Filed 6/28/13 W/F Investment Corp. v. Neal CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 

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or ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

W/F INVESTMENT CORP.,

 Plaintiff, Cross-defendant and 

Appellant,

v.

CHARLES F. NEAL et al.,

 Defendants, Cross-complainants and 

Respondents;

MORTGAGE ELECTRONIC 

REGISTRATION SYSTEM INC., et al.,

 Defendants and Respondents.

 G046882

 (Super. Ct. No. 30-2010-00355681)

 O P I N I O N

Appeal from a judgment and postjudgment order of the Superior Court of 

Orange County, Linda S. Marks, Judge. Affirmed.
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Aires Law Firm, Timothy Carl Aires for Plaintiff, Cross-complainant and 

Appellant.

Songstad Randall Coffee & Humphrey, L. Allan Songstad Jr., and Garret R. 

Rogers for Defendants, Cross-complainants and Respondents Charles F. Neal, Sharon K. 

Peile, Bank of America N.A., and Defendant and Respondent Mortgage Electronic 

Registration System Inc. 

No appearance by Defendant and Respondent First American Title 

Company.

* * *

Plaintiff W/F Investment Corp. seeks a declaration that its judgment debtor 

has an interest in a residential property, which plaintiff intends to use to satisfy the debt. 

The judgment debtor held legal title to the residence until 25 years ago when he 

transferred his interest to his mother. In 1991 a court determined that transfer was 

fraudulent as to a creditor unrelated to this suit and “set aside” the transfer. In this appeal 

we must interpret the 1991 judgment to determine whether the court “set aside” the 

transfer for all purposes such that legal title reverted to the judgment debtor, or whether it 

was set aside only to the extent necessary to satisfy the prior creditor‟s claim. The trial 

court held it was only set aside in the more limited sense, which results in plaintiff in this 

case having no claim on the residence. We affirm. 

FACTS

In 1987 Russell Diehl and his wife, Diane G. Diehl, transferred their 

interest in a residence to Diehl‟s mother the day after suffering a judgment for $37,500 in 
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favor of William F. Quirk, Jr.

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 Diehl‟s mother subsequently reconveyed the property to 

Diehl and his wife. In 1988 Diehl was served with an order to appear for a judgmentdebtor exam, and within days Diehl and his wife again conveyed the residence to Diehl‟s 

mother. Quirk subsequently filed a complaint “To Set Aside a Fraudulent Conveyance” 

against Diehl‟s mother. The complaint prayed for a judgment “[t]hat said fraudulent 

conveyance be set aside to the extent necessary to satisfy plaintiff‟s claim.” The trial 

court found that Diehl had transferred the residence with the intent to defraud Quirk, his 

creditor (Diehl‟s mother, on the other hand, did not have fraudulent intent). Accordingly, 

the court entered judgment, stating the transfer “having been found to have been made 

with the actual intent to defraud plaintiff, is hereby declared to be set aside” (we refer to 

this as the “set-aside judgment”). The judgment was recorded in 1991.

In 1993 Diehl suffered an unrelated judgment in favor of Westerly 

Corporation. That judgment was renewed in 2003 in the amount of $848,820.36. An 

abstract of judgment was recorded in 2004. The judgment was assigned to plaintiff, 

which is the basis of plaintiff‟s claim here. 

Between 1989 and 2007 there were a series of transfers of the residence 

among Diehl‟s family members, none of which involved Diehl himself. The last of these 

transfers resulted in Diehl‟s wife holding legal title as her sole and separate property.

In 2009 Diehl‟s wife sold the residence to defendant Charles F. Neal. 

Neal‟s purchase was financed in part by a loan from defendant Bank of America, N.A.

In 2010 plaintiff filed suit against, as relevant here, Neal, Neal‟s wife, Bank 

of America, and Mortgage Electronic Registration Systems Inc. (a beneficiary of the deed 

of trust in favor of Bank of America). The complaint seeks a declaration that Diehl has 

an interest in the residence upon which plaintiff could execute. 

