Filed 4/7/16 Tan v. Chen CA1/5 NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or or dered published for purposes of rule 8.1115.

IN THE COU RT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

VIVIAN T AN, Plaintiff , Cross

- d efendant and Appellant,

v. LILY CHEN, Defendant , Cross

- c omplainant and Respondent. A141615
(Contra Costa County Super. Ct. No. MSC10

- 02995)

Th is litigation arises from a verba l agreement between appellant Vivian Tan and respondent Lily Chen regarding the use of an album of original Chinese paintings that

was own ed by Tan’s grandmother

. Tan appeals from a judgment following a bench trial
in which the court found in favor of Chen on all of Tan’s claims for rel ief, concluded the agreement was unenforceable due to the parties’ mistake about the value of the album,

a nd ord ered Tan to return $70,000 paid to her by Chen under the terms of the agreement

. We affirm.

FACTS AND PROCEDURAL HISTORY
Chen lived next door to Jian Jun Lu, an artist. Through her family, Chen met Tan , who was then a law student, and Tan’s mother Felicia
, 1 who had a backgrou nd in the
field of fine arts. In 2008, Tan, Chen and Lu entered into a verbal agreement to

1 We refer to Felicia by her first name to avoid confusion. Later in our opinion, we do the same when referring to Tan’s aunt, Tammy Tan.2

undertake an art project in which Lu would create oil renderings of classical Chi nese paintings. Chen did not have any expertis e in art, but acted as L u’s agent during the project

. To f acilitate the pro

ject, Tan agreed to provide Lu with an album of 12 traditional Chinese paintings ow ned by her grandmother (the Luo Han album) , though she did not disclose the identity of the alb um’s owner to Chen or Lu. Tan advise d Chen that the album’s owner would lend it to the project for one year f or a fee of $120,000, and Chen
and Lu verbally agreed to this arrangement. At th e time of the discussions, Felicia had
estimated the value of the album to be $1.2 million. The $120,000 fee for the use of the album (which Chen understood to be a licensing fee) was supposed to come out of the sale s proceeds of the oil paintings produced by Lu. Tan and Felicia told Ch en they needed to come up with a way to get the money up front, and Chen borrowed $70,000 from her home equity line. The money was wired to Tan’s aunt in Taiwan, with Tan’s grandmother to be the ultimate recipient of the
funds. Tan’s aunt delivered the a lbum from Taiwan in October 200 8 and Tan gave it to Chen so Lu could use it for his paintings. Tan and Felicia became dissatisfied with Lu’s
work on the art project and took the album back. They gave it to Chen in November
2008

. On June 24, 2010, Tan filed this civil action against Chen and Lu . Tan’s amended complaint contained causes of action for civil conspiracy
, fraud, deceit, promissory fraud, conversion, breach of contract, and breach of the implied covenant of good faith and fair dealing

. Among other things, t he pra yer for relief sought da mages in the amount of $50,000 plus interest (representing the balance alleged ly due on the $120,000 fee for use of the album) , damages attributable to economic loss occasioned by Chen’s retention of the album, punitive damages, and an equitable order requiring Chen and Lu to ret urn the
album to Tan. The court sustained Chen’s demurrer with leave to amend, brought on the ground th at Tan did not own the album at issue and the true owner was a necessary and indispensible party. (See Code Civ. Proc., § 389.)3

Tan filed a second amended complaint combining the causes of action for fraud
and deceit and adding causes of action for declaratory relief, injunction and claim and delivery. This pleading also alleged that Tan had o btained an assignment from her grandmother with respect to all rights and claims arising from the album

. The court
overruled Chen’s demurrer to the second amended complaint , and Chen filed a cross

complaint against Tan and Lu asserting causes of action for fraud an d deceit, contractual indemnity and rescission. The cross

