Judge Kristin S. Escalante , Case 21STCV04527 2023-04-25 Tentative Ruling

Judge: Kristin S. Escalante , Case: 21STCV04527, Date: 2023-04-25 Tentative Ruling

DEPARTMENT 24 - LAW AND MOTION RULINGS

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Motion for assignment order re payments from Sony Pictures; and motion for assignment order with respect to payments from Samuel Goldwyn Films

The Motion for an Assignment Order with respect to payments from Sony Pictures Entertainment, Inc. and its Affiliates; reservation no.: 663381639752 filed by Plaintiff Rakuten Group. Inc., on 03/22/2023 is GRANTED as set forth below.

The Motion for an Assignment Order with respect to payments from Samuel Goldwyn Films, LLC; reservation no.: 073623854191 filed by Plaintiff Rakuten Group. Inc., on 03/22/2023 is GRANTED as set forth below.

Plaintiff Rakuten Group Inc. (“Plaintiff”) brings two separate motions for an assignment order. Plaintiff moves for an order directing that Defendants The H Collective, Inc.; the H Collective Entertainment; the H Holdings LLC; xXx The Fourth LLC; the Beast Film LLC; Kenneth Jian Hua Huang; Jianhui Huang (collectively “Defendants”) assign their right to payments due from Sony Pictures Entertainment, Inc. (“Sony”) and its subsidiaries and affiliates to Plaintiff (“Sony Motion”). (Notice of Mtn., at p. 2.) Plaintiff separately moves to for an order directing that Defendants assign their right to payments due from Samuel Goldwyn Films, LLC (“Goldwyn”) to Plaintiff (“Goldwyn Motion”). (Notice of Mtn. at p. 2.)

By way of procedural background, Plaintiff filed suit against Defendants on February 4, 2021. The allegations arise out of a series of investments Plaintiff made to Defendants based on based on misrepresentations. Specifically, Kenneth Jian Hua Huang and Jianhui Huang (“Huangs”) represented they were seasoned film produces with connections to the Los Angeles entertainment industry and who had had successful films in the United States box office. Plaintiff invested with the Huangs and their entities to support certain film franchises. However, Defendants used the investment funds for their own purpose and transferred rights they had promised to Plaintiff to other third parties. Plaintiff sought and obtained a default judgment against Defendants. On December 7, 2022, the court entered said judgment.

Discussion

The “court may order the judgment debtor to assign the judgment creditor. . . all or a part of a right to payment due or to become due, whether or not the right is condition on future developments . . .” (Code Civ. Proc., §708.510, subd. (a).) The court may consider all relevant factors in determining whether an assignment is appropriate. These include (a) the reasonable requirements of a debtor who is a natural person and of persons supported by the debtor, (b) payments the debtor is required to make or that are deducted to satisfy other judgments and wage assignments, including earnings assignment orders for support, (c) the remaining amount due on the money judgment, and (d) the amount received to satisfy the right to payment that may be assigned. (Code Civ. Proc., §708.510(c).)

However, the court may not order an assignment that is otherwise prohibited by law, e.g., a federal employee’s retirement benefits. (Code Civ. Proc., §708.510, subd. (a).) Further, the right to payment may be assigned only to the extent necessary to satisfy the money judgment. (Code Civ. Proc., §708.510, subd., (d).) Where a portion of the assigned payment is exempt from the enforcement of a money judgment by statute, the amount of the payment assigned may not exceed the amount by which the payment exceeds the exempt amount. (Code Civ. Proc., 708.510, subd. (f).) Additionally, “[p]roperty which is necessary for the support of a defendant who is a natural person or the family of such a defendant support in whole or in part by the defendant” is exempt from an attachment. (Code Civ. Proc., §487.020, subd. (b).)

Additionally, when a motion for assignment order is made, the judgment creditor may apply for an order restraining the judgment debtor from assigning or otherwise disposing of or encumbering the right to payment sought to be assigned. (Code Civ. Proc., § 708.520, subd. (a).) The court may issue the order merely upon a showing of need. It may, but is not required to, require the judgment creditor to provide an undertaking. (Code Civ. Proc., § 708.520, subd. (b).)

As the motions are substantially similar, the court address them in a single minute order, but takes each motion in turn.

Plaintiff specifically seeks payments which Defendants have received in connection with Sony and its affiliates distribution of the films Brightburn and Peter Rabbit (“pictures”). Plaintiff argues an assignment order is appropriate because (i) over $52,000,000.00 remains due on Plaintiff’s judgment, (ii) the picture payments Plaintiff seeks assignment of are unlikely to exceed the judgment because the judgment is greater than the publicly reported worldwide box office receipts for the pictures, and (iii) the Huangs, the individual defendants, have not shown that the assignment would limit their ability to obtain necessaries.

First, Plaintiff submits counsel’s declaration confirming that Defendants have made no payments on the judgment. (Shepard Decl., ¶7.)

Second, through counsel’s research and discovery, she has learned that Defendant receive some limited payments with respect to the films Peter Rabbit and Brightburn. (Shepard Decl., ¶¶3-4.) To obtain some of the judgment, Plaintiff obtained a right to attach order from the court which they served concurrently with writs of attachment on the banks in possession of Defendants’ property; however, the banks informed Plaintiff that Defendants had emptied and closed the accounts already. (Shepard Decl., ¶15.) Thus, Plaintiff has received no funds from Defendants and the evidence shows that Defendants have—whether intentionally or not—moved their sources of funding such that Plaintiff has been unable to obtain any satisfaction of the judgment. Plaintiff also attach evidence supporting that the sums to be assigned are less than the overall judgment. Counsel declares that she is “informed and believe that there may be no or only limited payments due to Defendants” from Peter Rabbit, and “the box office receipts for Brightburn [are] ($33,224,654).”

