Court Opinion

ID: 9904810
Source: CourtListenerOpinion
Date Created: 2023-11-27 22:03:48.333586+00
Date Added: 2024-06-11T09:21:28.804502
License: Public Domain

Filed 11/27/23
                 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                        DIVISION EIGHT

 HERMAN YEE,                           B321037

        Plaintiff and Respondent,      Los Angeles County
                                       Super. Ct. No. KC068890
        v.

 PANROX INTERNATIONAL
 (USA), INC.,

        Defendant and Appellant;

 ANN HON,

        Defendant and Respondent.

     APPEAL from an order of the Superior Court of
Los Angeles County, Peter Hernandez, Judge. Affirmed.
     Eric M. Schiffer and Ronald P. Slates for Defendant and
Appellant.
     Goldstein, Gellman, Melbostad, Harris & McSparran,
Brian E. Soriano and Vladie P. Viltman for Plaintiff and
Respondent Herman Yee.
       Law Offices of Julia Sylva and Julia Sylva; Acker &
Whipple, Stephen Acker for Defendant and Respondent Ann Hon.
                        ____________________
       Ann Hon and Herman Yee worked together in Hon’s
company, but they sued each other when their relationship
ended. Their litigation turned up a lien on one of their homes—a
lien in favor of a long-suspended corporation called Panrox
International (USA), Inc. A third-party attorney heard about the
lien, revived Panrox, and entered the litigation between Hon and
Yee, claiming Hon and Yee owed Panrox $141,000 from a 1995
debt. Hon and Yee said their debt to Panrox was resolved in
1999. In 2022, the trial court ruled for Hon and Yee. Panrox
appealed. We affirm. The Panrox debt was settled 24 years ago.
                                  I
       We journey back in time.
                                 A
       In the early 1990s, Hon and Yee developed a personal
relationship. Hon owned a small clothing business called ANC
Apparel Inc. that imported from China. Yee began helping Hon
run ANC. The two explored business possibilities with Panrox,
which was a subsidiary of a company in China.
       In 1995, ANC and Panrox agreed on a business deal. The
financing would involve two homes Hon and Yee owned. We
explain about these two houses, which are at the heart of the
case.
       In 1993, Hon bought a home in San Francisco. In 1994,
Hon and Yee moved from San Francisco to Los Angeles, but Hon
kept her San Francisco house. Yee bought a home in Los Angeles
County, where he and Hon lived from 1994 to 2007. Yee added
Hon’s name to the title of his Los Angeles home in 2002.

                               2
       On April 20, 1995, Hon, Yee, and Panrox wrote out a plan
for the Panrox/ANC business relationship. This document,
written in Chinese, has a title translated as “BUSINESS
COOPERATION OF JEAN APPAREL MANUFACTURE
CONTRACT.” By referring to “monthly sample orders and
purchase orders,” this document seemed to envision an ongoing
relationship between Panrox and ANC: Panrox would
manufacture apparel in China and ANC would be its U.S. sales
agent.
       On June 1, 1995, ANC and Panrox made their arrangement
concrete. ANC and Panrox signed a sales contract for 12,000
denim jackets: 3,000 each of four different styles. The payment
terms were these: in return for mortgages on two houses for
$141,000, Panrox agreed to manufacture 12,000 jackets and to
ship them from China to California. The signature for Panrox
appears to be by one Benjamin Yang, who also appears in our
record as Benjamin Biao Yang, or Biao Yang. In the 1990s, Yang
was a director and the secretary for Panrox.
       This $141,000 figure appears repeatedly in our record, as
will appear.
       Following this June 1, 1995 contract, Yee and Hon signed a
separate personal guaranty promising to pay the $141,000. Their
guaranty stated Yee’s and Hon’s $141,000 debt would be secured
via a deed of trust. The date on this guaranty was August 3,
1995.
       On this same date, Yee gave Panrox a deed of trust to his
Los Angeles house to secure the $141,000 debt. This deed listed
Panrox as beneficiary, Yee as trustor, and a title company as
trustee.