- complaint alleged Chen had been induced to pay a licensing fee based on the false representation that the album was worth more than $1
million. Tan sought a writ of possession directing Chen to r eturn the album. Chen filed opposition indicating she would agree to do so if (1) Tan agreed not to transfer the album to another party until the rightful owner (who was then still undisclosed) had been
determined ; (2) a mutually agr eed upon appraiser examined the album and documented its condition before transfer to avoid future claims the album had been damaged by Chen; and (3) Tan agreed to fully indemnify Chen for claims by third parties relating to the
album. The court denied the writ but issued a n order directing Chen to return the album. Chen complied. The case proceeded to a bench trial at which Tan, representing herself, testified that Chen had asked her for help in securing the album so Lu could use it as inspiration
and source material fo r his oil paintings; that she (Tan) did not disclose her grandmother was the owner of the album because her grandmother wished to keep her i dentity private; that after Lu failed to perform, Chen told Tan she wanted to keep the album because the “lease” had not expired and she wanted to find a replacement artist to do the project; and that Chen did not return the album until she was required by a court order to do so, despite Tan’s urging.
Chen testified she did not know anything about art but was e ncoura ged by Tan and
Felicia to help Lu; Tan and Felicia proposed the art project and told her the owner of the album had to be paid a license fee of $120,000 ; Tan and Felicia told her they needed to get the album quickly because the owner was in her nineties an d might die, convincing4

Chen to borrow $70,000 from her home e quity line ; Chen considered the art project to b e over after Tan and Felicia became dissatisfied with Lu; Tan and Felicia insisted she take the album and refused her offers to return it; and tha t Tan did not tell Chen she wanted
th e album back until she filed this lawsuit in 2010

. Chen also presented the testimony of Arjun Gupta, an expert in Asian art, who opined the album was worth between $4,500 and $6,000.
The trial court found in favor of Chen and Lu on each cause of action in Tan’s second amended complaint , concluding there was no enforceable agreement between the parties

. In its statement of decision, the court explained: “There was no written contract
and the oral representations betw een the parties were never specific enough to constitute an enforceable contract of any kind. Moreover, the evidence was overwhelming that the central object of any alleged agreement, the Luo Han A lbum, was not the rare art object worth more than $1,000,0 00 that it was represented to be by [Tan] and her mother. Instead, the court finds, based on the persuasive testi mony of Arjun Gupta that the [Luo]
Han A lbum is worth no more than $6,000. While insufficient evidence was presented to prove that [Tan] know ingly or fraudulently misrepresented the value of the Album to [Chen and Lu], it is clear that all parties were so mistaken regarding the Album’s value as to render any possible agreement between the parties unenforceable.”
The court found in favor of C hen on her cross

- complaint and ordered Tan to return the $70,000 fee paid by Chen

. “Insufficient evidence was presented to allow this court to conclude that Vivian Tan knowingly and fraudulen tly represented that the [Luo] Han
Album was worth more than $1, 000,000 when it actually was worth only a few thousand dollars. Similarly, Chen failed to meet her burden of proof to show that Vivian Tan knowingly tricked Chen into paying the $70,000 fee to obtain the Album when the
Album itself was not even worth one tenth of that amount. At all times relevant to these claims, Vivian Tan was a young law student with only limited knowledge of the fine art business, and an unlikely sophisticated swindler as Chen and Lu attempted to establish. From the evidence presente d, Chen may have been able to establish such claims as against Vivian’s mother, Felicia, but she is not a party to this litigation. The court finds5

in favor of Vivian Tan on the Fraud and Intentional Misrepresentation causes of action,
as well as the clai m for punitive damages in Lil y Chen’s cross

- c omplaint. [¶] However, as previously noted sufficient evidence was presented to establish that there was no enforceable contract between these parties. Vivian Tan is legally obligated to return the $70,000 pay ment made by Chen to secure the use of the Album under either the Rescission or Negligent Misrepresentation causes of action. The court therefore grants Chen’s request for rescission and awards $70,000 against Vivian Tan.” 2

DISCUSSION
A party may resci nd a contract if his or her consent was given by mistake. (Civ. Code, § 1689, subd. (b)(1); 3 Donovan v. RRL Corp. (2001) 26 Cal.4th 261, 278.)

“ ‘ “ Rescission for mistake .

. . is a remedy by means of which a party may be relieved of the burdens and may procure restitutionary redress respecting a contract which was defective at its inception because consent was not freely or knowingly given. ” ’ ” ( Sharabianlou v. Karp (2010) 181 Cal.App.4th 1133, 1145.) We apply the substantial
evidence standard in revi ewing a trial court’s finding that a mistake of fact was made. ( See Williams v. Puccinelli (1965) 236 Cal.App.2d 512, 515

– 516.) Tan does not challenge the trial court’s determination that the parties were mistaken as to the value of the album, nor d oes she dispute that such a mistake support s the remedy of res cission. Rather, she claims that Chen’s rescission of the verbal agreement was not effective because Chen did not comply with section 1691, the relevant portions of which provide: “Subject to Section 1693, to effect a rescission a party to the

contract must , promptly upon discovering the facts which entitle him to rescind

. . . : [¶] (a) Give notice of rescission to the party as to whom he rescinds; and [¶] (b) Restore to the other party every thing of value which he has received from him under the contract or offer to restore the same upon condition that the other party do likewise

. . . .” (Italics added.)

