It is currently Thu Jul 27, 2017 1:47 pm


All times are UTC - 8 hours [ DST ]




Post new topic Reply to topic  [ 1 post ] 
Author Message
 Post subject: FT - Keitel v. Heubel (3/5/2004) Civil Conspiracy
PostPosted: Thu Feb 26, 2009 3:40 pm 

Joined: Mon Dec 15, 2008 11:29 am
Posts: 112
Keitel v. Heubel
2004.CA.0001955 (Cal.App. Dist.1 03/05/2004)

Synopsis

The claims that were litigated in the present action arose while Keitel was trying to enforce a judgment that she obtained against the Heubels. Mary Keitel and George Heubel are brother and sister. The previous litigation involved the handling of their late mother’s estate.

The case at bar concerns the actions taken by the Heubels prior to the previous judgment being entered against them. Keitel alleges that the day before the judgment was entered; the Heubels executed four Grant Deeds in order to prevent Keitel from executing her judgment. Pursuant to the deeds, the Heubels then transferred title to the trustees of the “George William Heubel and Peggy Anne Heubel Blind Trust dated June 19, 1997.” Keitel further alleges that a notice of levy was recorded and served on the Heubels, but Keitel was unable to execute on the property.

Keitel also alleges that the transfers into the trust violated the UFTA because they were 1) made without consideration, 2) rendered the Heubel’s insolvent, and 3) were done with the specific intent to defraud Keitel. Keitel asserts that the Heubels and the named trustees of the trust “conspired together to steal assets from the estate of George Heubel and Mary Keitel’s mother, and to conceal those assets and hide the true ownership thereof I order to insulate them from collection or recovery.”

The court held that the conspiracy claim failed as a matter of law because there is no independent cause of action for conspiracy and the fraud claims upon which the conspiracy was based, failed. Keitel claims that the civil conspiracy claim should survive because the Heubels violated a penal code section that forbids fraudulent transfers to avoid debt execution. However, the court reasons that that particular provision of the Penal Code doesn’t authorize a civil action for damages and can’t support a civil conspiracy claim.

Opinion

[U] Keitel v. Heubel, 2004.CA.0001955 (Cal.App. Dist.1 03/05/2004)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT DIVISION TWO

A101788

2004.CA.0001955

March 5, 2004

MARY KEITEL, PLAINTIFF AND APPELLANT,
v.
GEORGE W. HEUBEL, ET AL., DEFENDANTS AND RESPONDENTS.

(Alameda County Super. Ct. No. 821290-6)

The opinion of the court was delivered by: Haerle, J.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

I. INTRODUCTION

Mary Keitel appeals from a judgment denying her relief in this fraud action she filed against her brother and sister-in law George and Peggy Heubel. The trial court granted the Heubels' motions for non-suit and a directed verdict and entered judgment in their favor because it found insufficient evidence was presented at trial to support Keitel's claims alleging (1) a violation of the Uniform Fraudulent Transfer Act, Civil Code sections 3439, et seq. *fn1 (the UFTA), (2) common law fraud, and (3) conspiracy to commit fraud. We affirm.

II. FACTS AND PROCEDURAL HISTORY

A. Background - The Prior Fraud Action

The claims that were litigated in the present action arose while Keitel was attempting to enforce a judgment for damages for fraud and undue influence that she obtained against the Heubels in 1997. In this case, the parties stipulated to the following factual summary of the prior fraud action: "Mary Keitel and George Heubel are sister and brother. A dispute arose out of the handling of their late mother's estate. Plaintiff sued defendants in a prior lawsuit alleging that defendants obtained property that was rightfully hers by asserting undue influence and by representing facts to Mary Keitel and failing to disclose material facts to her. That lawsuit resulted in a jury verdict against defendants in the amount of $361,267." *fn2

B. The Present Action

Keitel filed her complaint in this action on January 5, 2000. She alleged that a $361,267 fraud judgment was entered against the Heubels on June 20, 1997 (the 1997 judgment). Keitel further alleged that on June 19, 1997, the day before the 1997 judgment was entered, the Heubels executed four "purported Grant Deeds" in order to prevent Keitel from satisfying her judgment. Pursuant to these deeds, the Heubels transferred or purported to transfer title to their realty to the trustees of the "George William Heubel and Peggy Anne Heubel Blind Trust dated June 19, 1997" (the Heubel Trust). Keitel further alleged that, on or about June 3, 1998, a notice of levy was recorded and served on the Heubels but Keitel was nevertheless prevented from executing on the Heubels' property because of the "fraudulent deeds."

