Judge: Christopher K. Lui, Case: BC668542, Date: 2023-05-04 Tentative Ruling

Case Number: BC668542    Hearing Date: May 4, 2023    Dept: 76

Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the motion addressed herein.  Counsel must contact the staff in Department 76 to inform the Court whether they wish to submit on the tentative, or to argue the matter.  As required by Rule 3.1308(a)(2), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 of their intent to appear and argue.

Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776.

Per Rule of Court 3.1308, if notice of intention to appear is not given, the Court may adopt the tentative ruling as the final ruling.

            This is an action to partition real property owned by a partnership and to dissolve the partnership.

            Defendants filed a cross-complaint to quiet title, claiming Plaintiff does not have any actual ownership interest in the property.

            On December 12, 2022, the Court entered interlocutory judgment for partition.

            Plaintiff/Cross-Defendant brings a motion objecting to the sufficiency of the personnel surety bond.

TENTATIVE RULING

Conditioned upon Jose Arevalo producing bank account records corroborating that he has in excess of $100,000, Plaintiff’s request to increase the amount of the undertaking is DENIED. 

Defendants’ request to decrease the amount of the undertaking is also DENIED.

ANALYSIS

Motion Objecting To Sufficiency of Personnel Surety Bond

Request For Judicial Notice

            Defendants request that the Court take judicial notice of the following: (1) Dismissal of all Plaintiff s money claims (Counts Two Through 6 of the Seven-Count Claim), leaving only the real property Partition and Quiet Title Claims, dated September 3, 2021; (2) This Honorable Court’s Minute Order dated April 7, 2023; (3) Surety Undertakings and Supporting Declarations filed April 14, 2023; (4) Supplemental Surety Qualifications Declaration filed April 17, 2023; (5) California Evidence Code § 451(e).

            Requests Nos. 1 – 5 are GRANTED. (Evid. Code, § 452(a) & (d).)

Discussion

Plaintiff moves the Court pursuant to Civ. Proc. Code, §§ 995.910 to 995.960: (1) For an order deeming the personnel surety bond is insufficient because the real property pledged is the personal suretor’s residence. Thus the equity in the personal residence pursuant to California Code of Civil Procedure §704.730 is subject to a $600,000 homestead exemption leaving only $150,000 as collateral for the personnel surety bond; and 2). For an order deeming the personnel surety bond is insufficient because the undertaking was not posted by admitted surety insurer and thus needed to be double the amount of the order of $250,000.00 (Civ. Proc. Code, § 917.1(a)(1) & (b); and 3). An order lifting the stay of execution of the Interlocutory Judgment.

On April 7, 2023 the defendant filed an Ex Parte application requesting a stay of the action pending the appeal. The Court granted the stay and ordered the defendants to post and bond or undertaking in the amount of $250,000.00. However, they have failed to comply with this order. 

 Civ. Proc. Code § 917.1 provides:

(a) Unless an undertaking is given, the perfecting of an appeal shall not stay enforcement of the judgment or order in the trial court if the judgment or order is for any of the following:

(1) Money or the payment of money, whether consisting of a special fund or not, and whether payable by the appellant or another party to the action.

(2) Costs awarded pursuant to Section 998 which otherwise would not have been awarded as costs pursuant to Section 1033.5.

(3) Costs awarded pursuant to Section 1141.21 which otherwise would not have been awarded as costs pursuant to Section 1033.5.

(b) The undertaking shall be on condition that if the judgment or order or any part of it is affirmed or the appeal is withdrawn or dismissed, the party ordered to pay shall pay the amount of the judgment or order, or the part of it as to which the judgment or order is affirmed, as entered after the receipt of the remittitur, together with any interest which may have accrued pending the appeal and entry of the remittitur, and costs which may be awarded against the appellant on appeal. This section shall not apply in cases where the money to be paid is in the actual or constructive custody of the court; and such cases shall be governed, instead, by the provisions of Section 917.2. The undertaking shall be for double the amount of the judgment or order unless given by an admitted surety insurer in which event it shall be for one and one-half times the amount of the judgment or order. The liability on the undertaking may be enforced if the party ordered to pay does not make the payment within 30 days after the filing of the remittitur from the reviewing court.

