Winjet Trading v. Chu CA4/2 (2025) · DecisionDepot
Winjet Trading v. Chu CA4/2
California Court of Appeal Jul 22, 2025 No. E081214Unpublished
See Concurring Opinion
Filed 7/22/25 Winjet Trading v. Chu CA4/2 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
WINJET TRADING, INC. et al.,
Plaintiffs and Respondents, E081214
v. (Super.Ct.No. RIC1905805)
TSUI CHEN CHU, Individually and as OPINION Trustee, etc., et al.,
Defendants and Appellants.
APPEAL from the Superior Court of Riverside County. Irma Poole Asberry,
Judge. Affirmed as modified.
Straggas Law Group and George D. Straggas; Grammatico Law Firm and Paul A.
Grammatico, for Defendants and Appellants.
Kowal Law Group and Timothy M. Kowal for Plaintiffs and Respondents.
Plaintiffs and respondents prevailed in trial court in this fraudulent conveyance
action. On appeal, defendants and appellants make four arguments: (1) there was no
basis for damages liability under the Uniform Voidable Transactions Act (Civ. Code,
§ 3439 et seq.; UVTA) or common law; (2) awarding damages allows for double
recovery; (3) if awardable, the damages award should be reduced; and (4) the trial court
erroneously rejected their resulting trust defense.
We find the second argument has merit. Because the trial court set aside both
transfers at issue, its damages award relating to the later transfer was an impermissible
double recovery. We accordingly modify the judgment to strike the UVTA damages
award. We find no merit in (or decline to consider as moot) appellants’ other arguments 1 and affirm the judgment as modified.
I. BACKGROUND
We begin with what we will call the Underlying Lawsuit. Plaintiffs and
respondents Winjet Trading, Inc. and America Plastic Trading, Inc. (which we will refer
to collectively as Winjet) are in the business of purchasing scrap materials and exporting
them to Asia for processing and recycling. In 2017, they filed a complaint in Los
Angeles County Superior Court against Jim Hsieh and several others. They alleged that,
from 2011 to 2017 and while employed at Winjet, Jim Hsieh and others operated sham
companies that bought scrap materials from true suppliers and resold them to Winjet at
inflated prices. In 2019, the trial court awarded Winjet approximately $3.5 million.
During the Underlying Lawsuit, Winjet learned that, in 2014, Jim Hsieh had
transferred his partial ownership in three houses in Corona from himself to his mother,
1 Undesignated statutory references are to the Civil Code.
2
Tsui Chen Chu (the Corona Transfers). Seeking in part to avoid the transfers, Winjet
filed the instant action in 2019, soon after judgment had been entered in the Underlying
Lawsuit. The original complaint named Jim Hsieh and Tsui Chen Chu as defendants.
In 2020, after having been served with the complaint, Tsui Chen Chu executed a
$400,000 cash out refinance loan (the Cash Out Loan) using one of the Corona houses—
specifically, a house that Hsieh had transferred a 30 percent interest in (the Gypsum
Creek Property). She then deposited the funds in a bank account co-owned by her, her
husband Wu Yuan Hsieh, and their daughter (and Jim Hsieh’s sister) Helen Hsieh. The
operative complaint, filed in 2021, additionally names Wu Yuan Hsieh and Helen Hsieh
as defendants (we will refer to the three defendants collectively as the Hsiehs). Jim Hsieh 2 defaulted and is accordingly not a party to this appeal.
Following a bench trial, the trial court issued a statement of decision in Winjet’s
favor in 2023. As relevant here, it found that the Corona Transfers were avoidable under
the UVTA. It also found that the Cash Out Loan was avoidable under the UVTA. It
rejected the Hsiehs’ defense that Jim Hsieh was never a true owner of the Corona houses
and was merely holding title in trust for his mother’s benefit. The judgment avoided the
Corona Transfers, reverted title on the three houses to what they were immediately prior
2 The original and operative complaints also name three other individual defendants, two of whom were also defendants in the Underlying Lawsuit. All three defaulted, and the allegations relating to them do not affect the issues raised here.