2 The court also found against Lu on his affirmative claims. We do not discuss those claims as he is not a party t o this appeal.

3 Further statutory references are to the Civil Code unless otherwise indicated.6

We reject Tan’s argument that Chen’s delay in returning the album defeats her
claim for rescission

. The final paragraph of section 1691 specifically states: “When notice of rescission has not otherwise been given or an offer to restore the benefits received under the contract has not otherwise been made, the service of a pleading in an action or proceeding that seeks relief based on rescission shall be deemed to be such notice or offer or both .” (Italics added.) Moreover, section 1693 provides: “When relief based upon rescission is claimed in an action or proceeding, such relief shall not be denied because of delay in giving notice of rescission unless such delay has been substantially prejudicial to the other party . [¶] A party who has received benefits by reason of a contract that is subject to rescission and who in an action or pro ceeding seeks relief based upon rescission shall not be denied relief because of a delay in restoring or in tendering restoration of such benefits before judgment unless such delay has been substantially prejudicial to the other party ; but the court may ma ke a tender of restoration a condition of its judgment.” (Italics added.)
Chen’s cross

- complaint supplied adequate notice of rescission under sections 1691 and 1693, which recognize that the restoration of consideration may be delayed until judgment in the case in which rescission is sought. (See Vi llage Northridge Homeowners
A ss n. v. State Farm Fire & Casualty . Co. (2010) 50 Cal.4th 913, 928

– 929 .) Tan did not establish that the delay in returning the album to her was “substantially preju dicial ” under section 1693, in that she offered no e vidence the album could have been put t o another profitable use during the period that it was held by Chen. (See Wilke v. Coinway (1967) 257 Cal.App.2d 126, 140 [no unreasonable delay in restoration of consideration where delay not shown to be prejudicial].) To the contrary, Chen had already paid Tan $70,000,
more than ten times the value of the album as determined by the court , using money from an equity line on her home for which she was presumably paying interest. If anyone had been substantially prejudiced by the arrangement, it would app ear to be Chen. Citing Citicorp Real Estate, Inc. v. Smith (9th Cir. 1998) 155 F.3d 1097, 1104, Tan argues she was prejudiced by Chen’s delay in returning the album because she (Tan ) incurred substantial expenses in bringing her civil suit and applying fo r a writ of7

execution to recover the al bum . Tan’s lawsuit sought the $50,000 balance alle gedl y due
under the verbal agreement regarding the use of the album for a one

- year period as well as punitive and other damages; consequently, it cannot be said that this action and the ensuing legal expenses would have been avoided if Chen had returned the album at an
earlier date

. Moreover, the trial court could have reasonably credited Chen’s testimony to the effect that Tan gave her the album to keep and never sou ght its return until she
filed her lawsuit in June 2010, and could have further concluded it was reasonable for Chen to retain the album to forestall third party claims until such time that the court
ordered Chen to return it to Tan in May 2012.
Tan argues she should not have been require d to return the $70,000 paid by Chen
because she was n ot the ultimate recipient of that money. She suggests that her aunt, Tammy Tan, should have been joined a s an indispensible party to Chen’s cross

- complain t under Code of Civil Procedure section 389 4 because Tammy was the person who actually received the $70,000 in the wire transfer sent by Chen and was responsible for delivering

4 Code of Civil Procedure section 389 provides: “(a) A person who is subject to service of process and whose joinder will not deprive the court of jurisdicti on over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated tha t the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise in consistent obligations by reason of his claimed interest. If he has not been so joined, the court shall orde r that he be made a party. “(b) If a person as described in paragraph (1) or (2) of subdivision (a) cannot be made a party, the court shall determi ne whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed without prejudice, the absent person being thus regarded as indispensable. The factors to be considered by the court include: (1) to wh at extent a judgment rendered in the person’ s absence might be prejudicial to him or those already parties; (2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avo ided; (3) whether a judgment rendered in the person's absence will be adequate; [and] (4) whether the plaintiff or cross

- complainant will have an adequate remedy if the action is dismissed for nonjoinder.

