Judge: Michelle C. Kim, Case: BC650004, Date: 2024-09-09 Tentative Ruling

Case Number: BC650004    Hearing Date: September 9, 2024    Dept: 78

I.         BACKGROUND

On February 9, 2024, applicant Jiangmen Haoyin Trading Co LTD (“Plaintiff” or “Judgment Creditor”) makes this application for an order permitting the sale of real property commonly known as 507 Peckam Drive, La Puente, California 91746 (the “Peckam Property”).

            This is Plaintiff’s second application for an order permitting sale of the Peckam Property. The first application, filed on March 23, 2023, was denied without prejudice.

On February 9, 2024, Plaintiff filed the instant renewed application for order of sale of dwelling. On April 19, 2024, the Court granted Plaintiff’s ex parte application to specially set an Order to Show Cause Re: Why Order For Sale Of Dwelling Should Not Be Made, and set the hearing date for July 23, 2024. (Min. Order, April 19, 2024.)

On July 1, 2024, judgment debtor Yan Leung (“Leung”) and Mei Ling Huang (“Huang”) (collectively, “Respondents”) filed an opposition to the application for order of sale of dwelling.

On July 16, 2024, Plaintiff filed its reply.

On July 17, 2024, Plaintiff filed a Notice of Errata regarding its request for judicial notice regarding Exhibits 5 through 11.

On July 18, 2024, Respondents filed two additional declarations regarding their recent utility bills for the Packam Property.

On July 23, 2024, the Court continued the hearing due the court-wide ransomware attack.

On August 12, 2024, Plaintiff filed proofs of service on the defendants.

On August 30, 2024, Plaintiff filed a supplemental reply and 3 supporting declarations.

The Court declines to consider any documents filed on August 12 and August 30. The Court cannot continue to consider additional documents ad infinitum simply because the Court was unable to conduct the hearing due to the ransomware issue.

A.    Moving Argument

Plaintiff declares that it obtained a judgment against judgment debtor Leung and others on December 15, 2017 in the amount of $121,490.98 in Los Angeles County Superior Court Case No. BC650004. (Wu Decl. ¶ 3; Exh. A.)  An abstract of Judgment was recorded with the Los Angeles Recorder’s Office on August 20, 2018 creating a judgment lien on the Peckam Property. (Id. ¶ 4; Exh. B.) As of December 13, 2023, the total outstanding balance on the Judgment is $194,445.98. (Id. ¶ 5.) On February 7, 2024, through the Los Angeles County Sheriff’s Department, Plaintiff levied upon Leung’s interest in the Peckam Property. (Id. ¶ 7.) Prior to filing the instant Application, Plaintiff requested that Stewart Title Company issue a Litigation Guarantee pertaining to the Peckam Property. (Id. ¶8; Exh. E.) The December 18, 2018 Grant Deed reflects that the property was owned by Respondents as joint tenants. (Id. ¶ 9; Exh. F.) Wu declares that there is no disabled veteran’s exemption for the property, that the Litigation Guarantee reflects no exemptions recorded or filed for the property, that the property is not a homestead and that there is no homestead exemption, and no homestead declaration was recorded by Leung or a joint tenant for the Peckam Property. (Id. ¶10-13.) Plaintiff proffers the declaration of real estate appraiser Chad Harris in support of the fair market value of the Peckam Property.

B.    Opposing Argument

Respondents contend that Plaintiff incorrectly states that the Peckam Property is not subject to a homestead. In support thereof, Respondents provide certified copies of the recorded Homestead Declarations filed for Leung (Young Decl. ¶ 2; Exh. A) and for Huang (Id.; Exh. B.). Respondents further declare that they have continuously lived in the property since December 2019; notably, the referenced exhibits purportedly supporting their residence on the Peckam Property were not attached. Additionally, Respondents argue they are entitled to an automatic homestead, and that the homestead exemption is $600,000.

