Lee v. Zi Cheng, LLC CA1/1 ( 2023 )

Filed 2/10/23 Lee v. Zi Cheng, LLC CA1/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publi-
cation or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or o r-
dered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
JULIE LEE, A160298
Plaintiff and Appellant,
(San Francisco City
v. & County
ZI CHENG, LLC et al., Super. Ct. No.
CGC17562136)
Defendants and Respondents.
In 2017, plaintiff Julie Lee obtained a money judgment against
defendant Steve Ly and his company defendant STTC, Inc., for breach of a
settlement agreement. After the ruling in that case in favor of Lee, but
before entry of judgment, Ly and STTC sold STTC’s assets, a bar business
and liquor license, to defendant Zi Cheng, LLC. Although the escrow holder
for the sale told Lee’s attorney that Lee should file a written creditor’s claim
so her claim could be paid out of the sale proceeds, Lee did not do so. Instead,
after the sale closed, Lee filed the instant case against Ly and STTC (the
“sellers”) and Zi Cheng, LLC and its owner, Zi Qiang Cheng (the “buyers”),
claiming the sale was a fraudulent transfer made to preclude her from
satisfying her damages judgment.
Following a bench trial, the trial court issued a 13-page statement of
decision, ultimately concluding that while the sellers may have engaged in
fraudulent concealment as to Lee, the buyers did not and purchased the
1
business and liquor license in “good faith” and “for a reasonably equivalent
value.”
On appeal, Lee takes issue with a number of the trial court’s findings
set forth in its statement of decision. She also claims the court erred in
allowing witness Hong Chew (the escrow holder) to testify on rebuttal and in
admitting into evidence a document proffered by the defendants.
In their respondents’ brief, defendants Zi Cheng, LLC and Zi Qiang
Cheng focus principally on asserted deficiencies in Lee’s appellate briefing
and claim she failed to carry her burden on appeal to demonstrate error by
the trial court.1
We affirm.
DISCUSSION
Appellant’s Briefing Precludes Appellate Review
Defendants are correct in their assessment of Lee’s briefing on appeal—
it violates the rules of court and effectively precludes appellate review.
In contravention of California Rules of Court, rule 8.204(1)(a)(C), many
pages of Lee’s opening and closing briefs purporting to recount the facts and
procedural history are entirely bereft of, or have only a bare sprinkling of,
citations to the record. The first three pages of the “Statement of Facts”
(some capitalization omitted) in her opening brief, for example, contain only
two citations to the record. And one of these is in a footnote and purports to
support the entirety of an extended paragraph recounting facts about a
meeting with the escrow holder for the sale apparently as testified to by Lee’s
attorney, although that is unclear because the record citation is not to any
1 Lee dismissed defendant Ly during trial and STTC is not a party to
this appeal. Thus, the appeal is being pursued only as to the buyers, Cheng
LLC and Zi Cheng.
2
record of such testimony, but to a notice of intent to transfer a liquor license.
Some pages of her “Statement of Facts,” namely those discussing the
documents in the escrow file, do contain citations to the record (the file was
admitted as an exhibit). However, these pages contain no record citations
supporting statements recounting asserted trial testimony about the escrow.
Other pages in her opening brief purporting to recount “Testimony at Trial,”
(some capitalization omitted) for example, contain not a single reference to
any witness’s testimony, let alone to the settled statement approved by the
trial court that she designated in lieu of a reporter’s transcript.2 Pages in her
closing brief purporting to list, in bullet style, “[t]he undisputed facts,” are
similarly bereft of citation to the record. So, too, the pages of her closing brief
denominated “Reply Discussion of Facts” (some capitalization omitted) are
devoid of any evidentiary record citations, save for two footnotes each with a
citation not to any record evidence, but to the trial court’s statement of
decision.
“Rule 8.204(a)(1)(C) of the California Rules of Court requires all
appellate briefs to ‘[s]upport any reference to a matter in the record by a
citation to the volume and page number of the record where the matter
appears.’ It is well established that ‘ “[i]f a party fails to support an
argument with the necessary citations to the record, . . . the argument [will
be] deemed to have been waived. [Citation.]” ’ [Citation.] This rule applies
to matters referenced at any point in the brief, not just in the statement of
facts.” (Conservatorship of Kevin A. (2015) 240 Cal.App.4th 1241, 1253.)
