Judge: Joel L. Lofton, Case: 21AHCV00023, Date: 2023-08-09 Tentative Ruling

Case Number: 21AHCV00023    Hearing Date: August 9, 2023    Dept: X

   Tentative Ruling

Judge Joel L. Lofton, Department X

HEARING DATE:      August 9, 2023                                    TRIAL DATE: January 31, 2023

CASE:                         HAVEN OF PEACE FILMS LLC, v. ECOM ASSET SECURITIZATION, INC., WILLIAM CHEN; MINZHI ZHU AKA JENNY M. ZHU; ECOM MORTGAGE, INC.; and DOES 1 to 20.

CASE NO.:                 21AHCV00023

MOTION FOR ORDER ASSIGNING PAYMENT AND APPOINTMENT OF RECEIVER

MOVING PARTY:               Plaintiff Haven of Peace Films LLC

RESPONDING PARTY:      Defendants Minzhi Zhu and Ecom Mortgage, Inc.

SERVICE:                              Filed July 23, 2023

OPPOSITION:                       Filed July 27, 2023

REPLY:                                   Filed August 1, 2023

RELIEF REQUESTED

             Plaintiff moves for an order assigning William Chen’s rights to payments due from Ecom Mortgage, Inc. to satisfy the judgment in the present case.

            Plaintiff also moves for the appointment of a receiver and nominates Richard C. Griswold.

BACKGROUND

             This case arises out of Plaintiff Haven of Peace  Films, LLC’s (“Plaintiff”) claim that Defendants Ecom Asset Securitization, Inc., William Chen, Minzhi Zhu, and Ecom Mortgage, Inc. (“Defendants”) induced Plaintiff to invest $2 million in a fraudulent investment scheme. Plaintiff filed a second amended complaint on May 13, 2023, alleging three causes  of action for (1) breach of contract, (2) common counts, and (3) fraud.

TENTATIVE RULING

            Plaintiff’s motion for an order to assign William Chen’s right to payments from Ecom Mortgage, Inc. to a receiver is GRANTED.

            Plaintiff’s motion to appoint Richard Griswold as receiver for the assignment is GRANTED.

REQUESTS FOR JUDICIAL NOTICE

Plaintiff’s request for judicial notice for Exhibit 1 is granted pursuant to Evidence Code section 452, subdivision (d). Plaintiff’s request for judicial notice for Exhibits 2-4 is granted pursuant to Evidence Code section 452, subdivision (c).

DISCUSSION

            On February 24, 2023, the court entered judgment on behalf of Plaintiff against Defendants William Chen and Ecom Asset Securitization, Inc. and awarded damages totaling $2,045,949.98. Plaintiff seeks an order assigning William Chen’s income from Ecom Mortgage, Inc. to an appointed receiver to assist the collection of judgment. The statement of information filed with the California Secretary of State provides that William Chen is the chief executive officer of Ecom Mortgage, Inc. and Jenny Zhu is the secretary and chief financial officer. (RJN Exhibit 2.)

            “Except as otherwise provided by law, upon application of the judgment creditor on noticed motion, the court may order the judgment debtor to assign to the judgment creditor or to a receiver appointed pursuant to Article 7 (commencing with Section 708.610) all or part of a right to payment due or to become due, whether or not the right is conditioned on future developments, including but not limited to the following types of payments: [¶] (1) Wages due from the federal government that are not subject to withholding under an earnings withholding order. [¶] (2) Rents. [¶] (3) Commissions. [¶] (4) Royalties. [¶] (5) Payments due from a patent or copyright. [¶] (6) Insurance policy loan value.” (Code Civ. Proc. § 708.510, subd. (a).)

            Plaintiff brings this motion on the grounds that William Chen and Ecom Asset Securitization have not repaid the judgment owed. (Goodman Decl. ¶ 1.) Chen stated in a judgment debtor examination that Ecom Asset Securitization, Inc. is defunct. (Ibid.) Plaintiff has demonstrated that the assignment of Chen’s payment due from Ecom Mortgage, Inc. is warranted in the present case to assist in collection of judgment.

            Plaintiff requests that Chen’s payments due be assigned to a receiver and requests Richard C. Griswold be appointed. (Goodman Decl. ¶ 6.)

            “The court may appoint a receiver to enforce the judgment where the judgment creditor shows that, considering the interests of both the judgment creditor and the judgment debtor, the appointment of a receiver is a reasonable method to obtain the fair and orderly satisfaction of the judgment.” (Code Civ. Proc. § 708.620.) The appointment of a receiver is appropriate in this case to assist in the collection of judgment.

            In opposition, Minzhi Zu and Econ Mortgage, Inc. entirely focus on whether or not the underlying judgment is valid based on Plaintiff’s capacity to sue. Zhu and Ecom Mortgage Inc. argue that Plaintiff lacked standing to sue pursuant to Corporations Code section 17708.07 and that therefore the underlying judgment is invalid.

            “A foreign limited liability company transacting intrastate business in this state shall not maintain an action or proceeding in this state unless it has a certificate of registration to transact intrastate business in this state.” (Corp. Code § 17708.07, subd. (a).)

            “ ‘There is a difference between the capacity to sue, which is the right to come into court, and the standing to sue, which is the right to relief in court.’ ” (Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599, 1604. “[A] plea in abatement such as lack of capacity to sue ‘must be raised by defendant at the earliest opportunity or it is waived.... The proper time to raise a plea in abatement is in the original answer or by demurrer at the time of the answer. [Citation.] It is a technical objection and must be pleaded specifically.’ ”

            Here, Chen and Ecom Mortgage, Inc. are making a plea in abatement that Plaintiff lacked capacity to sue rather than standing to sue. However, Chen and Ecom Mortgage, Inc. make this plea only after judgment has been entered and in opposition to a motion to assist in the collection of the judgment. This plea in abatement is untimely and has therefore been waived.

CONCLUSION

            Plaintiff’s motion for an order to assign William Chen’s right to payments from Ecom Mortgage, Inc. to a receiver is GRANTED.

            Plaintiff’s motion to appoint Richard Griswold as receiver for the assignment is GRANTED.

            Moving Party to give notice.

Dated:   August 9, 2023                                  ___________________________________

                                                                                    Joel L. Lofton

                                                                                    Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court indicating their

intention to submit.  Parties intending to appear are strongly encouraged to appear remotely.  alhdeptx@lacourt.org