C.    Reply Argument

Plaintiff addresses the points raised in Respondents’ opposition. Plaintiff argues the paper trail supports that no homestead exemption exists, whether declared or automatic, because Plaintiff obtained judgment against Leung on December 15, 2017, and recorded the Abstract of Judgment with the Los Angeles County Recorder’s Office on August 20, 2018. Additionally, Plaintiff contends that Respondents are not insolvent, and that the sale would produce a bid to satisfy the lien amounts due.

II.        REQUEST FOR JUDICIAL NOTICE

A.    Plaintiff’s Request

Plaintiff requests the Court take judicial notice of Exhibits 5-9 and 11, consisting of: (1) Conformed Copy of the Default Judgment issued by the Los Angeles County Superior Court, dated Dec. 15, 2017, (2) the Abstract of Judgment recorded with the LA County Recorder’s office on August 20, 2018, (3) The Grant Deed of the Real Property located at 507 Peckam Dr, La Puente, CA, (4) The Grant Deed of the Real Property located at 7027 Clearwater Ave., Las Vegas, NV, (5) The Deed of Trust of the Real Property located at 7027 Clearwater Ave., Las Vegas, NV, and (6) The Grant, Bargain and Sale Deed of Meiling Huang’s Real Property located at 4110 Sanderling Circle, Las Vegas, NV.

The requests are GRANTED. (Cal. Evid. Code § 452(d), (h).) The court “may take judicial notice of the fact of a document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document’s legally operative language….  From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265, disapproved on other grounds by Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919, 939.)

B.    Respondents’ Request

Respondents request the Court take judicial notice of: (1) a certified copy of the recorded Homestead Declaration for Leung, (2) a certified copy of the recorded Homestead Declaration for Huang, and (3) data from Redfin, the California Association of Realtor, the National Association of Realtors and RocketHomes.

Requests 1 and 2 are GRANTED. (Cal. Evid. Code § 452(h).) Request 3 is DENIED.

III.      EVIDENTIARY OBJECTIONS

A.    Plaintiff’s Objections

Plaintiff objects to Respondents’ declarations: objections 1-2. Objections 1-2 are sustained.

Plaintiff objects to the opposition claiming a $600,000 homestead exemption. Objection 3 is overruled. Plaintiff agrees that there is a difference between a homestead declaration v. an automatic homestead. Cal. Civ. Proc. Code § 704.730 applies specifically to a “homestead declaration”, and there is no authority demonstrating that the amount for an automatic homestead is similarly limited to a prior enacted amendment to Section 704.730.

Plaintiff objects to Young’s objection to “Iniguez Declaration.” The objection is overruled. Indeed, there is no “Iniguez Declaration”, but it is clear to this Court that Respondents intended to refer to Declaration of Sam Wu (“Wu”), and that “Iniguez” is a typographical error.

B.    Respondents’ Objections

Respondents object to the declaration of “Iniquez” [sic]: Objections 1 and 2 are overruled, and objection 3 is sustained.

III.      LEGAL STANDARD

A.    Application For Sale of Dwelling

            A court order of sale is required to conduct a sale of a real property dwelling owned and resided in by a natural person judgment debtor. The “dwelling” may be an individual debtor's house, condominium, planned development or mobilehome affixed to land. (CCP § 704.740(a); Wells Fargo Fin'l Leasing, Inc. v. D & M Cabinets (2009) 177 Cal.App.4th 59, 77–78 [“The statute thus clearly and unambiguously makes a section 704.740 order a requirement for sale of a dwelling subject to a homestead exemption, without differentiation between a sale by a sheriff and a sale by a receiver”].)

            An application for sale of the dwelling under CCP §704.740 must first be brought in accordance with CCP §704.760. The application shall be made under oath, shall describe the dwelling, and shall contain all of the following:

“(a) A statement whether or not the records of the county tax assessor indicate that there is a current homeowner's exemption or disabled veteran's exemption for the dwelling and the person or persons who claimed any such exemption.