Accordingly, even if the factual and procedural sections of a brief contain
2 The court-approved settled statement consists of Lee’s “Proposed
Settled Statement” (some capitalization omitted) filed on December 6, 2021,
and Cheng LLC’s “Response to Appellant’s Proposed Settled Statement” filed
on December 7, 2021.
3
citations to the record, and here these sections of Lee’s briefs contain only a
few such citations, “do not cure the failure to cite evidence in the argument
section of the brief, and we will not pick and choose the portions of the brief
in the statement of facts that we may think are applicable to each assertion
in the argument. Rule 8.204(a)(1)(C) is intended to enable the reviewing
court to locate relevant portions of the record ‘without thumbing through and
rereading earlier portions of a brief.’ [Citation.] To provide record citations
for alleged facts at some points in a brief, but not at others, frustrates the
purpose of that rule, and courts will decline to consider any factual assertion
unsupported by record citation at the point where it is asserted.” (Alki
Partners, LP v. DB Fund Services, LLC (2016) 4 Cal.App.5th 574, 590, fn. 8,
quoting City of Lincoln v. Barringer (2002) 102 Cal.App.4th 1211, 1239, fn.
16.) Here, not only are the factual and procedural sections of Lee’s briefing
all but devoid of citations to the record, the argument sections of her briefs
have only scant references to the record, which, as we shall explain, are
manifestly insufficient to make her case on appeal.
Furthermore, Lee is, by her own admission, largely attacking the trial
court’s finding that the buyers gave “fair consideration” for the bar business
and liquor license, as well as a handful of other findings set forth in the
statement of decision. Not only does her failure to provide record citations
hamper our review of her substantial evidence challenges, but she has also
compounded the difficulty by arguing only the evidence she presented and
inferences she maintains must be drawn therefrom.
However, “ ‘[a]n appellant challenging the sufficiency of the evidence to
support the judgment must cite the evidence in the record supporting the
judgment and explain why such evidence is insufficient as a matter of law.
[Citations.] An appellant who fails to cite and discuss the evidence
4
supporting the judgment cannot demonstrate that such evidence is
insufficient. The fact that there was substantial evidence in the record to
support a contrary finding does not compel the conclusion that there was no
substantial evidence to support the judgment.’ ” (Verrazono v. Gehl Co.
(2020) 50 Cal.App.5th 636, 652.) Accordingly, a party challenging the
judgment for lack of substantial evidence must “ ‘set forth, discuss, and
analyze all the evidence on that point, both favorable and unfavorable.’ ”
(Pope v. Babick (2014) 229 Cal.App.4th 1238, 1246, italics omitted.)
“ ‘ “Unless this is done the error is deemed to be waived.” ’ ” (Ibid.) Thus, Lee
has forfeited any substantial evidence arguments that fail to take account of
the evidence and reasonable inferences supporting the trial court’s findings.
(Verranzono, at p. 653.)
Lee additionally disregards the principles that pertain on appeal where
the trial court has issued a statement of decision. She does not identify
anywhere in the record where she requested that the court make specific
findings or where she objected to the court’s statement as failing to make
findings on any material issue. “Where a party fails to ‘specify . . .
controverted issues’ or otherwise ‘make proposals as to the content’ of a
statement of decision under [Code of Civil Procedure] section 632 (forcing the
trial court to guess at what issues remain live during preparation of the
statement of decision), or where a party complies with [Code of Civil
Procedure] section 632 but fails to object under [Code of Civil Procedure]
section 634 (depriving the trial court of the opportunity to clarify or
supplement its statement of decision before losing jurisdiction), objections to
the adequacy of a statement of decision may be deemed waived on appeal.
