Filed 12/31/20 Fei v. W ang CA6 NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or or dered published for purposes of rule 8.1115.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 COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT
LANLAN FEI,

Plaintiff and Respondent ,

v. HUASHAN WANG,
Defendant, Cross

- complainant and Appellant ; BIN HE et al., Defendants and Appellants ;
LI YI,

Cross

- defendant and Respondent. H045442 (Santa Clara County Super. Ct. No. 1

- 12

- CV

- 217620)

Li loaned money to Wang to purchase a home in the San Francisco Bay Area. 1 Wang failed to record a secur ity interest in the home in favor of L i, sold the home during the pendency of this litigation, and transferred proceeds from the sale to foreign bank

accounts. The trial court entered judgment in favor of plaintiff Lanlan Fei ( the assignee

o f Li’s interest in the loan ) for breach of contract, fraudulent conveyance, and unjust

1 Li Yi and Yi Li are the same person. We refer to him as Li, as did the trial court in its statement of decision. Li is referred to as Yi Li in the operative complaint; he was sued by Wang as Li Yi, which is the name reflected in the judgment and therefore in our caption.2

enrichment against Wang, Wang’s wife (Bin He) , and a company formed by the couple

. Plaintiff was awarded $2,870,050 in damages, plus pre

- and post

- judgment interest.
D efendants challenge the judgment as to fraudulent conveyance and damages for unjust
enrichment . Wang also challenges the rejection of his cross claim for breach of contract

. For the reasons stated here, we will affirm the judgment.
I. BACKGROUND
Li is the board chairman and chief executive officer of Trony Solar Holding Co.
Ltd. (Trony). After he personally approached L i about employment, i n 2009 Wang was hired by a wholly owned Trony subsidiary ( Shenzen Trony Science and Technology Development Co. , Ltd. ) as a regional director overseeing marketing, development, and
sales in North America

. Later that year, Wang entered into a new employment contract
with Shenzhen T ro ny and relocated to China, while his family remained in
Massachusetts

. Wang approa ched Li several times in 2010 for a loan to purchase a home in the San Francisco Bay Area . Wang told Li he had bad credit in the United States and could not purchase a home on his own. In 2011 Li extended a $2.2 million personal loan to Wang , conditioned on the purchased home serving as collateral for the loan. Wang and
his wife , Bin He, set up two shell companies to facilitate the transaction

— Perpetual
Renewables Ltd. in the British Virgin Isl ands (Perpetual) and Bayside Health & Wealth
LLC in California (Bayside)

. In April 2011, Li borrowed $2.2 million from J

. P

. Morgan using a $3 million life insurance policy as security . The money was wired to Perpetual
and use d by Bayside to purchase a ho me in Palo Alto for $1,955,000

. Wang did not inform Li that he had purchased the home

. I n May and June 2011
he told Li he was negotiating the purchase, and in Ju ly he reported to Li that his family
had moved to California and was living in a rented prope rty while the transaction was in
process

. In September 2011, Li discovered that Wang had purchased the home in April
and his family was living in the home

. Li confronted Wang , who agreed to return the3

money loaned in excess of the purchase price and prepare formal documents securing the
loan

. Wang returned $200,000 , and he paid Li interest on the loan through November
2011. B ut he did not secure the loan, even after Li prepared the legal documents for He’s signat ure. In December 2011 Li assigned his interest in the loan to plaintiff, who commenced
th is action in January 2012. Wang voluntarily resigned from Trony sometime in the
summer or fall of 2012. In 2013, Bayside recorded a deed of trust signed by He, secu ring
the home in favor of Perpetual for Bayside’s purported $2.2 million indebtedness to Perpetual. T he home was sold in 20 1 4 for $2,825,000

. Over $2.3 million from the sale proceeds was wired to a Perpetual bank account in China , and of the $405,597 received by Bayside , $200,000 was wired to a Canadian bank account

. The matter proceeded to a bench trial in 2016 on a fourth amended complaint , 2
and t he court also considered Wang ’s cross

- claim alleg ing Li provided the money for Wang ’s home pur chase as an inducement to continue his employment with Trony, but later repudiated the agreement.
I n a 54

- page statement of decision, the court found Li’s testimony “to be completely credible,” and the testimony of Wang and He to be “self

- serving and almo st completely not credible.” The court found Wang and He each to be alter egos of Bayside and Perpetual, and each responsible for the br e ach of contact. The court found Li and Wang had entered into an oral contract for Li to lend Wang $2.2 million to be used by

