Judge: David Sotelo, Case: BC530334, Date: 2022-10-20 Tentative Ruling
Case Number: BC530334 Hearing Date: October 20, 2022 Dept: 40
MOVING PARTY: Defendants Kathy A.
Gomez fka Kathy A. Tehee and Kathy A. Tehee Family Trust.
Defendants Kathy A. Gomez fka Kathy A. Tehee and Kathy A.
Tehee Family Trust make two motions challenging Plaintiff Comerica Bank’s levy
of $330,635.80 from four Arizona-held bank accounts in the name of Mr. Gomez,
levied pursuant to a California-court issued Writ of Execution for the
collection of a Default Judgment against the Defendants in this action, which has
not been domesticated in the State of Arizona: (1) an opposed Motion to Quash
the Writ for either violation of Ms. Gomez’s due process rights as based on a failure
to serve the Writ of Execution documents on Ms. Gomez or lack of domestication
of the California Default Judgment in the State of Arizona; and (2) an opposed
Claim for Exemption of (after briefing) $322,201.34 levied from one of the four
Chase bank accounts held in Ms. Gomez’s name, grounded in California statutory
protections against the levy of mature life insurance policy payouts reasonably
necessary to support the debtor or the debtor’s spouse or dependents.
The Court: (1) GRANTS Ms. Gomez’s Motion to Quash because
the Writ of Execution is VOID, or alternately, IMPROPERLY ISSUED, because it employed
a California court order to enforce a judgment in the State of Arizona by
levying property held by the debtor in Arizona rather than obtaining a similar
writ through Arizona courts pursuant to Arizona domestication of the California
Default Judgment against the Defendants; and (2) finds the Gomez Claim for
Exemption is MOOT in light of the grant of the Motion to Quash.
On or about March 22, 2005, Defendant Kathy A. Gomez
(previously Tehee)—presently a 61-year-old person—executed a promissory note
(“Note”) in favor of Plaintiff Comerica Bank in the principal amount of
$200,000.00. Ms. Gomez defaulted on the Note in June 2013 and thereafter failed
to make any further payments pursuant to the Note.
Based on these facts, Comerica Bank brought this action on
December 11, 2013, alleging claims of (1) Breach of Promissory Note, (2) Breach
of Guaranty, and (3) Money Had and Received against Ms. Gomez and her Kathy A.
Tehee Family Trust (also a Defendant in this action; hereafter, the “Trust”).
The Defendants failed to answer or file a pre-answer motion
against the Complaint, leading Comerica Bank to obtain Entry of Default against
the Defendants on January 30, 2014. Comerica later obtained Default Judgment
against both Defendants on March 25, 2014.
Comerica Bank applied for a Writ of Execution on April 17,
2014, which was issued the same day but was returned as not satisfied on
November 13, 2015.
Then, after years of inaction on the case, on April 29,
2022, Comerica Bank filed a Memo of Costs with the Court on April 29, 2022,
requesting the $182,869.98 outstanding judgment in this action, as well as
$147,853.62 in accrued interest.
On June 6, 2022, Comerica Bank successfully obtained a Writ
of Execution from the Clerk of the Court, as against Defendants Gomez and the
Trust, for a total of $330,583.60, which included the $182,869.98 outstanding
principal, $147,853.62 in accrued interest, and $40 in costs for issuance of
the Writ, with interest continuing to accrue at the rate of $50.05 per day.
Pursuant to this Writ, on or about June 13, 2022, a levy was served on JPMorgan
Chase Bank, N.A. (“Chase Bank”).
On June 14, 2022, Chase Bank issued a Memorandum of
Garnishee indicating that it had levied $330,635.80 from four Chase Accounts
belonging to Defendant Gomez (one co-owned with Mr. Justin M. Tehee, Ms. Gomez’s
son): $322,201.34 from Account ending in 6560 (the account co-owned with Mr.
Tehee); $1,108.96 from Account ending in 0375; $ 3,250.62 from Account ending
in 5168; and $ 4,074.68 from Account ending in 4148. These monies, per Comerica
Bank, are sufficient to pay the judgment balance as of the date of the levy in
full. Of relevance to this discussion, these four Chase Accounts were opened
and maintained in the State of Arizona, where Ms. Gomez provides that she has
resided since 2010.
On June 17, 2022, Counsel for Comerica Bank received the
Chase Memorandum of Garnishee.