Keitel alleged that the June 19, 1997, transfers into the Heubel Trust violated the UFTA because they were made without consideration, rendered the Heubels insolvent and were done with the specific intent to defraud Keitel. Keitel also alleged the Heubels committed common law fraud by making material misrepresentations which prevented Keitel from proceeding against the Heubels' real property. Two types of misrepresentations were alleged: (1) that the Heubels made misrepresentations to the trial court in the prior action in order to delay entry of the 1997 judgment so they would have time to transfer their realty into the Heubel Trust, and (2) that the Heubels "misrepresented to the world . . . that the apparent conveyance in trust to the Trustees was a valid, true, honest and proper one." In a separate cause of action, Keitel alleged that the Heubels and the named trustees of the Heubel Trust conspired together to steal assets from the estate of George Heubel and Mary Keitel's mother, and to conceal those assets and hide the true ownership thereof in order to insulate them from collection or recovery. Notwithstanding this allegation, the complaint also states: "Plaintiff alleges herein alternatively that the Trustees were not co-conspirators, but that they were pawns without knowledge of the improper purpose of the purported trust."

The complaint contains several additional causes of action in which Keitel alleged or purported to allege claims for declaratory and injunctive relief. The prayer for relief was for an order that the Sheriffs of Alameda and Tuolumne Counties hold judgment execution sales of the four realty parcels or, alternatively, that the transfers into the Heubel Trust be set aside or, again alternatively, that a constructive trust be imposed. Keitel also sought numerous other types of equitable relief and damages according to proof.

On April 21, 2000, the Heubels filed an answer to Keitel's complaint in which they denied all material allegations and alleged twenty-two affirmative defenses. As a twenty-second affirmative defense the Heubels alleged: "These answering Defendants' conduct was justified and privileged under the circumstances in that the alleged conduct was for the purpose of protecting their legitimate interests." On April 21, the Heubels also filed a cross-complaint for libel and intentional infliction of emotional distress against both Keitel and her attorney of record, Brian Dinday. The Heubels alleged they were damaged by libelous statements contained in a letter that attorney Dinday sent to the trustees of the Heubel Trust.

C. Pretrial Proceedings

On July 25, 2000, the trial court sustained Keitel's demurrer to the Heubels' cross-complaint on the ground it challenged conduct that was privileged pursuant to section 47, subdivision (b) (section 47(b)). Section 47(b), the so-called litigation privilege, states, in relevant part, that "[a] privileged publication or broadcast is one made: . . . (b) In any . . . (2) judicial proceeding . . . ." The Heubels were granted leave to amend their cross-complaint, which they did. However, on September 13, 2000, the court sustained another demurrer and dismissed the cross-complaint with prejudice.

On September 26, 2000, the court filed a trial setting and case management conference order that provided, among other things, that "[a]ny dispositive motions" were to be heard and resolved prior to the mandatory settlement case management conference. That conference was set for and held on February 27, 2001. On February 28, the Heubels filed a motion for summary judgment. On April 30, the court denied the motion. On May 23, 2001, the court filed a separate order imposing sanctions against the Heubels' attorney for filing a frivolous motion for summary judgment in violation of the court's case management order resulting in a delay of trial. Thereafter, the Heubels' attorney was permitted to withdraw from this action. *fn3 Eventually, on November 27, 2001, the Heubels secured another attorney to represent them in this action.

On December 31, 2001, the Heubels filed a "Notice of Filing of Bankruptcy Proceeding & Stay of All Proceedings And Or Sale Pursuant to 11 USC 362." The Heubels' bankruptcy case was dismissed with prejudice on July 22, 2002.

On August 28, 2002, the Heubels' interest in two of the four parcels of realty at issue in this case were sold and the proceeds were paid to Keitel in partial satisfaction of her judgment. Although the trial record does not disclose any further details about the sales, the Heubels' appellate counsel has filed a declaration in support of the Heubels' motion to impose sanctions against Keitel and Dinday for filing a frivolous appeal in this case in which he states that Keitel has been paid "nearly $500,000 in satisfaction of [her] $361,267.00 judgment."

D. The Trial

A jury trial commenced on December 17, 2002, before the Honorable Horace Wheatley. By that time, Keitel had settled her claims against the trustees of the Heubel Trust leaving only the Heubels as defendants at trial. Further, only three of Keitel's claims were tried to the jury -- the UFTA claim, the common law fraud claim and the conspiracy claim. Keitel's position at trial was that these damages claims were not mooted by the sales of the Heubels' realty in satisfaction of the 1997 judgment because she was entitled to recover damages in the amount of $28,796.26 to compensate her for attorney fees incurred to enforce the 1997 judgment.

After Keitel presented her case to the jury, the Heubels made a motion for non-suit on the common law fraud claim. The court deferred ruling on the motion until the close of all the evidence.

After the close of evidence, the Heubels made a motion for a directed verdict. A hearing on the Heubels' two pending motions was held on December 27, 2002. On December 30, the court granted the motions for non-suit and directed verdict and dismissed the jury. Judgment was entered on January 22, 2003. Keitel filed her timely notice of appeal on February 24, 2003.