2 The operative complaint alleged breach of contract against Wang and He (first cause of action); fraud (false promise) against Wang, He, and Bayside (second cause of action); fraud (negligent misrepresentation) against Wang (third cause of action);
common c ounts against Wang, He, and Bayside (fourth cause of action); fraudulent conveyance against Wang and Bayside (fifth cause of action); promissory estoppel against Wang and He (sixth cause of action); and unjust enrichment against Wang, He, and Bayside (seve nth cause of action). Perpetual was named as a defendant in the second fourth, fifth, and seventh causes of action , but the court did not address Perpetual’s liability because a default had been entered against Perpetual before trial commenced.4

Wang to buy a home in the Bay Area using Li’s credit with J

. P

. Morgan. Wan g agreed to provide the home as collateral for the loan, to pay the actual interest accrued by Li on the
J

. P

. Morgan line of credit , and to re pay the principal in full immediately upon selling the
home from the proceeds of the sale.
The court found Wang breach ed the contract by failing to record Li’s security interest in the home, and by selling the home without repaying Li. The court found Wang and Bayside fraudulentl y convey ed the proceeds of the sale to Perpetual and Bayside with the intent to hinder, delay, and defraud Li. And the court found Wang, He, and Bayside were unjust ly enriche d to the extent they benefited from the sale of the home.
Plaintiff was awarded the $2 million principal balance remaining on the loan, the $870,050 gain realized from the sale of the home, and pre

- and post

- judgment interest.
The trial court did not reach plaintiff’s alternative common counts and promissory estoppel causes of actio n; it rejected plaintiff’s false promise cause of action for failure to prove fraudulent intent at the time Li and Wang orally agreed upon the terms of the loan; and it rejected the negligent misrepresentation cause of action because it was based on allege d false promises, not factual misrepresentation. The court found Wang failed to prove his crossclaim for breach of contract.
II. DISCUSSION
A. F RAUDULENT C ONVEYANCE Defendants argue Wang and Bayside were found liable for fraudulent conveyance based on an unpleaded legal theory . Plaintiff amended the complaint to add fraudulent conveyance and judicial foreclosure causes of action after learning of the 2013 deed of trust in favor of Perpetual. Plaintiff alleged the deed of trust was a fraudulent conveyance under the Uniform Voidable Transactions Act (Civ. Code, § 3439 et seq. ; the Act ) as it

was executed to avoid Li’s security interest and deprive Li of the legal remedy of judicial
foreclosure. Plaintiff sought remedies under the A ct and other relief deem ed appropriate.5

Plaintiff further amended the complaint after learning the home had been sold

. She withdr ew a judicial foreclosure cause of action and added a cause of action for unjust
enrichment , alleg ing the property had been sold to a third

- party in 2014 at a substantial profit

. She did not amend the fraudulent conveyance claim (except she no longer sought as remedies an attachment against the home or the appointment of a receiver to take charge of the property)

. Based on the trial evidence, p laintiff argued in her closing trial brief that Perpetual was controlled by Wang , Wang recorded Perpetual’s deed of trust before selling the
home , Wang concealed the deed of trust from Li, and Perpetual absconded with the sale proceeds. Responding to defendants’ argument that the cause of action was moot
because the deed of trust had been superseded by the sale , p laintiff clarified in her rebuttal brief that the fraudulent conveyance claim encompassed the improper transfer of
the sale proceeds to an offshore account which was inaccessible to Li and rendered Wang
insolvent. In closing argum ent, p laintiff asserted that the Perpetual deed of trust was the mechanism for the ultimate fraudulent transfer of the sale proceeds. T he trial court agreed that the deed of trust was used to defraud plaintiff: “Huashan Wang and Bayside
recorded a securi ty interest in favor of Perpetual on the property after this case had been filed. Mr. Wang and Bayside then used that recorded interest as the mechanism for the fraudulent transfer, by presenting a demand for payment on behalf of Perpetual and then
fraudu lently transferring most of the proceeds of the sale, $2,315,362 , out of the country and beyond the jurisdiction of this Court and this suit, to Perpetual.”
Defendants assert error based on the rule that claims involving fraud must be pleaded with specifi city. While that is a well