On June 20, 2022, Ms. Gomez mailed a Claim of Exemption to
Plaintiff Comerica, which sought exemption of the levies made from Chase
Accounts 6560 ($322,201.34) and 0375 ($1,108.96). (Later briefing by Ms. Gomez retracted
her request for exemption of the funds held in Account 0375.)
On June 20, 2022, Ms. Gomez also made a Motion to Quash Writ
of Execution.
Both the Claim of Exemption and the Motion to Quash are
opposed by Comerica Bank and, after additional briefing on the Claim for
Exemption, are now before the Court.
Judicial Notice, Motion to Quash, Comerica
The Court DECLINES to take Judicial Notice of Service of
Process on Chase and the 1505 Certificate because these documents are not
relevant to the disposition of the motions before the Court, for which reason
Comerica has failed to show adequate grounds on which this Court should take
notice of these documents. (Evid. Code, § 452, subds. (c), (h), 453.)
Judicial Notice, Claim for Exemption, Comerica
The Court DECLINES to take Judicial Notice of the Los
Angeles Times article, Arizona quitclaim and warranty deeds, and the Kats
Arizona Rental Properties, LLC documents submitted by Comerica because these
documents are not relevant to the disposition of the motions before the Court,
for which reason Comerica has failed to show adequate grounds on which this
Court should take notice of these documents. (Evid. Code, § 452, subd. (h),
453.)
Legal Standard
A writ of execution is issued to direct the levying officer
to enforce a money judgment in a manner prescribed by law. (See Code Civ.
Proc., § 699.520.) At the time of levy or promptly thereafter, the levying
officer shall serve a copy of (1) the writ of execution; (2) a notice of levy;
(3) a copy of the form listing exemptions, a list of exemption amounts, a copy
of the form the judgment debtor may use to make a claim of exemption, and a
copy of the form the judgment debtor may use to provide a financial statement,
if the judgment debtor is a natural person; and (4) any affidavit of identity
for the names of the debtor listed on the writ of execution. (Code Civ. Proc.,
§ 700.010(a).)
The court has the inherent equitable power over its process
to recall and/or quash a writ of execution improperly or inadvertently issued
or to vacate an execution levy. (See Meyer v. Meyer (1952) 115
Cal.App.2d 48, 49; United Taxpayers’ Co. v. City & County of San
Francisco (1927) 202 Cal. 264, 266; see also Code Civ. Proc., § 128 [The
court has inherent power to control the litigation process].) “‘[W]hen an
execution is quashed, any levy made pursuant thereto falls with it, and any
title to the property vested in the sheriff by the levy is defeated.’” (Hulse
v. Davis (1927) 200 Cal. 316, 318, quoting Wellington v. Wedgwick
(1859) 12 Cal. 469, 475.)
A motion to recall and quash a writ of execution and release
any liens lies where, among other things:
The judgment has been satisfied (see Marriage of Chapman
(1988) 205 Cal.App.3d 253, 259);
The judgment was satisfied by agreement or “substituted”
performance—e.g., agreement that lump-sum payment would discharge installment
judgment (Colby v. Colby (1954) 127 Cal.App.2d 602, 605);
The writ failed to account for legitimate offset against
payment due (Marriage of Peet (1978) 84 Cal.App.3d 974, 977-78; Nash
v. Kreling (1902) 136 Cal. 627, 628 [judgment subject to partial offset;
execution for full amount was improper];
The writ was improperly or inadvertently issued (e.g., where
judgment fully paid) (Meyer v. Meyer, supra, 115 Cal.App.2d at p.
49);
The judgment was not enforceable by execution (Montgomery
v. Meyerstein (1924) 195 Cal. 37, 43-48 [decree was not money judgment]);
The property levied upon was not subject to execution (United
Taxpayers’ Co. v. City & County of San Francisco, supra, 202
Cal. at pp. 266-67);
After issuance of the writ, the judgment was vacated (Stegge
v. Wilkerson (1961) 189 Cal.App.2d 1, 5);
The judgment is void (Jones v. World Life Research Inst.
(1976) 60 Cal.App.3d 836, 840);
The judgment is conditional, requiring a judicial
determination as to whether the judgment creditor is entitled to enforce the
judgment (see Adams v. Bell (1933) 219 Cal. 503, 505 [writ issued by
clerk on unauthorized determination that defendant had failed to comply with
conditional judgment].)
The lien is extinguished in connection with a stay of
enforcement (see Code Civ. Proc., § 697.040, subd. (a)); and
The debtor has filed a notice of appeal and posted a sufficient
appeal bond as to prevent the levying officer from disbursing funds to the
judgment creditor (Adir International, LLC v. Superior Court (2013) 216
Cal.App.4th 996, 1002-03).