Third, the court does not have evidence that assignment will stop Defendants from paying for the necessities. (Code Civ. Proc., §487.020, subd. (b).) The court has limited information before it regarding the Huangs ability to pay for necessities and the impact, or lack thereof, of the monies received from Sony on the Huangs ability to purchase necessities. Plaintiff contends it is the Huangs burden to establish the funds are necessary to them and should not be assigned. Plaintiff cites to non-binding, unpublished federal case law for this premise. (See Mtn at p. 4:02-11 [citing Fed Deposit Ins. Corp. v. Hyuan, (N.D. Cal, Dec. 13, 2016.) 2016 WL 72112311 (Hyuan)].) As the court cannot find any binding California case law as to this issue, it considers Hyuan for its persuasive value and finds it helpful. In Hyuan the court had assigned 25% of judgment debtor Hyuan’s income earned as an independent contractor to plaintiff to satisfy the debt. Hyuan appealed the order and the court of appeal determine plaintiff judgment debtor was not entitled to his full income as an independent contractor it because he had not “met his burden of showing that the entire amount of his right to payment is necessary to support his family.” (Id. at p. 5.)

Here, unlike Hyuan, the income at issue is not from independent contractor work or akin to wages. Indeed, counsel declares that some of the sums which Defendants will receive, have not become due yet. (Shepard Decl., ¶10 [discussing sums from Goldwyn Films]) The evidence shows this irregular and unpredictable income unlikely to be for the purpose of purchasing necessities. Moreover, Counsel submits that Defendants have other assets which have been moved, Plaintiff argues, for the purpose of evading judgment. Thus, this is not the only income Defendants have available to pay necessities. Therefore, the court finds the assignment will likely interfere with the Huangs ability to pay necessities.

As discussed, Counsel submits that Defendants have other assets which have been moved, Plaintiff argues, for the purpose of evading judgment and Defendants have not paid any portion of the judgment. Thus, Plaintiff has also demonstrated a need for a restraining order to prevent the judgment debtor Defendants from assigning or otherwise disposing of or encumbering the right to payment sought to be assigned. (see Code Civ. Proc., § 708.520, subd. (a), (b).)

Accordingly, taking all the factors into consideration, the court grants the motion for assignment and restraining order.

All payments due to Defendants now or in the future from Sony Pictures Entertainment, Inc. and its affiliates, including but not limited to any contingent compensation payments arising from Peter Rabbit and Brightburn, are assigned from Defendants to Rakuten to the extent necessary to fully pay and satisfy the judgment entered in this action in favor of Rakuten, with all accrued interest and post-judgment costs.

Defendants may not assign, transfer, pledge, commit, give, sell, convey, cede or otherwise dispose of any payments they are owed now or in the future from Sony Pictures Entertainment, Inc. and its affiliates to any third party now or in the future. Defendants may also not assign, transfer, pledge, commit, give, sell, convey, cede or otherwise dispose of their right to receive payments from Sony Pictures Entertainment, Inc. and its affiliates due in the future, including but not limited to any contingent compensation payments in Peter Rabbit and Brightburn.

Plaintiff specifically seeks payments which Defendants have received in connection with Sony and its affiliates distribution of the film The Parts You Lose. Plaintiff argues an assignment order is appropriate because (i) over $52,000,000.00 remains due on Plaintiff’s judgment, (ii) the payments Plaintiff seeks assignment of are unlikely to exceed the judgment because the judgment is greater than unreported box office receipts for the film, and (iii) the Huangs, the individual defendants, have not shown that the assignment would limit their ability to obtain necessaries.

Here, an assignment of rights is appropriate. Defendants have made no payments on the judgment. (Shepard Decl., ¶7.) Through counsel’s experience as an entertainment industry lawyer, she is familiar with how compensation interest are calculated by motion picture studies. (Shepard Decl., ¶13.) She states that “[i]nformation regarding box office receipts for TPYL is not available, which suggests that it had modest success at the box office.” (Shepard Decl., ¶12.) Furthermore, the box office figures represent a sum much greater than what a participant may obtain as expenses must be deducted. (Shepard Decl., ¶¶13-14.) Thus, the amount obtainable from The Parts You Lose is well below the judgment. (Shepard Decl., ¶14) And finally, as to the third consideration, the court incorporates by reference its prior discussion regarding the liability of the individual defendants. The court also incorporates by reference its prior discussion of the need for a restraining order.

Accordingly, taking all the factors into consideration, the court grants the motion for assignment and restraining order.

All payments due to Defendants now or in the future from Samuel Goldwyn Films, LLC, including but not limited to any contingent compensation payments arising from The Parts You Lose, are assigned from Defendants to Rakuten to the extent necessary to fully pay and satisfy the judgment entered in this action in favor of Rakuten, with all accrued interest and post-judgment costs.

Defendants may not assign, transfer, pledge, commit, give, sell, convey, cede or otherwise dispose of any payments they are owed now or in the future from Samuel Goldwyn Films, LLC, to any third party now or in the future. Defendants may also not assign, transfer, pledge, commit, give, sell, convey, cede or otherwise dispose of their right to receive payments from Samuel Goldwyn Films, LLC, due in the future, including but not limited to any contingent compensation payments from The Parts You Lose.