III. DISCUSSION

A. Standard of Review

A trial court employs the same standard to evaluate a motion for non-suit and a defense motion for a directed verdict. (Estate of Fossa (1962) 210 Cal.App.2d 464, 466; Quinn v. City of Los Angeles (2000) 84 Cal.App.4th 472, 479 (Quinn); Adams v. City of Fremont (1998) 68 Cal.App.4th 243, 263 (Adams).) The defendant is entitled to a non-suit or a directed verdict if, as a matter of law, the evidence presented by the plaintiff is insufficient to permit a jury to find in his favor. The trial court may not weigh the evidence or consider the credibility of witnesses. The evidence most favorable to plaintiff must be accepted as true and conflicting evidence must be disregarded. Nevertheless, there must be substantial evidence supportive of the plaintiff's claim[s] to warrant a resolution by the jury. (Nally v. Grace Community Church of the Valley (1987) 47 Cal.3d 278, 291 (Nally); Quinn, supra, 84 Cal.App.4th at pp. 479-480; Adams, supra, 68 Cal.App.4th at pp. 262-263.)

We review the trial court's rulings by applying the same test it was required to use. (Nally, supra, 47 Cal.3d at p. 291; Adams, supra, 68 Cal.App.4th at p. 263.) "We will not sustain the judgment `"unless interpreting the evidence most favorably to plaintiff's case and most strongly against the defendant and resolving all presumptions, inferences and doubts in favor of the plaintiff a judgment for the defendant is required as a matter of law."' [Citations.]" (Nally, supra, 47 Cal.3d at p. 291.)

B. The UFTA

Keitel contends she produced sufficient evidence to support a jury finding that the Heubels violated sections 3439.04 and 3439.05 of the UFTA.

Section 3439.04 provides: "A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation as follows: [] (a) With actual intent to hinder, delay, or defraud any creditor of the debtor. [] (b) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor: [] (1) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or [] (2) Intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due." Section 3439.04 has been construed to mean that a transfer is fraudulent if the provisions of either subdivision (a) or subdivision (b) of section 3439.04 are satisfied. (Monastra v. Konica Business Machines, U.S.A., Inc. (1996) 43 Cal.App.4th 1628, 1635; Reddy v. Gonzalez (1992) 8 Cal.App.4th 118, 122-123.)

Section 3439.05 states: "A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation."

Keitel focuses primarily on subdivision (a) of section 3439.04 and argues there was overwhelming evidence of the Heubels' "actual intent to hinder, delay, or defraud." She also contends there was sufficient evidence to support findings the Heubels violated sections 3439.04, subdivision (b), and 3439.05. However, in making these arguments, Keitel fails to heed a threshold requirement that is dispositive here. In order for either sections 3439.04 or 3439.05 to apply, the conveyance of the Heubels' realty into the Heubel Trust must constitute a "transfer" within the meaning of the UFTA.

The UFTA defines a transfer as "every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance." (§ 3439.01 subd. (i), emphasis added, (section 3439.01(i).) The trial court found that the conveyance of property into the Heubel Trust was not a transfer within the meaning of the UFTA. We agree.

Undisputed evidence presented at trial established that the Heubels transferred their property into a revocable trust. *fn4 On June 19, 1997, they executed and recorded four grant deeds pursuant to which they granted their real property to three individuals "as Co-Trustees" of the Heubel Trust. That same day, the Heubels executed a "Declaration of Trust" which described the Heubel Trust as a "revocable living trust." In this trust instrument, the Heubels expressly reserved the right to "revoke this trust at any time." While the trust was in effect, the Heubels were designated as the sole beneficiaries during their lifetime. The instrument also stated that if the trust was revoked, ownership of the property reverted to the Heubels.

Two additional facts are undisputed. First, on July 3, 2001, Keitel obtained a post-judgment order from the trial court in the prior fraud action against the Heubels (the July 3 order) which stated, in pertinent part: "the George William Heubel and Peggy Anne Heubel Blind Trust dated June 19, 1997, is a trust for which the settlors retained the power to revoke the trust in whole within the meaning of Probate Code section 18200 and, accordingly, the trust property is subject to the claims of the creditors of George William Heubel and Peggy Anne Heubel. . . . A writ of execution may issue against the Trustees of the George William Heubel and Peggy Anne Heubel Blind Trust dated June 19, 1997." *fn5

Second, on August 28, 2002, two parcels of the Heubels' real property were sold at a sheriff's sale and proceeds of that sale were paid to Keitel in partial satisfaction of the fraud judgment entered in the prior action.

This evidence -- that the Heubels transferred their property into a revocable trust, that the property in the trust was reachable by the Heubels' creditors, and that Keitel did in fact execute on some of that property in order to satisfy her judgment -- establishes that, as a matter of law, the Heubels did not "dispos[e] of or part[] with an asset or an interest in an asset" (§ 3439.01(i)) by placing their property into the Heubel Trust and thus did not make a "transfer" within the meaning of the UFTA.

