Kirkeby v. Superior Court

Cynthia Kirkeby (plaintiff) and her brother, Frederick W. Fascenelli (defendant), created a pet identification tag business, FasTags, Inc. (FasTags). Frederick and his wife owned 51 percent of the stock in FasTags; Cynthia owned 39 percent; and 10 percent was held in a trust of which Cynthia was the trustee. After Cynthia resigned from the board of directors, she alleged that Frederick and his wife looted the company and caused it to execute improper patent licenses to increase the salaries and bonuses of Frederick and his wife to pay their personal expenses and to make improper loans. Cynthia brought a 27-count lawsuit against Frederick and his wife for fraudulent conveyance and sought declaratory and injunctive relief. In the fraudulent-conveyance claim, Cynthia alleged that Frederick obtained a loan from FasTags, and falsely represented that he was going to use the funds to construct a building to house FasTag’s operations, but instead he used the funds to purchase residential income property that he transferred to a limited family partnership. Before that purchase, Frederick also transferred his interest in his family residence to a family trust. Cynthia alleged that those transfers were made to defraud creditors and formed the basis of her fraudulent-conveyance claim. After filing her lawsuit, Cynthia recorded a notice of lis pendens (notice of pendency of action) on the two properties. Frederick and his wife moved to expunge the lis pendens, and the trial court granted the motion after finding that Cynthia’s lawsuit was primarily about money damages, and that a lis pendens was not appropriate when a claim for fraudulent conveyance was made without claiming an ownership or possessory interest. Cynthia sought review in the court of appeal that denied the request because it found that her claims did not affect title to or the right to possess real property, which is required under applicable California civil procedure. Cynthia appealed.