Judge: Michael P. Linfield, Case: BC723015, Date: 2022-08-02 Tentative Ruling

Case Number: BC723015    Hearing Date: August 2, 2022    Dept: 34

SUBJECT:                 Ex Parte Application for a Turnover Order

Moving Party:          Judgment Creditor Hollywood Garden, LLC (“Hollywood”)

Resp. Party:             Judgment Debtor Ji Li (“Li”)

The Court GRANTS turnover order.

I.           BACKGROUND

On September 24, 2018, Plaintiff Hollywood Garden, LLC filed a complaint against Defendants Ji Li, Yong Bai, and Does 1 through 20, inclusive, to allege the following causes of action:

1.           Breach of Operating Agreement

2.           Breach of Covenant of Good Faith and Fair Dealing

3.           Breach of Fiduciary Duty

4.           Declaratory Relief

On March 3, 2022, the Court granted Plaintiff Hollywood Garden, LLC's motion for terminating sanctions.

On June 7, 2022, the Court issued default judgment for Plaintiff Hollywood Garden LLC against Defendant Ji Li in the amount of $6,546,516.99. (Judgment, p. 2:5-13.) The Court declared that Defendant Yong Bai has no membership interest in Hollywood Garden, LLC and that any interest he purports to hold is void. (Judgment, p. 2:1-4.)

On June 27, 2022, the Court issued a writ of execution that named Ji Li as the Judgment Debtor and listed the total amount due in the amount of $6,582,428.19. (Writ of Execution, p. 1.)

On July 29, 2022, Judgment Creditor Hollywood Garden, LLC brought its Ex Parte Application for a Turnover Order in Aid of Execution against Judgment Debtor Ji Li. Hollywood “requests turnover of Debtor Li’s original securities and/or proof of ownership (stock/share certificates) to the Los Angeles County Sheriff’s Department, Civil Division, 1427 West Covina Pkwy., Rm 127, West Covina, CA 91790 in:

a.           AA Sunrise, Inc.

b.           Auspicious International Medical

c.           China TV Media Group (USA), Inc.

d.           Fox Academy, Inc.

e.           Fox Holding USA, Inc.

f.            Fox University, Inc.

g.           Global Business Accelerator, Inc.

h.           Glory Enterprise, Inc.

i.             Henan Yujian Building Management Co., Ltd

j.            HTTV Holding, Inc.

k.           HTTV Media Management, Inc.

l.             J.L. Management & Construction Corporation

m.         PLG Crafts (USA), Inc.

n.           U.S. Noah Technology Corp.

o.           US Longton, Inc.

p.           US Noah Real Estate Corp.

q.           Washington Mutual Resource & Investment Group, Inc.” (Ex Parte App. for a Turnover Order, p. 2:1-20.)

On August 1, 2022, Judgment Debtor Ji Li opposed Judgment Creditor Hollywood Garden, LLC’s Ex Parte Application.

II.        ANALYSIS

A.          Legal Standard

Once a writ of execution issues, the judgment creditor may apply to the court for a “turnover” order to direct the judgment debtor to transfer to the levying officer the property sought to be levied upon. (CCP § 699.040.) Enforceable by contempt, turnover orders may be used to obtain possession of either:

·        Tangible personal property sought to be levied upon by taking it into custody; or

·        Documentary evidence of title to property sought to be levied upon (e.g., certificate of ownership of automobile) or of a debt sought to be levied upon (e.g., a promissory note) (CCP § 699.040(a); [6:311] Writ of Execution: Cal. Prac. Guide Enf. J. & Debt Ch. 6D-2.)

The Court may issue a turnover order upon a showing of need for the order. (CCP 699.040(b).) The order shall be personally served on the judgment debtor and shall contain a notice to the judgment debtor that failure to comply with the order may subject the judgment debtor to arrest and punishment for contempt of court. (CCP § 699.040(c); see also In re Burns (B.A.P. 9th Cir. 2003) 291 B.R. 846, 854 (cleaned up): “CCP § 699.040 provides an aid to execution and levy. It directs the transfer of possession of property (a) if a writ of execution is issued, or (b) “upon a showing of need for the order.” Nowhere does the provision state that service of a turnover order itself creates a lien on the subject property.”)