 

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Quirk is not a party to this suit.
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Prior to trial, the court bifurcated the proceeding. The first issue to be tried 

was whether the 1991 set-aside judgment completely nullified the 1987 and 1988 

transfers such that title was restored to Diehl. Plaintiff contended it did and that none of 

the subsequent transfers purported to transfer Diehl‟s interests. The result, plaintiff 

claimed, was that Diehl still maintained an interest in the residence, which was available 

to satisfy plaintiff‟s judgment. 

After hearing phase one of the trial, the court disagreed: “The Court rules 

that an avoidance judgment in the unrelated case 579724 Quirk vs. Diehl did not restore 

title to Russell Diehl, defendant in the present action.

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 The avoidance action only set 

aside the 1987 and 1988 conveyances for the limited purpose of permitting the plaintiff 

creditor Quirk to enforce his judgment. Defendant Russell Diehl transferred all of his 

interest in the real property more than 5 years prior to Plaintiff W/F Investment Corp. 

obtaining its judgment or recording its abstract.” (Footnote added.)

The second issue to be tried was whether, despite not holding record title to 

the residence, Diehl maintained an equitable interest in the residence. Plaintiff claimed 

Diehl maintained an equitable interest as evidenced by a 2007 deed transferring the 

residence among Diehl‟s family members. That deed was from “Diane G. Diehl and 

Russell Reed Diehl III, wife and husband and Reed Kyle Diehl, a single man, all as joint 

tenants” (italics added) to Diane G. Diehl as her sole and separate property. It was 

undisputed that the reference to “wife and husband” in this deed was erroneous — Diane 

G. Diehl‟s is Diehl‟s wife, but Russell Reed Diehl III is Diehl‟s son. Nonetheless, 

plaintiff claimed this reference to “wife and husband” was the “shark‟s fin” that revealed 

to the world Diehl‟s hidden equitable interest. There was no testimony from any of the 

Diehls. 

 

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At this point Diehl was a defendant in the action. Plaintiff later voluntarily 

dismissed Diehl.
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The court held there was insufficient evidence to show Diehl held an 

equitable interest: “Civil Code section 679 gave absolute ownership of the property to 

[Diehl‟s wife]. She held the property at the time of transfer in 2009 as her „sole and 

separate property.‟ Further, pursuant to Evidence Code section 662, the owner of legal 

title to property is presumed to be the owner of the full beneficial interest. There was no 

beneficial or equitable interest held in the name of Russell Diehl which existed in 2007. 

Further the evidence to support such a notion would have to be „clear and convincing 

evidence,‟ and there is no competent evidence this court could rely upon to reach such a 

conclusion. There is no merit to the argument that [Diehl‟s wife] was holding a 

beneficial interest for [Diehl] for the past 20 years.” 

The court entered judgment in favor of defendants. Plaintiff filed a motion 

to set aside the judgment and enter a new judgment (Code Civ. Proc., § 663) and a 

motion for new trial, raising the same legal issues raised in this appeal. The court denied 

both. Plaintiff timely appealed from the judgment and postjudgment order.

DISCUSSION

The first issue we address is whether the set-aside judgment reverted title to 

the residence to Diehl. This requires us to interpret the set-aside judgment. As the 

evidence concerning the interpretation of the judgment is undisputed, and as the 

interpretation of a written instrument is generally a question of law, our review is de 

novo. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799; Parsons v. Bristol Develop. Co. 

(1965) 62 Cal.2d 861, 865-866.)

“The rules for interpreting judgments are well settled . . . . [Citation.] 

. . . [T]he „same rules apply in ascertaining the meaning of a court order or judgment as in 

ascertaining the meaning of any other writing.‟ [Citation.] The general rule is that „The 

language of a . . . [writing] is to govern its interpretation, if the language is clear and 
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explicit, and does not involve an absurdity.‟ [Citation.] There are exceptions. „The 

terms of a writing are presumed to have been used in their primary and general 

acceptation, but evidence is nevertheless admissible that they have a local, technical, or 

otherwise peculiar signification, and were so used and understood in the particular 

instance, in which case the . . . [writing] must be construed accordingly.‟ [Citation.] 

