Judge Christian R. Gullon, Case Number: KC052751, Date: 2024-01-08 Tentative Ruling

(1) Defendant Scott Lee’s MOTION TO QUASH SERVICE OF THE SUMMONS is DENIED, notably for the reason that Defendant waived any objections to personal jurisdiction by appearing at the 9/7/22 ORAP.

(2) Defendant” Scott Lee and non-party Mei Ting Lee’s MOTION FOR A PROTECTIVE ORDER (as to the debtor exams of Tina Chiang, and Samantha Chang) is DENIED.

Monetary sanctions are imposed upon Debtor Defendant in the amount of $1,050.[1]

On April 15, 2008, Plaintiff INVESTMENT RETRIEVERS, INC. filed suit against Defendant Scott Lee INDIVIDUALLY AND DBA USA SCOTT LEE.

On July 11, 2008, Plaintiff filed its request or entry of default and court judgment.

On September 11, 2008, the court entered judgment against Defendant in the sum of $42,751.95 and $1,672.55 in attorney fees, and $11,316.20 in interest, $375.00 in cost and post judgment interest accruing at the rate of 010.00% for a total judgment amount of $56,115.70. (See RJN Ex. D, p. 18 of 94 of PDF.)

On December 26, 2008, a Notice of Continued Hearing and Bench Warrant was issued indicating that since Defendant did not appear at the ORAP set for 12/4/08, the matter was set for a second call on 12/30/08. (RJN, Ex. G.)

On June 22, 2022, the court issued a minute order indicating that Mei Ting Tseng aka Tina (non-party/third person) failed to appear on this date and set a bail of $50,000.00. (Ex. H.) Tina is Defendant’s wife.

On September 7, 2022, the court issued a minute order indicating that the bench warrant held on 6/22/22 for Ting is held issued and that Defendant is sworn and examined. Specifically, the minute order provides in pertinent part the following:

The matter is continued to 10/31/22 …to allow judgment debtor to bring the subpoenaed documents…the subpoena duces tecum is to remain in full force. The court orders Defendant that Scott Lee not take any action with proper he owns, do not get rid of or take a lien on any owned property. (RJN Ex. I, pp. 35-37 of 94 PDF.)[3]

On October 31, 2022, the court issued the following minute order stating in relevant part that “Plaintiff's counsel represents to the Court that Scott Lee has filed Chapter 13 Bankruptcy. The matters are continued pursuant to the pending Bankruptcy.” There was no appearance by Defendant at the hearing.

On April 21, 2023, the court issued the following minute order: “Mei Ting Tseng, AKA Tina failed to appear this date. Bench Warrant issued on 09/07/2022 for Mei Ting Tseng, AKA Tina is ordered Issued.” There was no appearance by Defendant.

On September 26, 2023, Plaintiff filed a Notice of Status of Case Re: Bankruptcy indicating that the bankruptcy filing of debtor Defendant was voluntarily dismissed on 9/6/23. That same day, Plaintiff filed two ORAP applications: one as to third party Tina Chiang CPA and one as to Samantha Chang, EA dba Miles Accounting and Tax Services.

On October 2, 2023, Defendant filed the instant motion to quash service of the summons.

On October 19, 2023, Plaintiff again filed two ORAP applications as to the same third parties.

On November 16, 2023, the court issued the following minute order regarding the Hearing on Application for Order for Appearance and Examination; Hearing on Application for Order for Appearance and Examination; Hearing on Ex Parte Application for a Protective Order, or in the alternative for an Order to Stay or Continue Third Party Exams stating in the relevant part:

Defense Counsel's written Ex Parte Application for a Protective Order, or in the Alternative for an Order to Stay or Continue Third Party Exams until the Hearings on the Motion to Quash, and Motion for a Protective Order, or in the Alternative for an Order Shortening Time is heard, argued, and DENIED. Samantha Chang (Non-Party/Third Person) failed to appear this date. A bench warrant is ordered and held until 01/08/2024. Bail is set in the amount of $5,000.00. Tina Chiang (Non-Party/Third Person) failed to appear this date. A bench warrant is ordered and held until 11/16/2023. Bail is set in the amount of $5,000.00.

On December 1, 2023, Plaintiff filed its opposition to the protective order motion.

On December 18, 2023, Plaintiff filed its opposition to the motion to quash, along with evidentiary objections and an RJN.

A party to a suit may challenge the court’s exercise of personal jurisdiction over him or her by filing a motion to quash service of summons. (Code Civ. Proc., § 418.10, subd. (a).) “A court lacks jurisdiction over a party if there has not been proper service of process.” (See Ruttenberg v. Ruttenberg (1997) 53 Cal.App.4th 801, 808.)

Defendant argues that he was not served via substituted service on his wife because (i) the general description describes most middle-aged females of Asian descent and (ii) his wife was absent from the country on the day of service on May 8, 2008. (Motion p. 4.)

As a registered process server effectuated service, the return of a registered process server establishes a rebuttable presumption of the facts stated in the return. (Opp. p. 4, citing Evid. Code § 647.) Effectively, Defendant has the burden to prove otherwise.