3
to the Corona Transfers, and awarded Winjet $400,000 in damages (plus approximately 3 $120,000 in interest) in connection with the Cash Out Loan.
II. DISCUSSION
The Hsiehs raise four arguments. First, as to the Cash Out Loan damages award,
they contend there was no basis for awarding damages under the UVTA or common law.
Second, they argue the damages award would allow Winjet a double recovery. Third,
they argue that if damages are awardable, the award should be reduced to reflect the fact
that Jim Hsieh only had a partial ownership interest. And fourth, as to the Corona
Transfers, they argue the trial court’s finding that Jim Hsieh was not holding title in trust
lacked substantial evidence.
A. The Uniform Voidable Transactions Act
Under the UVTA, a “transfer made or obligation incurred by a debtor is voidable
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”
with intent to defraud the creditor or if the debtor was insolvent and received no
reasonably equivalent value in exchange. (§ 3439.04, subd. (a).) Transferring with intent
to defraud is sometimes known as actual fraud, and receiving no reasonably equivalent
3 The judgment also stated that Winjet held “a valid judgment lien” to the Corona houses “which is senior to any other lien or encumbrance arising on or after” October 3, 2019, which the judgment stated was the date the abstract of judgment from the Underlying Lawsuit was recorded.
4
value while insolvent is sometimes known as constructive fraud. (See Chen v. Berenjian
(2019) 33 Cal.App.5th 811, 817.)
When a transfer is found to be actually or constructively fraudulent, one remedy
the creditor might obtain is “[a]voidance of the transfer or obligation to the extent 4 necessary to satisfy the creditor’s claim.” (§ 3439.07, subd. (a).) Another possible
remedy is “judgment for the value of the asset transferred . . . or the amount necessary to
satisfy the creditor’s claim, whichever is less.” (§ 3439.08, subd. (b)(1).) As to this
second remedy, “[t]he judgment may be entered against” multiple people. (§ 3439.08,
subd. (b)(1).) It may, for instance, be entered against the “first transferee of the asset or
the person for whose benefit the transfer was made.” (§ 3439.08, subd. (b)(1)(A).) It
may also be entered against an “immediate or mediate transferee” of the first transferee
so long as the immediate or mediate transferee is not a “good faith transferee that took for
value” or an immediate or mediate transferee of a good faith transferee. (§ 3439.08,
subd. (b)(1)(B).)
The UVTA remedies are “cumulative and not the exclusive remedy for fraudulent
conveyances.” (Berger v. Varum (2019) 35 Cal.App.5th 1013, 1019.)
4 As the official comments to the model law California’s UVTA was based on states, “‘[a]voidance’ is a term of art in this [a]ct, for it does not mean that the transfer or obligation is simply rendered void. It has long been established that a transfer avoided by a creditor under this [a]ct or its predecessors is nevertheless valid as between the debtor and the transferee.” Official Comments, Uniform Voidable Transactions Act (as amended in 2014), Section 7, Remedies of Creditor, ¶ 7, p. 35, available at <https://www.uniformlaws.org/viewdocument/final-act-156?CommunityKey=64ee1ccc- a3ae-4a5e-a18f-a5ba8206bf49&tab=librarydocuments> (last accessed Mar. 17, 2025).
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B. Liability for Cash Out Loan Damages
The Hsiehs’ first argument is that there is no basis for finding them liable on the
Cash Out Loan under the UVTA or the common law. We begin with UVTA liability and
some definitions.