[Citation.] Because either procedural defect impedes the trial court’s ability
to fulfill its duty under [Code of Civil Procedure] section 632 and potentially
5
undermines the effectiveness of any statement of decision it prepares as a
tool of appellate review, strict adherence to both steps of the process is
necessary before we will reverse the presumption of correctness generally
accorded trial court judgments on appeal.” (Thompson v. Asimos (2016)
6 Cal.App.5th 970, 983 (Thompson).)
Thus, we must, in the instant case, presume the judgment to be correct
and indulge all intendments and presumptions in favor of its correctness, and
under the doctrine of implied findings, we must infer that the trial court
“ ‘impliedly made every factual finding necessary to support its decision.’ ”
(Thompson, supra, 6 Cal.App.5th at p. 981, quoting Fladeboe v. American
Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 48.) Furthermore, “[a] single
witness’s testimony may constitute substantial evidence to support a
finding,” and “[i]t is not our role as a reviewing court to reweigh the evidence
or to assess witness credibility.” (Thompson, at p. 981.)
Challenges to the Statement of Decision
Lee first claims the trial court erred “in [its] finding that the
‘Defendants participated in an open process in their purchase of the liquor
license.’ ” She asserts, “[t]o start, the escrow holder named Hong Chew
testified at trial and was not credible in his testimony regarding his
relationship with [the seller] and [the buyer].” In support, Lee sets forth a
seven bullet-point list of summarized evidence that purportedly shows Chew
was disingenuous in his testimony. But not one of these bullet points is
supported by a single citation to the record. Lee has therefore forfeited this
claim of asserted error. Moreover, as we have recited, “ ‘[w]e do not reweigh
evidence or reevaluate a witness’s credibility.’ [Citations.] ‘Resolution of
conflicts and inconsistencies in the testimony is the exclusive province of the
trier of fact.’ ” (People v. Brown (2014) 59 Cal.4th 86, 106.) Thus, even if the
6
supposed evidence Lee points to is extant in the record, that does not carry
the day on appeal, as it was for the trial court to credit or not credit Chew’s
testimony at trial.
Lee next claims “[t]here was an abuse of discretion by [the court] in
[its] ruling that no [creditor’s] claim was filed by [Lee] prior to close of
escrow.” Lee provides a single record citation in support of this assertion—
excerpts from Chew’s deposition where he testified that Ly (the seller)
initially denied having any creditors, he (Chew) subsequently “discovered a
bunch of creditors,” he (Chew) did not run a “lien check” until right before the
close of escrow, he (Chew) met with Lee’s attorney (who was also her trial
attorney) and told him Lee needed to file a written claim “against escrow”
with him (Chew), and when he (Chew) asked Ly about Lee’s claim, Ly denied
owing her anything. After quoting this testimony, Lee launches into a two-
paragraph discussion of additional supposed evidence—without a single
record citation—which Lee argues proves that Chew paid off another creditor
who did not file a written claim. She then concludes “[o]bviously, [Chew]
exercised favorable treatment towards [Ly].” Lee’s failure to support half of
her argument and, indeed, the supposedly pivotal part of her argument, with
any record citations forfeits this claim. Moreover, her argument is another
unavailing effort to revisit the credibility of Chew’s trial testimony. In
addition, regardless of how Chew may have treated another creditor does not
establish any “abuse of discretion” by the trial court in finding that Lee did
not file a written creditor’s claim in escrow as Chew instructed.
Lee next claims the trial court “was erroneous in [its] finding that [Lee]
was ‘not’ a claimant [against the escrow] because no written claim was
submitted to [Chew] on her behalf.” She maintains she, in fact, filed an
adequate claim, albeit one that was not “written” and submitted to Chew,
7
and Chew therefore “disregarded any fiduciary duty he owed [Lee] despite . . .
her standing as a ‘creditor’ holding a ‘bona fide claim.’ ” In support of this
argument, Lee supplies a block quote that is unaccompanied by any citation
to the record or legal citation. She also cites to Webster v. Southern
California First National Bank (1977) 68 Cal.App.3d 407, 411 (Webster), for
the proposition that no “written” creditor’s claim need be submitted in order
for a creditor of the seller of a liquor license to be paid out of the escrow for
the transfer of the license.
