Judge: Layne H. Melzer, Case: 2008-00102394, Date: 2023-05-18 Tentative Ruling
Assignee
of Record WVJP 2021-4, LP
1.
Motion For Order Charging Interests of Judgment Debtor in Specified Entity
2. Motion For Assignment Order
Judgment Creditor WVJP 2021-4, LP (“Judgment Creditor”) seeks a charging order against the transferrable interest of judgment debtor Philip J. Immel (“Immel”) in Dolphin Entertainment, LLC (“Dolphin”). Judgment Creditor also seeks an assignment order for the rights to payments of income, compensation, commissions, and any and all monies payable to Immel by: Real Estate of The Pacific, Inc.; Real Estate Guru Productions, Inc.; Dolphin Entertainment, LLC; Craysea Whale, LLC; and Pacific Sotheby’s International Realty. Lastly, Judgment Creditor seeks an order restraining Immel from transferring, encumbering, assigning, disposing, or spending any of his interest in the rights to payments sought to be assigned to Judgment Creditor.
Judgment Creditor submitted new evidence in support of its omnibus reply. “The general rule of motion practice…is that new evidence is not permitted with reply papers…‘[T]he inclusion of additional evidentiary matter with the reply should only be allowed in the exceptional case ...’ and if permitted, the other party should be given the opportunity to respond.” (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537-1538.) Reply evidence should not address substantive issues in the first instance but only fill gaps in the evidence created by opposition. (Id., at 1538.) The reply evidence addresses issues raise in the opposition. Accordingly, the Court exercises its discretion to consider the new evidence. Immel may address the new evidence during oral argument.
CHARGING ORDER
Immel’s objection number 2 to Casey Donoyan’s 1/11/2023 declaration is sustained.
“If a money judgment is rendered against a partner or member but not against the partnership or limited liability company, the judgment debtor’s interest in the partnership or limited liability company may be applied toward the satisfaction of the judgment by an order charging the judgment debtor's interest pursuant to Section 15907.03, 16504, or 17705.03 of the Corporations Code.” (Code Civ. Proc., § 708.310.)
“On application by a judgment creditor of a member or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. A charging order constitutes a lien on a judgment debtor’s transferable interest and requires the limited liability company to pay over to the person to which the charging order was issued any distribution that would otherwise be paid to the judgment debtor.” (Corp. Code, § 17705.03, subd. (a).)
Code of Civil Procedure section 708.320, subdivision (a), provides as follows:
A lien on a judgment debtor’s interest in a partnership or limited liability company is created by service of a notice of motion for a charging order on the judgment debtor and on either of the following:
(1) All partners or the partnership.
(2) All members or the limited liability company.
In addition, Corporations Code section 17705.03, subdivision (b), provides as follows:
To the extent necessary to effectuate the collection of distributions pursuant to a charging order in effect under subdivision (a), the court may do any of the following:
(1) Appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made.
(2) Make all other orders necessary to give effect to the charging order.
(3) Upon a showing that distributions under a charging order will not pay the judgment debt within a reasonable time, foreclose the lien and order the sale of the transferable interest. The purchaser at the foreclosure sale obtains only the transferable interest, does not thereby become a member, and is subject to Section 17705.02.
“A transferable interest is personal property.” (Corp. Code, § 17705.01.)
A charging order “is against an LLC’s member's ‘transferable interest,’ defined as ‘the right, as originally associated with a person’s capacity as a member, to receive distributions from a limited liability company in accordance with the operating agreement ....’ (Corp. Code, § 17701.02, subd. (aa).)” (Rice v. Downs (2021) 73 Cal.App.5th 213, 227.) A transferable interest includes instances when “a managing member of an LLC directs the LLC to disburse funds for the managing member’s own purposes.” (Id.)
Judgment Creditor showed the notice of motion was properly served. (Proof of Service, ROA No. 129.) Judgment Creditor contends, and Immel does not dispute, that Immel is the sole member of Dolphin. (Donoyan 5/11/2023 Decl., ¶ 9.)