When a judge issues an order recalling or quashing a writ of
execution, any levy under the writ is automatically canceled, and any title to
the property vested in the levying officer by the levy is defeated. (See Code
Civ. Proc., § 699.060, subd. (a); Hulse v. Davis (1927) 200 Cal. 316,
318.) All rights and proceedings based on a writ that has been quashed fall
with it. (Moreno v Mihelis (1962) 207 Cal.App.2d 449, 451.)
Grounds for Quashing
Ms. Gomez presents two grounds for quashing the Writ of
Execution: lack of service triggering due process concerns for Ms. Gomez (Jun.
20, 2022 Quash Mot., 8:16-25) and lack of domestication of the Writ of
Execution in Arizona (Jun. 20, 2022 Quash Mot., 9:20-10:6).
Service and Due Process
Ms. Gomez’s first general ground for quashing the Writ of
Execution in this action—that her due process rights were violated when neither
Comerica nor the levying officer served the notice of writ of execution, notice
of levy, or related documents on her (Jun. 20, 2022 Quash Mot., 6:2-8:15 [law],
8:16-25 [legal reasoning])—is unavailing.
Upon delivery of the writ of execution to the levying
officer to whom the writ is directed, together with the written instructions of
the judgment creditor, the levying officer must execute the writ in the manner
prescribed by law. (Code Civ. Proc., § 699.530, subd. (a).) However, a failure
to post, serve, or mail a copy of the writ of execution and notice of levy to
the judgment debtor does not affect the execution lien created by the levy.
(Code Civ. Proc., § 699.550.)
Here, at the time this Motion to Quash was made, Ms. Gomez
had not been served with a copy of the writ execution, notice of levy, and
related documents. (Jun. 20, 2022 Quash Mot., Gomez Decl., ¶ 5.) This defect,
however, does not present a valid ground for quashing the levy. (Code Civ.
Proc., § 699.550; see Oct. 7, 2022 Quash Opp’n, 3:8-19 [Comerica making this
legal argument against quash of writ of execution].)
Further, in her Quash Reply, Ms. Gomez makes clear that she
has since been served with the necessary levy documents by Comerica and the
Sheriff (Oct. 13, 2022 Quash Reply, 1:5-11), mitigating any service defects.
Last, though a “levy is effective to create a lien even
though no notice is given the judgment debtor (as required by Section 700.010)
or the obligor under the instrument (as provided by Section 700.110(b) ), … the
rights of the obligor are not affected until the obligor knows or has reason to
know of the levy (see Sections 701.010, 701.060).” (Code Civ. Proc., § 699.550,
Law Revision Commission Comments, 1982 Addition.) In this sense, to the degree
that Ms. Gomez’s rights were affected by lack of service of the Writ of
Execution in this action, the Court notes that she retained her rights to
challenge such levy despite lack of service, thereby preserving her rights in
her property.
Lack of Domestication
Ms. Gomez’s second general argument for quashing the Writ of
Execution is that the Writ was never domesticated in Arizona as to reach her
Arizona assets, i.e., where her bank accounts were opened and maintained. (Jun.
20, 2022 Quash Mot., 9:3-19 [law], 9:20-10:6 [legal reasoning].)
Ms. Gomez’s briefing relies on the Arizona Revised Statutes (erroneously
citing to sections 12-170 and 12-707 thereof) provisions related to the
Enforcement of Foreign Judgment Act in Arizona (Jun. 20, 2022 Quash Mot., 9:19
n. 2, 9:20-10:6), where sections 12-1701 to 12-1708 of that statutory code
requires domestication of a sister-state judgment for the purposes of
enforcement of that judgment over debtor property in the State of Arizona.
Ms. Gomez’s Declaration on Motion states that the four Chase
Bank accounts levied by Comerica were “established in and have been maintained
in the [S]tate of Arizona.” (Jun. 20, 2022 Quash Mot., Gomez Decl., ¶ 6.)
On Opposition, Comerica Bank argues that the California Default
Judgment against the Defendants and the Writ of Execution need not be
domesticated in Arizona because the procedure for collection of a money
judgment in California is prescribed by statutory sections that were followed
by Comerica in securing their levy and which do not contain a domestication
requirement. (Oct. 7, 2022 Quash Opp’n, 4:4-5:23.)
