Filed 11/6/13 Ulllman v. Hollywood Dell First Mort. Investors CA2/4 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

JEFFREY ULLMAN,
Plaintiff and Appellant,

v.

HOLLYWOOD DELL FIRST MORTGAGE INVESTORS, LP et al.,
Defendants and Respondents. B246603
(Los Angeles County Super. Ct. No. BC442576)

APPEAL from a judgment of the Superior Court of Los Angeles County, Victor E. Chavez, Judge. Affirmed as modified. Leonard, Dicker & Schreiber, Richard C. Leonard, and Steven A. Schuman for Plaintiff and Appellant. Songstad Randall Coffee & Humphrey, L. Allan Songstad, Jr., and Linda D. Pasin for Defendants and Respondents.2 Following a bench trial on plaintiff and appellant Jeffre y Ullman’s complaint for declaratory relief and fraudule nt conveyance, the superior court entered judgment for defendants and respondents Hollywood Dell Fi rst Mortgage Investors, LP (Hollywood Dell), and Carl Lindros as “Tru stee of the Carl Lindros IRA” 1 (jointly, defendants). In this appeal from the judgment, Ullman c ontends the trial court erred in denying declaratory relief and dismissing the fraudulent conveyance claim. For the reasons that follow, we affirm the dismissa l of the fraudulent transfer cl aim, but modify the judgment to reflect that the dismissal is with prejudic e. The judgment, as modified, is affirmed.

BACKGROUND

In a prior action, Ullman sued his former business pa rtner, Rebecca Richards, for dissolution of partnershi p and other claims. ( Ullman v. Richards (Super. Ct. L.A. County, 2009, No. BC3 92003).) After obtaining a $1 .2 million judgment against Rebecca, Ullman recorded an abstract of judgment on April 10, 2009. 2 Rebecca’s

1 We note that Lindros answered the co mplaint as “Carl Lind ros, Trustee of the Lindros Family Trust dated December 17, 1982.”

2 “Except as otherwise pr ovided by statute, a judgment lien on real property is created under this section by recording an abstract of a money judgment with the county recorder.” (Code Civ. Pr oc., § 697.310, subd. (a).) “Except as provided in S ection 704.950: [¶] (a) A judgment lien on real property attaches to all interests in r eal property in the county where the lien is created (whether present or future, vested or contingent, legal or equitable) that are subject to enforcement of the money judgment against the judgment debtor pursuant to Article 1 (commencing with Section 695.010) of Chap ter 1 at the time the lien was created, but does not reach rental payments, a leasehold estate with an unexpired term of less than two years, the interest of a beneficiary under a trust, or real property that is subject to an attachment lien in favor of the creditor and was transferred be fore judgment. [¶] (b) If any interest in real property in the county on which a judgment lien could be created under subdivision (a) is acquired after the judgment lien was cr eated, the judgment lie n attaches to such interest at the time it is acquire d.” (Code Civ. Proc., § 697.340.)3 husband, Rob Richards, was not a party to that action, 3 but Ullman contends that his judgment lien attached to the interests of both spouses in all community real property located in this county. 4 In the present action, Ullman seeks declar atory relief to establish that as to Rob’s former 25 percent community prop erty interest (Rob’s interest ) in certain real properties (properties), 5 Ullman’s judgment lien is not subjec t to defendant’s fi rst and second deeds of trust, even though they we re recorded first in 2008. Although Ullman concedes that his judgment lien, which was reco rded in 2009, is s ubject to the deeds of trust with regard to Rebecca’s 75 percent interest in the properties, he argues th at as to Rob’s interest, the usual rule of priority based on the date of r ecording does not apply. Ullman asserts that because of an error (which we will explain) that occurred when Hollywood Dell’s loan was issued, neither Hollywood Dell’s first de ed of trust nor Lindros’s second deed of trust attached to Rob’s interest and, theref ore, Ullman’s judgment lien was the first and only lien that attached to Rob’s interest.