Where an ambiguity exists, „The rule with respect to orders and judgments is that the 

entire record may be examined to determine their scope and effect. . . .‟” (Estate of 

Careaga (1964) 61 Cal.2d 471, 475.) The statement of decision may be considered in 

construing the judgment. (Sutphin v. Speik (1940) 15 Cal.2d 195, 201 [“The suggestion 

made by defendant that the „judgment alone should be considered and the findings 

disregarded if outside the scope of the judgment‟ can have no force in view of the settled 

rule that the findings constitute the decision of the court”].) 

Plaintiff contends the term “set aside” means to void or annul, citing 

various dictionaries. Plaintiff further contends the set-aside judgment is clear on its face 

and that resort to materials outside the four corners of the judgment is improper. Plaintiff 

then concludes the set-aside judgment plainly voided the 1987 and 1988 transfers, with 

the result that legal title to the property reverted back to Diehl. And since no subsequent 

deed purported to transfer Diehl‟s interest, plaintiff concludes Diehl‟s interest is still 

available for execution.

Plaintiff‟s plain reading of the judgment has some surface appeal. In a 

vacuum, we might agree the term “set aside” means to void or nullify something. In 

context, however, we conclude the term “set aside” is ambiguous, and we ultimately 

conclude the court did not nullify the 1987 and 1988 transfers. 

The ambiguity stems from the historical and legal context of the judgment. 

This was a judgment in a fraudulent conveyance action. Historically in such cases, courts 

were authorized to avoid a transfer only to the extent necessary to satisfy a creditor‟s 

claim. In Heffernan v. Bennett & Armour (1952) 110 Cal.App.2d 564, for example, the 
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trial court held that title to certain fraudulently transferred assets remained with the 

transferor and never passed to the transferee, but the Court of Appeal reversed. It 

reasoned, “The first error in this line of reasoning is the assumption that title did not pass 

to [the transferee]. Title did pass, subject to attack only by members of the protected 

class, each of whom must pursue the property in a timely and appropriate manner, 

successfully to subject it to his claim. A transfer in fraud of creditors is valid as to the 

grantor and all persons claiming under him, „and as to all persons except creditors of the 

grantor who may question it in a proper proceeding.‟” (Id. at 585.) As another court 

stated the rule, “„No rule of law is more firmly established than that a transfer of property 

made in fraud of creditors, while void as to them, is binding upon the parties and those in 

privity with them. The statutes against fraudulent conveyances are designed merely to 

protect the interests of creditors, and their provisions do not in any manner affect the 

rights of the parties to the conveyance, and these must therefore be determined by the 

principles of the common law.‟” (Ramirez v. Hartford Acc. & Indem. Co. (1938) 29 

Cal.App.2d 193, 196-197.)

As plaintiff points out, these cases were decided prior to the enactment of 

the Uniform Fraudulent Transfer Act (UFTA) (Civ. Code, § 3439 et seq.), upon which 

the set-aside judgment is based. Consistent with the cases cited above, the UFTA 

provides as a remedy, “Avoidance of the transfer or obligation to the extent necessary to 

satisfy the creditor‟s claim.” (Civil Code § 3439.07, subd. (a)(1).) Plaintiff contends, 

however, that under the UFTA courts are empowered to go beyond that remedy based on 

section 3439.07, subdivision (a)(3)(C). That subdivision permits the court to order, 

“[s]ubject to applicable principles of equity and in accordance with applicable rules of 

civil procedure” “[a]ny other relief the circumstances may require.” 

The parties debate whether this catch-all remedy permits a court to go 

beyond the express statutory remedy of avoiding a transfer “to the extent necessary to 

satisfy the creditor‟s claim.” We need not decide that issue, however. We will assume, 
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without deciding, that under appropriate circumstances a court could nullify a deed for all 

purposes. The question to be answered here is: Did the court do so in the set-aside 

judgment?

