Judge: Ralph C. Hofer, Case: 24NNCV00309, Date: 2024-11-15 Tentative Ruling

Case Number: 24NNCV00309    Hearing Date: November 15, 2024    Dept: D

TENTATIVE RULING

Calendar:                                                                     7                                                         

Date:                                                   11/15/2024                                         

Case No:         24 NNCV00309

Case Name:     Umpqua Bank v. Dental Alloys USA, Inc., et al.

MOTION FOR TURNOVER ORDER

Moving Party:            Plaintiff Umpqua Bank

Responding Party:      Defendants Dental Alloys USA, Inc. and Ilya Gorbonos  (No Opposition)  

RELIEF REQUESTED:

Order directing Judgment Debtor Ilya Gorbonos to transfer to the Sheriff possession of Judgment Debtor Gorbonos’ stock certificates, voting trust certificates, and other documents evidencing Judgment Debtor Gorbonos’ ownership in STRS, Inc.

SUMMARY OF FACTS:

Plaintiff Umpqua Bank alleges that in May of 2019, plaintiff provided a business expressline of credit to defendant Dental Alloys USA, Inc. in the amount of $50,000, which credit line is evidenced by a small business loan application and a promissory note.  Pursuant to the credit line documents, defendant agreed to repay the outstanding principal balance of the loan, along with annual fees, late charges, and interest in the event of default.  Defendant has breached its obligations by failing to pay all sums which became due, with the last payment being made in March of 2023, and despite demand has failed to cure the default or pay the monies due and owing. 

The complaint alleges that to induce plaintiff to enter into the application and note, defendant Ilya Gorbonos, an individual, executed in writing a Commercial Guaranty, unconditionally guaranteeing to pay all indebtedness of Dental Alloys to plaintiff, which guarantee Gorbonos has failed to honor.  

On July 9, 2024, Judgment by the Court by Default was entered, signed and filed, based on plaintiff’s written declaration.  Judgment was entered for plaintiff Umpqua Bank and against defendants Dental Alloys USA, Inc. and Ilya Gorbonos, in the total sum of $63,416.96. 

On July 29, 2024, a Writ of Execution (Money Judgment) was executed by the clerk of the court, for the total amount due of $63,456.96, plus daily interest from the date of the writ at the legal rate in the daily sum  of $17.37. 

ANALYSIS:

            Relief here is sought pursuant to CCP § 699.040, which provides:

“(a) If a writ of execution is issued, the judgment creditor may apply to the court ex parte, or on noticed motion if the court so directs or a court rule so requires, for an order directing the judgment debtor to transfer to the levying officer either or both of the following:

(1) Possession of the property sought to be levied upon if the property is sought to be levied upon by taking it into custody.

(2) Possession of documentary evidence of title to property of or a debt owed to the judgment debtor that is sought to be levied upon. An order pursuant to this paragraph may be served when the property or debt is levied upon or thereafter.

(b) The court may issue an order pursuant to this section upon a showing of need for the order.

(c) 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.”

Here, a noticed motion has been made. As noted above, a writ of execution was issued on July 29, 2024.  The section requires a “showing of need for the order.”  Judgment creditor relies on a declaration of counsel, in which it is stated that judgment has been entered, no appeal was taken of the judgment, the time for appeal has elapsed, and “the Judgment remains unsatisfied.”  [Spiwak Decl. ¶ 2].  The declaration then states that it is believed the judgment debtor Gorbonos is the CEO, CFO and Director of STRS, Inc., and attaches California Secretary of State documents to this effect. [Spiwak Decl. ¶ 3, Ex. 1].  The business STRS, Inc. is described in the documents as a business for “Consulting, Construction.”  [Ex. 1].   Judgment Creditor is accordingly requesting that an order be issued directing judgment debtor Gorbonos to transfer to the sheriff possession of all of his stock certificates, voting trust certificates and other documents evidencing Gorbonos’ ownership in STRS, Inc.  [Spiwak Decl. ¶ 6].  Counsel states, “[a]t this time, I am informed and believe, and on that basis allege, that Judgment Debtor Gorbonos has no other assets subject to immediate execution and that his principal asset is his ownership in STRS, INC., a California Corporation.”  [Spiwak Decl. ¶ 3, Ex. 1]. 

Judgment creditor argues that the tangible personal properly sought to be transferred from judgment debtor Gorbonos is in the possession of or under the control of Gorbonos, so that to levy on such property, the levying officer must take it into custody under CCP § 700.030.  CCP § 700.030 provides:

“Unless another method of levy is provided by this article, to levy upon tangible personal property in the possession or under the control of the judgment debtor, the levying officer shall take the property into custody.”

Judgment creditor also argues that the tangible personal property at issue is included within CCP § 680.370, which provides, “‘Tangible personal property’ includes chattel paper, documents of title, instruments, securities, and money.” 

Judgment creditor argues that as such, the tangible personal property as described in the application is subject to a turnover order under CCP § 699.040.

As noted above, CCP § 699.040 (b) requires a showing of need for the order. 

This presentation is not a particularly strong showing of need under CCP § 699.040., with respect to the representation that the judgment is unsatisfied. Such a showing is the case with all such applications.  It is not explained what efforts have been made to satisfy the judgment as against either judgment debtor, which efforts have been unsuccessful.  The judgment was entered in July of 2024, and this motion filed in September of 2024, only two months later.  The file shows that there has not yet been a judgment debtor examination conducted, but one is scheduled for December 20, 2024. 

Hence,it is clear that no facts have been offered explaining why judgment creditor believes that the ownership in a corporation unrelated to this action is the only asset available to the individual.  It is not explained why the corporate judgment debtor cannot satisfy the judgment, such as that it has gone out of business.  There is no other evidence, such as a transcript from a judgment debtor examination, which would suggest that there are no other assets available to pursue in satisfaction of the judgment.  The court will discuss at the hearing if there are any further facts which could be offered to establish a “need” for the order.     

However, the court is mindful that no opposition has been filed. It is within the courts discretion to issue the order as requested, but the court elects not to do so given the inadequate showing of no alternative sources of recovery.

RULING:

[No Opposition]

Motion for Turnover Order in Aid of Execution is DENIED WITHOUT PREJUDICE.  The Court is not satisfied on the current showing that judgment creditor has demonstrated a need for the order, as required under CCP § 699.040 (b).

 DEPARTMENT D IS CONTINUING TO CONDUCT AND ENCOURAGE

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