Opinion ID: 466517
Heading Depth: 2
Heading Rank: 2

Heading: storm property

Text: 27 The Allustiartes contend that the bankruptcy court erred in imposing a constructive trust on the Storm property. They argue, first, that the action was barred by the statute of limitations. Second, they assert that the action should have been barred for failure to join an indispensable party. Third, they claim that the findings are not supported by sufficient evidence.
28 The Storm property was leased with an option to buy by Linda Allustiarte ostensibly acting on behalf of the family trusts. All the lease payments were made by the debtors. The Allustiartes subsequently exercised the option to buy. The trustee asserted at trial that these actions constituted fraud. 29 Both parties agree that the relevant statute of limitations is Cal.Civ.Proc.Code Sec. 338(4) (West 1986), which establishes a three year period for bringing an action based on fraud. The statute of limitations begins to run upon discovery of the fraud. Id. A conveyance is fraudulent if the grantor is insolvent, and receives no consideration. Cal.Civ.Code Sec. 3439.04 (Deering 1984). This fraud could not have been discovered by creditors at the time of recordation of the sale, since the names of the debtors did not appear on the deed. The fraud was not discovered until the trustee in bankruptcy took over the accounts and records of the debtors. The action was filed within three years of the date the fraud was discovered.
30 The Allustiartes contend that their spouses should have been joined as indispensable parties regarding the Storm property claim. The deed was conveyed to: 31 Gregory Allustiarte, a married man, dealing with his sole and separate property ... Benjamin A. Allustiarte, a single man; and Marianne Allustiarte, a single woman.... 32 The land is located in California. Thus, California law controls. Oregon ex rel. State Land Board v. Corvalis Sand & Gravel Co., 429 U.S. 363, 378-79, 97 S.Ct. 582, 590-91, 50 L.Ed.2d 550 (1977). In California, property acquired before marriage is separate property. Cal.Civ.Code Secs. 5106 & 5107 (West 1983). Benjamin, Jr. and Marianne were not married at the time of the alleged conveyance. The evidence is uncontradicted that any interest in the Storm property held by Benjamin Allustiarte, Jr. and his sister Marianne was their separate property. Thus, there was no duty to join their spouses concerning the Storm property claim. 33 Gregory Allustiarte was married at the time of the alleged conveyance of the Storm property. While there is a rebuttable presumption that property acquired during marriage is community property, In re Marriage of Mix, 14 Cal.3d 604, 611, 122 Cal.Rptr. 79, 536 P.2d 479 (1975); accord See v. See, 64 Cal.2d 778, 783, 51 Cal.Rptr. 888, 415 P.2d 776 (1966); In re Marriage of Aufmuth, 89 Cal.App.3d 446, 455, 152 Cal.Rptr. 668 (1979), there is a stronger rebuttable presumption that the terms of a conveyance accurately state the ownership interests. In re Marriage of Lucas, 27 Cal.3d 808, 814-15, 166 Cal.Rptr. 853, 614 P.2d 285 (1980). Since the conveyance specifically gives title to Gregory as separate property, and no evidence has been offered to rebut this presumption, Gregory's wife does not have an interest in the Storm property. Therefore, she was not an indispensable party regarding the Storm property claim.
34 The bankruptcy court found that it was proper to impose a constructive trust on the Storm property because the debtors' children acquired the property as part of a scheme to defraud the debtors' creditors. There is ample evidence in the record to support this finding. 35 Prior to the conveyance, the debtors had negotiated to lease the property in their own names. After the conveyance, the property was managed by one of the debtors. Further, the debtors made all the lease payments to Storm prior to the exercise of the option to buy. The Allustiartes' accountant testified that his records indicated that, [a]lthough the note was executed by Gregory, Benjamin and Marianne, it is considered to be the liability of Ben and Linda Allustiarte who are making the payments of interest and principal. The bankruptcy court's findings that the debtors attempted to use the family trusts as a veil to conceal their interest in the Storm property were not clearly erroneous.