- established rule of pleading, it is not a basis
for reversal after a trial on the merits. To the extent defendants challenge the variance
between the operative complaint and the trial court’s fraudulent conveyance finding, they
have forfeited the issue by failing to raise it to the trial court. Code of Civil Procedure
section 469 states , “ V ariance between the allegation in a pleading and the proof shall not6

be deemed material, unless it has actually misled the adverse party to his or her prejudice in maintaining his or her action or defense on the merits. ” This section precludes a party from complaining about variance between pleadings and proof at trial in the first instance on appeal if there is no objection raised to the trial court. ( Schweitzer v. Westminster Investments, Inc . (2007) 157 Cal.App.4th 1195, 1214 ; see also Wittenberg v. Bornstein (2020) 51 Cal.App.5th 556, 567 [“ ‘each party has the obligation to raise any issue or infirmity that might subject the ensuing judgment to attack’ ”].)
Defendants were put on notice through briefing and argument to the trial court that plaintiff had broadened her theory of liability for fraudulent conveyance to include the transfer of proceeds out of the country. Defendants di d not object in the trial court . N or do they argue that t he y would have offered any additional evidence in defense of that
claim , or otherwise show a miscarriage of justice. Defendants have fail ed to establish reversable error. (Cal. Const., art. VI., § 13 [“No judgment shall be set aside ... for any error as to any matter of pleading, or for any error as to any matter of procedure, unless, after an examination of the entire cause, including the evidence, the court shall be of the opinion that the error co mplained of has resulted in a miscarriage of justice”].)
Defendants argue the fraudulent conveyance ruling was erroneous because plaintiff did not show her legal remedy was inadequate , citing Mehrtash v. Mehrtash (2001) 93 Cal.App.4th 75. They have con fused liability under the Uniform Fraudulent
Transactions Act with remedies available under the A ct. The plaintiff in Mehrtash sought to set aside the defendant’s qui t claim deed to third parties as a fraudulent
transaction . ( Id . at p. 77.) The court in Mehrtash noted the equitable principle that “a plaintiff seeking the equitable relief of setting aside a transfer of property must show entitlement to relief and inadequacy of a remedy at law.” ( Id . at p. 80.) But p laintiff did
not seek to set aside the sale of the Palo Alto home, nor did the court provide her with any equitable relief. The trial court found Wang made a fraudulent conveyance under Civil Code section 3439.04, subdivision (a)(1), and plaintiff was awarded the leg al7

remedy of $2 million in damages , consistent with Civ il Code section 3439.08,
subd ivision (b)(1)

. The damages did not “add[] an additional sum to a legal recovery, i.e., making the legal recovery larger,” as defendants argue. The causes of action for
b reach of contract and fraudulent conveyance are independent bas e s for the same $2 million damages award.
Defendants argue the transfe r of sale proceeds to Bayside and Perpetual was not fraudulent because Bayside owned the home (and was thus the rightful recipient of sale proceeds) , and Perpetual held a promissory note against the proceeds . The trial court
found Perpetual was a shell company controlled by Wang , and Perpetual’s deed of trust
was used to transfer the sal e proceeds beyond the court’s jurisdiction during the pendency
of th e trial with actual intent to hinder, delay, or defraud plaintiff. The trial court did not find Bayside’s receipt of sale proceeds to be fraudulent; rather, it found Bayside’s
transfer of $200,000 of those proceeds to a Canadian bank account was a fraudulent
conveyance. S ubstantial evidence in the r e cord support s the trial court’s findings , and
defendants have therefore failed to show error

. ( Whiteley v. Philip Morris, Inc. (2004)
117 Ca l.App.4th 635, 678 [“ ‘ the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact ’ ”].)
B. U NJUST E NRICHMENT The trial court f

ound defendants were unjustly enriched by selling the home for over $2.8 million and transferring the bulk of the proceeds overseas to accounts under
their control

. It awarded as restitution the $8 70 ,0 5 0 difference between the loan amount
and the sale price of the home

. The court expressly rejected as not credible He’s testimony that Wang sold the home to take advantage of increasing property values, finding instead that the home was sold solely “to con vert [ the ] property into proceeds that could then be transferred out of the country before this case was resolved and before Mr. Li obtained his judgment for [defendants’] debt.”8

Unjust enrichment is an equitable remedy synonymous with restitution. ( Dure ll v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1370.) Its object “is to eliminate profit from wrongdoing” (Rest. 3d Restitution and Unjust Enrichment, § 51(4)), and it is appropriate “ where the defendant obtained a benefit from the plaintiff by fraud , duress, conversion, or similar conduct. ” ( Durell , at p. 1370; McBride v. Boughton (2004)
123 Cal.App.4th 379, 388.) Restitution is grounded in “ ‘obligations created by law for reasons of justice.’ ” ( Weitzenkorn v. Lesser (1953) 40 Cal.2d 778, 794.) Thus,

“ ‘[w]here “a benefit has been received by the defendant but the plaintiff has not suffered a corresponding loss ... but nevertheless the enrichment of the defendant would be unjust[,] the defendant may be under a duty to give the plaintiff the amount by which [ the
defendant ] has been enriched.” ’ ” ( American Master Lease LLC v. Idanta Partners, Ltd