                               3
       On the same day and for the same purpose, Hon gave
Panrox a deed of trust to her San Francisco house. The San
Francisco deed, also in the sum of $141,000, listed Panrox as
beneficiary, Hon as trustor, and the same title company as
trustee.
       Panrox argues to us, without contradiction, that deeds
against both properties were necessary because neither property
had enough equity to cover the $141,000 debt.
       Later in 1995, Panrox recorded both deeds as liens against
the respective houses.
       It will become significant that the San Francisco deed bore
a recording date of October 10, 1995 and a recording number of
95-F867388. This date and number would identify this recorded
deed with particularity.
       Panrox delivered the 12,000 jackets in October 1995. ANC
defaulted on the $141,000 payment. Panrox swiftly took action
against Hon and Yee: on November 16, 1995, it executed a notice
of default and election to sell under the deed of trust against
Hon’s San Francisco house. Biao Yang signed this document as
Secretary of Panrox. This was the first step in Panrox’s non-
judicial foreclosure against Hon’s San Francisco house.
Represented by attorney Ronald Slates, Panrox sent a settlement
letter to Hon’s attorney on February 5, 1996. This letter did not
trigger a settlement.
       Hon and Yee took the offensive against Panrox. They went
to court to stop its foreclosure efforts.
       Hon sued Panrox in San Francisco Superior Court on
February 13, 1996. This suit alleged Panrox had breached the
underlying contract by using “illegal employees” and
“undocumented workers” in violation of United States laws.

                                4
Hon’s San Francisco complaint sought to block the foreclosure
sale of her San Francisco house.
       One day later, Yee likewise sued Panrox in state court. Yee
decided to sue in Los Angeles. This case number was KC022178.
It appears the parties gave the trial court a copy of this
complaint, which seems to have been omitted from our record.
       Panrox filed separate cross-complaints in the San Francisco
and Los Angeles actions on April 4, 1996. These cross-complaints
named the $141,000 debt and sought payment as well as judicial
foreclosure.
       Panrox’s attorney Slates substituted out in May 1996.
Different attorneys began representing Panrox. Slates then
disappeared from this matter for a quarter of a century. As we
shall see, he would reappear in 2021.
       We return to the 1990s. On July 29, 1998, California’s
Chief Justice coordinated the San Francisco and the Los Angeles
actions and assigned them both to the Los Angeles Superior
Court.
       What happened after the two cases were coordinated and
sent to Los Angeles? After all this time, the evidence is elliptical.
By 2022, the official court file for case KC022178 had gone
missing. In 2022, the archive department responded to the trial
court’s file inquiry as follows: “FILE MISSING/UNABLE TO
LOCATE.”
       The sole official source of information we have about the
fate of this case KC022178 is the Los Angeles Superior Court’s
online Register Of Actions, which summarizes some data but is
not a comprehensive explanation of the litigation’s progress.
       This online source lists case KC022178 as dismissed on
December 1, 1999.

                                 5
       By way of explanation, this source also has, with our bold
italics, the following entries from late 1999:
            ● 07/08/1999 at 08:30 am in Department G, Jaeger,
              Karl W., Presiding. Motion Hearing (TRIAL
              SETTING CONFERENCE 8:30am PLAINTIFF'S
              COST MOTION 8:30am) - Case Deemed Settled at
              Settle Conf
            ● 07/21/1999 at 09:00 am in Department G, Jaeger,
              Karl W., Presiding. Jury Trial - Vacated
            ● 08/05/1999 at 08:30 am in Department G, Jaeger,
              Karl W., Presiding. Motion Hearing - Vacated
            ● 12/03/1999 at 11:00 am in Department G, Jaeger,
              Karl W., Presiding. OSC-Failure to File Dism. or
              Judg. - Matter Placed Off Calendar
       According to this concise and official court record, then,
case KC022178 was “deemed settled” in July 1999, and the court
vacated all further proceedings and dismissed the case on
December 1, 1999.
       After the July 1999 settlement date, Panrox executed two
documents. Both related to the San Francisco house alone.
Neither mentioned the Los Angeles house.
       The first was “SUBSTITUTION OF TRUSTEE BY
BENEFICIARY” for the San Francisco house. This form made
Panrox the new trustee, taking over for the original title company
trustee.
       The second document was a “DEED OF FULL
RECONVEYANCE.” The deed states that all sums secured by
the deed of trust on the San Francisco house “have been fully
paid . . . .”

