Lee v. Liu

sFiled 9/1/06 Lee v. Liu CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 977.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

SIXTH APPELLATE DISTRICT

I. INTRODUCTION

As part of a complex real estate transaction involving her purchase of a commercial building, appellant Ching Ching Lee signed three promissory notes. Each promissory note was secured by a deed of trust on the property in favor of the noteholders, who included respondents Hung Tao Liu, Huei Fen Hsu, and Yu Chang Tu. Lee failed to make any payments on the promissory notes and two noteholders attempted foreclosure.

Lee responded by filing an action in which she sought cancellation of one promissory note, rescission of all three promissory notes, and a permanent injunction barring the defendant noteholders from enforcing the notes and deeds of trust. Lee alleged that the promissory notes and deeds of trust were invalid because her signatures had been obtained through mistake and fraud and no consideration had been given.

Defendants moved for summary judgment on the ground that Lee's claims regarding the invalidity of the promissory notes and deeds of trust lacked merit as a matter of law because it was undisputed that Lee had failed to read the promissory notes or have them explained to her before she signed them and defendants had done nothing to defraud her. Defendants also argued that it was undisputed that Lee had received consideration in exchange for all three promissory notes.

The trial court granted the summary judgment motion on the ground that defendants had met their burden to show that Lee's claims lacked merit as a matter of law and Lee had failed to raise a triable issue of material fact. Judgment was entered in favor of defendants and Lee appeals. We will reverse the judgment because, as we will further explain, we find that defendants failed to meet their initial burden on summary judgment to establish that Lee cannot show that the promissory notes and deeds of trust are invalid on the ground of unilateral mistake and therefore subject to rescission.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. The Complaint

In her complaint,[1] Lee alleges that she is a recent immigrant from Taiwan whose primary language is Mandarin Chinese. Lee was befriended by defendant Mali Kuo,[2] who offered to help Lee with the various matters that Lee encountered in the United States. Kuo gained Lee's trust and confidence and Lee came to rely on her for financial and investment advice. During their financial dealings together, Lee gave Kuo over $1 million to invest. Kuo's investment advice included her recommendation that Lee purchase commercial property in Mountain View owned by Kuo.

Kuo further advised Lee that she could acquire the $2.4 million Mountain View property by obtaining a new loan in the amount of $1.4 million, because Kuo would give Lee a credit of $1 million towards the purchase price since Kuo owed Lee at least $1 million. However, unknown to Lee, Kuo had conspired with defendants Liu and Hsu to have Lee sign false promissory notes and deeds of trust encumbering the Mountain View property as part of the purchase transaction. When escrow closed, Kuo convinced Lee to sign multiple documents that Lee had not read and did not understand, which included three promissory notes and deeds of trust in favor of defendants.

According to Lee, all of the instruments that she signed were obtained through fraud, mistake, undue influence and without consideration. Based on these allegations, Lee states three causes of action against defendants Liu and Hsu, including a first cause of action for cancellation of a $265,000 promissory note and fourth deed of trust, a second cause of action against all defendants for rescission of the promissory notes and deeds of trust, and a third cause of action against all defendants for a permanent injunction barring them from attempting to enforce the promissory notes and/or deeds of trust, including the use of foreclosure proceedings.[3]

B. The Motion for Summary Judgment

Defendants Liu, Hsu and Tu moved for summary judgment, or, in the alternative, summary adjudication of issues. For purposes of the summary judgment motion, defendants conceded that several factual allegations made by Lee were undisputed: (1) when Lee signed the three promissory notes, she did not know what she was signing and she did not intend to sign promissory notes and deeds of trust in favor of Liu, Hsu and Tu; (2) when escrow closed on the Mountain View property, Kuo asked Lee to sign â€