The court finds Defendant did not meet his burden for the following four (4) reasons.

First, the wife’ declaration does not provide her height, weight, or hair color but merely focuses on one differing factor: age. She states in 2008 she was 33 years old despite the POS description that someone 40-45 years of age was served. But age is not a feature that is patently ascertainable with accuracy.

Second, by Defendant’s own admission, the description of his wife was somewhat accurate. (See Motion p. 4:14-15 [“The proof of service describes a woman similar [], but not terribly accurate in the description of the individual.”], italics added.) There is no requirement that the description on a POS be precise and exact.

Third, Defendant and his wife do not conclusively state that Tina was in Taiwan. Rather, they state that she is “often absent from the country.” (Motion p. 4, italics added; see also Mei Ting Lee Decl., P5 [“I would have been absent from the country.”], italics added.) Absent a plane ticket indicating that on May 3, 2008 she was in Taiwan/out of the country, Defendant has not produced evidence.

All in all, though mindful of the public policy strongly favors granting relief, the irrefutable evidence and case docket, when read in their totality, draw into question the credibility and veracity of Defendant’s declaration and his wife’s declaration that POS was improper. (See Hodge Sheet Metal Products v. Palm Springs Riviera Hotel (1961) 189 Cal.App.2d 653, 658 [“The weighing of the veracity of the affidavit was in the province of the trial court.”].)

Therefore, as Defendant has not produced evidence to refute the presumption of proper service, his challenge to the court’s jurisdiction is unmeritorious.

Fourth, even if the foregoing was not true (i.e., service was improper), the motion would be denied on another ground: waiver. (Opp. p. 5.)

A general appearance occurs when a party, either directly or through counsel, participates in an action in some manner that recognizes the court's authority to proceed. It does not require any formal or technical act. (Opp. p. 5, citing Mansour v. Superior Court (1995) 38 Cal.App.4th 1750, 1756.) “A general appearance by a party is equivalent to personal service of summons on such party.” (Code Civ. Proc. § 410.50 (a).)

Here, as explained by Plaintiff’s opposition, Defendant has appeared and submitted to debtor’s examination(s). Indeed, a review of August 8, 2022 transcript provides that debtor Defendant was stipulating to provide certain documents. (See Opp. to Protective Order, Ex. J, p. 58 of 75 of PDF:15-17.) Accordingly, Defendant did not appear at the hearing or other hearings for the sole purpose of making a special appearance (i.e., to object to the court's jurisdiction). (See Serrano v Stefan Merli Plastering Co., Inc., supra, 162 CA4th at 1029 [If a defendant raises any issue other than jurisdiction or asks for any relief that can only be granted on the assumption that the court has jurisdiction over the defendant, then the defendant's appearance in general]; see also Alioto Fish co. v. Alioto (1994) 27 Cal.App.4th 1669 [for discussion on general appearance with respect to a fee order and a receive order].)

By indicating an intent to submit to the court's jurisdiction, Defendant made a general appearance, consequently waiving any objection to defects in service. Based on the foregoing, the motion to quash is DENIED.

Cal. Code of Civ. Pro. 708.200 provides “in any proceeding under this article, the court may, on motion of the person to be examined or on its own motion, make such protective orders as justice may require.

The first is regarding “All accounting, source documentation and work papers concerning real property known as 3723 Mustang Drive, Ontario, CA 91761.”

According to Defendant and his wife, that real property was acquired in interest in real property via her inheritance (an inter-familial transfer from Tina’s mother to Tina). The real property was not purchased via community property, paid for via community property, nor is encumbered by community property debt. (Motion pp. 4-5.) Thus, as the real property is not community real property, it is not subject for examination to satisfy Defendant’s debt.

The court finds that the evidence and Defendant’s own statements show otherwise.

First, despite Defendant’s contention that “Plaintiff will simply have no evidence to present to this Court to support its claim that this is community real property” (Motion p. 5:4-5), Plaintiff does provide evidence, and a compelling one: Defendant himself, under the penalty of perjury, stated that the real property is his.

Indeed, turning to Plaintiff’s evidence, in Defendant’s second bankruptcy action (USBC Case No. 6:23-bk-11808-RR) filed on April 28, 2023 he identified in his Voluntary Petition for Bankruptcy that he owned the real property and claimed it as an asset. (Opp. p. 5, see also Opp., Ex. I, p. 47 of 75 of PDF.) What is more, that very same page indicates that only Defendant has interest in the real property. Specifically, the form states that even though the property is “Debtor's spouse separate property that was inherited from her family in September 12, 2019,” that the Debtor claims 40% interest as community property as debtor made payments for the mortgages from 2019 to 2023.

To the extent Defendant attempts to rebut the evidence, it is disingenuous as he merely states his bankruptcy counsel filled out the form.[5]

To the extent that Defendant avers that the loan referenced is a home equity line of credit (HELOC) such that Defendant did not acquire an interest in the property, that argument misses the mark because the HELOC—which effectively is a second mortgage as they are liens behind a first mortgage—encumbered the property. (Reply pp. 3-4, citing to In re Marriage of Marsden (1982) 130 Cal.App.3d 426.)