Even given the little we know about the record in this case, Webster
appears to be inapposite. In that case the bank, which was the escrow holder
for the sale of a bar business and liquor license, sought and was granted
summary judgment on the sole ground that in light of court orders that had
required it to pay specific claims, it did not need to comply with the creditor
payment priorities set forth in Business and Professions Code section 24074.
(Webster, supra, 68 Cal.App.3d. at pp. 411, 415–416.) The Court of Appeal
reversed. After rejecting the bank’s other “court orders” defense, the court
considered the bank’s alternative argument—that the party seeking payment
from the bank “was not a creditor who had filed a claim in the escrow” and
therefore the statutory priority provisions were, in any event, irrelevant. (Id.
at p. 416.) The appellate court refused to entertain this argument for two
reasons. First, whether a party is someone who has filed a claim in escrow
was a question of fact that the record before the trial court “left undisposed
and unresolved.” (Ibid.) Second, the bank’s moving papers “gave no inkling
whatsoever” the bank was relying on such an assertion. (Ibid.) “A party
opposing a motion for summary judgment,” said the court, “cannot be
required to marshal facts in opposition to the motion which refute claims
wholly unrelated to the issues raised by the moving papers. A party may not
8
present his case at the trial court on one theory and then urge a completely
different theory on appeal. As stated by the Supreme Court in Ernst v. Searle
[(1933)] 218 Cal. 233, . . . 240–241. . . : ‘A party is not permitted to change his
position and adopt a new and different theory on appeal. To permit him to do
so would not only be unfair to the trial court, but manifestly unjust to the
opposing litigant.’ ” (Webster, at pp. 416–417.)
Lee’s failure to provide any citations to the record supporting her
argument on this “question of fact,” alone, forfeits her challenge to the trial
court’s finding. She also does not identify any place in the record where she
advanced the argument she is now making on appeal—that she was not
required to file a “written” creditor’s claim and Chew owed and breached a
“fiduciary duty” to pay her claim out of escrow. In fact, we note that in her
trial brief Lee asserted “whether [she] filed a timely claim against the escrow
maintained under the Bulk Sale Act and ABC Liquor License Laws is a
secondary question in this case because [she] has not alleged a claim that
Defendants violated either [statutory scheme]. . . . Instead, the focus of [her]
present case against the Defendants is based upon an alleged fraudulent
conveyance under UFTA Civ. Code § 3439.” She additionally asserted, “[she]
does not claim she suffered damages in the lawsuit at hand arising out of
improper handling of the escrow claims process, set forth in the Bulk Sales
Act and the ABC Liquor License Laws.” As in Webster, Lee cannot repackage
her case on appeal to embrace a claim she never advanced in the trial court.
We are at a loss as to Lee’s next claim of error which she has titled,
“The Error in the Statement of Decision: Re the Fraudulent Transfer.”
(Boldface omitted.) She quotes the trial court’s summary of the defense
arguments and then argues in two paragraphs—again without the benefit of
any citation to the record—that the evidence was such that the trial court
9
could not possibly have believed Chew’s testimony. Given her failure to
provide record citations, Lee has forfeited this argument. In her final
paragraph under this argument heading, Lee quotes from the statement of
decision in her first lawsuit against Ly. We cannot fathom how this excerpt
of the prior ruling against Ly, the seller—that he had no right to breach his
settlement agreement with Lee—advances the claims that are on appeal
here, namely those asserted against the buyers Cheng LLC and Zi Cheng.
Lee next claims there was “[n]o ruling whether [she] established an
actual fraudulent transfer under [Civil Code section] 3439.05.”