Our conclusion is consistent with Gagan v. Gouyd (1999) 73 Cal.App.4th 835 (Gagan), *fn6 a case upon which the trial court expressly relied. In that case, Gagan obtained a money judgment against Victor and James. Before Gagan could collect the judgment, both Victor and James, and their respective wives, made several property transfers. The trial court found that all of the challenged property transfers violated the UFTA. The Gagan court reversed in part and affirmed in part. It held, among other things, that a transfer by James and his wife into a revocable trust did not violate the UFTA because the transfer was not a fraudulent transfer within the meaning of section 3439.01(i). As the court explained, "the transfer by James and Constance did not result in `disposing of or parting with an asset or an interest in an asset.' The property remained available to creditors. There is no evidence in this case that the transfer by James and Constance to a revocable trust of which they were the beneficiaries rendered the property unavailable to the creditors. Property in a revocable trust is subject to creditor claims to the extent of the debtor's power of revocation. (Prob. Code, § 18200.) Hence, the trial court erred in finding that transfer of the real property to the trust was a fraudulent conveyance." (Gagan, supra, 73 Cal.App.4th at p. 842.)

Keitel attempts to distinguish and/or discredit Gagan but her analysis of that case is tortured and misguided. Responding to Keitel's confusing contentions would not be beneficial. However, we do expressly reject her claim that Gagan cannot or should not be interpreted as advancing a general rule. Gagan illustrates that a transfer of property into a revocable trust does not violate the UFTA because (1) the transferor does not thereby part with any interest in the trust property, and (2) the trust property remains subject to the claims of creditors. This general rule is consistent with the language of section 3439.01(i) of the UFTA and section 18200 of the Probate Code. This rule has also been acknowledged by a variety of commentators. (See 3 Bancroft-Whitney's Cal. Civil Practice (2000) Probate and Trust Proceedings, § 24:167 ["If a settlor retains the power to revoke a trust in whole or in part, the trust property is subject to the claims of creditors of the settlor to the extent of the power of revocation during the lifetime of the settlor. [Prob. Code, § 18200] The creditors are thus enabled to ignore the trust during the settlor's lifetime to the extent that it is revocable. [Citation.]"]; 5 Miller & Starr, Cal. Real Estate (2000) § 12:62, p. 161 ["A transfer of assets to the inter vivos trust is not a fraudulent conveyance to third-party creditors because the property remains liable for the debt after the transfer."]; Schwartz and Ahart, Cal. Practice Guide: Enforcing Judgments and Debts (The Rutter Group 2003) § 3:319.1, p. 3-95 ["A property transfer to a revocable trust by a transferor who is also one of the trust's beneficiaries is not a fraudulent transfer."].)

We find that the trial court did not err by taking the UFTA claim away from the jury. The evidence presented at trial established that, as a matter of law, the Heubels did not violate the UFTA by transferring their real property into the Heubel Trust.

C. Common Law Fraud

The trial court found that Keitel's "fraud claim failed as a matter of law because all allegedly fraudulent actions, conduct and communications by defendants . . . were absolutely privileged" under the section 47(b) litigation privilege. Keitel contends the trial court erred by (1) permitting the Heubels to assert the section 47(b) privilege at trial and (2) finding the Heubels' actions and statements were privileged.

1. Alleged lack of notice regarding the privilege issue

Keitel contends the court committed "prejudicial error" by considering the section 47(b) privilege as a ground for granting the non-suit and directed verdict motions. Although she cites no pertinent authority, Keitel apparently maintains that she was denied "basic due process and a level playing field." To support this argument, Keitel makes several factual assertions, which are inconsistent with the appellate record.

First, Keitel contends the Heubels waived the privilege by failing to allege it as an affirmative defense in their answer. As noted in our factual summary, the twenty-second affirmative defense in the Heubels' answer was that their "conduct was justified and privileged under the circumstances in that the alleged conduct was for the purpose of protecting their legitimate interests." Keitel acknowledges this twenty-second affirmative defense but contends that "[i]n no way does this inform Plaintiff that Civil Code Sec. 47 immunity is alleged." We disagree. The complaint itself alleged facts indicating the applicability of the litigation privilege defense since some of the alleged misrepresentations were made "to the trial court." Further, as noted in our factual summary, Keitel opposed and defeated the Heubels' cross-complaint by relying on the section 47(b) litigation privilege. When viewed in light of these two circumstances, the twenty-second affirmative defense was adequate notice that the litigation privilege was an issue in this case.

Second, Keitel contends that the Heubels' trial counsel entered into a "pretrial stipulation that he was withdrawing all of his affirmative defenses." We find no evidence of such a stipulation. Rather, on the first day of trial, the court inquired whether defense counsel intended to prove any of the numerous affirmative defenses alleged in the Heubels' answer. Defense counsel responded with an apology, explained that the answer had been filed by prior counsel and confessed he was not prepared to share his plans as to what affirmative defenses he intended to pursue. Counsel asked and was permitted to "reserve" the issue.

