Court Opinion

ID: 2641414
Source: CourtListenerOpinion
Date Created: 2013-11-07 01:02:36.997665+00
Date Added: 2024-06-11T09:55:56.655227
License: Public Domain

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                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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,                                                         B246603

         Plaintiff and Appellant,                                       (Los Angeles County
                                                                        Super. Ct. No. BC442576)
         v.

HOLLYWOOD DELL FIRST MORTGAGE
INVESTORS, LP et al.,

         Defendants and Respondents.

         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.
       Following a bench trial on plaintiff and appellant Jeffrey Ullman’s complaint for
declaratory relief and fraudulent conveyance, the superior court entered judgment for
defendants and respondents Hollywood Dell First Mortgage Investors, LP (Hollywood
Dell), and Carl Lindros as “Trustee of the Carl Lindros IRA”1 (jointly, defendants). In
this appeal from the judgment, Ullman contends the trial court erred in denying
declaratory relief and dismissing the fraudulent conveyance claim. For the reasons that
follow, we affirm the dismissal of the fraudulent transfer claim, but modify the judgment
to reflect that the dismissal is with prejudice. The judgment, as modified, is affirmed.

                                      BACKGROUND

       In a prior action, Ullman sued his former business partner, Rebecca Richards, for
dissolution of partnership and other claims. (Ullman v. Richards (Super. Ct. L.A.
County, 2009, No. BC392003).) 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 complaint as “Carl Lindros, Trustee of the
Lindros Family Trust dated December 17, 1982.”

2       “Except as otherwise provided 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. Proc., § 697.310, subd. (a).)
        “Except as provided in Section 704.950: [¶] (a) A judgment lien on real property
attaches to all interests in real 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 Chapter 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 before 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 created, the judgment lien attaches to such
interest at the time it is acquired.” (Code Civ. Proc., § 697.340.)

                                               2
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 declaratory relief to establish that as to Rob’s
former 25 percent community property interest (Rob’s interest) in certain real properties
(properties),5 Ullman’s judgment lien is not subject to defendant’s first and second deeds
of trust, even though they were recorded first in 2008. Although Ullman concedes that
his judgment lien, which was recorded in 2009, is subject to the deeds of trust with regard
to Rebecca’s 75 percent interest in the properties, he argues that as to Rob’s interest, the
usual rule of priority based on the date of recording 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 deed of trust nor Lindros’s second deed of
trust attached to Rob’s interest and, therefore, 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 this action. Because they share the same
last name, we refer to them by their first names with no disrespect intended.

4      “‘Debt’ means an obligation incurred by a married person before or during
marriage, whether based on contract, tort, or otherwise.” (Fam. Code, § 902.)
       “Except as otherwise expressly provided by statute, the community estate is liable
for a debt incurred by either spouse before or during marriage, regardless of which
spouse has the management and control of the 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 Property’) and two adjacent undeveloped lots in
the Hollywood Hills (the ‘Vine St. Lots’).”
       The trial court did not determine whether Rob had an ownership interest in the
subject properties when the loans were issued and, if so, the nature or extent of that
interest. Accordingly, we express no opinion 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 the deeds of trust were signed by Rebecca.

                                              3
       Because the properties were sold at a nonjudicial foreclosure sale over three years
ago, it is unclear what, if any, relief may be obtained by Ullman at this late date. In any
event, in the following sections we discuss (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 aside that ruling, and (6) the judgment for defendants.

I.     Significant Dates and Events
       In 2007, Rebecca and Rob acquired 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 sought to refinance the properties with a new lender, Hollywood
Dell. Hollywood Dell agreed to make a $4.1 million loan secured by a first deed of trust
to the property, provided certain conditions were met. The conditions, as specified in the
instructions to First American Title Company (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 insurance policy; and (3) prepare and 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 requirements, (1) Ullman transferred his interest
in the properties to Rebecca,6 and (2) First American Title Insurance Company (FATICO
or title insurance company) issued a lender’s title insurance policy that guaranteed and
insured that Rebecca had clear title and was the sole owner of the properties.
       However, due to an error by the escrow company, the $4.1 million 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 undivided 50 percent interest) and Ullman (as to an undivided
50 percent interest) granted title to the properties to “Rebecca L. Richards, a married
woman as her sole and separate property.”