                                6
       Both documents were notarized on November 4, 1999 and
signed by Benjamin Biao Yang on behalf of Panrox. Both
referred to the deed dated October 10, 1995 and numbered
F867388, which was the document creating the lien against Hon’s
San Francisco house. Both documents were recorded on
February 6, 2001.
       Nothing was recorded, however, to affect Panrox’s lien on
the Los Angeles home. From every indication in our record, this
lien was forgotten, and would remain forgotten until 2020.
       Panrox ceased operation in about 1998. The State of
California suspended Panrox on January 2, 2001 for failure to
pay taxes. Panrox would remain suspended for 20 years, until
Slates revived it in 2021. ANC was dissolved in early 1999.
       Thus began a long period of stillness. Panrox was
suspended; ANC was dissolved; no one took notice of the Los
Angeles lien, and for many years the record contains no events
pertaining to the $141,000. The $141,000 topic would resurface
only as an unexpected byproduct of Hon’s and Yee’s acrimonious
rupture.
                                 B
       Hon and Yee ended their personal and business
relationship in 2007. This split was final and total. Yee moved
out of the Los Angeles house. Hon stayed there.
       After 2007, Hon and Yee took to suing each other, but their
court warfare did not move swiftly.
       On June 19, 2008, Hon sued Yee in case KC053203, seeking
partition by sale of the Los Angeles house. This case moved to
default judgment, but the court vacated the judgment on
December 31, 2009.

                                7
       On November 23, 2016, Yee sued Hon in case KC068890,
seeking relief including the partition of the Los Angeles house.
       In 2020, the court in case KC068890 conducted a bench
trial. On August 20, 2020, the court split the Los Angeles house
value evenly between Yee on one hand and Hon (and her son) on
the other.
       To sell the Los Angeles house and to divide the proceeds,
the court appointed a referee, who ordered a title report. On
November 3, 2020, this report revealed the long-dormant
$141,000 Panrox lien on the Los Angeles property.
       For a reason not plain on the record, Hon’s attorney Julia
Sylva searched out attorney Ronald Slates, who had been
Panrox’s counsel before the July 1999 settlement. On May 3,
2021, Sylva informed Slates of Panrox’s lien on the Los Angeles
house. Why did Sylva do this? Yee’s attorney argues Sylva’s
motive was “to disrupt the imminent partition sale her clients
[Hon and her son] were facing.” Hon and Panrox do not comment
on this argument or give a different explanation of Sylva’s reason
for alerting Slates to the lien. Sylva’s client Hon, however, now is
adverse to Slates’s client Panrox. Hon’s position in this appeal is
that the Panrox deed secures a debt that has been satisfied and
the trial court was right to invalidate Panrox’s lien.
       After learning about the Los Angeles lien from Sylva,
Slates revived Panrox for the limited purpose of prosecuting the
case in favor of Panrox’s Los Angeles lien.
       Slates tracked down Aihua Xia, who had worked for Panrox
in the 1990s but who left Panrox in 1998. Through Slates’s
efforts, Xia became Chief Executive Officer in 2021 of the revived
and limited-purpose Panrox. Xia also became Chief Financial
Officer, Secretary, Agent for Service of Process, and “the Director

