Judge: Cherol J. Nellon, Case: 20STCV03339, Date: 2023-05-10 Tentative Ruling

Case Number: 20STCV03339    Hearing Date: May 10, 2023    Dept: 28

Hearing on Claim of Exemption/Third-Party Claim

            Having considered the claim of exemption and opposition, the Court rules as follows.

BACKGROUND

            On January 27, 2020, Plaintiffs Amy Roe, by and through her GAL Beth Roe, Beth Roe, and James Roe (collectively, “Plaintiffs”) filed a Complaint against Luther Johns (“Defendant”), alleging eight causes of action arising from Defendant’s purported sexual abuse and assault of Plaintiff Amy Roe on January 28, 2018.

            On October 13, 2022, the jury returned a special verdict in favor of Plaintiffs and against Defendant in the amount of $28,536,750.

            In December 2022, Plaintiff’s lawyers filed various documents to levy and execute against Defendant’s property.

            On January 11, 2023, Defendant filed a claim of exemption. Notice of the claim of exemption was mailed to Plaintiffs on February 9, 2023.

            On February 23, 2023, Plaintiffs filed a notice of hearing on Plaintiff’s claim of exemption and an opposition. On March 3, 2023, Plaintiffs filed a memorandum of points and authorities along with a declaration of Plaintiffs’ counsel, Vaheh Manoukian, in support of their opposition. On March 27, 2023, the Court continued the hearing from March 30, 2023 to May 10, 2023. On March 28, 2023, Plaintiffs filed a notice of the new hearing date with proof of service on Defendant.

PARTY’S REQUESTS

Plaintiffs request a determination of Defendant’s claimed exemptions.

LEGAL STANDARD

            “Except as otherwise provided by statute, property that has been levied upon may be claimed to be exempt as provided in this article.”  (Code Civ. Proc., §703.510.)  A claimant may make a claim of exemption by following the procedure in CCP §703.520.

CCP §703.580 provides:

(a)    The claim of exemption and notice of opposition to the claim of exemption constitute the pleadings, subject to the power of the court to permit amendments in the interest of justice.

(b)    At a hearing under this section, the exemption claimant has the burden of proof.

(c)    The claim of exemption is deemed controverted by the notice of opposition to the claim of exemption and both shall be received in evidence. 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. If not satisfied, the court shall order the hearing continued for the production of other evidence, oral or documentary.

(d)    At the conclusion of the hearing, the court shall determine by order whether or not the property is exempt in whole or in part. Subject to Section 703.600, the order is determinative of the right of the judgment creditor to apply the property to the satisfaction of the judgment. No findings are required in a proceeding under this section.

(e)    The court clerk shall promptly transmit a certified copy of the order to the levying officer. Subject to Section 703.610, the levying officer shall, in compliance with the order, release the property or apply the property to the satisfaction of the money judgment.

(f)     Unless otherwise ordered by the court, if an exemption is not determined within the time provided by Section 703.570, the property claimed to be exempt shall be released.

"Money in a judgment debtor’s deposit account that is not otherwise exempt under this chapter is exempt to the extent necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor." (Code Civ. Proc., § 704.225.) "Money in the judgment debtor’s deposit account in an amount equal to or less than the minimum basic standard of adequate care for a family of four for Region 1, established by Section 11452 of the Welfare and Institutions Code and as annually adjusted by the State Department of Social Services pursuant to Section 11453 of the Welfare and Institutions Code, is exempt without making a claim." (Code Civ. Proc., § 704.220.) (This amount at the time of the Senate Bill deliberation was $1,724.)

            A claimant filing a claim of exception must file such claim within 10 days after the service date of the notice of levy on the property claimed to be exempt. (Code Civ. Proc., § 703.520, subd. (a).)

            In the instant case, the judgment was filed on October 13, 2022. A writ of execution was filed on December 7, 2022. The instant claim of exemption was filed on January 11, 2023. Therefore, the claim of exemption was not timely.

DISCUSSION

            Plaintiffs seek an order denying Defendant’s claimed exemptions for insufficient facts in support of the Motion. The Court agrees with Plaintiffs that Defendant’s claims have insufficient factual support. Therefore, the Court continues the hearing to allow Defendant to provide such support. 

            Defendant claims the following property to be exempt: a US Bank account; a motor vehicle, the proceeds of its sale, or the proceeds of insurance or other indemnification from its loss or damage; and tools, implements, materials, etc. used in the trade, business or profession of Defendant or his spouse. (Manoukian Declaration, Exhibit C, Claim of Exemption, p. 1, Sec. 4 and 8.) Additionally, Defendant’s Chase account is exempt from levy due to being a deposit account for Social Security Insurance benefits. (Manoukian Decl. ¶ 9.)

