Carey v. Carey

Filed 8/30/06 Carey v. Carey CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 977.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

APPEAL from a judgment and an order of the Superior Court of Los Angeles County. Jean E. Matusinka, Judge. Judgment - reversed; order - affirmed in part, reversed in part.

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Brian Carey, in pro. per.; Roger Jon Diamond for Plaintiff and Appellant.

Rodi, Pollock, Pettker, Galbraith & Cahill, Allan E, Ceran and Richard W. Petty for Defendant and Respondent.

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In this action between two brothers for constructive trust and related claims, plaintiff Brian Carey appeals from the judgment of dismissal entered after the court sustained a demurrer without leave to amend. We reverse the judgment of dismissal but affirm the order sustaining the demurrer to three causes of action.

BACKGROUND

This lawsuit concerns a dispute over real property in Inglewood (the property). Given the similar names of the three family members mentioned in this opinion, we will refer to: (1) the plaintiff, Brian Carey, as Brian; (2) the defendant, Raymond J. Carey, as Brother; and (3) the parties' late father, also named Raymond J. Carey, as Father. The following factual allegations are taken from the first amended complaint.

In August 1974, Brian, who owned the property and used it for his podiatry clinic, gave Father a grant deed to the property pursuant to their oral agreement that Father, who paid no consideration to Brian and no part of the purchase price, would hold the property in trust for Brian. Brian continued using the property and paid all of the property's taxes and mortgage, which he finished paying in 1983.

Upon Father's death in September 1984, Brother became the executor and trustee of Father's estate. As executor and trustee, Brother orally promised to hold the property in trust for Brian and to reconvey the property upon demand. Title to the property, which was not administered through the probate of Father's estate, remained in Father's name and Brian continued using the property as his own.

In 1985, the district attorney charged Brian with insurance billing fraud. Brian, who was convicted and incarcerated in 1993, was released in 1997. During his incarceration, Brian leased the property to a tenant, Nix, who sent the rental payments to Brother. Brother used approximately 30 percent of the rental income for taxes and saved the balance of 70 percent for Brian. In 2000, Brian and Nix negotiated a new lease, which Brother signed, and Brother continued collecting and saving approximately 70 percent of the rental income for Brian after deducting 30 percent for taxes.

In November 2004, Brother refused Brian's request to reconvey the property. Accordingly, on March 25, 2005, Brian filed the first amended complaint (the complaint) for constructive trust, breach of fiduciary duty, willful conversion of rental income, breach of contract, unjust enrichment, specific performance, injunctive relief, declaratory relief, and quiet title. Brian attached as exhibits to the complaint documents written by Brother that indicated the property was being held in trust: (1) Brother's letter dated August 12, 2004, informing Brian that Brother had executed a will "to protect your properties in California"; (2) an excerpt from Brother's will stating that Brother has "held legal title (but never equitable title)" to the property as Brian's nominee; and (3) Brother's letter dated August 10, 2004, informing Brian that 70 percent of the property's rental income would continue to be forwarded to him "until the transfer issue is resolved, hopefully as soon as possible."

Brother demurred to the complaint, contending that the entire complaint was barred by the doctrine of judicial estoppel and the statute of frauds. In addition, Brother contended that the fourth (breach of contract), eighth (declaratory relief), and ninth (quiet title) causes of action failed to state facts sufficient to constitute a valid claim.^[1] The trial court agreed with all of Brother's contentions and, after sustaining the demurrer without leave to amend, dismissed the complaint. This appeal followed.

DISCUSSION

We treat the demurrer as admitting all material facts properly pleaded but not contentions, deductions or conclusions of fact or law. We accept the factual allegations of the complaint as true and also consider matters that may be judicially noticed. (First Nationwide Savings v. Perry (1992) 11 Cal.App.4th 1657, 1662.)

"On a demurrer a court's function is limited to testing the legal sufficiency of the complaint. [Citation.] 'A demurrer is simply not the appropriate procedure for determining the truth of disputed facts.' (Ramsden v. Western Union (1977) 71 Cal.App.3d 873, 879.)" (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374.)

I

Judicial Estoppel

The doctrine of judicial estoppel prevents a party from asserting a position in a legal proceeding that is inconsistent with or contrary to a position previously taken in the same or an earlier proceeding. (Daar & Newman v. VRL International (2005) 129 Cal.App.4th 482, 490-491.) The doctrine serves both to protect the integrity of the judicial system and to protect parties from the unfair strategies of their opponents. (Aguilar v. Lerner (2004) 32 Cal.4th 974, 986.) The doctrine is an extraordinary remedy that may be invoked to prevent a miscarriage of justice. (Daar & Newman v. VRL International, supra, 129 Cal.App.4th at p. 491.) The doctrine applies when "(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake. [Citations.]" (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 183.)

