Judge: Maurice A. Leiter, Case: 19STCV27214, Date: 2025-01-09 Tentative Ruling

Case Number: 19STCV27214    Hearing Date: January 9, 2025    Dept: 54

Hearing Date: January 9, 2025

Department 54, Judge Maurice A. Leiter

Motion to Amend Judgment to Add Judgment Debtor;

Motion for Turn Over Order

Moving Party: Plaintiff WS Communities, LLC

Responding Party: Defendants Linda T. Hollenbeck, Tania Cardoso and Law Offices of Hollenbeck & Cardoso, LLP

T/R:      PLAINTIFF’S MOTION TO AMEND JUDGMENT IS GRANTED.

PLAINTIFF’S MOTION FOR TURNOVER ORDER IS GRANTED.

PLAINTIFF TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at SMCdept54@lacourt.org with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

The Court considers the moving papers, opposition, and reply.

A. Motion to Amend Judgment to Add Judgment Debtor

Code of Civil Procedure § 187 grants every court the power and authority to carry its jurisdiction into effect. (Highland Springs Conf. & Training Ctr. v. City of Banning (2016) 244 Cal.App.4th 267, 280.) This includes the authority to amend a judgment to add an alter ego of an original judgment debtor, making the additional judgment debtor liable on the judgment. (Toho–Towa Co., Ltd. v. Morgan Creek Productions, Inc. (2013) 217 Cal.App.4th 1096, 1106.) Amending a judgment to add an alter ego of an original judgment debtor “ ‘is an equitable procedure based on the theory that the court is not amending the judgment to add a new defendant but is merely inserting the correct name of the real defendant.’ ” (McClellan v. Northridge Park Townhome Owners Assn. (2001) 89 Cal.App.4th 746, 752.)

“The ability under section 187 to amend a judgment to add a defendant, thereby imposing liability on the new defendant without trial, requires both (1) that the new party be the alter ego of the old party and (2) that the new party had controlled the litigation, thereby having had the opportunity to litigate, in order to satisfy due process concerns.” (Toho, supra, 217 Cal.App.4th at p. 1106.) “A court may also disregard the corporate form in order to hold one corporation liable for the debts of another affiliated corporation when the latter is so organized and controlled, and its affairs are so conducted, as to make it merely an instrumentality, agency, conduit, or adjunct of another corporation.” (Id. at p. 1107 [internal quotations omitted].)

Plaintiff moves to add HC Law APC as a judgment debtor. Plaintiff previously obtained a judgment against Law Offices of Hollenbeck & Cardoso LLP (LOHC) in the amount of $834,368.40. The parties stipulated that Defendants would pay Plaintiff $10,000.00 per month plus 100% of LOHC’s monthly gross receipts in excess of $150,000.00 until the judgment is satisfied.

Plaintiff now asserts that Defendants have failed to consistently make the required payments. Plaintiff represents that HC Law is merely a continuation of LOHC after LOHC could no longer practice due to Defendant Hollenbeck’s temporary suspension from the practice of law. No agreement exists between LOHC and HC Law concerning the terms and conditions by which HC Law succeeded to LOHC’s business. (Judgment Debtor Transcript, 44:24-45:10.) Ms. Cardoso simply contacted LOHC’s clients and requested that they sign substitutions of attorney substituting HC Law for LOHC (TR, 45:21-47:17.), and HC Law thereafter retained for itself all sums paid by LOHC’s former clients. (TR, 51:20-52:6; 56:6-58:2.) In doing so, neither Ms. Cardoso nor HC Law made any arrangements to see LOHC’s creditors, including WS, would be paid when HC Law succeeded to LOHC’s business. Since succeeding to LOHC’s business, HC Law has used the office address (¶10 of Wolf Decl. and Exhibits “G” and “H” thereto.) and phone numbers previously used by LOHC. (TR, 41:23-25.)

In opposition, Defendants assert that HC Law is not a continuation of LOHC because Defendant Hollenbeck owned the majority shares of LOHC and now Defendant Cardoso owns the majority of HC Law. Defendants also argue that the amendment should not be granted because Defendants are making consistent payments on the judgment. Defendants admit that HC Law has made payments on the settlement on behalf of Defendants.

The Court finds amendment appropriate. LOHC is a continuation of HC Law and already has been making settlement payments.

Plaintiff’s motion is GRANTED.

B. Motion for Turnover Order

Pursuant to Code of Civil Procedure § 708.510, a judgment creditor may apply to the court for an order requiring the judgment debtor to assign to the creditor or a receiver appointed under Code of Civil Procedure § 708.610, et seq., all or part of the debtor's right to a payment due or to become due, whether or not the right is conditioned on future developments. (Code Civ, Proc., § 708.510(a); see, e.g., Philippine Export and Foreign Loan Guarantee Corp. v. Chuidian (1990) 218 Cal.App.3d 1058, 1098-1099.) The statute provides the creditor a procedure for reaching certain types of property that cannot be reached by levy under a writ of execution. It also provides the creditor an optional method for reaching assignable types of property that are subject to levy, such as accounts receivable, general intangibles, judgments, and instruments.

Section 708.510, subdivision (a) provides that the assignment order procedure is applicable to, but not limited to, the following types of payments: (1) Federal wages not subject to withholding under an earnings withholding order; (2) Rents, commissions, and royalties; (3) Payments due from a patent or copyright; (4) The loan value of an insurance policy.

Plaintiff seeks a turnover order against HC Law:

(i) Commanding HC Law to pay and deliver to WS, until the judgment entered in this action might be satisfied, with interest, in full, all sums it might collect or receive, as and when collected or received, provided, however, HC Law will not, in any calendar month, be obligated to pay WS more than the greater of (x) $10,000.00 and (y) 100% of its monthly gross receipts in excess of $150,000.00;

(ii) Commanding HC Law to provide WS with such financial, bank and other records on a monthly basis as are reasonably necessary for WS to confirm HC Law has paid to it all of the sums owing under paragraph (i), above; and,

(iii) Should HC Law fail to comply with the orders set out in paragraphs (i) and (ii), above, or either of them, that, a receiver be appointed for HC Law to collect and pay the aforesaid sums to WS.

Plaintiff asserts that this order is necessary to collect the judgment from newly added debtor HC Law. The terms of the order are the same as the settlement agreement with Defendants, including LOHC. In opposition, Defendants argue the motion should be denied because HC Law and LOHC are separate entities.

The Court finds good cause for the turnover order. HC Law has been added as a judgment creditor and the order mirrors the payment obligations of the settlement between all parties. Plaintiff’s motion is GRANTED.