Third, Keitel contends it was unfair to allow the Heubels to rely on the section 47(b) privilege during trial because it is a dispositive legal issue. Without citing any authority, Keitel contends the privilege should have been raised in a summary judgment motion. Indeed, she claims the Heubels violated the lower court's September 26, 2000, case management conference order by asserting the privilege as a ground for a non-suit and a directed verdict because it was a dispositive issue and the case management conference order required that "[a]ny dispositive motions" be brought and heard prior to the mandatory settlement conference. This is not a compelling argument. Clearly, the case management order was not intended to and did not apply to a motion for non-suit or directed verdict which, by definition, are both potentially dispositive and brought after the presentation of evidence at trial. Furthermore, although the litigation privilege does raise questions of law, its application in a given case obviously depends on the factual circumstances. Here, Keitel's factual allegations that actionable misrepresentations were made were both broad and vague. Thus, it may not have been clear until the time of trial that the litigation privilege could be a defense to the entire fraud claim.

Finally, Keitel contends that her counsel did not have sufficient notice of or time to oppose the privilege defense because the Heubels' non-suit and directed verdict motions were "sandbag" motions brought during a hectic time in the trial and shortly before Christmas. Keitel made an oral motion for non-suit on the common law fraud claim based on the litigation privilege on December 19, 2002. The court deferred ruling on the motion until after the defense presented its case to the jury in order to, among other things, give Keitel's trial counsel "an opportunity to submit whatever written points and authorities he wishes to present in opposition to it." Subsequently, the court held a hearing on the motions for non-suit and directed verdict on December 27, took the matter under submission and made its rulings on December 30, 2002. In our view, Keitel had ample notice and opportunity to oppose the motions.

2. The section 47(b) privilege

Keitel maintains she alleged and proved at trial that the Heubels engaged in fraudulent conduct that was not protected by the section 47(b) litigation privilege.

Section 47(b) "states any `publication or broadcast' made in the course of a `judicial proceeding' is privileged. Originally enacted in 1872, this provision stems from the common law's defense to defamation actions for statements made in judicial proceedings." (O'Keefe v. Kompa (2000) 84 Cal.App.4th 130, 133.) The privilege extends to communications: "(1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action." (Silberg v. Anderson (1990) 50 Cal.3d 205, 212 (Silberg); see also Kimmel v. Goland (1990) 51 Cal.3d 202, 209 (Kimmel).)

"The chief function of the privilege is to afford litigants and witnesses free access to the courts without the threat of derivative litigation." (Brown v. Kennard (2001) 94 Cal.App.4th 40, 45 citing Silberg, supra, 50 Cal.3d 205.) To further this policy, "California courts have extended the litigation privilege beyond the defamation context to preclude numerous other tort actions. For example, abuse of process, fraud, intentional inducement of breach of contract, intentional infliction of emotional distress, intentional interference with prospective economic advantage, invasion of privacy, negligence, and negligent misrepresentation are all subject to the privilege. Malicious prosecution is the only tort not subject to the litigation privilege. . . . Because the privilege applies without regard to malice or evil motives, it has been characterized as `absolute.'" (Brown v. Kennard, supra, 94 Cal.App.4th at p. 45, fns. omitted.)

In the present case, Keitel's efforts to show that the Heubels made non-privileged material misrepresentations are muddled. We perceive three distinct alleged misstatements of material fact and, for reasons we explain, we find that all three fall within the privilege.

3. The application for a stay in the prior fraud action

Keitel contends the Heubels made misrepresentations in an "Ex Parte Application For Temporary Stay of Enforcement of Judgment" they filed in the prior fraud action on June 12, 1997. However, in her appellate brief, Keitel does not identify any specific statement in the stay application as false. Instead, she contends that filing the document made the Heubels liable for fraudulent concealment because they owed a duty to both the court and Keitel to disclose their intention to obtain a stay so they would have time to convey their realty into the Heubel Trust.

We have serious reservations about Keitel's theory of liability. However, we needn't test that theory since statements contained in the stay application are squarely covered by the section 47(b) privilege. The stay application is a written communication that was made in a judicial proceeding by a litigant to achieve the objects of the litigation, and it was directly connected and logically related to the action. (See Silberg, supra, 50 Cal.3d at p. 212.)

Keitel contends the stay application was not protected by the litigation privilege because the filing of that document constituted a fraud on the court. To support her contention, she cites In re Marriage of Park (1980) 27 Cal.3d 337, 340; Olivera v. Grace (1942) 19 Cal.2d 570, 576-577 and Rice v. Rice (1949) 93 Cal.App.2d 646, 653. This authority is inapposite. In each of these cases a judgment was set aside because one of the litigants committed a fraud upon the court by failing to disclose material facts. None of these cases were derivative actions for money damages and thus none implicated the section 47(b) litigation privilege.

