Judge: Joseph Lipner, Case: 18STCP02482, Date: 2023-08-31 Tentative Ruling

Case Number: 18STCP02482    Hearing Date: August 31, 2023    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Plaintiff Sergio Larios’ motion to strike is DENIED.

Defendant Specialized Loan Servicing Inc.’s motion to compel Plaintiff to file an acknowledgement of partial satisfaction of judgment in the amount of $517,836.33 is GRANTED.

Plaintiff is ordered to pay $3,382.00 in attorney’s fees and damages to Defendant Specialized Loan Servicing Inc., pursuant to Code of Civil Procedure §§ 724.070, 724.080.  Plaintiff shall make this payment within 30 days of this order.

          On October 9, 2018, Plaintiff Sergio Larios brought this action against Defendant Specialized Loan Servicing (“SLS”). The Third Amended Complaint contained causes of action for (1) violation of the California Consumer Credit Reporting Agencies Act; (2) violation of Business & Professions Code 17200, (3) negligence and (4) defamation.

          On August 13, 2021, the Court granted Defendants Specialized Loan Servicing, LLC and WF Victoria Grantor Trust 2016-3’s Motion for Partial Summary Judgment, entering judgment in favor of Defendants and against Plaintiff as to the second cause of action for violation of Business & Professions Code § 17200 and third cause of action for negligence.

          On April 8, 2022, a jury trial was held, and on August 26, 2022, the Court entered judgment for $2,900,000 in favor of Plaintiff and against SLS. On December 15, 2022, the Court amended this judgment for $2,105,000 in favor of Plaintiff and against SLS.  The Court additionally ruled that SLS was enjoined from foreclosing upon, transferring, or selling, and assisting in the foreclosure, transfer, or sale of, the Subject Property at any time prior to thirty (30) days after SLS has (1) partially or fully satisfied the judgment in this matter and (2) filed with this Court proof of such satisfaction in an amount equal to or exceeding the monies necessary to pay off the Home Equity Line of Credit (account number xxxxx12385) secured by the Subject Property (‘HELOC”), including all accrued interest, late fees, and penalties (as of the date the satisfaction or partial satisfaction of judgment is filed with the Court).

On April 26, 2023, Defendant SLS filed a Notice of Partial Satisfaction of Judgment. The Notice stated that Defendant SLS “has tendered to Plaintiff Sergio Larios (“Plaintiff”) an amount equal to the monies necessary to pay off the Home Equity Line of Credit (account number  xxxxx12385) (“HELOC”), as of today, including all accrued interest, late fees, penalties, attorney’s fees and costs owed, in partial satisfaction of the $2,105,000 judgment against SLS. Copies of the three checks payable to Plaintiff totaling $517,199.63 (i.e. the tendered amount) are attached as Exhibit 1.”

On May 2, 2023, Plaintiff filed a motion to strike Defendant SLS’ Notice of Partial Satisfaction of Judgment on the grounds that it stated an incorrect amount for payoff of the HELOC. Plaintiff also requests that the Court order that SLS exchange a full reconveyance of Plaintiff’s HELOC serviced by SLS, in exchange for a payment of $190,881.00 to Victoria Trust.

On May 25, 2023, Defendant SLS moved to compel Plaintiff to deliver an acknowledgement of partial satisfaction of judgment and for attorney’s fees.

On June 5, 2023, the parties stipulated to have the two motions heard together because the issues are essentially the same.

On June 15, 2023, the hearing on these motions was continued to August 31, 2023.

Discussion

1.     Relevant Facts

On March 6, 2023, the Court granted Defendant WF Victoria Grantor Trust 2016-3 (“Victoria Trust”) motion for attorney fees in the amount of $284,773.49 against Plaintiff. (03/06/23 Ruling.) Plaintiff has since filed an appeal as to the attorney fees awarded to Victoria Trust.

On April 14, 2023, SLS’ counsel sent Plaintiff’s counsel a letter with three checks totaling $517,836.33, stating that it represented the amount necessary for Plaintiff to pay off the Home Equity Line of Credit (HELOC), “including all accrued interest, late fees, penalties and attorney’s fees incurred by WF Victoria Grantor Trust 2016-3.” (Brennan Decl. Ex. B.) SLS requested that Plaintiff file an acknowledgement of partial satisfaction of judgment. (Brennan Decl. Ex. B.)

Plaintiff reached out to SLS’ counsel, advising that the payoff amount for the HELOC without the attorney’s fees of Victoria Trust was $190,881.00. (Brennan Decl. Ex. C.) Plaintiff stated that it would file a partial satisfaction in the amount of $190,881.00 if there was a full reconveyance of the HELOC. (Brennan Decl. Ex. D.) SLS’ counsel rejected Plaintiff’s offer and demanded that Plaintiff tender the full $517,836.33 payment to Victoria Trust. (Brennan Decl. Ex. E.)

On April 26, 2023, SLS filed a Notice of Partial Satisfaction of Judgment stating that SLS has tendered $517, 836.33 in partial satisfaction of the judgment.

Plaintiff argues that SLS’ Notice of Partial Satisfaction should be stricken because the Notice does not state the correct amount for payoff of the HELOC because it includes the attorney’s fees of Defendant Victoria Grantor Trust 2016-3 (“Victoria Trust”). Plaintiff states that he is willing to issue a Partial Satisfaction of Judgment in the amount of $190,881.00 and will maintain the balance of the amount tendered in counsel’s trust account, pending the outcome of the appeal Victoria Trust’s attorney fees.

