Metropolitan News-Enterprise


Monday, November 9, 2015


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C.A. Upholds Substituted Service in Fraudulent Conveyance Case

Justices Say State Had Jurisdiction Over Deportee Where Suit Was Over California Property




A California court had specific jurisdiction to hear a fraudulent conveyance case against a Mexican national deported to his home country, because the property involved in the action was located in this state, the Fourth District Court of Appeal ruled Friday.

Div. One affirmed a San Diego Superior Court judge’s denial of motions to set aside a judgment against Ramon Soto and to quash service of process on him.

Diana Buchanan successfully sued Ramon Soto’s wife for failing to make payments on a note, which was part of a transaction in which Maria Soto purchased a bridal shop from Buchanan. Buchanan won a default judgment against Maria Soto for more than $400,000, and a motion to set aside the default was denied.

Upon learning that Maria Soto had conveyed her real property interests to her husband, Buchanan brought an action against both Sotos to set aside the conveyance as fraudulent.

Judge Robert P. Dahlquist denied Ramon Soto’s motions after Buchanan served him by publication and won a judgment setting aside the conveyance. The judge found that the plaintiff made diligent efforts to serve Ramon Soto personally and said he was “skeptical” of Maria Soto’s testimony that she did not know where her husband lived, other than that it was “in the rural Mexicali area.”

Buchanan brought the fraudulent conveyance action with respect to two adjacent properties in Vista. The Sotos and another couple bought the properties in 1994, and remained co-owners until Maria Soto transferred all of her interest to her husband in late July 2011.

The conveyance occurred three weeks after Buchanan filed her collection suit.

Court of Appeal Opinion

Justice Patricia Benke, writing for the appeals court, said the trial court properly exercised its long-arm jurisdiction over Ramon Soto. The three attributes of specific long-arm jurisdiction—purposeful availment, a lawsuit “arising out of,” or related to, the defendant’s California-related conduct, and reasonableness—were present in the case, she said.

Soto, she elaborated, “purposefully availed himself of the benefits and protections of the laws of California” when he acquired his wife’s interest in the properties. Since the fraudulent conveyance suit arose out of that transaction, the “arising out of” requirement was met, and it was reasonable under the totality of the facts for the court to hear the case.

Benke rejected the argument that the defendant’s status as a deportee—he had served a prison sentence in the United States—made the exercise of jurisdiction unreasonable.

“Although Ramon claims he is barred from entering the United States after he was deported to Mexico upon his release from prison, we note he hired counsel and participated (after the trial) in the fraudulent conveyance action, as demonstrated by his filing of the motions,” the jurist wrote.

Indispensable Party

The justice also noted that Maria Soto sought to have the fraudulent conveyance action dismissed on the ground that her husband was an indispensable party who had not been properly served.

“In our view, it would be highly unreasonable and candidly, unfair, to require Buchanan to include Ramon as a party in her fraudulent conveyance action, while at the same time preventing her from litigating the validity of Maria’s transfer of her interest in the Olive Properties to him because he allegedly was not subject to personal jurisdiction,” Benke wrote.

Benke went on to reject Ramon Soto’s attack on service by publication. The justice noted that Buchanan’s attorney had attempted to serve him personally in the United States before learning he had been deported, and that Maria Soto had been in telephone contact with him and had discussed the properties with him during the period in which she claimed not to know where he lived.

There was also evidence in the record that Ramon Soto, in his declaration in support of his motion to vacate, stated as his current address a location where he actually had not lived in seven months, Benke noted.

The case is Buchanan v. Soto, D065652.


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