If the Heubels defrauded the trial court in the prior action, Keitel's remedy would have been to attack the 1997 judgment. She made no such attack because the alleged fraudulent concealment did not affect the validity of the 1997 judgment. Indeed, Keitel enforced that judgment. Thus, the present case is of a fundamentally different nature than the "fraud on the court" cases upon which Keitel relies. This is a derivative action in which Keitel seeks money damages for fraudulent injury allegedly resulting from communications the Heubels made during the course of the prior judicial action. Section 47(b) protects those communications.

Here, and throughout her appellate briefs, Keitel underscores evidence that the Heubels were intentionally deceptive. We acknowledge that evidence and by no means condone such conduct. However, the litigation privilege extends to fraudulent statements, even when made to a court, if they were made in furtherance of litigation. (Boston v. Nelson (1991) 227 Cal.App.3d 1502, 1507 [intentional misstatements and misleading statements by attorney to trial court were privileged because made in furtherance of litigation].) "`The "furtherance" requirement was never intended as a test of a participant's motives, morals, ethics or intent.'" (Ibid., quoting Silberg, supra, 50 Cal.3d at p. 220.)

4. The deeds

Keitel contends she produced evidence that the Heubels made misstatements in the June 19, 1997, deeds transferring their realty to the trustees of the Heubel Trust. Specifically, she contends that statements contained in each deed that the transfer of realty was made (1) "FOR A VALUABLE CONSIDERATION" and (2) to trustees of a "Blind Trust" were material misstatements of fact. She contends these misrepresentations contained in the deeds were communicated to her, to the Alameda County Sheriff's office and to the world at large.

At trial, Keitel testified that neither George nor Peggy Heubel made any representation directly to her or spoke to her at all after entry of the verdict in the prior fraud action. Keitel also testified that, after the date the verdict was entered, she did not receive any document from the Heubels that was not filed in a legal action. Thus, the record establishes that the Heubels did not make any direct misrepresentations to Keitel. The statements in the deeds were not communicated to Keitel by the Heubels. Rather, the Heubels sent copies of these deeds to the sheriff on or about August 9, 1998.

Keitel's theory is that statements the Heubels communicated to the sheriff can support her claim for damages because the Heubels intended for those statements to be communicated to her and/or because the sheriff was her agent for purposes of executing on the Heubels' property. We accept these theories for purposes of argument but find, nevertheless, that Keitel's argument fails because of the litigation privilege. Evidence produced at trial establishes that the alleged misrepresentations in the deeds were communicated to Keitel (via the sheriff) in the context of the post-judgment enforcement proceedings in the prior fraud action. As such, the alleged misstatements were privileged. (See, e.g., Brown v. Kennard, supra, 94 Cal.App.4th at p. 49 ["enforcement proceedings are an extension of the judicial process, and are related to the realization of a litigation objective"]; O'Keefe v. Kompa, supra, 84 Cal.App.4th at p. 133 [statements made during post-trial collection proceedings were covered by the privilege]; Merlet v. Rizzo (1998) 64 Cal.App.4th 53, 65 [privilege barred abuse of process claim against attorneys for filing improper motion for writ of sale against property owned by debtor's husband, seeking reconsideration when motion was denied and appealing order denying motion for reconsideration].)

Keitel contends a jury could have found that the privilege does not apply to statements in the deeds because there was evidence that the deeds were executed for reasons not related to the prior fraud action. She relies on testimony by Peggy Heubel that execution of the deeds was part of the Heubels' estate planning and had nothing to do with the 1997 judgment or Keitel's efforts to enforce it. Keitel also relies on testimony by George Heubel that the Heubel Trust was created for estate planning purposes and he did not anticipate it would have any impact on Keitel's ability to enforce the 1997 judgment. Keitel contends that the jury could have concluded from this evidence that the litigation privilege does not apply to the deeds because they are not sufficiently related or connected to the underlying fraud action. *fn7

The problem with Keitel's argument is that the relevant act, for purposes of determining whether the privilege bars the common law fraud claim, was not execution of the deeds but rather the communication of the alleged misrepresentations in the deeds to Keitel. As noted above, undisputed evidence establishes that the Heubels never directly communicated with Keitel about the deeds. Rather, Keitel became aware of the deeds, and the allegedly fraudulent statements therein, after the Heubels sent copies of the deeds to the sheriff in August 1998. Representations that the Heubels made to the sheriff, by communicating the contents of the deeds to him, clearly were made during the course of the post-judgment enforcement proceedings in order to further the Heubels' litigation objective.

At times, it appears that Keitel may be arguing that the actual transfer of property into the Heubel Trust, which was accomplished by executing the deeds, was unprivileged conduct that could support her fraud claim. For example, she cites Kimmel, supra, 51 Cal.3d 202, as generally supportive of her arguments on appeal. Kimmel establishes that "[t]he litigation privilege applies only to torts arising from communicative acts; it does not protect purely non-communicative tortious conduct." (Brown v. Kennard, supra, 94 Cal.App.4th at p. 40.) If Keitel is suggesting that her fraud claim was not barred by the litigation privilege because the Heubels' wrongful conduct was non-communicative, we disagree.

