Vartazarian v. Behrens et al

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UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re:
Patricia Lea Behrens,
Debtor(s),
Sergik Vartazarian
Plaintiff(s),
Vs.
Patricia Lea Behrens, Richard John Behrens
Defendant(s).
Case No.: 1:09-bk-15514-MT
Adversary No.: 1:09-ap-01426-MT
Chapter: 11
MEMORANDUM OF OPINION
RE: DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT
Date: January 20, 2010
Time: 11:00 am
Location: Courtroom 302
I. Background
On January 28, 1998, Richard Behrens (“Mr. Behrens”), ex-husband of the defendant,
filed an action, on behalf of Sarkis Sayandian, against Sergik Vartazarian (“Vartazarian”).
(Defendant’s Request for Judicial Notice Ex. 1). On March 3, 2000, Vartazarian filed an action
for malicious prosecution against Mr. Behrens, Law Office of Richard Behrens, David White,
Steven Staszower, and Jacobson, White, Diamond & Bordy, (Defendant’s Request for Judicial
Notice Ex. 2). On May 12, 2000, the Clerk entered the default of Richard Behrens.
(Defendant’s Request for Judicial Notice Ex. 3). On May 16, 2000, Varazarinan filed an
amended proof of service. This proof of service indicated that Vartazarian served Mr. Behrens.
FILED & ENTERED
FEB 23 2010
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY DEPUTY CLERK	natan
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(Defendant’s Request for Judicial Notice Ex 14). On November 29, 2000, Patricia Lea Behrens
(“Ms. Behrens”) recorded a quit-claim deed. This quit claim deed purported to transfer all of Mr.
Behrens’ interest in the property, located at 5151 Rubio Avenue, Encino, CA 91346 (“the
property”) to Ms. Behrens. On December 1, 2000, Mr. & Ms. Behrens legally separated.
(Defendant’s Request for Judicial Notice. Ex. 6).
On May 9, 2001, the state court granted Vartazarian, in his malicious prosecution
action, a default judgment against Mr. Behrens. The court granted damages in the amount of
$360,000. (Plaintiff’s request for Judicial Notice Ex. G). On May 9, 2001, Ms. Behrens filed for
divorce. (Defendant’s Request for Judicial Notice Ex. 6). On March 12, 2002, Vartazarian
sought and obtained an abstract of judgment against Mr. Behrens’ property. On December 20,
2002, the state bar suspended Mr. Behrens. (Dec. of Vartazarian Ex. P & ¶7).Vartazarian
believed that Mr. Behrens did not pay a $750 judgment against him. Vartazarian believed that
this failure to pay this small judgment indicated that Mr. Behrens did not have property to pay
the larger judgment. (Vartazarian Dec. ¶8).
On January 9, 2004, the state court entered a stipulated judgment in the Behrens’
divorce case. (Defendant’s Request for Judicial Notice Ex. 6). On April 12, 2006, Mr. Behrens
filed a motion, in the malicious prosecution action, to lift the default judgment. The court denied
the motion (Defendant’s Exhibit 15). On October 12, 2007, more than seven years after Ms.
Behrens recorded the quitclaim deed, Vartazarian filed a complaint against Mr. & Ms. Behrens
to declare the transfer of the property to Ms. Behrens a fraudulent conveyance. (Defendant’s
Request for Judicial Notice Ex. 10). Ms. Behrens moved for and received judgment on the
pleadings. (Defendant’s Request for Judicial Notice Ex. 12). On April 9, 2008, Vartazarian filed
a first amended complaint. The state court denied Ms. Behrens motion for judgment on the
pleadings. (Cho Dec. ¶3). On May 10, 2009, Ms. Behrens filed bankruptcy and subsequently
removed the fraudulent conveyance proceeding to this court. On October 27, 2009, Ms.
Behrens brought a motion for summary judgment. Ms. Behrens, in her motion, argues that
plaintiff’s claim is barred by the statue of limitations, that Ms. Behrens is not estopped from
litigating the validity of the Vartazarian’s judgment against Mr. Behrens, and that there is no
evidence of a fraudulent transfer.
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II. Law
A. Summary Judgment Standard
Summary judgment should be granted “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law. FRCP 56(c) (incorporated by FRBP 7056).
