Judge: Anne Richardson, Case: BC723902, Date: 2023-03-10 Tentative Ruling

Case Number: BC723902    Hearing Date: March 10, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

MOVING PARTY:              Defendant Armando Mendoza.

OPPOSITION:                      Plaintiffs Miguel Valencia, Jr., and Lizette Valencia.

REPLY:                                 [None]

Relevant Background

On October 2, 2018, Plaintiffs Miguel Valencia, Jr., and Lizette Valencia filed a Complaint against Defendants Armando Mendoza, Coastal Holdings, Inc., Class A Realty, Inc. and Does 1 through 100 relating to the purchase of real property located at 1118 Harbor View Ave., San Pedro, CA 90732 (“Property”) and failure to disclose defects in that Property, breach of contract, negligence, fraud, and other related issues arising therefrom.

On January 25, 2019, this matter was ordered to arbitration by stipulation of the parties.

On August 23, 2022, an arbitrator—Hon. Judith C. Chirlin (Ret.)—found in favor of Plaintiffs and ordered Defendants to pay monetary damages, prejudgment interest, punitive damages, attorney’s fees, and costs in the amount of $1,512,849.55 (the “Arbitration Award”).

On September 2, 2022, the Plaintiffs filed a Petition to Confirm the Arbitration Award, which the Defendants opposed on September 14, 2022.

On September 27, 2022, the Defendants also filed a Petition to Vacate Arbitration Award, arguing that misconduct by the arbitrator substantially prejudiced the Defendants’ rights in arbitration and that the arbitrator unfairly refused to postpone the hearing or consider evidence useful to settle the dispute.

On September 28, 2022, the Court granted the Plaintiffs’ Petition to Confirm Arbitration Award and advanced and vacated the Defendants’ Petition to Vacate the Arbitration Award.

Entry of judgment occurred on September 28, 2022, with notice of entry of judgment occurring on October 7, 2022.

On October 7, 2022, the Plaintiffs obtained a writ of execution against Defendant Mendoza in the full amount of the Arbitration Award.

On October 27, 2022, the Plaintiffs served a Notice of Levy on E-Trade Securities aimed at levying Mendoza’s known bank accounts.

On November 22, 2022, Defendant Mendoza filed a Notice of Appeal pursuant to Code of Civil Procedure section 1294, subdivisions (b) and (d)—i.e., an appeal related to the order dismissing his petition to vacate the Arbitration Award and to the judgment entered thereon.

On December 27, 2022, Defendant Mendoza’s counsel, Christopher E. Delaplane of Delaplane Law Group, APC, filed a Claim of Exemption based on “Code of Civ. Proc., section 704.115 et seq.” regarding two Roth IRA accounts in Mendoza’s name held with and levied at E-Trade Securities, LLC. (The levied funds were briefed as approximately $15,000 by the Plaintiffs’ opposition to the Claim of Exemption but these figures are not evidenced by any documents before the Court.)

On January 17, 2023, the Plaintiffs filed a notice of hearing on the Claim of Exemption, with the hearing set for February 9, 2023.

On February 9, 2023—at a time when Department 40 was transitioning between judicial officers—Department 32 heard the Defendant Mendoza’s Claim of Exemption and continued a hearing thereon to March 10, 2023.

On February 21, 2023, the Plaintiffs filed an opposition to Defendant Mendoza’s Claim of Exemption. Defendant Mendoza has failed to reply thereto.

Claim for Exemption: DENIED.

Legal Standard

Except as otherwise provided by law, all property of the judgment debtor is subject to enforcement of a money judgment. (Code Civ. Proc., § 695.010, subd. (a).) After entry of a money judgment other than those arising from the Family Code (subject to additional requirements), and upon application of the judgment creditor, the clerk of the court shall issue a writ of execution, which must be directed to the levying officer in the county where the levy is to be made and to any registered process server. (Code Civ. Proc., § 699.510.)

Property that has been levied upon may be claimed to be exempt as provided in Code of Civil Procedure sections 703.510 to 703.610 unless otherwise provided by statute. (Code Civ. Proc., § 703.510, subd. (a).) The debtor must make the claim within 15 days of the date the notice of levy on the property was served (20 days if the notice of levy was served by mail). (Code Civ. Proc., § 703.520, subd. (a).)

The claim must be executed under oath and include the name and mailing address of the claimant, a description of the property claimed to be exempt, a financial statement as required by section 703.530, a citation of the statute on which the claim is based, and a statement of facts necessary to support the claim. (Code Civ. Proc., § 703.520, subd. (b).) A financial statement is required where property is claimed as exempt pursuant to a provision exempting property to the extent necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor. (Code Civ. Proc., § 703.530, subd. (a).) The financial statement must be executed under oath by the judgment debtor and the debtor’s spouse unless the same are living separate and apart, and must include:

(1) The name of the spouse of the judgment debtor;

(2) The name, age, and relationship of all persons dependent upon the judgment debtor or the spouse of the judgment debtor for support;

(3) All sources and the amounts of earnings and other income of the judgment debtor and the spouse and dependents of the judgment debtor;

(4) A list of the assets of the judgment debtor and the spouse and dependents of the judgment debtor and the value of such assets; and

(5) All outstanding obligations of the judgment debtor and the spouse and dependents of the judgment debtor.