The Kimmel court found that the litigation privilege did not bar a Penal Code section 637.2 claim for statutory damages for injuries caused by illegally recording a confidential telephone conversation. The court reasoned that the privilege did not apply because the plaintiff alleged "that it suffered injury from the taping of confidential telephone conversations, not from any `publication' or `broadcast' of the information contained in these conversations." (Kimmel, supra, 51 Cal.3d at p. 209.) The court limited its holding to the "narrow facts before [it] involving non-communicative acts--the illegal recording of confidential telephone conversations--for the purpose of gathering evidence to be used in future litigation." (Id. at p. 205.)

Kimmel might have assisted Keitel had she proven that the Heubels fraudulently transferred their property. Arguably, the act of transferring one's property is non-communicative conduct not protected by the litigation privilege as it is defined in Kimmel. However, for reasons we have already explained, the transfer of property into the Heubel Trust was not a fraudulent transfer. All of the remaining fraudulent conduct alleged by Keitel in this case was unquestionably communicative in nature. Indeed, proving a misrepresentation of material fact was an essential element of Keitel's common law fraud claim. Thus, the rule announced in Kimmel simply does not apply in this case.

Keitel also intimates that the litigation privilege does not bar her claim because the Heubels engaged in criminal conduct by executing the deeds and fraudulently transferring their property into the Heubel Trust. (Citing Pen. Code, § 531.) She acknowledges that the privilege immunizes wrongful and even malicious conduct but asserts that "there are limits, and one dark, thick line is drawn at immunizing criminal conduct." Although Keitel cites no authority for this proposition, we believe it to be sound. Indeed, the Kimmel court suggested that the privilege cannot be used to obtain immunity from civil liability for violating a penal statute. (Kimmel, supra, 51 Cal.3d at p. 212.) However, this is neither a criminal case nor a civil action for damages for violating a penal statute. Since Keitel neither alleged nor proved that the Heubels committed a crime, it is unnecessary for us to consider the nature or scope of a possible criminal conduct exception to the section 47 litigation privilege.

5. Letter to the Sheriff

Keitel also bases her fraud claim on statements contained in an August 9, 1998, letter the Heubels sent to the Alameda County Sheriff along with copies of the deeds pursuant to which they transferred property into the Heubel Trust. The letter acknowledged receipt of a "Notice of Levy under Writ of Execution." It stated that enclosed copies of the grant deeds showed how the "subject properties" were owned. The letter further stated that "[t]he properties described are in the possession and control of the Trust as stated on each of the attached deeds." The Heubels also stated that "we are not the owners of record and were not at the time of levy" and advised that a "legal sale of the property cannot take place simply because we are not the owners of the properties referenced in the Notice of Levy."

Accepting, again for purposes of argument, Keitel's contention that statements made to the sheriff can support her fraud claim, we nevertheless find these statements are protected by the litigation privilege. The statements were made (1) by litigants in the fraud action which resulted in the 1997 judgment, (2) to the sheriff who was charged with enforcing that judgment, and (3) directly related to the Heubels' litigation objectives with respect to the underlying fraud action. As such, the statements had the requisite logical connection to the underlying fraud action to bring them within the scope of the litigation privilege.

Rather than squarely face the issue of privilege, Keitel attempts to support her position by underscoring evidence that statements in this letter were clearly false. However, that evidence simply is not relevant since the litigation privilege applies to bar fraud claims. We join other courts that "`recognize the necessary harsh result in extending a privilege to false and fraudulent statements made in the course of a judicial proceeding. We accept that result, however, on account of the overriding importance of the competing public policy in favor of enhancing the finality of judgments and avoiding unending post judgment derivative litigation -- a policy which places the obligations on parties to ferret out the truth while they have the opportunity to do so during litigation.'" (Home Ins. Co. v. Zurich Ins. Co. (2002) 96 Cal.App.4th 17, 26 quoting Edwards v. Centex Real Estate Corp. (1997) 53 Cal.App.4th 15, 30.)

Since evidence presented at trial established that all of the alleged misrepresentations upon which Keitel based her fraud claim were privileged, the court did not err by granting the motions for non-suit and directed verdict as to the cause of action for common law fraud.

D. Conspiracy

The trial court found that Keitel's conspiracy claim failed as a matter of law because there is no independent cause of action for conspiracy and the fraud claims upon which the conspiracy was based failed. In other words, the conspiracy claim necessarily failed along with the fraud claims. Keitel disagrees with the trial court's reasoning. We do not.

