Judge Stephen P. Pfahler, Case Number: 19STCV32837, Date: 2024-12-05 Tentative Ruling

Judge: Stephen P. Pfahler, Case: 19STCV32837, Date: 2024-12-05 Tentative Ruling

Case Number: 19STCV32837` Hearing Date: December 5, 2024 Dept: 68

Dept. 68

Calendar #1

Date: 12-5-24

Case #19STCV32837

Trial Date: Not Set

OSC re: Sale of Dwelling

MOVING PARTY: Plaintiff/Judgment Creditor Jeff Goldstein (“Judgment Creditor”)

RESPONDING PARTY: Real Party in Interest Katy Ramachandran (“Third-Party Claimant”) (Defendant/Judgment Debtor Nishant Ramachandran (“Judgment Debtor”) did not file an opposition)

RELIEF REQUESTED

Order of the court for sale of the interest of Judgment Debtor in the following two dwellings to satisfy judgment in favor of Judgment Creditor: (1) 2104 PLANT AVE, REDONDO BEACH, CA 90278 (“2104 Plant”); and (2) 2106 PLANT AVE, REDONDO BEACH, CA 90278 (“2106 Plant”) (collectively, “the Properties”).

SUMMARY OF ACTION

On September 16, 2019, Judgment Creditor filed suit against Judgment Debtor based on a written acknowledgement of debt signed by Judgment Debtor dated September 17, 2015.

Judgment Creditor obtained a judgment against Judgment Debtor on April 6, 2023, for $2,284,609.55 in LASC Case Number 19STCV32837 (“Judgment”). Including interest, the balance due on said judgment as of January 29, 2024, the date of the ex parte application for an order for sale of the dwelling, was $2,472,385.68 (pursuant to CCP §685.010(a), interest accrues at the rate of $625.92 per day).

On January 29, 2024, Judgment Creditor filed two separate Ex Parte Applications for orders for the sale of each dwelling.

On January 31, 2024, the Court granted both Ex Parte Applications for orders for the sale of each dwelling.

On March 7, 2024, Judgment Creditor filed a notice of stay of proceedings caused by Judgment Debtor filing in bankruptcy court.

On May 10, 2024, the bankruptcy court granted relief from the bankruptcy stay specifically to Judgment Creditor to pursue the Properties.

On November 19, 2024, Third-Party Claimant filed her Opposition.

On November 25, 2024, Judgment Creditor filed a Reply.

RULING: Denied.

Evidentiary Objections

Third-Party Claimant’s objections are SUSTAINED as to Judgment Creditor impermissibly raising new arguments in his Reply brief.

Discussion

California Family Code § 2581 states, in relevant part:

Property acquired by the parties during marriage in joint form, including property held in tenancy in common, joint tenancy, or tenancy by the entirety, or as community property, is presumed to be community property. This presumption is a presumption affecting the burden of proof and may be rebutted by either of the following:

(a) A clear statement in the deed or other documentary evidence of title by which the property is acquired that the property is separate property and not community property.

(b) Proof that the parties have made a written agreement that the property is separate property.

(Cal. Fam. Code § 2581.)

Judgment Debtor and Third-Party Claimant married on June 14, 2009. (Third Party Claimant Decl., Ex. I.) They separated on February 20, 2018. (Id.) They divorced on August 11, 2023. (Id.) Judgment Creditor contends that the Properties are owned by Judgment Debtor and Third-Party Claimant, Husband and Wife, as community property (“CP”) and are thereby subject to the Judgment. (App., ¶ 5.) Third-Party Claimant argues that that the Properties do not belong to Judgment Debtor but have instead always been and continue to be her separate property (“SP”), such that they cannot be sold to satisfy the judgment against Judgment Debtor. (Third-Party Claimant Decl., ¶ 4.)

Here, the Court finds that both properties are presumed to be CP because title to each was held jointly in both Judgment Debtor and Third-Party Claimant’s names when they were first acquired. The Title Report for each property states, “[a]ccording to the Public Records as of the Date of Guarantee, a. Title to the estate or interest is vested in: NISHANT RAMACHANDRAN and KATY RAMACHANDRAN, Husband and Wife as Community Property.” (App., Ex. E.) Thus, because title to the Properties was held jointly at the time of acquisition, the Properties are presumed to be CP unless Third-Party Claimant can provide proof to the contrary.

The key issues are (1) whether the parties executed a valid transmutation agreement on February 29, 2016, changing 2106 Plant from CP to SP; and (2) whether a Dissolution Judgment entered on August 11, 2023, purporting to award the Properties to Third-Party Claimant, transforms the CP properties into SP.