(Capitalization & boldface omitted.) We are again at a loss as to exactly what
argument Lee is advancing. She commences her argument with two
paragraphs of purported facts that are unsupported by any citation to the
record, and which we therefore disregard. She then states, in seeming
contradiction with her argument heading, “the question is, what was the
reasoning process employed [by the court] in [its] finding that it was shown
there was ‘good faith’ on the part of [Cheng LLC].” 3 In this regard she does
provide a citation to the record, specifically deposition testimony of Zi Cheng
that was read into the record. This testimony is to the effect that Cheng’s son
handled the purchase of the bar business and liquor license, and he (Cheng)
signed documents as instructed by his son. In the next two paragraphs of her
argument, and in a complete disconnect, Lee asserts—again without citing to
3 So clearly, the trial court did make a ruling as to whether Lee
established a fraudulent transfer as to the buyers, Cheng LLC and Zi Cheng,
and it was a ruling against her. The trial court also made a ruling as to
whether Lee established fraudulent intent on the part of the sellers, Ly and
STTC, and found that “[o]verall, the timing and circumstances of the transfer
support an inference that Ly actually intended to defraud [Lee].” However,
Lee dismissed Ly during trial, and only the buyers, Cheng LLC and Zi Cheng,
are parties to this appeal.
10
the record—that “[b]ecause it was never settled during trial who was actual
owner of Zi Cheng, LLC, there were insufficient facts to support [the court’s]
finding that [Cheng, LLC and Zi Cheng] acted in ‘good faith.’ ” Suffice it to
say Lee has not only forfeited this challenge to the trial court’s statement of
decision for lack of citations to the record, but her argument is
incomprehensible.
Lee next complains there was “[n]o testimony” from the sellers, Ly and
STCC, Inc. (Boldface omitted.) This appears to be an attack on the
defendant buyers’ evidence that they assumed the seller’s lease obligations,
which defendants asserted should be factored into the value they paid for the
bar business and liquor license and evidenced a good faith purchase for fair
value—a proposition defendants supported with testimony from witnesses
and with which the trial court ultimately agreed. Lee’s argument seems to be
that without testimony from the sellers (namely from Ly), defendants had
unbridled opportunity to inflate the value paid for the business and liquor
license. She posits, for example, “[w]ithout the testimony of [the sellers], how
could [the buyers] make a credible assertion at trial that [the sellers] feared
becoming indebted for breach of the lease.” She similarly argues in her
closing brief that “[t]he entire ‘lease assumption’ argument” which “was
erroneously adopted by [the court],” “is plagued by hearsay and speculation
which required the seller [(Ly)] to give testimony at trial to substantiate the
argument that the seller received a benefit from the ‘lease assumption
agreement.’ ”
To begin with, Lee does not cite to any part of the record where she
objected to the defendants’ evidence, let alone articulated the specific basis
for any objection thereto. She has therefore forfeited any complaint about the
admissibility of the evidence about which she complains. (See People v.
11
Demetrulias (2006) 39 Cal.4th 1, 21 (Demetrulias) [defendant forfeited
evidentiary claim by failing, in the trial court, “to make timely objections or a
timely motion to strike” on the “specific ground” raised on appeal].) Further,
as we have recited, we do not, on appeal, reweigh the evidence or reassess the
credibility of witnesses. That is the province of the trial court, and Lee is
again quarreling with the court’s assessment of the evidence before it.
In her closing brief, for the first time, Lee cites to a string of cases that
she maintains compel the conclusion the defendants did not pay “reasonably
equivalent value” for the bar business and liquor license and therefore were
not good faith purchasers beyond the reach of her fraudulent transfer claim.
We first point out that these are all older cases and there is no reason why
Lee did not cite them in her opening brief so defendants could have an
opportunity to respond. In any event, they do not assist Lee, as they all turn
on their particular facts, and Lee has provided an utter paucity of citations to
the record here, including none in the paragraphs in which she argues the
buyers “should have . . . known” (boldface omitted) the sellers intended to
defraud her and therefore are subject to her fraudulent transfer claim.
Lee cites, for example, to In re JTS Corp. (9th Cir. 2010) 617 F.3d 1102,
for the proposition that a finding that equivalent value has been given for a
debtor’s property is subject to reversal if it is “clearly erroneous.” 4 JTS
concerned, in part, the extent of a bankruptcy trustee’s avoidance power as
against a good faith transferee. (In re JTS Corp., at p. 1114.) Lee quotes
from the circuit court’s discussion of a case that the court distinguished,
wherein “the record demonstrated that [the debtor] had actual intent to
4 The “clearly erroneous” standard is the standard used by federal
courts to review factual findings. (See People v. Aguilera (2020)
50 Cal.App.5th 894, 908.) It is “practically the same as the California sub-
stantial evidence test.” (People v. Alvarez (1996) 14 Cal.4th 155, 196.)