The moving party has the burden of establishing the absence of a genuine issue of
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows
the absence of a genuine issue of material fact, the nonmoving party must go beyond the
pleadings and identify facts that show a genuine issue for trial. Id. at 324. The court must
view the evidence in the light most favorable to the nonmoving party. Bell v. Cameron
Meadows Land Co., 669 F.2d 1278, 1284 (9th Cir.1982). All reasonable doubt as to the
existence of a genuine issue of fact should be resolved against the moving party. Hector v.
Wiens, 533 F.2d 429, 432 (9th Cir.1976). The inference drawn from the underlying facts must
be viewed in the light most favorable to the party opposing the motion. Valadingham v.
Bojorquez, 886 F.2d 1135, 1137 (9th Cir.1989). Where different ultimate inferences may be
drawn, summary judgment is inappropriate. Sankovich v. Insurance Co. of N. Am., 638 F.2d
136, 140 (9th Cir.1981).
B. Statute of Limitations
An action for common law fraud must be brought within three years of the alleged fraud1
or within three years of the plaintiff discovering the fraud. Cal. Code Civ. Proc. §338(d). The
normal rule is that a plaintiff must bring a cause of action for fraud within three years of the
fraud occurring. Hobart v. Hobart Estate Co., 26 Cal.2d 412, 437 (1945). A plaintiff may bring
an action for fraud after the three years if the plaintiff can establish facts showing: “’(a) Lack of
knowledge. (b) Lack of means of obtaining knowledge (in the exercise of reasonable diligence
1 When an alleged fraudulent transfer occurs during an action to liquidate an underlying claim, the three year
period begins to run upon the entry of judgment in the underlying action. Cortz v. Vogt 52 Cal.App.4th 917, 931-
932 (1997).
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the facts could not have been discovered at an earlier date). (c) How and when [s]he did
actually discover the fraud or mistake.’” Parsons v. Tickner, 31 Cal.App.4th 1513, 1525 (1995)
quoting 3 Witkin, Cal. Procedure, supra, Actions, § 454, pp. 484-485. Under this rule
constructive and presumed notice or knowledge are equivalent to knowledge. So, when the
plaintiff has notice or information of circumstances to put a reasonable person on inquiry, or
has the opportunity to obtain knowledge from sources open to [her] investigation (such as
public records or corporation books), the statute commences to run.’” Id.
III Analysis
Even if all of the facts are viewed in the light most favorable to the plaintiff, this court
cannot find that Vartizarian met his burden to establish facts showing that he had lack of
means of obtaining knowledge. Specifically, Mr. & Ms. Behrens recorded a quitclaim deed in
November of 2000. Thus, the deed was in the public record when Vartizarian recorded an
abstract of judgment. Vartizarian, if he ran a title search, would have discovered the deed
when he recorded his judgment. Vartizarian, however, did not run a title search, or conduct a
debtor’s examination. A reasonably prudent person, in a similar situation, would have taken
some step to investigate Mr. Behrens property, especially if they took the time to record an
abstract of judgment.
Vartizarian argues that this court should not grant summary judgment because the
deed, pursuant to California Civil Code §1213, only provides constructive notice to subsequent
purchasers of the property, not judgment creditors. Further, Vartizarian argues that up until Mr.
Behrens moved to vacate Vartizarian’s default judgment Vartizarian had no idea of the
conveyance to Ms. Behrens. This argument goes too far. While it is true that a recorded deed
does not provide constructive notice to judgment creditors, a reasonable judgment creditor,
recording an abstract of judgment would at least conduct a title search at the time of judgment
or attempt to execute on the abstract of judgment. Also, California case law does not support
this liberal interpretation of the delayed discovery rule. California courts generally do not apply
the delayed discovery rule when the defendant made no affirmative misrepresentation to the
plaintiff and the public record contained information that would have put the defendant on
notice of the transfer. See Parsons v. Tickner, 31 Cal.App.4th 1513, 1525 (1995)(finding that
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courts apply the delayed discovery rule if (1) the fraud is hard to discover or (2) the defendant
has a confidential or fiduciary relationship with the creditor). California courts have applied the
delayed discovery rule to cases involving a recorded conveyance but the facts of those cases
differ substantially from the facts at issue in this case.