(c) If a surety on the undertaking pays the judgment, either with or without action, after the judgment is affirmed, the surety is substituted to the rights of the creditor and is entitled to control, enforce, and satisfy the judgment, in all respects as if the surety had recovered the judgment.

(d) Costs awarded by the trial court under Chapter 6 (commencing with Section 1021) of Title 14 shall be included in the amount of the judgment or order for the purpose of applying paragraph (1) of subdivision (a) and subdivision (b). However, no undertaking shall be required pursuant to this section solely for costs awarded under Chapter 6 (commencing with Section 1021) of Title 14.

     (Civ. Proc. Code § 917.1 [bold emphasis added].) 

Defendants argue that § 917.1(b) cited by Plaintiff applies only to money judgments. Here, Plaintiff obtained judgment for partition of real property only, with an order for sale of the real property as specified in § 917.4, not a money judgment. Plaintiff’s argument in the Reply that § 917.1(b) applies to orders as well, would ignore the qualifying language “money or the payment of money.” While Plaintiff then admits that § 917.4 provides protection for the money portion of the judgment, Plaintiff did not obtain a money judgment, and the provision for costs in the judgment is expressly excluded from the scope of § 917.1. 

The beneficiary may object to a bond on any of the following grounds:

(a) The sureties are insufficient.

(b) The amount of the bond is insufficient.

(c) The bond, from any other cause, is insufficient.

(Civ. Proc. Code § 995.920.)

(a) An objection shall be in writing and shall be made by noticed motion. The notice of motion shall specify the precise grounds for the objection. If a ground for the objection is that the amount of the bond is insufficient, the notice of motion shall state the reason for the insufficiency and shall include an estimate of the amount that would be sufficient.

(b) The objection shall be made within 10 days after service of a copy of the bond on the beneficiary or such other time as is required by the statute providing for the bond.

(c) If no objection is made within the time required by statute, the beneficiary is deemed to have waived all objections except upon a showing of good cause for failure to make the objection within the time required by statute or of changed circumstances.

(Civ. Proc. Code § 995.930.)

(a) Unless the parties otherwise agree, the hearing on an objection shall be held not less than two or more than five days after service of the notice of motion.

(b) The hearing shall be conducted in such manner as the court determines is proper. The court may permit witnesses to attend and testify and evidence to be procured and introduced in the same manner as in the trial of a civil case.

(c) If the value of property or an interest in property is a ground for the objection, the court shall estimate its value. The court may appoint one or more disinterested persons to appraise property or an interest in property for the purpose of estimating its value.

     (Civ. Proc. Code § 995.950.) 

(a) Upon the hearing, the court shall make an order determining the sufficiency or insufficiency of the bond.

(b) If the court determines that the bond is insufficient:

(1) The court shall specify in what respect the bond is insufficient and shall order that a bond with sufficient sureties and in a sufficient amount be given within five days. If a sufficient bond is not given within the time required by the court order, all rights obtained by giving the bond immediately cease and the court shall upon ex parte motion so order.

(2) If a bond is in effect, the bond remains in effect until a bond with sufficient sureties and in a sufficient amount is given in its place, or the time in which to give the bond has expired, whichever first occurs. If the time in which to give a sufficient bond expires, the original bond remains in full force and effect for all liabilities incurred before, and for acts, omissions, or causes existing or which arose before, expiration.

(c) If the court determines that a bond is sufficient, no future objection to the bond may be made except upon a showing of changed circumstances.

     (Civ. Proc. Code § 995.960.)

(a) If a bond is given in an action or proceeding, the court may determine that the bond is or has from any cause become insufficient because the sureties are insufficient or because the amount of the bond is insufficient.

(b) The court determination shall be upon motion supported by affidavit or upon the court’s own motion. The motion shall be deemed to be an objection to the bond. The motion shall be heard and notice of motion shall be given in the same manner as an objection to the bond.

(c) Upon the determination the court shall order that a sufficient new, additional, or supplemental bond be given within a reasonable time not less than five days. The court order is subject to any limitations in the statute providing for the bond.