3 Neither Rebecca nor Rob is a party to th is action. Because they share the same last name, we refer to them by their fi rst names with no disrespect intended.

4 “‘Debt’ means an obligation incurre d by a married person before or during marriage, whether based on contract, tort , or otherwise.” (Fam. Code, § 902.) “Except as otherwise expre ssly provided by statute, the community estate is liable for a debt incurred by either spouse befo re or during marriage, regardless of which spouse has the management and control of th e property and regardless of whether one or both spouses are parties to the debt or to a judgment for the debt.” (Fam. Code, § 910, subd. (a).)

5 The subject properties are “a large house located at 2110 Alcyona Drive, Los Angeles, California (the ‘Alcyona Propert y’) and two adjacent undeveloped lots in the Hollywood Hills (the ‘Vine St. Lots’).” The trial court did not determine whethe r Rob had an ownership interest in the subject properties when the loan s were issued and, if so, th e nature or extent of that interest. Accordingly, we express no opini on on that point and, like the trial court, assume, for purposes of discussion only, that Rob had a 25 percent community property interest in the subject properties when th e deeds of trust were signed by Rebecca.4 Because the properties were sold at a nonjudicial foreclosure sale over three years ago, it is unclear what, if any, relief may be ob tained by Ullman at this late date. In any event, in the following sections we disc uss (1) the significant dates and events, (2) Ullman’s and (3) defendants’ contentions at trial, (4) the trial court’s ruling, (5) Ullman’s motion to set as ide that ruling, and (6) th e judgment for defendants.

I. Significant Da tes and Events In 2007, Rebecca and Rob acqu ired the subject properties as joint tenants. Later that year, Rebecca and Rob granted Ullman , Rebecca’s business partner, a 50 percent interest in the properties, which Rebecca intended to renovate. In 2008, Rebecca sough t to refinance the properties with a new lender, Hollywood Dell. Hollywood Dell agreed to make a $4.1 million loan secu red by a first deed of trust to the property, provided cert ain conditions were met. The conditions, as specified in the instructions to First American Title Comp any (FATCO or escrow company), required FATCO to: (1) prepare and record “Quit Claim Deeds duly executed by Rob Richards, husband of Rebecca L. Richards, and Jeffrey C. Ullman Separate Property Trust ”; (2) obtain a lender’s title insu rance policy; and (3) prepare a nd record a $4.1 million first deed of trust to the properties signed by “ Rebecca L. Richards, a married woman as her sole and separate property .” In partial satisfaction of the loan require ments, (1) Ullman transferred his interest in the properties to Rebecca, 6 and (2) First American Titl e Insurance Company (FATICO or title insurance company) issued a lender’s title insurance policy that guaranteed and
insured that Rebecca had clear title and wa s the sole owner of the properties. However, due to an error by the escrow company, the $4.1 milli on loan was issued to Rebecca, as sole borrower, without the required quitclaim deeds from Rob.