. . . ”8

the money to Tan’s grandmother in Taiwan. 5 Tan did not raise this argument in the tria l court and it is forfeited on appeal. ( Jermstad v. McNelis (1989) 210 Cal.App .3 d 528, 538.)
Forfeiture a side, the absence of Tammy from this litigation does not require reversal of the judgment. “Code of Civil Procedure section 389, subdivision (a), describes the circumstances under which the trial court may require a person to be joined as a party (necessary party). Code of Civil Procedure sec tion 389, subdivision (b)
, provides that a trial court, in the exercise of its discretion, may additionally find that a necessary party is also an indispensable party but cannot be joined as a party, and therefore ‘in equity and good conscience’ the action should be dismissed without

pr ejudice.

. . . [ ¶ ]

. . . ‘.

. . Courts must be careful to avoid converting a discretionary power or rule of fairness into an arbitrary and burdensome requirement that may thwart rather than further justice. [Citation.] ’ ” ( Riverwatch v. Olivenhain Mun. Water Dist. (2009) 170 Cal.App.4t h 1186, 1216.) Two factors

— the court’ s ability to grant “complete
relief” and the interests of the exis ting parties and the absentee

— govern t he
determination o f whether a party is “necessary ” under Code of Civil Procedure section 389, subdivision (a), a p rerequisite for concluding a party is “indispensable” under section 389, subdivision (b). ( Deltakeeper v. Oakdale Irrigation Dist. (2001) 94 Cal.App.4th 1092, 1100 ; Countrywide Home Loans, Inc. v. Superior Court (1999)
69 Cal.Ap p.4th 785, 792

– 793 ( Country wide ).)
T he absence of Tammy did not prevent the court from granting complete relief to
Chen in connection with the rescission o f her verbal agreement with Tan, because the court had the power to rescind the contract and order Tan to return the money paid by
Chen. “The ‘complete relief’ clause [of Code of Civil Procedure section 389] ‘requires joinder [of the absentee] when nonjoinder precludes the court from effecting relief not in some overall sense, but between extant parties

. . . . Simply put, ‘the term complete relief

5 The trial court had previously determine d that Tan’s grandmother was not a necessary or indispensable party, based on Tan’s allegation her grandmother had assigned her rights to Tan.9

refers only “to relief as between the persons already parties, and not as between a party and the absent pers on whose joinder is sought.” ’ ” ( Countr ywide
, supra , 69 Cal.App.4th

at pp. 793

– 794.) Turning to the second consideration under Code of Civil Procedure section 389, subdivision (a), this lawsuit did not jeopardize Tammy’s rights as the absent party

. The
evidence s howed the m oney was wired to T ammy in Taiwan so she could give it to Tan’s grandmother. Tammy was not a party to the verbal agreement between Tan and Chen
and had no clai m on Ch en’s money. Nor will Tammy be liable in any future claim by
Chen for return of the money, as Chen has been made whole by the judgment in this litigation. (See § 1692 [relief based on rescission “shall not include duplicate or inconsistent items of recovery ” ].) In short, Tammy was neither a necessary nor an indispen sable party

. To the extent Tan is arguing she should not have been ordered to return the money because she was not its ultimate recipient, the claim is untenable

. The evidence showed Tan attempted to enter into a verbal agreement with Chen for the lease or lice nsing of the album, and that Chen pa id $70,000 for this privilege at Tan’s direction. Indeed, Tan’s lawsuit against Chen sought the balance allegedly due from Chen under the verbal agreement , and s he cannot now distance herself from the transaction by pointing to her aunt and her grandmothe r as the intermediary for and ultimate recipient of the money.
S ection 1692 specifically provides: “A claim for damages is not inconsistent with a claim for relief based upon rescission. The aggrieved party shall be awarded complete relief, including re stitution of benefits, if any, conferred by him as a result of the
transactio n and any consequential damages to which he is entitled

. . . the court may require the party to whom such relief is granted to make any compensation to the other which justice ma y require and may otherwise in its judgment adjust the equities between the parties.” A court has broad powers to grant equitable relief under section 1692. (See Wong v. Stoler (2015) 237 Cal.App.4th 1375, 1389.) It did not exceed those powers in
enteri ng judgment against Tan for the amount paid by Chen under the rescinded agreement.10 DISPOSITION The judgment is affirmed. Ordinary costs on appeal are awarded to respondent
Chen.11 NEEDHAM, J.

We concur.

JONES, P.J.

SIMONS, J.

(A141615)