(b) A statement, which may be based on information and belief, whether the dwelling is a homestead and the amount of the homestead exemption, if any, and a statement whether or not the records of the county recorder indicate that a homestead declaration under Article 5 (commencing with Section 704.910) that describes the dwelling has been recorded by the judgment debtor or the spouse of the judgment debtor.

(c) A statement of the amount of any liens or encumbrances on the dwelling, the name of each person having a lien or encumbrance on the dwelling, and the address of such person used by the county recorder for the return of the instrument creating such person's lien or encumbrance after recording.

(d) A statement that the judgment is based on a consumer debt, as defined in subdivision (a) of Section 699.730, or that the judgment is not based on a consumer debt, and if the judgment is based on a consumer debt, whether the judgment is based on a consumer debt that was secured by the debtor's principal place of residence at the time it was incurred or a statement indicating which of the exemptions listed in subdivision (b) of Section 699.730 are applicable. If the statement indicates that paragraph (7) of subdivision (b) is applicable, the statement shall also provide the dollar amount of the original judgment on which the lien is based. If there is more than one basis, the statement shall indicate all bases that are applicable.”

(CCP § 704.760.)

B.    Post-Application For Sale of Dwelling

After the application is filed, the court must do the following: (1) set a hearing date no later than 45 days after the application is filed (unless a showing of good cause is made for a later date) and (2) issue an order requiring the judgment debtor to appear and show cause (OSC) why an order for sale should not be made in accordance with the judgment creditor's application. (CCP §704.770(a).)

At least 30 days before the hearing, the judgment creditor must serve the judgment debtor with copies of the OSC, application for order of sale and the official notice of hearing form.  (CCP § 704.770(b)(1).) Service may be made personally or by mail. (Ibid.) The creditor must also personally serve the above documents on an occupant of the dwelling; or, if there is no occupant present when service is attempted, must post the documents in a conspicuous place at the dwelling. (CCP § 704.770(b)(2).)

            At the OSC, the Court must determine whether a homestead exemption applies under CCP §704.780. Where Judgment Creditor’s application sets forth an amount of exemption, the burden is on Judgment Debtor to establish the inapplicability of that exemption amount. (See CCP §704.780(a)(2).)

The Court must then make a determination as to (1) whether the property is exempt; (2) if so, the amount of the exemption and the FMV of the property. (See CCP §704.780(b).) “The court shall make an order for sale of the dwelling subject to the homestead exemption, unless the court determines that the sale of the dwelling would not be likely to produce a bid sufficient to satisfy any part of the amount due on the judgment pursuant to Section 704.800.” (CCP §704.780(b).)

IV.       DISCUSSION

The following information undisputed. Plaintiff filed the Abstract of Judgment with the Los Angeles Recorder’s Office on August 20, 2018. (Plf. Jud. Notice, Exh. 6.) Based on the Grant Deed, ownership of the subject property was transferred to Respondents on December 18, 2019. (Plf. Jud. Notice, Exh. 7.) Respondents each individually filed a homestead declaration with the Los Angeles County Recorder on April 4, 2023. (Respondents’ Jud. Notice Exhs. A & B.)

A.    Declared Homestead

There is a distinction between a declared homestead and automatic homestead. (Webb v. Trippet (1991) 235 Cal. App. 3d 647, 651.) A declaration of homestead affords greater protections, provided that it was recorded prior to the abstract of judgment. “The homestead exemption itself does not have any effect on the liens created voluntarily by the property owners, nor does it have any effect on the claims of creditors secured by liens that have priority over the declaration of homestead.” (Title Tr. Deed Serv. Co. v. Pearson (2005) 132 Cal. App. 4th 168, 174. (Title Tr.)) In reference to Smith v. James A. Merrill, Inc. (1998) 64 Cal. App. 4th 94, “a recorded abstract of a money judgment creates a lien that attaches to all interests in the property that are subject to the enforcement of money judgments—except when a declaration of homestead has been recorded on the property before the abstract of judgment is recorded." (Title Tr., 132 Cal. App. 4th at 176.)