6 Rebecca and Ullman signed and recorded a grant deed on April 18, 2008, by which Rebecca (as to an undivi ded 50 percent interest) and Ullman (as to an undivided 50 percent interest) granted title to the prop erties to “Rebecca L. Richards, a married woman as her sole and separate property.”5 Hollywood Dell’s first deed of trust, which Re becca had signed as “Rebecca L. Richards, a married woman as her sole and separate property, ” was recorded on April 30, 2008. In August 2008, Rebecca obtained a $450,000 loan from Lindros, which was secured by a second deed of trust that was recorded on September 5, 2008. FATICO
issued a lender’s title insurance policy that guaranteed and in sured that Rebecca had clear title and was the sole owner of the properties. On March 24, 2009, Ullman obtained a $1 .2 million judgment against Rebecca in the partnership action. On April 10, 2009, Ul lman recorded the abstract of judgment. By April 2009, Rebecca had defaulte d on the loans from Hollywood Dell and Lindros. On April 30, 2009 , Hollywood Dell began nonjudici al foreclosure proceedings against the properties. During the foreclosure process, it came to light that the escrow company had failed to obtain and record the required qu itclaim deeds from Rob. Because the title insurance company had guaranteed that Rebecca was the sole owner of the properties, Hollywood Dell and Lindros sued the title insura nce company for breach of contract and breach of the implied covenant of good faith and fair dealing. ( Hollywood Dell First Mortgage Investors, L.P. et al. v. First American Title Insurance Company et al. (Super. Ct. Santa Barbara County, 2010 , No. BC1338788) (title insurance action).) They alleged in their complaint that because Rebecca “was and is not the only reco rd title holder,” they did not have a “true security in terest in the propert[ies]” a nd could “not possibly foreclose on the propert[ies].” In June 2009, Rob filed a bankruptcy ac tion. In May 2010, the bankruptcy court filed an order “abandoning any interest R ob may have had in the Properties.” On May 20, 2010, Rob executed the grant deeds that transferred his intere st in the properties
to Rebecca. On July 28, 2010 , Ullman filed the present ac tion against Hollywood Dell and Lindros for declaratory relief (seeking to esta blish the seniority of his judgment lien as to Rob’s interest in the properties) and fraudul ent conveyance (seeking to set aside the May
2010 transfer of Rob’s interest in the properties to Rebecca).6 In August 2010, Ho llywood Dell and Lindros settled the title insurance action. In the settlement, Hollywood Dell and Lindros received $850,000 pl us a defense and indemnity in this action. Th e settlement agreement stated in relevant part that the $850,000 payment “includes payment for lo sses incurred by Hollyw ood Dell and Lindros IRA for being unable to fore close their respective deeds of trust against the Subject Properties through approximately mid October 2010, when it is anticipated that the new
foreclosure sale date will be scheduled on the $4.1 million deed of trust.” On October 28, 2010, Hollywood Dell ac quired the properties by making a $2.5
million credit bid at the trus tee’s foreclosure sale. On November 6, 2012, the superior court conducted a one-day bench trial on Ullman’s complaint in this action for declar atory relief and fraudulent conveyance. In addition to the above facts, wh ich were presented primarily by joint stipulation, the trial court heard Rob’s testimony that: (1) he had no beneficial interest in the properties and “had absolutely no par ticipation in the real estate whatso ever”; (2) he had no objections to the loans taken by Reb ecca; (3) when Rebecca obtai ned the loans from Hollywood Dell and Lindros, he believed he “had signed quitclaims on everything and the properties were the sole property of Rebecca Richards as an individual”; (4) it was his “intent to be off of all the deeds”; and (5) he did not l earn he was still on title to the properties until “after Mr. Ullman initiated all this litigation.”

II. Ullman’s Contentions At trial, Ullman contended that he wa s entitled to declaratory relief based on two theories. First, because Rob still had an in terest in the properties when Rebecca signed the deeds of trust, Rebecca’s signature alone was insufficient to encu mber Rob’s interest. (Fam. Code, § 1102.) 7 When Ullman re corded his abstract of judgment in 2009, his lien

7 “Except as provided in Sections 761 and 1103, either spouse has the management and control of the community real property, whether acquired prior to or on or after January 1, 1975, but both spouses, either personally or by a duly authori zed agent, must join in executing any instrume nt by which that community re al property or any interest7 attached to Rob’s interest in the properties, and remained affixed to Rob’s interest when it was transferred to Rebecca in May 2010. (Code Civ. Proc., § 697.390.) 8 Ullman also argued he was entitled to declaratory relief under the doctrine of judicial estoppel. Ullman contended defenda nts were bound by their concession in the title insurance action that, due to the existence of Rob’s interest in the properties, they did not have a “true security inte rest in the propert[ies]” and could “not possibly foreclose on the propert[ies].” Alternatively, Ullman contended the Ma y 2010 transfer of Rob’s interest to
Rebecca should be set aside as a fraudulent conveyance. Ullman argued that “because Rob Richards was in bankruptcy at the time of the transfer, was admittedly insolvent, and received no consideration for the transfer, Rob’s transfer to Rebecca was a fraudulent conveyance and Plaintiff has the right to set it aside.”