A turnover order may only be issued to the judgment debtor; it cannot require third parties to transfer property to levying officers. (Office Depot, Inc. v. Zuccarini (N.D. Cal. 2007) 488 F.Supp.2d 920, 922.) Intangible assets incapable of being taken into custody like domain name registration or virtual, online spaces may not be addressed in a turnover order; “section 699.040 limits itself to tangible property that can be “levied upon by taking it into custody” (or tangible, “documentary evidence of title” to property or a debt).” (Palacio Del Mar Homeowners Assn., Inc. v. McMahon (2009) 174 Cal.App.4th 1386, 1391; see also Pacific Decision Sciences Corp. v. Superior Court (2004) 121 Cal.App.4th 1100, 1109.)

Ex parte applications must include a memorandum in support, and a declaration alleging facts why the order is needed. (Sufficient “need” is shown if the property effectively can be reached only by a turnover order—e.g., where property is known to exist but is hidden or moved about.) Special notice requirements also apply. (Cal. Rules of Court, Rules 3.1200-3.1207; 2. [6:311] Writ of Execution: Cal. Prac. Guide Enf. J. & Debt Ch. 6D-2.) Turnover orders must be served on the judgment debtor personally. (CCP 699.040(c).)

B.          Discussion

1.           Procedural Requirements

Hollywood’s ex parte application includes a memorandum in support and declarations alleging facts on the order’s need. (Memorandum of Points and Authorities Re Ex Parte Application for a Turnover Order; Declaration of Kai Hou Liang in Support of Ex Parte Application for a Turnover Order; Declaration of Bryan D. Sampson Re Ex Parte Application for a Turnover Order.) The Court finds the ex parte application’s procedural requirements satisfied.

2.           Creditor’s Settlement Efforts

Hollywood’s counsel contacted Li to discuss settlement on June 29, 2022. (Sampson Decl., ¶ 23.) Li failed to respond to meet and confer attempts and settlement inquiries. (Id.) Further, Li has not designated representation for post-judgment matters. (Id.) Hollywood’s counsel “initiated paid investigations and public records searches into Debtor Li’s assets and liabilities.” Hollywood’s counsel unearthed Li’s ownership interests and securities in the 17 businesses listed above in §I(a)-(q).  (Sampson Decl., ¶ 24(a—q).)

Though Hollywood’s counsel initiated a securities levy through the Los Angeles County Sheriff’s Department on Li’s shares/ stock certificates in the aforementioned seventeen companies, Li’s alleged refusal to answer his door and efforts to evade Sheriff Dept. Service render the levy useless. (Sampson Decl., ¶ 26.) Hollywood’s counsel attests that he “cannot use a private process server to levy upon Li’s securities, the Sheriff’s Dept. cannot conduct a stake-out to complete service on Li, and Li previously claimed insolvency. (Sampson Decl., ¶¶ 27, 28.) “The Sheriff’s Department has agreed to open a levy, attempt service again on Debtor Li, then await a court turnover order in aid of execution before completing the levy process.” (Sampson Decl., ¶ 29.)

Hollywood therefore seeks a turnover order to allow a private process server to contact Li. (Sampson Decl., ¶ 30.) “Once a turnover order is issued and served by the private process server, Debtor Li is then required to deliver the shares/stock certificates directly to the Los Angeles County Sheriff’s Department to complete the levy process.” (Id.)

3.           Debtor’s Arguments

Li argues that the Sampson email of July 29, 2022 represents the first time Li’s counsel received a communication from Hollywood’s counsel. (Walz Decl., ¶ 4.) Li’s counsel argues further that Hollywood’s counsel first requests a meet and confer and invites settlement discussion with this communication, “while also providing notice of the Creditor’s ex parte application for a turnover order, also filed on the same date as the email, July 29, 2022.” (Walz Decl., ¶ 5.) Li’s counsel is unaware of any other efforts to meet and confer or other offers to discuss settlement in this case. (Walz Decl., ¶ 6.) Li’s counsel disputes Hollywood’s argument that Li has refused to meet and confer or declined to discuss settlement. (Walz Decl., ¶ 7.)

Li argues that no legal grounds exist to support the exigency required for ex parte relief, that the arguments made in support of the instant motion are not credible, and that evidence filed in support of the application is inadmissible. (Opposition., p. 2:14--3:18.)

The Court finds that Judgment Creditor Hollywood establishes sufficient need for a turnover order in the present case. Judgment was issued in this case on June 7, 2022.  There is no evidence that Li or Li’s counsel responded to the June 29, 2022 email sent by Bryan Sampson. Judgment Debtor Li’s prior history justifies a turnover order in the present instance. (Liang Decl., ¶¶ 5-7.)

III.     CONCLUSION

The Court GRANTS turnover order.