            Defendant’s claim is made 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. (Manoukian Declaration, Ex. C, Sec. 7.) In support of his claim, Defendant provides a list of categories of property that are subject to exemptions and their corresponding statutory provision. (Manoukian Declaration, Ex. C, Attachment 1.)

            Defendant states that he is in “serious medical need, which requires a multitude of unexpected expenditures.” (Manoukian Declaration, Ex. C, Sec. 6.) He states that “surplus funds are necessary to cover unusual medical expenses such as supplies and accessories.” (Manoukian Declaration, Ex. C, Attachment 6.)

            Defendant is alleged to have no dependents and one spouse. (Opposition Brief, Exhibit C, Claim of Exemption, Financial Statement.) In the financial statement attached to the claim of exemption, Defendant is claiming:

(1)             One spouse

(2)             Gross monthly income: $5,534.32 from veterans pay and social security

(3)             Property: a U.S. Bank account containing $20,060.78; a Chase account containing $18,000.00; a 2017 Ford F150 and a 2016 Kia Sol with zero equity; $407,000.00 in real estate equity; and a wedding ring, heirlooms, and diamond earrings worth $9,000.00.

(4)             Monthly expenses: $7,414.09

(5)             Debts: None

(6)             Other facts: Due to an unspecified serious medical condition, surplus funds are necessary to cover unusual medical expenses, such as supplies and accessories.

            Plaintiffs request that the Court hold Defendant’s U.S. Bank account susceptible to execution insofar as that account does not contain exempt benefits. According to Plaintiffs, the non-exempt amount is $12,372.10. (Manoukian Decl. ¶ 8.) Plaintiffs secondly seeks to execute on any non-exempt equity in Defendant’s motor vehicles.

Defendant has the burden of proof to substantiate that his claim of exemption is an amount necessary for the support of himself and his spouse. (Code Civ. Proc., § 704.225.) Pursuant to the Senate Floor Analysis of the relevant bill (SB 616), the legislature intended to use this statute to protect debtors from having their bank accounts drawn down to zero through bank account levies. Defendant's claim of exemption should apply only as far as what is "necessary" to support himself and his spouse. This amount may be decided based on Defendant's professed need and subject to evidence presented at the hearing. The legislature sought only to provide a floor beneath which a debtor would receive protection for basic expenses and did not explicitly seek to fully cover a debtor's monthly living expenses.

Here, Defendant does not meet his burden. First, Defendant’s claim is overly broad. Attachment 1 simply lists the statutory exemption categories without specifying which apply to Defendant’s claim. Therefore, the Court is left to infer which provisions Defendant’s claim is made pursuant to.

Second, Defendant provides insufficient factual or legal support for why the subjects of his claim should be exempt. Defendant provides zero documentary evidence of for his claims. There are no receipts for any of his monthly expenses or proof of the value of his heirlooms or real estate equity. Defendant claims that he is in “serious medical need, which requires a multitude of unexpected expenditures,” but explanation is to vague and general. For example, Defendant does not prove how his medical needs connect to the high monthly clothing claim or high transportation costs. Moreover, Defendant’s various monthly living expenses will likely not meet the legislature's intended definition of "necessary" expenses. For example, without documentation, Defendant claims $1,200 per month for clothing, $1,291 for medical and dental costs,  and $489.90 for transportation. Without any explanation from Defendant to show otherwise, these costs appear grossly excessive.

Plaintiff also seeks the non-exempt equity in Defendant’s 2017 Ford F150 pickup truck and a 2016 Kia Soul hatchback.

            Section 704.010(a) permits a judgment debtor to “exempt in the amount of” $7,500 the “aggregate equity in motor vehicles.” Section 704.060(a) creates a dollar-limited exemption for (in sum) “tools, . . . one commercial motor vehicle, . . . and other personal property” to the extent that those are “reasonably necessary to and [are] actually used . . . in the exercise of the trade . . . by which the judgment debtor earns a living.” However, “[A] motor vehicle is not exempt under [§ 704.060](a) if there is a motor vehicle exempt under Section 704.010 which is reasonably adequate for use in the trade . . . for which the exemption is claimed under this section.” (§ 704.060(c).)

            Here, Defendant can shield an aggregate of $7,500 in the equity value of his two motor vehicles, but nothing beyond that. Though Defendant claims the tools of the trade exemption under section 704.060(a), he provides zero proof of exempt tools or how they are necessary to a trade, calling, or profession. Therefore, Defendant provides insufficient evidence to support this exemption.

            The Court continues the hearing for Defendant to provide sufficient evidence.

CONCLUSION

                       The motion is CONTINUED to  July 5, 2023 at 1:30 p.m. for Defendant to file further evidence in support of his claimed exemptions.

            Plaintiffs are ordered to give notice.

The parties are directed to the header of this tentative ruling for further instructions.