III. Defendants’ Contentions A. Declaratory Relief In opposition to Ullman’s claim for declaratory relief, defendants argued their
deeds of trust were senior to the judgment lien for two main reasons. First, they argued that Rebecca was author ized to encumber Rob’s interest, but in any event, an un authorized encumbrance of community property is not void, but merely voidable at the request of the other spouse or his or her representative. Because Rob was aware of and had acquiesced to the deeds of trus t, the trustee’s sale was valid as to Rob’s interest in the properties. (Citing Clar v. Cacciola (1987) 193 Cal.App.3d 1032, 1036- 1037 ( Clar ); Miller v. Johnston (1969) 270 Cal.App.2d 289, 300, fn. 6.)

therein is leased for a longer period than one year, or is so ld, conveyed, or encumbered.” (Fam. Code, § 1102, subd. (a).)

8 Code of Civil Procedure s ection 697.390 provides in rele vant part: “If an interest in real property that is subj ect to a judgment lien is tran sferred or encu mbered without satisfying or extinguishing the judgment lien: [¶] (a) The interest transferred or encumbered remains subj ect to a judgment lien created pur suant to Section 697.310 in the same amount as if the interest had not been transferred or encumbered.”8 Second, defendants argued that Ullman wa s barred, under the doctrine of judicial estoppel, from taking unfair advantage of the es crow company’s error in failing to obtain and record Rob’s quitclaim deed before th e $4.1 million loan wa s issued. Defendants
contended that as Rebecca’s bus iness partner with respect to the properties, Ullman was privy to the lender’s requirement that all othe r interests must be cleared from title before the $4.1 million loan would issu e. And because Ullman had transferred his own interest
to Rebecca in accordance with th e lender’s instructions, he should be charged with the knowledge that Hollywood Dell would not have issued the lo an based on the signature of only one spouse if it had known of the escrow company’s error in failing to obtain and record Rob’s quitclaim deed.