(Code Civ. Proc., § 703.530, subds. (b)(1)-(5), (c).)

The hearing on the motion shall be held not later than 30 days from the date the notice of motion was filed with the court unless continued by the court for good cause. (Code Civ. Proc., § 703.570, subd. (a).)

The claim of exemption is deemed controverted by the notice of opposition to the claim of exemption and both shall be received in evidence. (Code Civ. Proc., § 703.580, subd. (c).) If no other evidence is offered, the court, if satisfied that sufficient facts are shown by the claim of exemption (including the financial statement if one is required) and the notice of opposition, may make its determination thereon. (Code Civ. Proc., § 703.580, subd. (c).) If not satisfied, the court shall order the hearing continued for the production of other evidence, oral or documentary. (Code Civ. Proc., § 703.580, subd. (c).)

At the hearing on the claim of exception, the claimant has the burden of proof. (Code Civ. Proc., § 703.580, subd. (b).)

Analysis

A review of Defendant Mendoza’s Claim of Exemption shows that he seeks exemption of funds being levied from two Roth IRA accounts held by Mendoza with E-Trade Securities, LLC (the “E-Trade Accounts”). (Opp’n, Cohen Decl., Ex. A, Claim of Exemption, ¶ 4.) The Claim is being made on the ground that that the funds in the E-Trade Accounts are exempt under Code of Civil Procedure section “704.115 et seq.” because “[‘][a]ll amounts held, controlled or in the process of distribution by a private retirement plan […] are exempt[’] from enforcement.” (Opp’n, Cohen Decl., Ex. A, Claim of Exemption, ¶¶ 5, 6; see Code Civ. Proc., § 704.115, subd (b) [quoted exemption language].)

No other grounds, filings, or supporting documents have been made by Defendant Mendoza with respect to this Claim of Exemption. (See docket generally.)

In opposition, the Plaintiffs argue that (1) exemption under section 704.115 does not apply because the approximately $15,000 in Defendant Mendoza’s E-Trade Accounts are not necessary to provide support to Mendoza in retirement, as required by subdivision (e) of section 704.115, (2) Defendant Mendoza cannot overcome his burden to prove the E-Trade Account funds are necessary for his retirement because the Claim for Exemption does not contain a financial statement permitting this conclusion, and (3) the exemption claim fails because it did not comply with section 703.520 of the Code of Civil Procedure because the claim was untimely made and because the Claim of Exemption form does not include the required name and last known address of Defendant Mendoza. (Opp’n, 3:2-4:16 [fund necessity for retirement argument], 4:17-5:4 [burden of proof argument], 5:5-18 [section 703.520 argument].)

No reply or other papers appear in the record supporting Defendant Mendoza’s exemption claim.

The Court agrees with the Plaintiffs.

In line with the Plaintiffs’ second ground for denial of Defendant Mendoza’s exemption claim, because Defendant Mendoza makes his claim pursuant to section 704.115—dealing with exemptions based on private retirement plans—and because the retirement plans at issue are individual retirement accounts—two Roth IRAs with E-Trade—subdivision (e) of 704.115 provides that such funds are exempt “only to the extent necessary to provide for the support of the judgment debtor when the judgment debtor retires.” Where property is claimed as exempt pursuant to a provision exempting property to the extent necessary for the support of the judgment debtor, a financial statement is required, which must include, inter alia, (3) sources and the amounts of earnings and other income of the judgment debtor, (4) a list of the assets of the judgment debtor and the value of such assets, and (5) all outstanding obligations of the judgment debtor. (Code Civ. Proc., § 703.530, subds. (a), (b)(3)-(5).) A review of Defendant Mendoza’s Claim of Exemption alleges that a “Financial Statement form is attached to th[e] claim,” but no such statement appears to have been provided to the Plaintiffs or to this Court. (Opp’n, Cohen Decl., Ex. A, Claim of Exemption, ¶ 7.) As a result, the Claim does not comply with Code of Civil Procedure section 703.530 by failing to provide a financial statement with the statutorily required information.

Further, in line with the Plaintiffs’ third argument, a review of Defendant Mendoza’s exemption claim shows it does not comply with the requirements of Code of Civil Procedure section 703.520. Such a claim must include the name and mailing address of the claimant, and the name and last known address of the judgment debtor if the claimant is not the judgment debtor. (Code Civ. Proc., § 703.520, subds. (b)(1) and (2).) Despite this statutory requirement, the Claim for Exemption shows that the claim is made in the name of defense counsel Christopher E. Delaplane, not the judgment debtor, and fails to provide the name or last known address of the judgment debtor. (Opp’n, Ex. A, Claim for Exemption, ¶ 3.)

The Court therefore DENIES Defendant Mendoza’s Claim for Exemption.

Conclusion

Defendant Armando Mendoza’s Claims for Exemption (Enforcement of Judgment) is DENIED for failing to comply with requirements set forth in Code of Civil Procedure sections 703.520 (contents required in the exemption claim) and 703.530 (required financial statement).