In this case, the trial court sustained the demurrer and dismissed the complaint on the theory that Brian is barred by the doctrine of judicial estoppel from asserting a position in this litigation that contradicts a position that he previously asserted in his criminal case. During the criminal court's inquiry in the prior action concerning Brian's financial ability to pay for his legal defense, Brother testified that Brian had transferred the property to Brother by means of the 1974 grant deed to Raymond J. Carey, leaving Brian with no assets to pay for his defense. In this action, the trial court concluded that Brian, having taken the earlier position in the criminal case that the property was transferred to Brother, is judicially estopped to deny that the transfer occurred.

On appeal, Brian contends that the doctrine of judicial estoppel does not necessarily apply, as a matter of law, to preclude him from asserting in this litigation that the property was transferred to Father because: (1) in the criminal case, the court did not rely on Brother's testimony that the property was transferred to Brother in that (a) the court found that Brian was the beneficial owner of the property, and (b) the court absolved Brian of liability for his criminal defense costs solely because of the court's own failure to advise him of his financial obligation to pay for his legal fees before defense counsel was appointed; and (2) if Brother is permitted to apply the doctrine of judicial estoppel as a defense in this action, Brother would unfairly benefit from his (allegedly) perjured testimony in the criminal case.

We conclude that because the facts are disputed, it is premature to apply the doctrine of judicial estoppel in this case. As Brian correctly points out, one of the necessary requirements for applying the doctrine of judicial estoppel is that "the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true)[.]" (Jackson v. County of Los Angeles, supra, 60 Cal.App.4th at p. 183.) "Absent success in a prior proceeding, a party's later inconsistent position introduces no 'risk of inconsistent court determinations,' [citation], and thus poses little threat to judicial integrity. [Citation.]" (New Hampshire v. Maine (2001) 532 U.S. 742, 750-751; see Jogani v. Jogani (2006) 141 Cal.App.4th 158; Gottlieb v. Kest (2006) 141 Cal.App.4th 110.) If, as Brian argues, the criminal court concluded that Brian was the beneficial owner of the property but absolved him of liability for his defense costs solely because of the court's failure to inform him of his financial obligations, Brian's present position that he is the beneficial owner of the property would be consistent with the criminal court's prior determination.

Moreover, the parties strongly disagree as to whether Brother perjured himself in the criminal case by testifying that he had acquired the property in 1974. Because there is a possibility that Brother committed perjury in the criminal case, it is premature to apply the doctrine of judicial estoppel in this case. (See In re Marriage of Dekker (1993) 17 Cal.App.4th 842, 850 [evidence of wife's participation with husband in asserting the prior inconsistent position supported the court's determination that wife may not apply the doctrine of judicial estoppel against husband in the subsequent proceeding].)

II

Statute of Frauds

The factual premise of the complaint is that Brian deeded the property to Father in 1974 pursuant to an oral agreement that Father would hold the property in trust for Brian, who thereafter paid the entire purchase price and either occupied or leased the property as his own. Allegedly, after Father's death, Brother promised to reconvey title to the property upon demand and regularly paid 70 percent of the rental income to Brian after deducting 30 percent for taxes.

Brian contends on appeal that the trial court erred in sustaining the demurrer and dismissing the complaint on the ground that the statute of frauds precludes him from proving the existence of a constructive trust. We agree. Despite the absence of a written trust agreement for real property, the statute of frauds does not necessarily bar an action to impose a constructive or resulting trust by a plaintiff who had possession of the property and paid the property's purchase price. (Jones v. Gore (1956) 141 Cal.App.2d 667, 672-673.)

III

Statute of Limitations

Brother argues, for the first time on appeal, that the allegations of the complaint are barred by the statute of limitations. Brian contends that the defense was waived. We conclude that to the extent a statute of limitations defense appears on the face of the complaint, Brother's failure to raise the defense in his demurrer precludes him from raising it for the first time on appeal. "It is blackletter law that the defense of the statute of limitations is a personal privilege which must be affirmatively invoked in the lower court by appropriate pleading (if the defense appears on the face of the complaint, it must be raised by demurrer; otherwise it must be specially pleaded in the answer) or is waived (Hall v. Chamberlain (1948) 31 Cal.2d 673, 679 . . . )." (O'Neil v. Spillane (1975) 45 Cal.App.3d 147, 156.)

IV

Leave to Amend

Brian alternatively argues that even if judicial estoppel or the statute of frauds is found to apply, he should have been granted an opportunity to amend his complaint to allege different causes of action, such as promissory estoppel, which would not be barred. In light of our determination that neither defense supports the dismissal of the complaint, we need not reach this issue.

DISPOSITION

The judgment of dismissal is reversed. The order sustaining the demurrer as to the fourth, eighth, and ninth causes of action is affirmed; the order sustaining the demurrer as to the remaining causes of action is reversed. The parties are to bear their own costs.

NOT TO BE PUBLISHED.

ROTHSCHILD, J.

We concur:

SPENCER, P. J.

VOGEL, J.

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^[1] In the opening brief, Brian raised no issues regarding the order sustaining the demurrer as to the fourth, eighth, and ninth causes of action for the additional reason that the complaint fails to allege facts sufficient to constitute a valid claim. Accordingly, we affirm the order sustaining the demurrer as to those claims only.