B. Fraudulent Conveyance Defendants argued the transfer of Rob’s interest in the properties to Rebecca
should not be set aside as fra udulent for the following reasons. First, the claim must fail
because of Ullman’s failu re to join Rebecca, a necessary pa rty. In a claim for fraudulent transfer, the transferee is a necessary party who must be given an opportunity to defend the transfer. (Citing Diamond Heights Village Assn., Inc. v. Financial Freedom Senior Funding Corp. (2011) 196 Cal.App. 4th 290, 304-305.) Second, the transfer did not place Rob’s interest beyond Ullman’s reach. If, as Ullman contends, his judgment lien was the seni or lien, the transferred interest remained subject to that lien. (Citing Code Civ. Proc ., § 697.390 [the transferred interest remains subject to any lien agai nst the property].) Third, nothing of value is conveyed by th e transfer of real property that is fully encumbered by a valid lien. The properties, which were fu lly encumbered by the deeds of trust, had no equity. Accordingly, the transfer of Rob’s interest was not fraudulent because nothing of va lue was conveyed thro ugh the transfer.9 IV. The Trial Court’s N ovember 15, 2012 Ruling After taking the matter under submis sion, the superior court issued its November 15, 2012 ruling in favor of Hollyw ood Dell and Lindros. The court stated in relevant part: “As to the first cause of action for Declaratory Relief, plaintiff seeks a
determination that the Abstract of Judgment is senior to the liens, if any, of Lindros and Hollywood Dell as to Rob’s 25% in terest in the property. [¶] The first cause of action for Declaratory Relief is based upon allegations that as of April 18, 2008, title for the properties was in the name of [Rebecca] as to 75% and [Rob] as to the remaining 25%. Plaintiff’s claim of a superior lien fails in that defendants’ deeds of trust encumbered 100% of the property. Plaintiff is not entitled to declaratory relief.” In rejecting Ullman’s frau dulent conveyance claim, the court stated in relevant part: “As to the second cause of action fo r Fraudulent Conveyance , plaintiff moves for an order setting aside the transfer of Rob’ s 25% interest in the property, and instead directing that the sheriff sell those interests at public auction, with the proceeds to be applied to the judgment. [¶] The second ca use of action for Fraudulent Conveyance fails in that [Ullman] dismissed the transferee to the alleged fraudulent transfer. At trial, [Rob] testified that while he might be on title to the proper ties prior to defendant making the loans, he claimed no beneficial interest in the property and was under the impression the property belonged to [Rebecca]. [Rob] attempted to remove himself from the title and executed quitclaim deeds to [Rebecca]. His belief was that he was thus removed from title to the property . [Rob] never claimed an interest in the property. It was his belief that it belonged to [R ebecca]. [¶] Here, the allege d fraudulent transferee to the May 2011 transfer was [Rebecca]. Therefore, she is a necessary party to [Ullman’s] second cause of action for fraudulent convey ance; she is an indispensable party to Plaintiff’s second cause of action. [Rebe cca’s] rights would be n ecessarily affected by any judgment setting aside the May 2011 transfer because any such judgment sets aside a conveyance of real property to her. [Ullm an] dismissed [Rebecca] from this action on February 23, 2011. Therefore, because [U llman] has failed to include all necessary,10 indispensable parties, namely [Rebecca], [Ullman’s] second cause of action for fraudulent conveyance fails as a matter of law.”

V. Ullman’s Motion to Set Asid e the November 15, 2012 Ruling
Ullman moved to set aside the November 15, 2012 ruling as legally incorrect. Ullman requested a ruling on his claim for judi cial estoppel, arguing th at defendants were bound by their position in the title insurance action that they did not have a valid lien as a result of Rob’s interest in the properties. Ullman also requested a ruling on his claim that, under Code of Civil Procedure section 697.340, subdivision (b), his judgment lien
was the first lien to attach to Rob’s interest in the propertie s and, under section 697.390,
remained attached to any interest transferred from Rob to Rebecca. As to the fraudulent conveyance claim, Ullman requested findings that: (1) Rebecca was not an indispensable party because she no longer owned the properties and, therefore, her rights would not be negativ ely impacted by any judgment in this case; (2) Hollywood Dell and Lindros “failed to m eet their burden of proof with respect to [Rebecca’s] role”; and (3) Hollywood Dell an d Lindros “failed to raise the issue of [Rebecca’s] role as a ‘necessary’ party prio r to trial and have thus waived it.”

VI. Judgment for Holl ywood Dell and Lindros
After the trial court denied Ullman’s motion to set aside its ruling, it entered judgment for defendants on December 6, 2012. The judgment stated in relevant part: “Judgment is entered in favor of Defendants and against Plaintiff on the First Cause of Action for Declaratory relief alleged in Plainti ff’s Complaint. Defendants’ deeds of trust are prior to and senior to the abstract of ju dgment recorded by Plai ntiff.” “The Second Cause of Action for Fraudulent Conveyance is dismissed without prejudice as the claim failed to include an indispensable party, i. e., Rebecca Richards.” This timely appeal
followed.11 DISCUSSION

