Judge: Gail Killefer, Case: 21STCV31946, Date: 2022-10-25 Tentative Ruling

Case Number: 21STCV31946    Hearing Date: October 25, 2022    Dept: 37

HEARING DATE:                 October 25, 2022     

CASE NUMBER:                  21STCV31946

CASE NAME:                        Flagstar Bank, FSB v. AACSA Partners, LLC dba Association Partners Group, LLC 

MOVING PARTY:                Defendant, AACSA Partners, LLC dba Association Partners Group, LLC

OPPOSING PARTY:             Plaintiff, Flagstar Bank, FSB

TRIAL DATE:                        None

PROOF OF SERVICE:          OK

MOTION:                               Defendant’s Motion to Recall and Quash Writ of Execution and Vacate Levy

OPPOSITION:                       October 14, 2022

REPLY:                                  October 20, 2022

TENTATIVE:                         Defendant’s motion is granted. The January Writ is ordered quashed, and the associated levy and judgment lien is ordered vacated. Plaintiff is ordered to return all fund levied. Defendant is ordered to post a bond for the same amount as the levied funds. Defendant is to give notice.  

Background

This action arises out of a sublease agreement between Flagstar Bank FSB (“Plaintiff”) and AACSA Partners, LLC dba Association Partners Group, LLC (“Defendant”).  Plaintiff alleges that it entered into a Sublease Agreement with Defendant on October 23, 2019 regarding the Premises, located at 15260 Ventura Boulevard, Suite 600, Sherman Oaks, California 91403. On December 12, 2019, the parties entered into an Amendment to the Sublease Agreement. Defendant allegedly breached the Sublease Agreement by failing to pay rent due. Plaintiff alleges that as a result of Defendant’s breach, it has incurred damages of $152,795.26. 

Plaintiff’s Complaint alleges one cause of action for breach of sublease agreement.  

On December 10, 2021, a default judgment was entered against Defendant.

On January 31, 2022, the court issued a writ of execution against Defendant (“January Writ”).

On May 24, 2022, the court vacated the default entered against Defendant and ordered funds received by Plaintiff to be frozen in Plaintiff’s trust account.

Defendant now moves to recall and quash the writ of execution, transfer all sums back to Defendant from Plaintiff’s trust account, remove all recorded judgment liens, and for attorney fees. Plaintiff opposes the motion.

Plaintiff’s Objections

Plaintiff’s objections to Declaration of Fadi. K. Rasheed

Objection 1: sustained, lacks personal knowledge and hearsay without exception.

Objection 2: sustained, see objection 1.

Objection 3: sustained, lacks personal knowledge and conclusory.

Plaintiff’s objections to Fadi K. Rasheed Reply Declaration

Objection 1-2: sustained, secondary evidence rule.

Objection 3: sustained, argumentative, conclusory and lacks personal knowledge.

Plaintiff’s objections to Declaration of Paul Rock

Objection 4: overruled. Not argumentative or conclusory.

Objection 5-6: sustained. Argumentative and conclusory.

Discussion

“ “A judgment, when vacated, cannot be effective for any purpose.”” (Stegge v. Wilerkson (1961) 189 Cal.App.2d 1, 7 [quoting Levy v. Drew (1935) 4 Cal.2d 456, 459.]) “A writ of execution may be recalled and quashed where the issuance was improperly or inadvertently made.” (Meyer v. Meyer (1952) 115 Cal.App.2d 48, 49 (Meyer); Creditors’ Adjustment Co. v. Newman (1921) 185 Cal. 509, 511 (Creditors) [“the right of the court to recall the execution cannot be doubted if the issuance was improperly or inadvertently made or authority therefore revoked.”]). “As the result of quashing a writ of execution all rights and proceedings based thereon fall with it.” (Moreno v. Mihelis (1962) 207 Cal.App.2d 449, 451 (Moreno).) 