Judgment Creditor showed, and Immel does not dispute, that judgment in the amount of $237,832.61 was entered against him and Virtual Estates on 11/11/2022, that judgment in the amount of $363,646.99 was renewed on 8/31/2021, and that Immel has not paid on the judgment in over eight years. (Donoyan 1/11/2023 Decl., ¶¶ 5-8 and 16.)
Accordingly, Judgment Creditor’s motion is granted.
ASSIGNMENT ORDER AND RESTRAINING ORDER
Immel’s objection number 2 to Casey Donoyan’s 11/21/2022 declaration is sustained.
Code of Civil Procedure section 708.510, subdivision (a) provides that:
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.
“The notice of the motion shall be served on the judgment debtor. Service shall be made personally or by mail.” (Code Civ. Proc., § 708.510, subd. (b).) The notice of motion was properly served by email.
In making its determination, the Court may take into consideration all relevant factors, including the following:
(1) The reasonable requirements of a judgment debtor who is a natural person and of persons supported in whole or in part by the judgment debtor.
(2) Payments the judgment debtor is required to make or that are deducted in satisfaction of other judgments and wage assignments, including earnings assignment orders for support.
(3) The amount remaining due on the money judgment.
(4) The amount being or to be received in satisfaction of the right to payment that may be assigned.
(Code Civ. Proc., § 708.510, subd. (c).)
Immel did not make any showing regarding Immel’s reasonable requirements or what payments Immel is required to make. The judgment in the amount of $363,646.99 renewed on 8/31/2021 has not been satisfied and neither judgment debtor made any more payments toward the judgment. (Donoyan Decl., ¶ 8.) The current balance owed as of 11/21/2022 is $369,067.01. (Id., ¶ 12.)
Although Immel contends Judgment Creditor did not submit sufficient evidence to support this motion, Immel does not offer any legal authority to support his contention. Judgment Creditor is not required to show the listed entities are obligors. (See, Code Civ. Proc., § 708.540 [“An ‘obligor’ means the person who is obligated to make payments to the judgment debtor or who may become obligated to make payments to the judgment debtor depending upon future developments.”]; see also, Greenbaum v. Islamic Republic of Iran, 782 F.Supp.2d at 897 [Motion for assignment order warranted under the relevant California statutory authority “notwithstanding the concededly scant evidence presented by Plaintiffs in support of their argument that these [ ] companies are, in fact, obligors.”].)
The burden is on the judgment debtor to establish any exemption. Code of Civil Procedure section 708.550, subdivision (a) provides that: “The judgment debtor may claim that all or a portion of the right to payment is exempt from enforcement of a money judgment by application to the court on noticed motion filed not later than three days before the date set for the hearing on the judgment creditor’s application for an assignment order. The judgment debtor shall execute an affidavit in support of the application that includes all of the matters set forth in subdivision (b) of Section 703.520. Failure of the judgment debtor to make a claim of exemption is a waiver of the exemption. (Code Civ. Proc., § 708.550, subd. (a).)
Immel has not filed any claim of exemption and has not shown the payments Judgment Creditor seeks an assignment order are not assignable.
Accordingly, Judgment Creditor’s motion for an assignment order is granted.
Code of Civil Procedure section 708.520, subdivision (a) provides that: “When an application is made pursuant to Section 708.510 or thereafter, the judgment creditor may apply to the court for an order restraining the judgment debtor from assigning or otherwise disposing of the right to payment that is sought to be assigned. The application shall be made on noticed motion if the court so directs or a court rule so requires. Otherwise, it may be made ex parte.”
“The court may issue an order pursuant to this section upon a showing of need for the order. The court, in its discretion, may require the judgment creditor to provide an undertaking.” (Code Civ. Proc., § 708.520, subd. (b).)
Judgment Creditor has shown a restraining order is needed. (Donoyan Decl., ¶¶ 6-8, 11-14, and 17.) Accordingly, Judgment Creditor’s motion for a restraining order is granted. No undertaking is required.
Judgment Creditor shall prepare and serve the order in accordance with section 708.520.
Judgment Creditor shall give notice.