I. No Statement of Decision Was Required
Ullman contends the trial court failed to issue a statement of decision that explained: (1) why Rebecca was a necessary party given that sh e no longer owned the properties; and (2) why defendants were not bound under the doctrine of judicial estoppel by their position in the title insura nce action that they did not have a valid lien because of Rob’s interest in the properties. Ullman c ontends the trial court “completely ignored” these issues in its “statement of decision,” a nd that the “failure to rule [on the issue of judicial estoppel] constitutes reversible error per se , unless this Court of Appeal finds that as a matter of law, the trial court had no choice but to reject judicial estoppel.” Defendants, on the other hand, argue that no statement of deci sion was required. Where, as here, the trial is completed in a day or less, a request for a statement of
decision must be made before the matter is submitted for decision. (Code Civ. Proc., § 632.) 9 Ullman’s motion to set aside the November 15, 2 012 ruling was not a timely request for a statement of decision becau se it was not made before the matter was
submitted.
We conclude defendants are correct that Ullman did not timely request a statement of decision and, thus, no statement of deci sion was required. Because a statement of decision was not required, the trial court had no obligation to provide the requested explanations.

9 Code of Civil Procedure section 632 provid es in relevant part: “In superior courts, upon the trial of a question of fact by the co urt, written findings of fact and conclusions of law shall not be required. The court sha ll issue a statement of decision explaining the factual and legal basis for its decision as to each of the principal controverted issues at trial upon the request of any party appearing at the trial. The request must be made within 10 days after the court announces a tentative decision unless the trial is concluded within one calendar day or in less than eight hours over more than one day in which event the request must be made prior to the submi ssion of the matter for decision. The request for a statement of decision shall specify those c ontroverted issues as to which the party is requesting a statement of decision. After a party has requested the statement, any party may make proposals as to the cont ent of the statement of decision.”12 “When no statement of decision is reque sted and issued, we imply all findings necessary to support the judgment. ( In re Marriage of Cohn (1998) 65 Cal.App.4th 923, 928.)” ( Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956.) In the absence of specific finding s in favor of a losing plai ntiff, the appellate court will presume the trial court found the plaintiff’s ev idence was insufficient to carry the burden of proof. Code of Civi l Procedure section 634, 10 which applies when the court is required but fails to provide a statem ent of decision, does not apply here.

II. Ullman’s Judgment Lien Is Subject to the Deeds of Trust In rejecting Ullman’s claim for declar atory relief, the trial court stated that “Defendants’ deeds of trust are prior to and se nior to the abstract of judgment recorded by Plaintiff.” Ullman conten ds this ruling was erroneous as a matter of law for two reasons, both of which involve the escrow company’s error in failing to obtain and record Rob’s quitclaim deed before th e $4.1 million loan was issued in Rebecca’s name alone: (1) Because of the escrow company’s error, Rob still had an interest in the property and therefore Rebecca’s signature alone was insufficient to encumber Rob’s interest. (Fam. Code, § 1102.) Accordingly, Ullman’s judgment lien was the first lien
that attached to Rob’s interest and remain ed attached to that interest when it was transferred to Rebecca in May 2012. (2) Defendants, having argued in the title insurance action that foreclosure was impossible due to the escrow company’s failu re to obtain and record Rob’s quitclaim deed, were bound by that position under the doctrine of judicial estoppel.
We conclude both contentions lack merit.

10 Code of Civil Procedure section 634 provides: “When a statement of decision does not resolve a controverted issue, or if the statement is ambiguous and the record shows that the omission or ambiguity was brough t to the attention of the trial court either prior to entry of judgment or in conjunctio n with a motion under Se ction 657 [motion for new trial] or 663 [motion to set aside judgment], it shall not be inferre d on appeal or upon a motion under Section 657 or 663 that the tr ial court decided in favor of the prevailing party as to those facts or on that issue.”13 A. Ullman Lacked Standing to Challenge Rebecca’s Authority to Encumber
Rob’s Interest By failing to obtain Rob’s quitclaim deed , the escrow company failed to eliminate the possibility that Rob could object under Family Code section 1102 to Rebecca’s authority to encumber his interest. “The cases interp reting [former Civil Code] section 5127[, now found in Family Code section 1102, ] and its statutory pred ecessors have held that unauthorized gifts, sales or encumbranc es of community proper ty are not void, but voidable, and this only at the instance of the other spouse or his or her personal representative. ( Harris v. Harris (1962) 57 Cal.2d 367, 369-370; Head v. Crawford (1984) 156 Cal.App.3d 11, 17-18; Andrade Development Co. v. Martin (1982) 138 Cal.App.3d 330, 333-335 and fn. 2 ( Andrade ); Mitchell v. American Reserve Ins. Co