                                              4
Hollywood Dell’s first deed of trust, which Rebecca 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 insured 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, Ullman recorded the abstract of judgment.
       By April 2009, Rebecca had defaulted on the loans from Hollywood Dell and
Lindros. On April 30, 2009, Hollywood Dell began nonjudicial 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 quitclaim 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 insurance 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 record title holder,” they
did not have a “true security interest in the propert[ies]” and could “not possibly foreclose
on the propert[ies].”
       In June 2009, Rob filed a bankruptcy action. In May 2010, the bankruptcy court
filed an order “abandoning any interest Rob may have had in the Properties.” On
May 20, 2010, Rob executed the grant deeds that transferred his interest in the properties
to Rebecca.
       On July 28, 2010, Ullman filed the present action against Hollywood Dell and
Lindros for declaratory relief (seeking to establish the seniority of his judgment lien as to
Rob’s interest in the properties) and fraudulent conveyance (seeking to set aside the May
2010 transfer of Rob’s interest in the properties to Rebecca).

                                              5
       In August 2010, Hollywood Dell and Lindros settled the title insurance action. In
the settlement, Hollywood Dell and Lindros received $850,000 plus a defense and
indemnity in this action. The settlement agreement stated in relevant part that the
$850,000 payment “includes payment for losses incurred by Hollywood Dell and Lindros
IRA for being unable to foreclose 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 acquired the properties by making a $2.5
million credit bid at the trustee’s foreclosure sale.
       On November 6, 2012, the superior court conducted a one-day bench trial on
Ullman’s complaint in this action for declaratory relief and fraudulent conveyance. In
addition to the above facts, which 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 participation in the real estate whatsoever”; (2) he had no objections
to the loans taken by Rebecca; (3) when Rebecca obtained 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 learn 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 was entitled to declaratory relief based on two
theories. First, because Rob still had an interest in the properties when Rebecca signed
the deeds of trust, Rebecca’s signature alone was insufficient to encumber Rob’s interest.
(Fam. Code, § 1102.)7 When Ullman recorded 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 authorized agent, must
join in executing any instrument by which that community real property or any interest

                                               6
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 defendants 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 interest in the propert[ies]” and could “not possibly foreclose on
the propert[ies].”
       Alternatively, Ullman contended the May 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 authorized to encumber Rob’s interest, but in
any event, an unauthorized 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 trust, 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 sold, conveyed, or encumbered.”
(Fam. Code, § 1102, subd. (a).)

8       Code of Civil Procedure section 697.390 provides in relevant part: “If an interest
in real property that is subject to a judgment lien is transferred or encumbered without
satisfying or extinguishing the judgment lien: [¶] (a) The interest transferred or
encumbered remains subject to a judgment lien created pursuant to Section 697.310 in the
same amount as if the interest had not been transferred or encumbered.”

                                              7
       Second, defendants argued that Ullman was barred, under the doctrine of judicial
estoppel, from taking unfair advantage of the escrow company’s error in failing to obtain
and record Rob’s quitclaim deed before the $4.1 million loan was issued. Defendants
contended that as Rebecca’s business partner with respect to the properties, Ullman was
privy to the lender’s requirement that all other interests must be cleared from title before
the $4.1 million loan would issue. And because Ullman had transferred his own interest
to Rebecca in accordance with the lender’s instructions, he should be charged with the
knowledge that Hollywood Dell would not have issued the loan 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 fraudulent for the following reasons. First, the claim must fail
because of Ullman’s failure to join Rebecca, a necessary party. 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 senior lien, the transferred interest remained
subject to that lien. (Citing Code Civ. Proc., § 697.390 [the transferred interest remains
subject to any lien against the property].)
       Third, nothing of value is conveyed by the transfer of real property that is fully
encumbered by a valid lien. The properties, which were fully encumbered by the deeds
of trust, had no equity. Accordingly, the transfer of Rob’s interest was not fraudulent
because nothing of value was conveyed through the transfer.

                                              8
IV.    The Trial Court’s November 15, 2012 Ruling
       After taking the matter under submission, the superior court issued its
November 15, 2012 ruling in favor of Hollywood 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% interest 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 fraudulent conveyance claim, the court stated in relevant
part: “As to the second cause of action for 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 cause 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 properties 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 [Rebecca]. [¶] Here, the alleged fraudulent transferee to the
May 2011 transfer was [Rebecca]. Therefore, she is a necessary party to [Ullman’s]
second cause of action for fraudulent conveyance; she is an indispensable party to
Plaintiff’s second cause of action. [Rebecca’s] rights would be necessarily affected by
any judgment setting aside the May 2011 transfer because any such judgment sets aside a
conveyance of real property to her. [Ullman] dismissed [Rebecca] from this action on
February 23, 2011. Therefore, because [Ullman] has failed to include all necessary,

                                               9
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 Aside 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 judicial estoppel, arguing that 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 properties 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 negatively impacted by any judgment in this case;
(2) Hollywood Dell and Lindros “failed to meet their burden of proof with respect to
[Rebecca’s] role”; and (3) Hollywood Dell and Lindros “failed to raise the issue of
[Rebecca’s] role as a ‘necessary’ party prior to trial and have thus waived it.”