The Court finds that Respondents’ are not entitled to the benefits of a homestead exemption for the Peckam Property based on the belated homestead declarations filed over three years after Plaintiff filed its Abstract of Judgment in Los Angeles County.

B.    Automatic Homestead

Respondents declare that they resided in the Peckam Property since December 2019 and that it is their principal place of residence. (Decls. Leung and Huang, ¶2.) Notwithstanding Plaintiff’s criticism regarding Responents’ lack of proof of residency, “ “The automatic homestead exemption is available when a party has continuously resided in a dwelling from the time that a creditors' lien attaches until a court's determination in the forced sale process that the exemption does not apply." [Citations]." (Amin v. Khazindar (2003) 112 Cal. App. 4th 582, 588 [emphasis added]; see also CCP § 704.710(c).) Here, Respondents did not acquire or live in the property until December 2019, years after judgment was entered and after the abstract was recorded. "[T]he legislative history of section 704.710 clearly indicates that it does not allow a homestead exemption on property acquired by the debtor after the judgment has been recorded unless it was purchased with exempt proceeds from the sale, damage or destruction of a homestead within the six-month safe harbor period." (SBAM Partners, LLC v. Cheng Miin Wang (2008) 164 Cal. App. 4th 903, 912–13.) Respondents’ most recent brief declarations regarding their utility bills for gas, internet, water, and trash services for the current year of 2024 are not relevant.

The Court finds that the Peckam Property is not exempt under an automatic homestead.

C.    Fair Market Value & Satisfaction of Liens

Plaintiff avers that the fair market value (“FMV”) of the property is $692,000, and Respondents assert that the appraisal value is $690,000. In sum, the parties are in agreement that the FMV is around $690,000. In terms of Plaintiff’s request, there is no reason or this Court to appoint a qualified appraiser to assist in determining the FMV when Plaintiff has submitted the declaration of its appraiser, and Respondents’ asserted amount is practically the same. It is also undisputed that there is $441,600 in senior or priority claims, and that Plaintiff’s judgment is in the amount of $121,490.98. Considering the FMV is not subject to any exemption, the money from the sale would satisfy all the priority leans ahead of Plaintiff’s and be more than enough to satisfy Plaintiff’s judgment lien.

Lastly, as Plaintiff avers, "The policy behind this homestead exemption was to ensure that insolvent debtors and their families should not be rendered homeless by virtue of a forced sale of their residential property." (Webb v. Trippet (1991) 235 Cal. App. 3d 647, 650.) Aside from the Peckam Property, Respondents have other assets such as ownership of two real properties in Nevada (Plf. Judicial Notice, Exhs. 8-9, 11) The Court finds no reason to not issue an order to sell the dwelling per CCP §704.780.

V. CONCLUSION

Based on the foregoing, Plaintiff’s application for an order permitting the sale of dwelling is GRANTED.

Moving Party is ordered to give notice.

DATED: September 6, 2024

__________________________

Hon. Michelle C. Kim 

Judge of the Superior Court

PLEASE TAKE NOTICE:

•           Parties are encouraged to meet and confer after reading this tentative ruling to see if they can reach an agreement.

•           If a party intends to submit on this tentative ruling, the party must send an email to the court at SMCDEPT78@lacourt.org with the Subject line “SUBMIT” followed by the case number. The body of the email must include the hearing date and time, counsel’s contact information, and the identity of the party submitting.

•           Unless all parties submit by email to this tentative ruling, the parties should arrange to appear remotely (encouraged) or in person for oral argument. You should assume that others may appear at the hearing to argue.

•           If the parties neither submit nor appear at hearing, the Court may take the motion off calendar or adopt the tentative ruling as the order of the Court. After the Court has issued a tentative ruling, the Court may prohibit the withdrawal of the subject motion without leave.