. (1980) 110 Cal.App.3d 220, 223 ( Mitchell ); Gantner v. Johnson (1969) 274 Cal.App.2d 869, 876-877; Horton v. Horton (1953) 115 Cal.App.2d 360, 364.)” ( Clar
, supra , 193 Cal.App.3d at p. 1036.) Rob, the only person with standing to object to Rebecca’s authority under Family Code section 1102, failed to do so. 11 Family Code section 1102 was not intended to protect creditors such as Ullman, who had no standing to object that Rebecca was
unauthorized to encumber Rob’ s interest. Family Code se ction 1102 “was designed to protect a spouse from the unauthorized aliena tion or encumbering of marital property by the other spouse; it has never been interpre ted in such a way as to provide a means

11 The record is devoid of any evidence that Rob objected to the deeds of trust or the trustee’s sale of the properties. On the cont rary, Rob testified that he had no beneficial interest in the properties, which he viewed as Rebecca’s sole property. Rob stated that he believed he “had signed quitclaims on everything ,” it was his “intent to be off of all the deeds,” he had no objections to the loans taken by Rebecca, and he did not learn of the error regarding the deeds to the properties until “after Mr. Ullman initiated all this litigation.”14 whereby a third party creditor of the married couple may challenge and void instruments signed by only one of the spouses.” ( Clar
, supra , 193 Cal.App.3d at p. 1037.) 12

B. Ullman’s Lien Is Subject to the Deeds of Trust Under the Theory of Equitable Estoppel
We also conclude that because Ullman had constructive if not actual knowledge that Hollywood Dell was relying on 100 percent of the propertie s as security for the $4.1 million loan, his judgment lien is subject to the deeds of trust un der the theory of equitable estoppel. (See 5 Miller & Starr, Cal. Real Estate (3d ed. 2009) § 11:59 [“A title or lien of a subsequent party is subject to prior unrecorded interests in the property of which he has actual knowledge or notice, even though he or she records the deed or security instrument first.”].) Ullman held a 50 percent intere st in the properties that he
transferred to Rebecca to facilita te the loan from Hollywood Dell. As Rebecca’s business partner, Ullman was privy to the loan requ irements and knew or reasonably should have known the loan was contingent on the escrow company’s receipt and recording of Rob’s quitclaim deed.

12 Two of the cases cited in Clar
, supra , 193 Cal.App.3d at page 1036— Mitchell
, supra , 110 Cal.App.3d 220, and Andrade
, supra , 138 Cal.App.3d 330—were analyzed in Droeger v. Friedman
, Sloan & Ross (1991) 54 Cal.3d 26. Under Mitchell , the nonconsenting spouse may invalidate the transfer as to the nonconsenting spouse’s onehalf interest only. Under Andrade , the nonconsenting spouse may invalidate the transfer entirely. In Droeger , the Supreme Court held that the Andrade line of cases was correct. In response to the Supreme Court’s decision in Droeger , the Legislature enacted former sections 4372 and 4373 of the Civil Code (now fo und in Fam. Code, §§ 2033 & 2034), which allow a spou se to encumber his or her inte rest in community real property to pay attorney fees and costs in a proceedi ng for dissolution of marriage, nullification of marriage, or legal separation of the parties. (See In re Marriage of Turkanis & Price (2013) 213 Cal.App.4t h 332, 346-347.) Notwithstanding these legisl ative amendments and judici al decisions, the appellate court’s decision in Clar
, supra , 193 Cal.App.3d at page 1036—that former Civil Code section 5127 (now found in Fam. Code, § 1102) was not intended to protect creditors such as Ullman—remains good law.15 The evidence is overwhelming that, but fo r the unforeseen erro rs by the escrow and title companies, Rob’s quitclaim deed woul d have been recorded before the close of escrow, such that the deeds of trust would have indisputably attached to Rebecca’s 100 percent interest in the properties. It was only through inadvertence that Rob’s quitclaim deed went unrecorded, which created th e discrepancy that Ullman relies upon to
invalidate the deeds of trus t as to Rob’s interest.