. (2014) 225 Cal.App.4th 1451, 1482.) “ ‘ [P]ublic policy ... does not permit one to “ take advantage of his own wrong ” regardless of whether the other party suffers actual damage. ’ ” ( County of San Bernardino v. Walsh (2007) 158 Cal.App.4th 533, 542 .)
Defendants argue the trial court’s finding of an enforceable contract for repayment of money preclude s a recovery for unjust enrichment as a matter of law

. Indeed, t he general rule in California is that “ a quasi

- contract action for unjust enrichment does not
lie where

... express binding agreements exist and define the parties ’ rights .” ( California Medical Assn v. Aetna U.S. Healthcare of California , Inc. (2001) 94 Cal.App.4th 151 , 172; accord Klein v. Chevron U.S.A

. , Inc. (2012) 202 Cal.App.4th 1342, 1388 [ quasi

contract recovery not available “ if the parties have an enforceable agreement regarding a particular subject matter ” ]; Hedging C oncepts, Inc. v. First Alliance Mortgage Co . (1996) 41 Cal.App.4th 1410 , 14 19 [ “ ‘where the parties have freely, fairly and voluntarily bargained for certain benefits in exchange for undertaking certain obligations , it would be inequitable to imply a different liability’ ”].) B ut b y selling the home solely to place the loan proceeds beyond the court’s jurisdiction, as found by the trial court, defendants gained $870,050 in real estate appreciation at the expense of Li. We see no error in9

characterizing that gain as unjust enrichment. Defendants are liable to plaintiff because they profited through deceitful and fraudulent conduct. Further, t he parties did not bargain for defendants’ wrongful appropriation and con ver sion of the loan collateral

. Thus, the unjust enrichment award is not encompassed by or contrary to the parties’ agreement . ( Hillsman v. Sutter Community Hospitals (1984) 153 Cal.App. 3d 743 [a covenant will not be implied against the express terms of the contract].)
C. C ROSS - C OMPLAINT Wang cross

- complain ed against Li for breach of contract, alleg ing Li provided
funds for Wang to purchase a home to induc e Wang to continue to provide services to Trony . According to the cross

- complaint, Wang and Li agreed Wang would not have to repay any money if his services were terminated by Li ; Wang would be required to repay
ap portion ed unforgiven funds if he voluntarily terminated his relationship with Trony ; Wan g fully performed under the agreement; and Li breached the agreement by repudiation. Wang argues Li breached the agreement by failing to provide him future venture opportunities as set forth in a private understanding memo admitted in evidence , resulting in the failure of a condition precedent to Wang having to repay the money. In ruling that Wang failed to prove his breach of contract cause of action , the trial court noted Wang ’s concession that his claim was based solely on a n oral contract and
that it “does not find that there were any terms of the oral agreement ... other than those
the Court has found in connection with plaintiff’s cause of action for breach of contract.”
The trial court rejected Wang’s attempt to impose additional terms on the oral contract by
email ing them in a private understanding memo which it found Li did not read at the
time

. In addition, the court found Wang’s testimony that Li had identified specific Trony ventures which would provide equity returns to repay the loan “t o be completely not credible.” I t further credited L i ’s explanation that such terms involving Trony would not have been part of the agreement because the oral contract was a private loan agreement unrelated to Wang’s employment relationship with Trony.10

W h ere , as here, “ the issue on appeal turns on the failure of proof at trial, the question for a reviewing court becomes whether the evidence compels a finding in favor of the appellant as a matter of law. [Citations.] Specifically, the question becomes
wh ether the appellant’s evidence was (1) ‘uncontradicted and unimpeached’ and (2) ‘of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding.’ ” ( In re I.W . (2009) 180 Cal.App.4th 1517, 152 8 , disapproved on other grounds in Conservatorship of O.B. (2020) 9 Cal.5th 989, 1010,
fn. 7 .) The trier of fact is the exclusive judge of the credibility of the evidence and can reject evidence as unworthy of credence

. ( Oldenburg v. Sears, Roebuck & Co

. (1957) 152 Cal.App.2d 733, 742

. ) Wang’s evidence was both contradicted and found not
credible. T he evidence therefore does not compel a finding that Li breached the parties’ agreement. III. DISPOSITION The judgment is affirmed. Respondent s are awarded costs on appeal.____________________________________ Grover, J.

WE CONCUR:

____________________________ Premo, Acting P. J.

____________________________ Elia , J

.

H045442

- Fei v. Wang et al.