient to begin the running of the statute of limitations in March or April 2001 when Sergio advised Canela to seek professional help "to recuperate this."

Canela asserts the trial court did not err in finding he did not have sufficient notice requiring him to seek legal recourse until he received the eviction notice in May 2004.

Standard of Review

The parties dispute the standard of appellate review. Gonzalez requests de novo review. He asserts the issue of when the statute of limitations begins to run involves applying a statute to undisputed facts. Canela asserts the issue is one of fact subject to the substantial evidence standard of review.

"Resolution of a statute of limitations defense is normally a question of fact. However, when the uncontradicted facts established through discovery are susceptible of only one legitimate inference, the trial court may determine the matter as one of law." (Snapp & Associates Ins. Services, Inc. v. Robertson (2002) 96 Cal.App.4th 884, 889-890.)

The fact central to the resolution of the statute of limitations issue--time of notice--is disputed. Therefore, we review the judgment under the substantial evidence standard. When reviewing for substantial evidence, all intendments and presumptions are indulged to support the judgment. Under this standard, we look only to the evidence supporting the prevailing party. (GHK Associates v. Mayer Group, Inc. (1990) 224 Cal.App.3d 856, 872.) "It is not our task to weigh conflicts and disputes in the evidence; that is the province of the trier of fact. Our authority begins and ends with a determination as to whether, on the entire record, there is any substantial evidence, contradicted or uncontradicted, in support of the judgment. . . . We must accept as true all evidence and all reasonable inferences from the evidence tending to establish the correctness of the trial court's findings and decision, resolving every conflict in favor of the judgment." (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 630-631.)

Code of Civil Procedure Section 338

The three-year statute of limitations in Code of Civil Procedure section 338, subdivision (d) applies when the gist of an action is fraud, regardless of its form. Under that provision, the cause of action for fraud does not accrue--and the statute of limitations does not begin to run--"until the discovery, by the aggrieved party, of the facts constituting the fraud . . . ." (Code Civ. Proc., § 338, subd. (d).) The purpose of this provision is to promote the resolution of claims on the merits. Since fraud by its nature is often concealed from the victim, the provision protects fraud victims from having the limitations period run before they are aware of the fraud. (Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408 ,421.) The limitations period in section 338 commences upon the discovery by the aggrieved party of the fraud or facts that would lead a reasonably prudent person to suspect fraud. (Ibid.)

Code of Civil Procedure section 338 has been applied to causes of action to establish a constructive trust. (Security First National Bank v. Ross (1963) 214 Cal.App.2d 424, 429-430.)

Gonzalez argues Sergio's advice to Canela in March or April 2001 to seek professional help was sufficient to put Canela on notice and begin the running of the limitations period. This argument is less than compelling for at least two reasons. First, the only evidence that Sergio made any such comment to Canela was Sergio's testimony at trial. Although not expressed in the statement of decision, we may infer that the trial judge disbelieved this testimony. Credibility determinations are the exclusive province of the trier of fact. (People v. Ochoa (1993) 6 Cal.4th 1199, 1206.)

Even if the statement were believed, it is not the type of information that would put a reasonably prudent person on notice in these circumstances. Canela had been on the title, living in the house and paying all expenses related to the house for 13 years without any indication that his father intended to back out of their original agreement. The reason for taking Canela off title--to aid in obtaining refinancing--was legitimate and was suggested by a third party. There is nothing in the record, except the March 2004 eviction notice, that would put a reasonably prudent person on notice that Gonzalez had changed his mind about reconveying title to Canela.

Gonzalez also argues the trial court's finding that there was insufficient evidence of fraudulent intent precludes Canela from arguing that the statute of limitations was tolled. The trial court's finding on this issue does not help Gonzalez. If there were no fraud, Gonzalez's affirmative defense would disappear. We interpret the trial court's finding of lack of evidence to support a fraud claim as relating only to actual fraud. Imposition of a constructive trust is a remedy "used to prevent unjust enrichment or to compel restoration of property by one who is not justly entitled to it" and may be based on constructive fraud. (Day v. Greene (1963) 59 Cal.2d 404, 411.)[1]

The judgment is affirmed. Costs are awarded to respondent.

NOT TO BE PUBLISHED.

PERREN, J.

We concur:

GILBERT, .P.J.

COFFEE, J.

Vincent J. O'Neill, Jr., Judge

Superior Court County of Ventura

______________________________

Wasserman, Comden & Casselman LLP, Gregory J. Ramirez for Defendants and Appellants.

Law Office of Christian Menard, Christian Menard for Plaintiff and Respondent.

Publication courtesy of San Diego free legal advice.

Analysis and review provided by Santee Apartment Manager Lawyers.

[1] Although not cited by the parties, we note there is authority to support an argument that the five-year statute of limitations in Code of Civil Procedure section 318 for recovery of real property applies here. (See Buic v. Buic (1992) 5 Cal.App.4th 1600, 1603.) If that statute were applicable, then time of notice would not be an issue because Canela filed his complaint within five years of signing the quitclaim deed.