C. Defendants Did Not Take Inconsistent Positions Ullman argues that under the doctrine of judicial estoppel, defendants are bound by their position in the title in surance action that, because of Rob’s interest in the properties, foreclosure was impossible. We conclude the contention lacks merit. “Judicial estoppel, sometimes referred to as the doctrine of preclusion of inconsistent positions, ‘“preven ts a party from ‘asserting a position in a legal proceeding that is contrary to a position previously take n in the same or some earlier proceeding.’”’ ( Daar & Newman v. VRL International (2005) 129 Cal.App. 4th 482, 490-491 ( Daar &
Newman ).) The dual purposes for applying this doctrine are ‘“‘to maintain the integrity of the judicial system and to protect par ties from opponents’ unfair strategies.’”’ ( Aguilar v. Lerner (2004) 32 Cal.4th 974, 986.) Judicial estoppel ‘is intended to prevent litigants from “‘“‘playing “fast and loose with th e courts.”’”’ [Citation.]” [Citation.] It is an “‘extraordinary remed[y] to be invoked when a party’ s inconsistent behavior will otherwise result in a miscarriage of justice.’”’ ( Daar & Newman, supra, at pp. 490- 491.)” ( Levin v. Ligon (2006) 140 Cal.App.4th 1456, 1468 .) The trial court’s ruling on the judicial estoppel claim is reviewed un der the abuse of discretion standard. ( Ibid. ) We conclude the positions taken by defendants in the present action and the prior
title insurance action were not inconsistent. Th e language used by defe ndants in the prior action must be viewed in light of the existi ng circumstances. Afte r defendants discovered the escrow company’s failure to obtain and r ecord Rob’s quitclaim deed, they sued the title insurance company fo r breach of contract because, c ontrary to the provisions of the policy, Rebecca’s title was vulne rable to a possible objection by Rob under Family Code16 section 1102 that she was unauthorized to en cumber his interest. But after Rob’s grant deeds were recorded, Hollyw ood Dell proceeded with the foreclosure proceedings and acquired the properties at the October 2010 tr ustee’s sale. By th e time this action was tried, defendants were no longer at risk of an objection under Family Code section 1102,
because Rob had transferred hi s interest to Rebecca and waived any objection to the
foreclosure sale. Given the changed circum stances from August 2009, when the title insurance action was filed, to November 2012, when this case was tried, it was well within the trial court’s discretion to reject Ullman’s judicial estoppel claim. Justic e would not have been served by forcing defendants to argue that foreclosure was impossibl e when, in fact, the properties had been sold at the October 20 10 foreclosure sale. Ullman has failed to
establish an abuse of discretion.

III. The Fraudulent Transfer Claim Is Moot Ullman challenges the trial court’s dism issal of the fraudulent conveyance claim without prejudice based on the fa ilure to join an indispensibl e party. In light of our determination that Ullman’s judgment lien is subject to the deeds of trust under the doctrine of equitable estoppel, the validity of the May 2010 tr ansfer is a moot issue. Because the claim is moot, the ju dgment is modified to indicat e that the dismissal is with prejudice.17 DISPOSITION

The judgment is modified to indicate th at the dismissal of the fraudulent transfer claim is a dismissal with prejudice. As m odified, the judgment is affirmed. Defendants are entitled to their costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

SUZUKAWA, J.

We concur:

EPSTEIN, P. J.

WILLHITE, J.