"[T]here is no separate tort of civil conspiracy, and there is no civil action for conspiracy to commit a recognized tort unless the wrongful act itself is committed and damage results there from." (5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, § 44, p. 107, italics omitted.) "A conspiracy is not actionable unless a wrongful act was committed with resulting damage." (Id. at § 45 p. 108.) "Standing alone, a conspiracy does no harm and engenders no liability; it must be activated by the commission of an actual civil wrong. [Citation.]" (Monastra v. Konika Business Machines U.S.A., Inc., supra, 43 Cal.App.4th at p. 1644-1645.)

Keitel also contends that, even if her UFTA and common law fraud claims failed, her conspiracy claim survived because the evidence showed that the Heubels violated Penal Code section 531, which forbids fraudulent conveyances to avoid debt execution. Keitel's conspiracy theory was never really developed. *fn8 However, it is clear that she did not allege or prove that the Heubels violated Penal Code section 531. In any event, that provision of the Penal Code does not authorize a civil action for damages and thus cannot support a civil conspiracy claim.

E. The Heubels' Motion for Sanctions

On November 17, 2003, the Heubels filed a motion requesting that this court impose sanctions against Keitel and Dinday pursuant to rule 26(a)(2) of the California Rules of Court for filing a frivolous appeal in this case. Actually, the relevant rule is rule 27(e) which requires that a motion to impose sanctions for taking a frivolous appeal be filed "no later than 10 days after the appellant's reply brief is due." Therefore, the Heubels' motion is denied as untimely. Furthermore, there is an additional procedural impediment to considering the Heubels' motion: They have improperly failed to comply with this court's direct order to pay sanctions to this court for filing a prior frivolous appeal against Keitel. (See Keitel v. Heubel, supra, 103 Cal.App.4th at p. 343.)

However, the motion for sanctions raises an issue we will briefly address. The Heubels contend that Keitel is using the litigation process to harass them and delay their efforts to settle their debts and regain financial stability. Keitel responds with accusations that the Heubels continue to misrepresent events and she blames them for the ongoing legal problems in this patently dysfunctional family. It appears to us that both parties have lost objectivity and become their own worst enemies. We are also concerned by the strategic decisions that counsel are making on behalf of these parties. We encourage everyone to consider whether further legal proceedings would be in the best interest of anyone involved.

IV. DISPOSITION

The judgment is affirmed.

We concur:

Kline, P.J.

Lambden, J.



Opinion Footnotes

*fn1 All further statutory references are to the Civil Code unless otherwise indicated.

*fn2 This court resolved two appeals filed in connection with the prior fraud action. (See Keitel v. Heubel (2002) 103 Cal.App.4th 324; Keitel v. Heubel (Feb. 25, 1999, A079982) [non- pub. opn.].)

*fn3 According to the Heubels, their prior counsel withdrew because of a conflict of interest resulting from the sanction order and from a malicious prosecution action that Keitel and Dinday filed against them and their former attorney.

*fn4 Keitel's November 7, 2003, motion to substitute copies of exhibits for lost originals is granted.

*fn5 Keitel's November 7, 2003, motion to supplement this record to include a copy of the July 3 order is denied because this order was admitted into evidence at trial as Defendant's Exhibit C and is already a part of the record on appeal. Probate Code section 18200, which was the basis for the July 3 order, states: "If the settlor retains the power to revoke the trust in whole or in part, the trust property is subject to the claims of creditors of the settlor to the extent of the power of revocation during the lifetime of the settlor." This court affirmed the July 3 order in Keitel v. Heubel, supra, 103 Cal.App.4th 324.

*fn6 Gagan was disapproved on another ground in Mejia v. Reed (2003) 31 Cal.4th 657. The Mejia court found that the Gagan court erred by concluding that the provisions of the UFTA do not apply to marital settlement agreements. (Id. at p. 669.) Mejia is not relevant to the issues before us in the present case.

*fn7 We find it particularly odd that Keitel relies on this evidence. If the jury credited this testimony by the Heubels, it would necessarily have found that the Heubels did not intend to commit fraud when they executed the deeds.

*fn8 As noted in our factual summary, Keitel's conspiracy claim was not clearly alleged. Keitel claimed that the Heubels conspired with the trustees to conceal assets but also alleged in the alternative that the trustees were not co- conspirators. Although the trial record is unclear, it appears that Keitel abandoned her conspiracy claim at some point during trial but then revived it before the motions for non-suit and directed verdict were granted. Furthermore, it appears that Keitel now concedes that the trustees were not participants in the alleged conspiracy. Her position on appeal is that she proved that George Heubel and Peggy Heubel conspired with each other to conceal their assets by making fraudulent transfers and fraudulent misrepresentations.


Top
Offline Profile  
 
Display posts from previous:  Sort by  
Post new topic Reply to topic  [ 1 post ] 

All times are UTC - 8 hours [ DST ]


Who is online

Users browsing this forum: No registered users and 1 guest


You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum

Search for:
Jump to:  
cron
Powered by phpBB © 2000, 2002, 2005, 2007 phpBB Group
Theme created StylerBB.net