(d) If a sufficient bond is not given within the time required by the court order, all rights obtained by giving the original bond immediately cease and the court shall upon ex parte motion so order.

     (Civ. Proc. Code § 996.010.)

Plaintiff requests that the Court order that defendant post an additional $100,000 cash bond and provide $300,000 personal surety bond, or that the stay of enforcement of judgment should be lifted because Defendants failed to post the court-ordered bond or undertaking. 

Defendants argues that they filed a $250,000 surety undertaking. 

In response to Plaintiff’s argument that there was only $150,000 in equity due to the new expanded homeowner exemption, Defendants argue that they filed a supplemental surety declaration identifying an additional asset of over $100,000, bringing the total undertaking to well over $250,000 as ordered by the Court.

Defendants argue that Civ. Proc. Code § 720.770 allows the court to order the amount of the undertaking decreased if the court determines the amount prescribed exceeds the probable recover of the beneficiary if the beneficiary ultimately prevails in proceedings to enforce the liability on the undertaking.

Defendants argue that, pursuant to Civ. Proc. Code § 917.4, which governs the amount of undertaking required in this instance, the raising of the $250,000 undertaking filed is unnecessary because of the receivership in place, and the court should decrease the undertaking to the level set forth in § 917.4, which provides:

The perfecting of an appeal shall not stay enforcement of the judgment or order in the trial court if the judgment or order appealed from directs the sale, conveyance or delivery of possession of real property which is in the possession or control of the appellant or the party ordered to sell, convey or deliver possession of the property, unless an undertaking in a sum fixed by the trial court is given that the appellant or party ordered to sell, convey or deliver possession of the property will not commit or suffer to be committed any waste thereon and that if the judgment or order appealed from is affirmed, or the appeal is withdrawn or dismissed, the appellant shall pay the damage suffered by the waste and the value of the use and occupancy of the property, or the part of it as to which the judgment or order is affirmed, from the time of the taking of the appeal until the delivery of the possession of the property. If the judgment or order directs the sale of mortgaged real property and the payment of any deficiency, the undertaking shall also provide for the payment of any deficiency.

      (Civ. Proc. Code § 917.4 [bold emphasis added].)

Defendants argue that the surety satisfied the requirements of Civ. Proc. Code § 995.520.

Plaintiff argues that Jose Arevalo is not worth more than the $250,000 amount of the bond and the has not identified an additional non-exempt asset well in excess of $100,000 based on perjured testimony which is contradicted by Plaintiff’s expert. 

Defendants argue that Plaintiff obtaining the issuance of a writ of possession and service of a Notice to Vacate improperly usurped the powers of the receiver, as Plaintiff is not entitled  to possession of the home until the receiver acts.

Plaintiff argues that the writ of possession was being processed by the sheriff when the court granted the stay. The Sheriff continued processing the writ, unaware that a stay had been granted, because Defendant’s counsel failed to notify the sheriff, as ordered by the Court.

The Court declines to increase the amount of the undertaking. As Defendants point out, § 917.1 applies to judgments or orders for money or the payment of money. Further, Jose Arevalo has stated in his Supplemental Declaration of Additional Surety Qualifications that his assets included funds saved in excess of $100,000 in an account at the VA Desert Pacific Federal Credit Union, at 5901 E. 7^th St., Bldg. 2, Long Beach, CA 90822. (RJN, No. 4; Suppl. Decl., ¶ 5.)  Conditioned upon Arevalo producing bank account records corroborating that he has in excess of $100,000 (for which Arevalo may request filing under seal), the Court will deem this additional collateral sufficient to satisfy the $250,000 bond amount. Thus, upon provision of this information, Plaintiff’s request to increase the amount of the undertaking is DENIED. 

On the other hand, the Court declines to reduce the amount of the undertaking, as requested by Defendants. As Plaintiff points out, reducing the surety bond could potentially leave Plaintiff without adequate protection. Plaintiff also points out that the receiver might have problems adequately protecting the property. Defendants’ request to decrease the amount of the undertaking is also DENIED.