Some, but not all, of the pertinent terms are statutorily defined. Under the UVTA,
a “claim” refers to “a right to payment, whether or not the right is reduced to judgment,
§ 440.) “There are, however, exceptions, to this doctrine. It is well settled that one
exception to the rule is found in transactions between parent and child.” (Quinn v. Reilly
(1926) 198 Cal. 465, 467.) “These transactions are presumed to be in the nature of gifts,
advancements or bounties. In short, the existence of the relationship of parent and child
is a circumstance which prima facie establishes the presumption of an advancement and
thereby rebuts the presumption of a resulting trust.” (Id. at pp. 467-468.) In such cases,
“‘the burden is upon the payor seeking to enforce a resulting trust to prove that he did not
intend to make a gift to the transferee.’” (Altramano v. Swan (1942) 20 Cal.2d 622, 628,
citing Rest.2d Trusts, § 442, cmt. b.)
“‘In reviewing a judgment based upon a statement of decision following a bench
trial,’ we ‘apply a substantial evidence standard of review to the trial court’s findings of
fact.’ [Citation.] Generally, ‘our review begins and ends with the determination as to
whether, on the entire record, there is substantial evidence, contradicted or
uncontradicted, which will support the trial court’s factual determinations.’” (Symons
Emergency Specialties v. City of Riverside (2024) 99 Cal.App.5th 583, 596.) “‘It is not
our role to reweigh the evidence, redetermine the credibility of the witnesses, or resolve
conflicts in the testimony, and we will not disturb the judgment if there is evidence to
support it.’” (Slone v. El Centro Regional Medical Center (2024) 106 Cal.App.5th 1160,
1173.)
Substantial evidence supports the trial court’s finding of no trust here. For one,
Tsui Chen Chu wrote five checks to Jim Hsieh in 2020 referencing the Corona properties
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and a “refund.” She testified that the checks were to compensate Jim Hsieh for the
amounts those properties had appreciated between the time of original purchase and the
Corona Transfers. The fact that Jim Hsieh was compensated for the appreciation in the
Corona houses is inconsistent with the idea that Jim Hsieh held his interests in them
solely for someone else’s benefit. For another, one of the properties other than the
Gypsum Creek Property was partially funded with a mortgage, and Jim Hsieh had
claimed a mortgage interest deduction on that property on his tax returns. A forensic
accounting expert testified at trial that “[y]ou’re not allowed to take deductions unless
you own that property,” thus further undercutting the claim that Jim Hsieh only held the
Corona properties in trust.
The Hsiehs argue that the checks and tax deduction do not show Jim Hsieh and
Tsui Chen Chu’s intent at the time of the purchases. However, the “conduct of the payor
and of the transferee subsequent to the transfer” can be relevant when considering
whether a trust was intended. (Rest.2d Trusts, § 443, cmt. a.) The Hsiehs in effect ask us
to reweigh the evidence, which we do not do in evaluating substantial evidence claims.
(Slone v. El Centro Regional Medical Center, supra, 106 Cal.App.5th at p. 1173.) We
accordingly find no error in the trial court’s rejection of the Hsiehs’ trust defense.
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III. DISPOSITION
The judgment is modified by striking the Cash Out Loan damages award. As
modified, the judgment is affirmed. The parties are to bear their own costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
RAPHAEL J.
I concur:
McKINSTER Acting P. J.
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[Winjet Trading, Inc. v. Chu, E081214]
MENETREZ, J. Concurring.
I concur in the majority opinion. I write separately to address some issues
concerning the $400,000 damages award and to explain why, in my view, it must be
stricken.
The $400,000 award was supposed to compensate plaintiffs for harm caused by
the $400,000 Cash Out Loan’s impairment of plaintiffs’ ability to enforce the underlying
$3.5 million fraud judgment against the Gypsum Creek Property. But plaintiffs have not
yet been and might never be damaged by the Cash Out Loan.
First, the judgment in this case provides that plaintiffs hold a $3.5 million
judgment lien against the Gypsum Creek Property that is senior to any encumbrance
created after October 3, 2019. (See maj. opn., ante, at p. 4, fn. 3.) That would make
plaintiffs’ $3.5 million judgment lien senior to any encumbrance associated with the Cash
Out Loan. If that provision of the judgment is valid and enforceable against the bank that
made the Cash Out Loan, then plaintiffs have not been damaged by that loan. I doubt,
however, that the provision is valid and enforceable against the bank. The bank is not a
party to this action, and it has never had an opportunity to litigate any issues of lien
priority. The bank may, for example, be able to prove that it is a bona fide encumbrancer
and had no notice of the $3.5 million lien until after making the $400,000 loan.