Defendant contends that the January Writ must be recalled and quashed, and the associated levy must be vacated, and frozen funds returned because the court has now vacated entry of Defendant’s default and, thus, there is no judgment to levy on. (Motion, 8-9.) Defendant also requests attorney fees in the sum of $10,000.00 pursuant to CCP § 697.510(i). (Motion, 10.) However, section 697.510(i) states, “[t]he court shall award reasonable attorney's fees to the prevailing party in any action or proceeding maintained pursuant to this section.” As the present motion to vacate the writ is not maintained pursuant to this section, the court exercises its discretion in denying attorney fees and disregarding Defendant’s request.

In opposition, Plaintiff contends that Defendant’s motion should be denied because it asks the court to reconsider its earlier ruling without a duly noticed motion for reconsideration filed within 10 days of the notice of the entry of the order vacating default. (Opposition, 1.) Plaintiff also contends that the remainder of Defendant’s request are moot “as the Writ has already expired, and the only judgment lien recorded has already been released.” (Opp., 2, 12-13.) Plaintiff argues that if Plaintiff seeks to characterize the motion as a renewal of its earlier motion to vacate the default, such a motion also fails on its merits. (Opp., 6.) Plaintiff further asserts “[o]verturning the Court’s ruling and unfreezing the assets in the trust account based solely on this conclusory, hearsay statement would be prejudicial and unfair to Flagstar. Flagstar has been given no opportunity to investigate or contest the assertion that AACSA cannot pay its legal bills, and how and when that supposedly occurred.” (Opp., 7-8.) Plaintiff also contends Defendant has no legal basis “to place priority on paying [its] counsel to the detriment of [Plaintiff] (Defendant’s creditor), which has filed a valid complaint for the recovery of the amounts owed for breach of the sublease.” (Opp., 9-11.) However, as explained above, a vacated judgment also means a vacated writ and Plaintiff points to no precedent or authority to show it has a right to the frozen funds before a determination of liabilities has been made. In the alternative, Plaintiff requests Defendant to post a bond in the same amount if the court does grant Defendant’s request to “unfreeze the assets.” (Opp., 12.)

In reply, Defendant contends this present motion is not one for reconsideration as the freezing of these funds were not a condition to the court’s order vacating default. (Reply, 6-7.) Defendant further reiterates correctly that Plaintiff has not shown an entitlement to the frozen funds, and Plaintiff will be highly prejudiced if it cannot pay its own counsel and fees. (Reply, 9-11.) Defendant further contends again that the judgment lien was only giving a “Partial release” and has not been released as a matter of law. (Reply, 11-12.)  

First, the court is not persuaded by Plaintiff’s argument that Defendant’s motion is a motion for reconsideration, as Plaintiff has not shown entitlement to the frozen funds and has not shown a basis for maintaining the frozen funds in their current trust account, given Plaintiff’s financial hardship. The court’s ruling on Defendant’s motion to vacate default was not contingent upon the freezing of these funds in Plaintiff’s trust account. Given the equities between the parties here and given the potential for prejudice to the parties given the financial circumstances as explained, the court does agree that Defendant should post a bond for the total amount requested by Plaintiff in its Complaint, totaling $152, 795.26.   

Second, the court is persuaded based on the authority Defendant cites that the writ of execution should be quashed and that the associated levy should be vacated. It is undisputed that Defendant’s motion to vacate default was granted. Thus, pursuant to guidance from Creditors, Meyer and similar cases, the authority for the January Writ has been revoked given that the judgment is now vacated. Further, and pursuant to Moreno, the levy associated with the January Writ is a “right and proceeding” associated with the writ and, thus, must also be vacated. Plaintiff has cited no authority for its argument that the levy may not be vacated because it has already been perfected, and the court is aware of no such authority.  

For these reasons, Defendant’s motion is granted. The January Writ is ordered quashed, and the associated levy and judgment lien is ordered vacated. Plaintiff is ordered to return all fund levied. Defendant is ordered to post a bond for the same amount as the levied funds. Defendant is to give notice.  

Conclusion

Defendant’s motion is granted. The January Writ is ordered quashed, and the associated levy and judgment lien is ordered vacated. Plaintiff is ordered to return all fund levied. Defendant is ordered to post a bond for the same amount as the levied funds. Defendant is to give notice.