                                 8
of Panrox.” The corporate statement of information filed with the
California Secretary of State lists Panrox’s principal office and
address as Slates’s law firm. This 2021 filing lists no names
affiliated with the revived Panrox other than Slates and Xia.
       Today, Panrox apparently consists only of Slates and Xia.
Panrox’s current activities are confined to pursuing the Los
Angeles lien.
                                   C
       On October 1, 2021, the trial court set a briefing schedule
to resolve the validity of the Los Angeles lien. There is no sign
Panrox objected to this briefing plan.
       On October 28, 2021, Panrox filed its motion to confirm the
validity of its Los Angeles lien. Panrox argued its Los Angeles
deed remained valid and, with interest, entitled it to a payment
of $514,746.58 upon sale of the Los Angeles house. Panrox’s
motion also argued there was no evidence the debt of $141,000
ever had been paid, and that the deed of reconveyance on the San
Francisco house was improperly executed and therefore void.
       Panrox’s motion did not object that the trial court had
behaved unfairly by placing the burden of proof on Panrox. Nor
did Panrox’s motion mention anything about summary judgment,
or about how some other procedure might be preferable to the
motion the court had ordered.
       After filing its motion, Panrox conducted further discovery.
On October 14, 2021 and again on December 14, 2021, Panrox
deposed Hon. Before the depositions, Hon’s attorney Sylva told
Slates that Hon “has no recollection of the business details of over
twenty years ago and she has no documents as you request.”
       At her depositions, Hon testified she did not know if anyone
had paid $141,000 or any amount to Panrox. She had “no idea at

                                 9
all.” Hon did not know if Yee had made any payment to Panrox.
In her second deposition, Hon testified she was “not too sure” if
she had signed a settlement agreement with Panrox.
      On December 15, 2021, Panrox deposed Benjamin Biao
Yang. Yang testified he signed the Substitution of Trustee form
and the Deed of Full Reconveyance on November 4, 1999 at the
direction of one Yoming Sung, who was chairman of Panrox
International and of other firms Yang termed the “stock
controlled companies in Shanghai called Shen Shi.” Yang said
the “mother company” of Panrox International was located in
Shanghai, and Yang’s only contact was with the Shanghai
headquarters: Yang had no contact with ANC. Yang said
Yoming Sung told Yang the “headquarter company” had a
dedicated law firm based in Shanghai that would “totally take
care of this matter.” Yang did not participate in resolving the
ANC dispute at arbitration; that was handled by counsel
representing Panrox’s “mother company” and its counsel. Yang
did not know the settlement terms because the “mother company”
and its attorney handled the settlement. All Yang did was sign
documents “prepared by the representing counsel of the Panrox
over there in Shanghai.”
      Attorney Slates asked Yang, “who were the witnesses at
the arbitration?” Yang answered, “I don’t know. You need to ask
the mother company of Panrox who [were] representing that
company at that time.”
      The record contains no other information about this
supposed arbitration.
      Slates also asked Yang the following: “What were the
specific terms under which this settlement about which you are
speaking occurred? What were the terms? What was each party

                               10
supposed to do or not do?” Yang answered: “That I don’t know
because that was totally handled by the mother company of
Panrox and their representing attorney. Therefore, I don’t
know.”
      Yang also testified in his 2021 deposition that he had
trouble remembering events from 1999 “because that was such a
long time ago.” Yang did not remember the name or contact
information for Panrox’s Shanghai counsel.
      In December 2021 and January 2022, Panrox replied to
Hon’s and Yee’s oppositions and filed excerpts of these
depositions with the trial court.
                                  D
      On April 12, 2022, the trial court denied Panrox’s lien
motion. The court’s thorough written order recited the facts and
procedural history but mentioned nothing about a Panrox
objection that the briefing unfairly placed the burden of proof on
Panrox.
      The court determined Panrox’s motion lacked merit. The
court quoted Evidence Code section 1603, which makes a
recorded deed prima facie evidence that the interest described in
the deed was conveyed to the deed’s grantee and which explains
this presumption affects the burden of proof.
      The trial court noted Panrox’s contentions: that the
$141,000 had not been paid and there had never been a final
settlement.
      The court rejected both contentions. It concluded the
annotations in the court’s Register of Actions showed there had
been a settlement. The court reasoned three kinds of evidence
corroborated this conclusion: the Substitution of Trustee by
Beneficiary; the Deed of Full Reconveyance; and Yang’s