To support this proposition, Comerica cites two federal
court cases—one published by the Eastern District of Missouri, the other an
unpublished decision by the Northern District of California. (See Oct. 7, 2022
Quash Opp’n, 5:7-15 [citing to Regions Equipment Finance Corp. v. Blue Tee
Corp. (E.D. Mo. 2016) 313 F.R.D. 568 & Straitshot Communications,
Inc. v. Telekenex, Inc. (N.D. Cal. 2012) 2012 WL 4105125].)
Straitshot is inapposite, however, because it relies
on federal case law holding that a “[a] judgment creditor may bring an action
to enforce a judgment in any district court.” (Straitshot Communications,
Inc. v. Telekenex, Inc., supra, 2012 WL 4105125 at p. *2.)
Regions Equipment is also inapposite because that
case assumed the monies to be attached were located in the forum state. (Regions
Equipment Finance Corp. v. Blue Tee Corp., supra, 313 F.R.D. at p.
568 [“The circuit court granted the motion, and the writ was served on the Bank
of America branch located in Clayton, Missouri”] & p. 570 [“Persuasive
authority leads the Court to ‘predict that the Missouri Supreme Court would
find that,’ … funds held in a bank account concededly available and (for all
intents and purposes, therefore) ‘present’ at a bank’s branch in Missouri are
subject to attachment in this State.”].)
The Court thus turns to Arizona law to answer the question
in dispute.
A judgment obtained in the courts of another state may be
enforced in Arizona either by bringing an independent action on the judgment or
by utilizing the procedures of the Revised Uniform Enforcement of Foreign
Judgments Act (occasionally, “the Revised Uniform Act”), A.R.S. §§ 12-1701 to
12-1708. (C & J Travel, Inc. v. Shumway (1989) 161 Ariz. 33, 35.)
Due process concerns balancing a creditor’s interest in
collecting a valid judgment against a debtor’s interest in keeping his property
are satisfied in Arizona by domestication of a sister-state judgment and notice
of domestication to the last known address of the debtor. (Douglas N.
Higgins, Inc. v. Songer (1991) 171 Ariz. 8, 11.)
Such requirements have not been met in this action where the
Writ of Execution at issue involves the enforcements of California judgment
through a California Court-issued writ of execution rather than a similar writ
issued by an Arizona Court pursuant to the California Default Judgment in this
action.
Further, Comerica Bank’s position—permitting a judgment
creditor to levy assets in an out-of-state bank account pursuant to an order
from a California court without compliance with out-of-state statutes relating
to domestication of foreign judgments, e.g., Arizona’s Revised Uniform
Enforcement of Foreign Judgments Act, or this State’s Sister State
Money-Judgments Act—would completely circumvent the purposes of these statutory
provisions and eviscerate their purpose in being enacted.
Last, while Arizona Revised Statute section 12-1706 provides
that “[t]he right of a judgment creditor to bring an action to enforce his
judgment instead of proceeding under this article remains unimpaired” (A.R.S.,
§ 12-1706), Arizona case law has clarified the meaning of such ‘other
proceeding’ as “a creditor’s unimpaired right to bring a separate action on the
foreign judgment and reduce it to judgment in a sister state.” (C & J
Travel, Inc. v. Shumway, supra, 161 Ariz. at p. 35.)
Comerica does not provide authority to the contrary outside
of non-binding precedent that is inapposite to the circumstances before the
Court.
The Court thus finds that the Writ of Execution is VOID (Jones
v. World Life Research Inst., supra, 60 Cal.App.3d at p. 840), or
alternately, IMPROPERLY ISSUED (Meyer v. Meyer, supra, 115
Cal.App.2d at p. 49), and accordingly GRANTS Ms. Gomez’s Motion for Writ of
Execution.
In light of the grant of the Motion to Quash, Ms. Gomez’s
further Claim for Exemption is MOOT.
Defendants Kathy A. Gomez fka Kathy A. Tehee and Kathy A.
Tehee Family Trust’s Motion to Quash Writ of Execution and Objection to Levy is
GRANTED because it employed a California court order to enforce a judgment in
the State of Arizona by levying property held by the debtor in Arizona rather
than obtaining a similar writ through Arizona courts pursuant to Arizona
domestication of the California Default Judgment against the Defendants.
Defendants Kathy A. Gomez fka Kathy A. Tehee and Kathy A.
Tehee Family Trust’s Claim of Exemption [from Enforcement of Writ of Execution]
is MOOT in light of the grant of the Motion to Quash.