Judge: Barbara M. Scheper, Case: BC642994, Date: 2023-03-27 Tentative Ruling

Case Number: BC642994    Hearing Date: March 27, 2023    Dept: 30

Dept. 30

Calendar No.

Loekman, et. al. vs. Lin, et. al., Case No. BC642994 

Tentative Ruling re:  Judgment Creditors Application for Sale of Dwelling

Judgment Creditors/Plaintiffs Muljono Loekman, PAAS LLC, PAAS II LLC, 21450 Golden Springs LLC (Plaintiffs) apply for an order for the sale of dwelling located at 126 W. Wistaria Ave., Arcadia, CA 91007 (the Property), and the issuance of an order to show cause why such order for sale should not take place pursuant to Code Civ. Proc. § 704.710, et seq. Plaintiffs seek this order to enforce the Judgment entered against Defendant/Judgment Debtor David Ku Fang Lin (Lin) on July 23, 2019, and the Writ of Execution issued on October 3, 2022, in the amount of $3,894,959. The application is denied.

The Enforcement of Judgments Law (Code of Civil Procedure, §§ 680.010-724.260) provides a comprehensive¿scheme for the enforcement of civil judgments in California.  (Evans v.¿Paye¿(1995) 32 Cal.App.4th 265, 276.)¿ Under the Enforcements of Judgments Law, a writ of execution¿requires a levying officer to enforce the corresponding judgment.¿¿(In re Marriage of¿Schenck¿(1991) 228 Cal.App.3d 1474, 1479¿(Marriage of¿Schenck).)¿¿The officer does so by levying on the debtor’s property, i.e., by seizing the property under the writ, either constructively or¿actually.¿¿(Code Civ. Proc., §§ 699.510-699.530, 700.010-700.200; see also¿Marriage of¿Schenck, supra, 228 Cal.App.3d at¿p.¿1479.)¿¿To levy on real property, the officer records the writ of execution and a notice of levy with the recorder for the county in¿which the property is located.¿¿(Code Civ. Proc.,¿§ 700.015,¿subd.¿(a); see also¿Marriage of¿Schenck, supra, 228 Cal.App.3d at¿p.¿1479.)¿¿The levying officer must serve a copy of the writ and notice of levy on an¿occupant of the real property.¿¿(Code Civ. Proc.,¿§ 700.015,¿subd. (c); see also¿Marriage of¿Schenck, supra, 228 Cal.App.3d at 1479.)¿ 

Real¿property dwellings¿(defined in¿Code of Civil procedure section¿704.710, subdivision¿(a))¿may not be sold to enforce a money judgment except pursuant to a court order for sale obtained under¿section¿704.740, subdivision¿(a).¿¿(Marriage of¿Schenck,¿supra, 228 Cal.App.3d at¿p.¿1480;¿c.f.¿Gonzalez v.¿Toews¿(2003) 111 Cal.App.4th 977, 981 (Gonzalez) [sale of judgment debtor’s dwelling to third party after levy is absolute under¿section¿701.680, regardless of failure to obtain court order under section 704.740.].)  Promptly after a real property dwelling has been levied upon, the levying officer must serve notice on the judgment creditor that the levy has been made and that the property will be released from the levy unless the creditor applies to the court for an order of sale.¿ (Code Civ. Proc., § 704.750,¿subd. (a).)¿ After the creditor files an application for an order of sale, the court sets a time and place for hearing and orders the debtor to show¿cause¿why an order for sale should not be made.¿¿(Code Civ. Proc., § 704.770,¿subd. (a).)  The hearing must be scheduled not later than forty-five (45) days after the application is filed, unless the time is extended for good cause.¿¿(Code Civ. Proc., § 704.770,¿subd.¿(a).) 

On January 30, 2023, Plaintiffs received a Notice to Creditor of Levy on Dwelling from the Los Angeles County Sheriff’s office, the levying officer. (Ip Decl. ¶ 12, Ex. B.) The Notice was mailed on January 26, 2023. Plaintiffs filed the current application on February 10, 2023, within the requisite 20 days of service. (Code Civ. Proc. § 704.750, subd. (a).)

The procedure for evaluating an application for order of sale is provided by Code Civ. Proc. § 704.780. Under that section, “The court shall determine whether the dwelling is exempt. If the court determines that the dwelling is exempt, the court shall determine the amount of the homestead exemption and the fair market value of the dwelling. The court shall make an order for sale of the dwelling subject to the homestead exemption, unless the court determines that the sale of the dwelling would not be likely to produce a bid sufficient to satisfy any part of the amount due on the judgment pursuant to Section 704.800.” (Code Civ. Proc. § 704.780, subd. (b).)

