Unreported / Non-Citable
Background
Cyrus Hazari and Mandy Brady litigated over Hazari's Felter Road property in San Jose. In 2021 the trial court entered judgment against Hazari as a terminating sanction for discovery violations, awarding Brady $586,427 plus interest in attorney fees, and later deemed Hazari a vexatious litigant. After Brady obtained a writ of execution in November 2022 and levied on the property, a May 2023 notice set a sheriff's sale for June 28, 2023.
Dagmar Horvath—Hazari's friend, physician, and co-investor—sued Brady in December 2022, claiming Hazari had quitclaimed the property to her in 2019, and sought damages for slander of title plus an injunction against the sale; the court granted Brady's anti-SLAPP motion to strike and denied the injunction. While that appeal was pending, Horvath petitioned under Code of Civil Procedure section 720.110 for a determination of third party ownership and release of the property from the levy, alternatively seeking about $1.5 million in reimbursement under section 720.390.
Brady opposed the petition as Horvath's latest attempt, acting as Hazari's proxy, to block enforcement of the judgment. She cited evidence that Hazari claimed ownership until as late as October 2022 and stated in June 2020 that he had "commemorated the loans" from Horvath "in a mortgage and provide[d] a quitclaim deed that she can record immediately if I die," and she challenged Horvath's shifting testimony about her possession of the deed. Brady separately moved under section 187 to add Horvath as a judgment debtor.
The Court’s Holding
The Court of Appeal affirmed the denial of Horvath's third party ownership claim. Reviewing for substantial evidence, the court held that physical possession of the 2019 quitclaim deed creates only a permissive inference of legal delivery, not a presumption: under Miller v. Jansen (1943) 21 Cal.2d 473, the Civil Code section 1055 presumption applies only to the date of a deed, not the fact of delivery, so the burden never shifted to Brady to prove fraud. Substantial evidence supported the finding that Hazari and Horvath were "bound by their admissions and conduct which indicate that title to the Property was never effectively transferred until long after Ms. Brady's levy," including Hazari's 2020 statement that the deed was recordable only if he died and Horvath's initial 2023 testimony that Hazari had not given her the original deed. The court also held Horvath forfeited her section 720.390 reimbursement argument.
The court reversed the judgments adding Horvath as a judgment debtor and awarding Brady statutory attorney fees. Although Code of Civil Procedure section 187 grants courts broad power to amend judgments, adding an individual as a judgment debtor without an alter ego relationship is proper only where "the equities overwhelmingly favor the amendment" and it is necessary to prevent an injustice—typically where a third party has held, secreted, or removed the debtor's assets. The court was aware of no authority to add an individual simply for financing underlying litigation or claiming ownership of disputed property; Brady at best showed Horvath helped Hazari in service of his own interests. The court declined to expand the equitable doctrine, leaving the property itself subject to the judgment lien.
Key Takeaways
- Physical possession of an unrecorded quitclaim deed creates only a permissive inference of legal delivery, not a presumption, and does not shift the burden to the opposing party to disprove delivery.
- A trial court may infer from a grantor's statements that a deed was executed but not delivered with present intent to transfer title, such as where the grantor says the deed is recordable only upon his death and the grantee initially testifies the grantor kept the original.
- Code of Civil Procedure section 187 permits adding a judgment debtor without an alter ego relationship only when the equities overwhelmingly favor the amendment, such as when a third party systematically drains or secretes the debtor's assets.
- Financing litigation and asserting ownership claims to property subject to a judgment lien, without more, do not justify adding a third party as a judgment debtor under equitable principles.
- A third party ownership claim under section 720.110 requires the claimant to prove that title was effectively transferred before the levy; the claimant bears the initial burden.
Why It Matters
The decision clarifies the distinction between an inference and a presumption in deed-delivery disputes: possession of an unrecorded deed does not shift the burden of proof to the party challenging the transfer. Relying on Miller v. Jansen, the court confirmed that the Civil Code section 1055 presumption governs only the date of delivery, leaving trial courts free to weigh conflicting evidence and draw reasonable inferences about the grantor's intent.
The ruling also sets limits on the equitable power to amend judgments under Code of Civil Procedure section 187. Adding a judgment debtor remains an extraordinary remedy reserved for third parties who actively frustrate enforcement by concealing or transferring assets; the court's refusal to extend liability to someone who merely financed litigation or asserted ownership claims protects non-parties while preserving the creditor's ability to enforce against the debtor's property.