                                11
testimony about his authority from Panrox to sign these
documents. The court stated it was placing greater weight on the
testimony of Yang than Xia because Xia lacked personal
knowledge of the circumstances surrounding the execution of
these recorded documents.
      The court rejected Panrox’s attack on the legal validity of
the Substitution of Trustee by Beneficiary and the Deed of Full
Reconveyance, observing Panrox’s attack applied equally to
Panrox’s deed to the Los Angeles house. That is, this Panrox
argument proved too much: if accepted, it would destroy Panrox’s
own case.
      The court also ruled against Panrox on the alternate
ground that Panrox had abandoned its interest in the Los
Angeles house because, over 20 years ago, it had stopped
pursuing its interest in the house.
      Panrox appealed this adverse order.
                                   II
      The trial court was right on the law and right on the facts.
                                   A
      The standard of review is in controversy. Panrox urges
independent review, while Yee argues for deferential review.
      No cited case squarely settles this issue.
      As authority for independent review, Panrox cites only
Crocker National Bank v. City and County of San Francisco
(1989) 49 Cal.3d 881, 888. This precedent is afield: it addressed
taxation classification. (Id. at p. 884.)
      Hon’s brief skips the standard of review.
      Yee’s brief argues for deferential review. It says the trial
court proceeding was a partition action, which is equitable in
character, which dictates deferential review. To this, Panrox

                               12
replies the analysis of its Los Angeles lien was not an equitable
balancing but rather a determination based on “legal principles
and their underlying values.” Panrox’s reply has merit.
       Lacking specific cited precedent, we therefore recur to
basics: we defer to the trial court’s weighing of the facts, and we
independently review its legal analyses.
                                   B
       Panrox’s first claim of error is that the trial court
erroneously shifted the burden of proof to Panrox by ordering it to
file a motion demonstrating the validity of its Los Angeles deed of
trust. Panrox forfeited this objection by failing to raise it in the
trial court. Had Panrox made this objection, the trial court could
have addressed the issue and, if need be, rectified the problem on
the spot. It is detrimental for parties to store up secret objections
they deploy only if they lose and, after much cost and delay,
appeal.
       Similarly, Panrox in a footnote complains the trial court
never afforded it the opportunity “to present a summary
judgment motion or some other procedural vehicle that would
have properly shifted the burden of proof to Respondents Hon
and Yee after Panrox made its initial showing.” Panrox forfeited
this argument by failing to present it to the trial court.
       Moreover, the trial court did in substance what Panrox now
urges: the court applied law favoring the prima facie validity of
Panrox’s Los Angeles lien, and then shifted the burden to Hon
and Yee after Panrox made its initial showing. That is, the court
quoted Evidence Code 1603 as establishing prima facie evidence
the property named in a recorded deed, or the interest described,
has been transferred to the grantee named in the deed. The
court ruled, however, this prima facie presumption was overcome

                                 13
by Hon’s and Yee’s evidence from the Register of Actions, which
suggested Panrox settled its case against Hon and Yee about the
$141,000. The trial court found corroborating evidence in Yang’s
creation, at Panrox’s behest, of the two documents about the San
Francisco house that Yang signed in 1999.
       This analysis was eminently reasonable. Whether we
review this analysis independently or with deference makes no
difference, for our conclusion is the same: the court’s conclusion
accords with the law and common sense.
       The superior court’s online record was cryptic but
impartial. This unbiased record states Panrox, Hon, and Yee
settled their litigation in July of 1999. Panrox has not explained
away this evidence. The trial court rightly gave this factor
powerful weight.
       Moreover, actions after this July 1999 notation are fully
consistent with a settlement. The court vacated the jury trial
and dismissed the case, which remained dismissed. In other
words, the parties to the cases acted as though all their
coordinated complaints and cross-complaints indeed were fully
settled and completely concluded.
       There is more. Particularly telling is Yang’s deed of full
reconveyance, which Yang created after the settlement date.
This document recites all secured sums “have been fully paid.”
The secured sum was the $141,000.
       This recorded document, created by Panrox, is decisive
proof the $141,000 debt was—in Panrox’s contemporaneous
estimation—fully satisfied. There is no other reason Panrox
would create and record a document so completely counter to its
own interest in getting the $141,000.