“Homestead” means the principal dwelling (1) in which the judgment debtor or the judgment debtor’s spouse resided on the date the judgment creditor’s lien attached to the dwelling, and (2) in which the judgment debtor or the judgment debtor’s spouse resided continuously thereafter until the date of the court determination that the dwelling is a homestead. (Code Civ. Proc. § 704.710, subd. (c).) “A homestead is exempt from sale under this division to the extent provided in Section 704.800.” (Code Civ. Proc. § 704.720, subd. (a).)

Under Code of Civil Procedure § 704.780, where the records of the county tax assessor indicate that there is not a current homeowner’s exemption for the dwelling, “the burden of proof that the dwelling is a homestead is on the one who claims that the dwelling is a homestead.” (Code Civ. Proc. § 704.780, subd. (a)(1).)

Plaintiffs’ counsel states that the records of the Los Angeles County recorder show that no homestead declaration has been recorded with the Los Angeles County tax assessor by Lin or his spouse. (Ip Decl. ¶ 7.) Lin has presented no evidence that a homestead declaration has been recorded, and thus has the burden to show that the Property is a homestead.

In support of the homestead exemption, Lin states in his declaration that he and his family have continuously resided in the Property since September 18, 2007. (Lin Decl. ¶ 6.) Lin also states that the Property is his principal residence. (Lin Decl. ¶ 10.) The Court finds this evidence sufficient to meet Lin’s burden to show that he is entitled to the homestead exemption. Plaintiffs have presented no evidence disputing Lin’s statements.

“If the court determines that the dwelling is exempt, the court shall determine the amount of the homestead exemption and the fair market value of the dwelling.” (Code Civ. Proc. § 704.780, subd. (b).) “The amount of the homestead exemption is the greater of the following: (1) The countywide median sale price for a single-family home in the calendar year prior to the calendar year in which the judgment debtor claims the exemption, not to exceed six hundred thousand dollars ($600,000). (2) Three hundred thousand dollars ($300,000).” (Code Civ. Proc. § 704.730, subd. (a).)  Neither party has provided the Court with admissible evidence of the median sale price of a home in Los Angeles County so the Court will assume it is $600,000.

In their Reply, Plaintiffs present a declaration from Shawn Luong, a licensed real estate broker and agent. (Luong Decl. ¶ 2.) Luong performed a comparable market analysis of the Property, and based on that analysis concludes that fair market value for the Property is currently $2,370,000. (Luong Decl. ¶¶ 8-10, Ex. A.) This declaration is new matter that has been improperly included in the reply rather than as part of the moving papers.  Even considering the declaration, Plaintiff’s motion fails.

The Court finds that the fair market value of the Property is $2,370,000, and that the amount of the homestead exemption is $600,000.

After determining the amount of the homestead exemption and the dwelling’s fair market value, “[t]he court shall make an order for sale of the dwelling subject to the homestead exemption, unless the court determines that the sale of the dwelling would not be likely to produce a bid sufficient to satisfy any part of the amount due on the judgment pursuant to Section 704.800.” (Code Civ. Proc. § 704.780, subd. (b).)

Under Section 704.800, “If no bid is received at a sale of a homestead pursuant to a court order for sale that exceeds the amount of the homestead exemption plus any additional amount necessary to satisfy all liens and encumbrances on the property, including but not limited to any attachment or judgment lien, the homestead shall not be sold and shall be released and is not thereafter subject to a court order for sale upon subsequent application by the same judgment creditor for a period of one year.” (Code Civ. Proc. § 704.800, subd. (a).) In other words, “[t]he purchaser at the execution sale must pay in cash as a minimum bid the total of (a) the amount of all liens and encumbrances (except that the judgment creditor need not pay the amount of his or her judgment in cash) and (b) the amount of the homestead exemption.” (Rourke v. Troy (1993) 17 Cal.App.4th 880, 884.)

Plaintiffs state that the current liens on the Property, in order of seniority, are as follows:

(Ip Decl. ¶ 10.)

Plaintiffs argue that the lien of Edmond Hank Kwong should not be calculated as a lien requiring satisfaction prior to the Judgment, on the basis that Kwong is also a judgment debtor in this action. Plaintiffs present no authority in support of this contention, and so the Court declines to disregard Kwong’s lien.

The liens senior to Plaintiffs’ Judgment lien total $2,018,000, and the applicable homestead exemption is $600,000. Consequently, to warrant the requested order, it must be likely that the sale of the Property will produce a bid greater than $2,618,000. Because the fair market value of the home is $2,370,000, it does not appear likely that the sale of the Property will produce a bid sufficient to satisfy all senior liens, plus the amount of the homestead exemption. The application is therefore denied.