In Adams v. Bell, the California Supreme Court found that the delayed discovery rule
applied in to a case where the defendant transferred property to her son and recorded the
transfer while she was being sued by plaintiff. 5 Cal. 2d 697, 699 (1936). The judgment
creditor in that case, however, did not sit on her rights. Specifically, the judgment creditor,
immediately after obtaining his judgment, attempted to execute on her abstract of judgment.
The judgment debtor, however, sued to quash the writ. Id. Resolving that suit and related
appeals took more than three years. Therefore, because the writ had not been returned
unsatisfied, the judgment creditor did not have knowledge of the transfer until the writ was
returned. Id. at 703.
In Nevada Irrigation District v. Jones a California appellate court found that the delayed
discovery rule applied when a judgment debtor, post suit and pre judgment, purchased land
and recorded the deed. 69 Cal. App. 2d 262 (1945). On the deed, the debtor listed himself as
the trustee and listed his daughter as the beneficiary. Id. at 977-978. The court found that
recording a deed listing a judgment debtor as trustee did not put a judgment creditor on notice
that the debtor had a beneficial interest in property. Id. In dicta, the court mentioned that
properly recording a transfer might put a judgment creditor on notice of the transfer. Id. Unlike
Jones, the Behrens correctly recorded the deed and Vartizarian would have located the deed
and Ms. Behrens’ ownership interest in the chain of title.
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Thus, even when all of the facts are viewed in the light most favorable to Vartizarian,
Vartizarian did not meet his burden to show that he had a lack of means of obtaining
knowledge of the transfer. The undisputed facts show that he waited until after the statute of
limitations ran before filing this action. There are inadequate countervailing facts even when
reasonable inferences are made to deny movant the repose the statute of limitations is
intended to afford her.
United States Bankruptcy Judge
DATED: February 23, 2010
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NOTE TO USERS OF THIS FORM:
1) Attach this form to the last page of a proposed Order or Judgment. Do not file as a separate document.
2) The title of the judgment or order and all service information must be filled in by the party lodging the order.
3) Category I. below: The United States trustee and case trustee (if any) will always be in this category.
4) Category II. below: List ONLY addresses for debtor (and attorney), movant (or attorney) and person/entity (or
attorney) who filed an opposition to the requested relief. DO NOT list an address if person/entity is listed in category I.
NOTICE OF ENTERED ORDER AND SERVICE LIST
Notice is given by the court that a judgment or order entitled (specify) MEMORANDUM OF OPINION
RE: DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
was entered on the date indicated as AEntered@ on the first page of this judgment or order and will be served
in the manner indicated below:
I. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (ANEF@) B Pursuant to controlling
General Order(s) and Local Bankruptcy Rule(s), the foregoing document was served on the following
person(s) by the court via NEF and hyperlink to the judgment or order. As of , the
following person(s) are currently on the Electronic Mail Notice List for this bankruptcy case or adversary
proceeding to receive NEF transmission at the email address(es) indicated below.
• James A Dumas jamedumas@aol.com
• Paul J Laurin plaurin@rutterhobbs.com, calendar@rutterhobbs.com
• United States Trustee (SV) ustpregion16.wh.ecf@usdoj.gov
• Stuart J Wald stuart.wald@gmail.com
Service information continued on attached page
II. SERVED BY THE COURT VIA U.S. MAIL: A copy of this notice and a true copy of this judgment or order
was sent by U.S. Mail to the following person(s) and/or entity(ies) at the address(es) indicated below:
Wilkie Cheong
Cheong, Denove, Rowell & Bennett
10100 Santa Monica Blvd Ste 2460
Los Angeles, CA 90067
Service information continued on attached page
III. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment or
order which bears an AEntered@ stamp, the party lodging the judgment or order will serve a complete copy
bearing an AEntered@ stamp by U.S. Mail, overnight mail, facsimile transmission or email and file a proof of
service of the entered order on the following person(s) and/or entity(ies) at the address(es), facsimile
transmission number(s) and/or email address(es) indicated below:
Service information continued on attached page
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