12
defraud its creditors by transferring the sums,” and the transferee, in turn,
“should have known that [the debtor] was running a Ponzi scheme based on
statements it made to [the transferee] and from [the debtor’s] willingness to
accept little value in exchange for the transfer.” (Ibid.) Accordingly, the
transfers in that case were avoidable by the bankruptcy trustee. (Ibid.)
That, however, was not the case in JTS Corp. (Id. at p. 1115.)
Lee also cites to Hansen v. Cramer (1952) 39 Cal.2d 321, 322 in which
our high court reversed a nonsuit against a creditor. The court explained the
debtor “did not receive ‘fair consideration’ for her conveyance . . . since she
was thereby rendered insolvent.” (Id. at p. 325.) Specifically, “the antecedent
debt [the debtor had conveyed and] discharged was that of a third person, her
husband, for which she was not liable.” (Ibid., italics added.) While Lee
repeatedly argues Ly and STCC Inc. did not believe they had any real
liability in connection with the lease they transferred to defendants, she does
not provide a single citation to the record in support of her argument.
Instead, she baldly maintains only Ly’s testimony, and not the testimony of
defendants’ witnesses, could provide such evidence—a contention squarely at
odds with the substantial evidence standard of review. (See Thompson,
supra, 6 Cal.App.5th at p. 981 [testimony of even one witness can constitute
substantial evidence].)
In sum, the trial court’s pivotal ruling for purposes of this appeal is
that Lee failed to prove that Cheng LLC and Zi Cheng (the buyers) were
“insider[s] of” Ly and STCC (the sellers) and either knowingly colluded with
the sellers or should have known they were participating in a fraudulent
transaction. For all the reasons we have discussed, Lee has not presented
this court with briefing that demonstrates the trial court’s ruling in favor of
Cheng LLC and Zi Cheng is unsupported by any substantial evidence.
13
Irregularity In the Proceedings
Lee also makes two procedural arguments.
She first complains the trial court allowed Chew to testify in rebuttal.
She asserts this “arguably demonstrated a bias” in favor of Chew. She
secondly complains the court allowed the defense to introduce a “hearsay
letter” apparently concerning matters that occurred after the close of escrow.
Nether argument is supported by any citation to the record.5 We
therefore have no way of evaluating whether the trial court appropriately
exercised its discretion either in allowing the rebuttal testimony (see People
v. Hart (1999) 20 Cal.4th 546, 653 [“The admission of evidence in rebuttal is a
matter left to the sound discretion of the trial court.”]) or in admitting the
letter into evidence (see People v. DeHoyos (2013) 57 Cal.4th 79, 132 [“a trial
court has broad discretion to determine whether a party has established the
foundational requirements for a hearsay exception”]). Indeed, we cannot
even tell whether at the appropriate time during trial Lee made an objection
to the testimony and the letter, let alone, the specific basis of any such
objections. Accordingly, these complaints have also been forfeited on appeal.
(See Demetrulias, supra, 39 Cal.4th at p. 21 [defendant forfeited evidentiary
claim on appeal by “failing to make timely objections or a timely motion to
strike on that specific ground” in the trial court].)
DISPOSITION
The judgment is AFFIRMED. Respondents to recover costs on appeal.
5 In her closing brief, Lee refers to a “ ‘Consent to Assignment of
Lease’ ” which is perhaps the hearsay letter about which she complains. But
that is never clearly stated. In any case, attempting to provide a record
citation in her closing brief is too little, too late.
14
_________________________
Banke, J.
We concur:
_________________________
Margulies, Acting P.J.
_________________________
Devine, J.*
*Judge of the Contra Costa Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
A160298, Lee v. Zi Cheng LLC et al
15