Second, even if the $3.5 million judgment lien is not senior to any encumbrance
associated with the Cash Out Loan, plaintiffs still have not yet been damaged by the loan,
might never be damaged by it, and certainly will never be damaged by as much as
1
$400,000. Before Jim Hsieh fraudulently transferred his interest in the Gypsum Creek
Property to his mother, he owned only a 30 percent interest in that property.
Consequently, plaintiffs’ damages from impairment of their ability to recover against the
property can never exceed 30 percent of the value of the property. So, for example, if the
property is sold for $400,000, all of the proceeds of the sale go to the bank in satisfaction
of the Cash Out Loan, and plaintiffs get nothing, then plaintiffs would be damaged by 30
percent of the $400,000 value of the property, i.e., plaintiffs’ damages would be
$120,000. If the value of the property when sold is lower than $400,000, then plaintiffs’
damages will be less than $120,000 (because 30 percent of the value of the property will
be less than $120,000). And if the value of the property when sold is higher than
$400,000, then plaintiffs’ damages will still be lower than $120,000, because 30 percent
of the value of the property minus plaintiffs’ portion of the sale proceeds will be less than
$120,000. For example, if the property sells for $500,000, the bank receives $400,000 in
satisfaction of the Cash Out Loan, and plaintiffs receive the remaining $100,000, then
plaintiffs will be damaged by only $50,000, i.e., 30 percent of the value of the property
(30 percent of $500,000 is $150,000) minus the $100,000 that plaintiffs receive from the 1 sale.
1 In all of these examples, for the sake of simplicity I am omitting considerations like loan interest and fees—which might cause the loan payoff amount to be greater than $400,000—as well as fees and closing costs associated with the sale of the property— which will inevitably cause the sale proceeds to be less than the value of the property. Such details do not affect the conclusions that (1) plaintiffs’ damages will depend on the
2
In sum, the amount of plaintiffs’ damages caused by the Cash Out Loan will
depend on both the value of the property when it is sold and the amount owed on the
Cash Out Loan at that time. And if the value of the property is high enough, or the loan
payoff amount is low enough, or both, then plaintiffs will not be damaged at all, because
they will be able to recover 30 percent of the value of the property from the sale proceeds
even if the encumbrance associated with the Cash Out Loan has priority.
For all of these reasons, at present it is impossible to determine the amount of
damages caused by the Cash Out Loan, but we do know that the damages caused to
plaintiffs by that loan will never be $400,000. I therefore agree that the $400,000
damages award must be stricken.
MENETREZ J.
value of the property and the loan balance when the property is sold, and (2) plaintiffs’ damages will never be as high as $400,000.
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AI Brief
AI-generated · verify before citing
Holding. The court held that the trial court's damages award for the Cash Out Loan constituted an impermissible double recovery because the avoidance of the underlying property transfers already restored the plaintiffs to their pre-fraudulent position. Consequently, the court modified the judgment to strike the $400,000 damages award while affirming the remainder of the judgment.
Issues
Whether the trial court's damages award for the Cash Out Loan constituted an impermissible double recovery.
Whether the trial court erred in rejecting the defendants' resulting trust defense regarding the Corona property transfers.
Disposition. Affirmed as modified.
Quotations verified verbatim against the opinion
“Because the trial court set aside both transfers at issue, its damages award relating to the later transfer was an impermissible double recovery.”
“A well-established principle, applied both at law and in equity, is that a plaintiff is entitled to only a single recovery for a distinct harm suffered, and double or duplicative recovery for the same harm is prohibited.”
“Because Winjet has already been placed in its pre-fraudulent transfer position with the avoidance of the Corona Transfers, Winjet may not also recover damages for the Cash Out Loan.”