That said, as the issue of the HELOC was raised in Reply, the court may allow for supplemental briefing on the issue (i.e., whether encumbrance on the real property transfers an interest to Defendant). The determination of whether Defendant has any interest in the real property is of import because, as noted by Defendant, CCP section 720.150 precludes the sale of the real property of a third party (here, Tina).

At the outset, it is somewhat unclear as to Defendant’s argument with respect to the tax returns.

On the one hand, Defendant avers that his tax returns are privileged (Motion p. 4:6-7), suggesting they are not subject to the ORAP. Defendant also avers that Plaintiff is not entitled to Tina/third-party’s tax returns (Motion p. 5:14-15). On the other hand, Defendant contends that he does not dispute the right to examine third parties, but merely the relevance of the intended examination. (Reply p. 5:12-14.)

Here, all arguments are moot as on August 8, 2022, this court already ordered Defendant to produce the certain tax returns and tax information sought from the third-party accountants.

Even if this court previously did not make such a ruling, it would now as Defendant’s tax returns and tax work papers maintained by his accountants are property of the debtor and thus discoverable under CCP sections 708.120, which entitles a judgment creditor to examine a third person who has “possession or control of property in which the judgment debtor has an interest.” The privilege for income tax returns is not absolute. Of pertinence, the privilege will not be upheld when “public policy greater than that of the confidentiality of tax returns is involved.” (Opp. citing Li v. Yan (2016) 247 CA4th 56, 67.) Specifically, the policy being to prevent fraud against creditors. (Id. at p. 68.) And here, Plaintiff has attempted to collect upon its judgment for 15 years.

All in all, the docket demonstrates a calculated attempt to obstruct enforcement of valid orders. If the court were to grant any of the motions, they will have, in effect, undermine the policy of the law favors the enforcement of judgments.

[1] The court must impose a monetary sanction under Code Civ. Proc. §¿2023.030 against any party, person, or attorney who unsuccessfully makes a motion for a protective order, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust (Code Civ. Proc. §§¿2023.030(a), 2025.420(h)). Here, the court finds so no substantial justification in filing the motion for a protective order because (i) Defendant’s own statements do not conclusively show he has no interest in the real property and (2) the court already ordered Defendant to provide various tax information. Therefore, the court grants Plaintiff’s request for monetary sanction in the total amount sought as it finds the total number of hours and hourly rate reasonable (3.5 hours preparing the opposition and anticipate expending 1.5 hours to attend and oppose the hearing at an hourly rate of $350.00 per hour).

[2] As this is a legacy case such that numerous documents are unavailable in the court docket, the court has gathered relevant filings from Plaintiff’s Request for Judicial Notice (RJN) filed on 12/18/23. The RJN is granted as it consists of records of this court. (See Evidence Code section 451(c).)

[3] This date is crucial for showing Defendant’s waiver of personal jurisdiction.

[4] Specifically: “1. All state and federal personal tax returns for the years 2008 through the present with respect to Scott Lee. 2. All state and federal tax returns for the years 2008 through present with respect to Rowland Heights Auto Services, Inc. 3. All state and federal tax returns for the years 2008 through the present with respect to any business entity owned or controlled by Scott Lee. 4. All other county, state or federal returns for the years 2008 through the present prepared and/or filed for Scott Lee. 5. All other county, state or federal returns for the years 2008 through the present prepared and/or filed for any business entity owned or controlled by Scott Lee. 6. All accounting, source documentation and work papers concerning any assets of Scott Lee. 7. All accounting, source documentation and work papers concerning any assets under the ownership or control of Scott Lee. 8. All accounting, source documentation and work papers concerning any real property under the ownership or control of Scott Lee. 9. All accounting, source documentation and work papers concerning real property known as 3723 Mustang Drive, Ontario, CA 91761.” (Motion pp. 11, 16 of PDF.)

[5] (Reply p. 3: 9-13 [“Defendant is surprised by the bankruptcy schedule claiming an interest in the real property. Defendant avers his bankruptcy counsel likely preemptively included the residence in the bankruptcy schedule based on counsel's own legal interpretation as a good faith extension of application of the law, in an attempt to confirm a Chapter 13 plan of reorganization, as opposed to a Chapter 7. Defendant's counsel cannot speculate, and need not, as it is irrelevant.”].)

[6] Both parties appear to state that the ORAP seeks Tina’s tax returns (See e.g., Opp. p. 7:12-14, Motion p. 5), but the subpoenas do not seek Tina’s tax returns (see footnote 4, supra). Even if Plaintiff seeks Tina’s tax information, a judgment creditor may seek third party discovery in aid of enforcement of a judgment, regardless of whether the judgment debtor's assets are in the possession of the third party, or the third party is indebted to the judgment debtor. (See Opp. p. Yolanda's, Inc. v. Kahl & Goveia Commercial Real Estate (2017) 11 Cal.App.5th 509.) What is more, as observed by Plaintiff, Tina has expressly or implicitly waived any objections to tax returns as they were not raised during the debtor’s examination. (Opp. p. 7:12-14.)