                                14
        This decisive proof mooted the Los Angeles lien completely.
The original debt was for $141,000, but Panrox had demanded
two liens for that sum. The San Francisco deed of “full”
reconveyance meant the $141,000 had been fully satisfied. The
Los Angeles lien did not matter anymore, except as litter in a
title chain.
        It is true this deed of full reconveyance is as to the San
Francisco house only, and there is no similar reconveyance deed
as to the Los Angeles house.
        The simple explanation is neglect: someone dropped the
ball. Someone forgot to follow through on the settlement by filing
a parallel negation of the lien on the Los Angeles house. Trial
judges of experience routinely see these kinds of omissions by
lawyers, because everyone makes mistakes. (Judges of course are
no exception.) A mistake is the best explanation for the
persistence of the long-outstanding but long-ago satisfied Panrox
lien on the Los Angeles house.
        Panrox protests there is no other evidence it got paid the
$141,000. It certainly is true that no one in 2020 found a signed
settlement document, a receipt, or some document of that kind
from 1999. And Hon cannot remember anything useful about the
affair except that she did not pay the $141,000 and she has no
evidence to offer on this score.
        This is a problem with litigating about events from decades
ago: memories fade, people die, corporations dissolve, businesses
fail, files are sent to storage and then to landfill, and evidence
disappears. Grain by grain, time buries the past. As the poet
said, the lone and level sands stretch far away.
        At this late date, we cannot learn about this July 1999
settlement. For reasons the parties do not disclose, no one

                                15
deposed Yee or offered his declaration. We do not know who
negotiated this settlement, or if the negotiators were lawyers, or
if it was an arbitration, or in what country the participants
worked and lived, or whether they are still alive, or anything
about one Yoming Sung who at one time might have run things
from Shanghai. There is so much we do not know. What we do
know points to one conclusion: the trial court was right to deduce
the parties satisfied the $141,000 debt in 1999.
       Panrox cites Evidence Code section 635, which states that
an obligation possessed by the creditor is presumed not to have
been paid. This presumption is rebuttable. (Gabriel v. Wells
Fargo Bank (2010) 188 Cal.App.4th 547, 555.) The trial court
properly found the evidence rebutted it.
       In the same vein, Panrox insists the defense of payment is
affirmative and must be established by evidence. So it was: the
record of settlement and Yang’s deed of full reconveyance
established this defense. When Panrox insists “neither Yee nor
Hon could offer any evidence of payment or other satisfaction of
the underlying debt,” Panrox slights the decisive evidence that
convinced the trial court and that convinces us and all objective
observers. Besides completing a settlement that satisfied
Panrox’s demand, what other motive could Yang possibly have
had to create a deed of full reconveyance—a document so
contrary to Panrox’s interest at the time? Panrox is silent on this
point, and its silence devastates its argument.
       Panrox’s opening brief contains a separate section asserting
that the purported settlement did not prove payment of the
underlying obligation, but this argument recapitulates the
already-identified infirmities of Panrox’s contentions.

                                16
       In another footnote, Panrox suggests the deed of full
reconveyance was void for several reasons. These reasons are
insubstantial.
       First, Panrox argues, without cited authority, that a
suspended corporation cannot transfer property. Yang notarized
the deed of full reconveyance on November 4, 1999. Panrox was
suspended on January 2, 2001. Panrox created this deed before it
was suspended. That fact ruins this argument.
       Second, Panrox argues Yang lacked corporate authority to
create this deed. But Yang testified the head of Panrox’s Chinese
parent company directed him to take these actions. No evidence
impeached Yang’s testimony.
       Third, Panrox faults the deed of full reconveyance for
lacking a corporate seal. Yee points out Panrox’s original lien
also lacked a corporate seal. In other words, Panrox’s argument,
if taken seriously, would overthrow its own case. Panrox’s reply
brief does not attempt to answer Yee on this point.
       We do not reach the trial court’s alternative holding that
Panrox had abandoned the litigation against Hon and Yee.
                          DISPOSITION
       We affirm the order denying Panrox’s motion, award costs
to Yee and Hon, and remand for further proceedings.

                                         WILEY, J.
We concur:

             GRIMES, Acting P. J.            VIRAMONTES, J.

                               17