The answer to that question is not immediately clear. The term “set aside” 

is not found in the remedies authorized under the UFTA, and the history of fraudulent 

transfer remedies described above suggests the possibility that the court intended the 

ordinary remedy but simply used loose language. Given this ambiguity, contrary to 

plaintiff‟s claim, the trial court properly looked to the statement of decision and the 

underlying complaint to interpret the set-aside judgment. 

The statement of decision underlying the set-aside judgment is notable for 

what it does not discuss: it does not discuss any intent to issue an extraordinary remedy. 

It cites no authority for issuing such a remedy, nor is any rationale for such a remedy 

discussed. Rather, the statement of decision reveals the underlying case to be a vanilla 

fraudulent transfer case: Diehl suffered a judgment, and the next day, unbeknownst to his 

mother, he recorded a deed transferring the residence to her. The court specifically found 

the mother did not participate in the fraud. (Cf. Ahmanson Bank & Trust Co. v. Tepper

(1969) 269 Cal.App.2d 333, 344 [where transferee participated in the fraud, transfer was 

voided].) In short, there is no indication the court intended to grant extraordinary relief, 

nor that the circumstances warranted extraordinary relief.

Further, the complaint sought the traditional, limited relief from a 

fraudulent transfer: that the fraudulent conveyance be set aside “to the extent necessary 

to satisfy plaintiff‟s claim.” The fact that plaintiff prayed for limited relief tends to 

corroborate our inferences from the statement of decision that the court intended the 

ordinary remedy of avoiding the transfer for limited purposes. We also note the 

complaint is titled “Complaint (To Set Aside a Fraudulent Conveyance)”, which may 

explain where the court picked up the “set aside” language. 
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The historical and statutory context, combined with the statement of 

decision and complaint, lead us to conclude the trial court properly interpreted the setaside judgment as avoiding the 1987 and 1988 transfers for the limited purpose of 

satisfying the claim of the creditor in that action. Consequently, the set-aside judgment 

did not revert legal title to Diehl.

The Court Correctly Ruled Diehl Did Not Have an Equitable Interest 

Plaintiff contends next that, even if Diehl holds no legal title, he maintained 

an equitable interest in the residence. Plaintiff‟s argument rests wholly on the 2007 deed 

transferring the residence from “Diane G. Diehl and Russell Reed Diehl III, wife and 

husband, Reed Kyle Diehl, a single man, all as joint tenants” to “Diane G. Diehl a 

married woman as her sole and separate property.” It was undisputed at trial that Russell 

Reed Diehl III is not Diane Diehl‟s husband, but instead her son, and that the reference to 

“wife and husband” was erroneous. Undeterred, plaintiff claims, “The execution of the 

2007 Grand Deed [sic] by the hand of Diane G. Diehl conclusively establishes that 

Russell R. Diehl, had at that moment an equitable interest in [the residence]; no other 

evidence on this issue was needed or even admissible.” 

Plaintiff‟s argument is obscure, but we divine two distinct arguments from 

plaintiff‟s various comments. 

First, plaintiff seems to contend the 2007 deed evidences a resulting trust in 

which Diehl‟s wife held title for Diehl. “„A resulting trust arises by operation of law 

from a transfer of property under circumstances showing that the transferee was not 

intended to take the beneficial interest. [Citations.] Such a resulting trust carries out and 

enforces the inferred intent of the parties.” (Fidelity National Title Ins. Co. v. Schroeder

(2009) 179 Cal.App.4th 834, 847.) “[O]ne who claims a resulting trust in property has 

the burden of proving the facts establishing his [or her] beneficial interest by clear and 

convincing evidence.” (Gomez v. Cecena (1940) 15 Cal.2d 363, 366-367; see Evid. 
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Code, § 662 [“The owner of the legal title to property is presumed to be the owner of the 

full beneficial title. This presumption may be rebutted only by clear and convincing 

proof”].) 