Defendant argues that this proposal is unacceptable because, first, SLS has tendered $517,836.33, not $190,881.00, and, second, SLS’s partial satisfaction of the judgment is not contingent upon any action by Victoria Trust. (Grant Decl. Ex. 5.)

Defendant argues that Plaintiff should be compelled to file an acknowledgement of satisfaction pursuant to Code of Civil Procedure § 724.110.

2.     Legal Standard

“The judgment debtor or the owner of real or personal property subject to a judgment lien created under a money judgment may serve on the judgment creditor a demand in writing that the judgment creditor execute, acknowledge, and deliver an acknowledgment of partial satisfaction of judgment to the person who made the demand.” (Code Civ. Proc. § 724.110(a).) The judgment debtor has 15 days to comply with the demand. (Code Civ. Proc. § 724.110(a).) “If the judgment creditor does not comply with the demand within the time allowed, the judgment debtor or the owner of the real or personal property subject to a judgment lien created under the judgment may apply to the court on noticed motion for an order requiring the judgment creditor to comply with the demand.” (Code Civ. Proc. § 724.110(b).)

3.     Application

The parties do not dispute the fact that SLS tendered $517,836.33 to Plaintiff on April 14, 2023. The parties dispute whether this amount constituted the correct “amount necessary to pay off the balance due and owing on the Home Equity Line of Credit, including all accrued interest, late fees, penalties and attorney’s fees.” Essentially, the parties dispute whether the amount to pay off the HELOC included Victoria Trust’s attorney fees.

Plaintiff argues that the payoff amount does not include the attorney fees for Victoria Trust. However, Plaintiff submits no evidence to support this assertion. On the other hand, Defendant offers evidence that the terms of the HELOC and the Deed of Trust provide that attorney’s fees and legal expenses are part of the indebtedness. (Grant Decl. Ex. 8 [HELOC p. 3]; Ex. 9 [Deed of Trust, p. 6].)

Plaintiff argues that the Judgment does not contemplate forcing Plaintiff to pay Victoria Trust’s attorney fees and costs. However, the Judgment enjoins SLS from foreclosing the property until SLS has “partially or fully satisfied the judgment in this matter and (2) filed with this Court proof of such satisfaction in an amount equal to or exceeding the monies necessary to pay off the Home Equity Line of Credit (account number xxxxx12385) secured by the Subject Property (‘HELOC”), including all accrued interest, late fees, and penalties.” (10/12/23 Judgment (emphasis added).) Thus, the Judgment does not specify the amount of the HELOC, only that SLS is enjoined until it pays an amount equal to or exceeding the payoff amount on the HELOC.

The Court does not determine the amount necessary to pay off the HELOC at this juncture as neither party has submitted evidence to allow the Court to determine this amount. However, the parties do not dispute that SLS has tendered $517,836.33 and that this amount is at least equal to or exceeding the monies necessary to pay off the HELOC. (See Brennan Ex. B.) The fact that Plaintiff has filed an appeal of the court’s ruling that awarded fees and costs to Victoria Trust does not affect the fact that SLS tendered $517,836.33 to Plaintiff.

Thus, because Plaintiff has put forward no evidence that the amount is the incorrect amount owing on the HELOC, and because the parties do not dispute that SLS tendered $517,836.33, as stated on Defendant’s Amended Notice of Partial Satisfaction of Judgment, Plaintiff’s motion to strike is DENIED. 

Further, because Plaintiff has failed to comply with SLS’ request to file an acknowledgement of satisfaction, the Court GRANTS SLS’ motion for an order requiring Plaintiff to file an acknowledgment of satisfaction in the amount tendered to Plaintiff, namely $517,836.33.

Plaintiff requests a reconveyance of the HELOC. However, Plaintiff offers no legal basis for this request or any evidence for the Court to conclude that Plaintiff has satisfied all the conditions necessary for a reconveyance. Thus, this request is DENIED.

4.     Attorney Fees  

“If a judgment creditor intentionally conditions delivery of an acknowledgment of satisfaction of judgment upon the performance of any act or the payment of an amount in excess of that to which the judgment creditor is entitled under the judgment, the judgment creditor is liable to the judgment debtor for all damages sustained by reason of such action or two hundred fifty dollars ($250), whichever is the greater amount.” (Code Civ. Proc. § 724.070.) Further, in any action or proceeding for an acknowledgement of satisfaction of judgment, “the court shall award reasonable attorney’s fees to the prevailing party.” (Code Civ. Proc. § 724.080.)

Defendant SLS submits evidence that Plaintiff specifically conditioned delivery of an acknowledgement of satisfaction of judgment on reconveyance of the HELOC, even though the Judgment does not contemplate this act. (Grant Decl. Ex. 5, 7.) Thus, the Court awards Defendant SLS $250 pursuant to Code of Civil Procedure § 724.070.

Additionally, the Court awards attorney fees of $3,132 (8.7 hours at an hourly rate of $360) pursuant to Code of Civil Procedure § 724.080. (Grant Decl. ¶¶ 14, 16.)