VI.    Judgment for Hollywood 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 Plaintiff’s Complaint. Defendants’ deeds of trust
are prior to and senior to the abstract of judgment recorded by Plaintiff.” “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.

                                             10
                                       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 she no longer owned the
properties; and (2) why defendants were not bound under the doctrine of judicial estoppel
by their position in the title insurance action that they did not have a valid lien because of
Rob’s interest in the properties. Ullman contends the trial court “completely ignored”
these issues in its “statement of decision,” and 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 decision 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, 2012 ruling was not a timely
request for a statement of decision because 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 decision 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 provides in relevant part: “In superior courts,
upon the trial of a question of fact by the court, written findings of fact and conclusions
of law shall not be required. The court shall 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 submission of the matter for decision. The request
for a statement of decision shall specify those controverted 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 content of the statement of decision.”

                                              11
       “When no statement of decision is requested 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 findings in favor of a losing plaintiff, the appellate court will
presume the trial court found the plaintiff’s evidence was insufficient to carry the burden
of proof. Code of Civil Procedure section 634,10 which applies when the court is
required but fails to provide a statement of decision, does not apply here.

II.    Ullman’s Judgment Lien Is Subject to the Deeds of Trust
       In rejecting Ullman’s claim for declaratory relief, the trial court stated that
“Defendants’ deeds of trust are prior to and senior to the abstract of judgment recorded
by Plaintiff.” Ullman contends 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 the $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 remained 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 failure 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 brought to the attention of the trial court either
prior to entry of judgment or in conjunction with a motion under Section 657 [motion for
new trial] or 663 [motion to set aside judgment], it shall not be inferred on appeal or upon
a motion under Section 657 or 663 that the trial court decided in favor of the prevailing
party as to those facts or on that issue.”

                                              12
       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 interpreting [former Civil Code] section
5127[, now found in Family Code section 1102,] and its statutory predecessors have held
that unauthorized gifts, sales or encumbrances of community property 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 section 1102 “was designed to
protect a spouse from the unauthorized alienation or encumbering of marital property by
the other spouse; it has never been interpreted 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 contrary, 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.”

                                             13
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 properties as security for the $4.1
million loan, his judgment lien is subject to the deeds of trust under 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 interest in the properties that he
transferred to Rebecca to facilitate the loan from Hollywood Dell. As Rebecca’s business
partner, Ullman was privy to the loan requirements 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 one-
half 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 found in Fam. Code, §§ 2033 &
2034), which allow a spouse to encumber his or her interest in community real property
to pay attorney fees and costs in a proceeding for dissolution of marriage, nullification of
marriage, or legal separation of the parties. (See In re Marriage of Turkanis & Price
(2013) 213 Cal.App.4th 332, 346-347.)
        Notwithstanding these legislative amendments and judicial 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.

                                             14
       The evidence is overwhelming that, but for the unforeseen errors by the escrow
and title companies, Rob’s quitclaim deed would 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 the discrepancy that Ullman relies upon to
invalidate the deeds of trust 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 insurance 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, ‘“prevents a party from ‘asserting a position in a legal proceeding
that is contrary to a position previously taken 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 parties 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 the 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 under 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. The language used by defendants in the prior
action must be viewed in light of the existing circumstances. After defendants discovered
the escrow company’s failure to obtain and record Rob’s quitclaim deed, they sued the
title insurance company for breach of contract because, contrary to the provisions of the
policy, Rebecca’s title was vulnerable to a possible objection by Rob under Family Code

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section 1102 that she was unauthorized to encumber his interest. But after Rob’s grant
deeds were recorded, Hollywood Dell proceeded with the foreclosure proceedings and
acquired the properties at the October 2010 trustee’s sale. By the time this action was
tried, defendants were no longer at risk of an objection under Family Code section 1102,
because Rob had transferred his interest to Rebecca and waived any objection to the
foreclosure sale.
       Given the changed circumstances 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. Justice would not have been
served by forcing defendants to argue that foreclosure was impossible when, in fact, the
properties had been sold at the October 2010 foreclosure sale. Ullman has failed to
establish an abuse of discretion.

III.   The Fraudulent Transfer Claim Is Moot
       Ullman challenges the trial court’s dismissal of the fraudulent conveyance claim
without prejudice based on the failure to join an indispensible 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 transfer is a moot issue.
Because the claim is moot, the judgment is modified to indicate that the dismissal is with
prejudice.

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                                         DISPOSITION

       The judgment is modified to indicate that the dismissal of the fraudulent transfer
claim is a dismissal with prejudice. As modified, 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.

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