Here, the evidence fully supports the trial court finding no evidence of a 

resulting trust. There was no evidence that in 1987 and 1988, when Diehl transferred his 

interest to his mother, he or any other party to the transaction intended Diehl to maintain 

an equitable interest. None of the Diehls testified, and there was no other evidence 

concerning the parties‟ intent. It was undisputed that the reference in the 2007 deed to 

“wife and husband” was erroneous. Plaintiff claims the error somehow evidences the 

parties‟ intent — 20 years in the past — to create a resulting trust. We are at a loss to 

follow plaintiff‟s logic. 

The other argument plaintiff makes is that, under Evidence Code section 

622, the erroneous recitation in the 2007 deed that Diane Diehl and Russell Diehl III are 

“wife and husband” creates a conclusive presumption that Diehl maintained an equitable 

interest. Evidence Code section 622 states, “The facts recited in a written instrument are 

conclusively presumed to be true as between the parties thereto, or their successors in 

interest . . . .” 

The logic of plaintiff‟s argument is flawed, however. If we were to 

straightforwardly apply section 622 here, we would conclude (absurdly) that mother and 

son are actually husband and wife. But that would not establish that Diehl has an interest 

in the residence. Thus, section 622 is no help to plaintiff. Accordingly, Diehl does not 

hold an equitable interest.

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Another argument plaintiff advances, the logic of which evades us, is that 

because a fraudulent conveyance action affects title to real property, the set-aside 

judgment nullified the 1987 and 1988 transfers. Plaintiff spends four pages of its brief 

citing out-of-state cases holding that a fraudulent conveyance action affects title to real 

property, and thus it is appropriate to file a lis pendens. We agree that a lis pendens is 

appropriate in connection with a fraudulent conveyance action; California law is already 
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The Court Committed No Reversible Evidentiary Error

Plaintiff contends the court made several reversible evidentiary errors. We 

disagree. 

First, in phase two of the trial, the court excluded exhibit 18, which is the 

lis pendens filed in connection with the set-aside judgment. Phase two concerned only 

whether Diehl maintained an equitable interest in the property. The lis pendens had no 

bearing on the intent of the parties to the 1987 and 1988 transfers and was properly 

excluded as irrelevant.

Next, exhibits 69, 80, 94, and 98 were various documents related to the title 

company report and escrow instructions pertaining to the Neals‟ purchase of the 

residence. Plaintiff offered them to show the Neals‟ escrow officer was on notice of the 

set-aside judgment. The trial court excluded them in phase two of the trial as irrelevant. 

We agree; whether the escrow agent was on notice of the set-aside judgment in 2009 is 

irrelevant to whether Diehl preserved an equitable interest in the residence in 1987 and 

1988.

Exhibit 131 was a completely unrelated judgment that underlay the decision 

in Reddy v. Gonzales (1992) 8 Cal.App.4th 118. The judgment was offered to help the 

trial court interpret the published appellate decision. The court properly excluded it. The 

judgment itself is not binding, and the published appellate decision stands on its own. 

Further, plaintiff has not explained how excluding the judgment was harmful, and thus 

even if we found error we would not reverse. 

Finally, plaintiff argues exhibit 104 was improperly admitted. Exhibit 104 

was the Neals‟ receipt of a preliminary title report. It was offered by defendants in phase 

 

settled on that point. (Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 649.) It does not

follow, however, that every fraudulent conveyance judgment nullifies the transfers in 

question entirely. Assuming such a remedy is available at all, we would have to 

determine from the language of the judgment whether the court ordered such a remedy. 

As set forth above, the set-aside judgment did not.
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two to show the Neals were unaware of any cloud on title to the residence. We agree 

with plaintiff it was irrelevant to whether Diehl maintained an equitable interest in the 

residence. Nonetheless, plaintiff has offered no explanation for how such an error 

impacted the court‟s holding in phase two. We see no indication the court relied on it at 

all. Accordingly, the error was harmless.

DISPOSITION

The judgment is affirmed. Defendants shall recover their costs incurred on 

appeal.

IKOLA, J.

WE CONCUR:

O‟LEARY, P. J.

BEDSWORTH, J.