As to 2106 Plant, Third-Party Claimant declares that a Property Agreement executed by Judgment Debtor and Third-Party Claimant on February 29, 2016, establishes that 2106 Plant was acquired with Third-Party Claimant’s separate property and was deemed her separate property to which Judgment Debtor has no right to. (Third-Party Claimant Decl., ¶ 6-7, Ex. C.) The Property Agreement states, in relevant part:

Whereas, the parties acknowledge that the property located at 2106 Plant Ave, Redondo Beach, CA 90278 was acquired using the funds that the wife brought into the marriage and that the rental income from this property exceeds the mortgage and the maintenance on this property and it has always been the intention of the parties to treat this property as a separate property of the wife;

Whereas, the parties agree that it would be appropriate for them to enter into an agreement identifying their separated property and fixing their respective rights and interests in that property and in their joint and marital property, the parties have entered into this Agreement...

(B) The following shall be considered the separate property of the wife...

(2) The property at 2106 Plant Avenue, Rodendo Beach property including the land and all structures thereon, and all contents of the structures;

(3) All income from the sale or leasing of the property described in subparagraph (2) above...

(A) The provisions of this agreement shall not be terminated by a separation, divorce, or dissolution action;

(B) The provisions contained in article four regarding the separate property of each of the parties shall remain in effect, and neither shall make any claim against the other for any interest in any portion of this separate property...

(Third-Party Claimant Decl., Ex. C.)

A transmutation agreement must meet the following requirements of Family Code § 852 to be valid:

(a) A transmutation of real or personal property is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.

(b) A transmutation of real property is not effective as to third parties without notice thereof unless recorded.

(c) This section does not apply to a gift between the spouses of clothing, wearing apparel, jewelry, or other tangible articles of a personal nature that is used solely or principally by the spouse to whom the gift is made and that is not substantial in value taking into account the circumstances of the marriage.

(Fam. Code § 852.)

Here, the Court finds that a valid transmutation occurred with respect to 2106 Plant. The Property Agreement was made in writing and contains an express declaration of the Properties’ change of form, consented to by Judgment Debtor whose interest in the property is adversely affected by losing his community interest. Judgment Debtor and Third-Party Creditor both signed the agreement, which is notarized. Although Judgment Creditor argues that Third-Party Claimant does not offer “tracing” evidence to explain where her “separate property” came from that she allegedly used to acquire the Properties, nor does she explain what monies were used to maintain and operate the Properties for the past 10+ years, such information is not required for a valid transmutation agreement. Therefore, 2106 Plant is Third-Party Claimant’s SP which cannot be used to satisfy the Judgment against Judgment Debtor.

As to both properties, Third-Party Claimant argues that a Dissolution Judgment entered on August 11, 2023, awarded both properties to her as her sole and separate assets. Third Party Claimant further argues that per the Dissolution Judgment, any debt incurred by Judgment Debtor to Judgment Creditor was awarded and confirmed as Judgment Debtor’s sole and separate property. (Third Party Claimant Decl., ¶ 18, Ex. I (Section 6.3 and 7.2.3).)

The Dissolution Judgment states, in relevant part:

The following assets, whether separate or community, are awarded and confirmed to Katy as Katy’s sole and separate property, with the right of immediate possession, free and clear of any claim, right, title or interest of Nishant. Katy solely assumes and shall pay and hold Nishant free and harmless from any and all encumbrances, obligations, liabilities, liens and debts regarding the assets awarded and confirmed to Katy:

The real property located at 2104 Plant Ave., Redondo Beach, CA 90278...

The real property located at 2106 Plant Ave., Redondo Beach, CA 90278...

Nishant shall assume, indemnify, and hold Katy harmless from and against the following obligations:

... All debts or liabilities arising out of any lawsuit against Nishant filed by his former business partner, or any other person or entity. To the extent that any creditors seek to collect from Katy in any way, including by seeking to set aside this Stipulated Judgment, Nishant shall defend, indemnify and hold Katy harmless.

(Third Party Claimant Decl., Ex. J.)

Here, the Court finds that the Dissolution Judgment renders both properties Third-Party Claimant’s SP. Further, the Dissolution Judgment specifically states that Judgment Debtor will assume all debts or liabilities arising out any lawsuit against Judgment Debtor filed by his former business partner, Judgment Creditor. This evidences that the Family Court was aware of the Judgment in the instant action when it issued this Dissolution Judgment, and clearly intended for the properties to be Third-Party Claimant’s SP which were not to be used to satisfy the Judgment against Judgment Debtor in the instant action.

In Reply, Judgment Creditor argues that Third-Party Claimant’s attempts to “convert” the Properties to her separate property after the debt was acknowledged in 2015 and again in 2023 after Judgment Creditor filed suit are voidable as fraudulent transfers under Cal. Civil Code Section 3439.05. However, Judgment Creditor does not elaborate on this argument and makes only a conclusory statement that mentions section 3439.05 in passing rather than engaging with the language of the statute. Further, a Dissolution Judgment from a family court is clearly not a fraudulent transfer. Thus, the Court disregards this argument.

Therefore, both properties are Third-Party Claimant’s SP based on the Dissolution Judgment and the transmutation agreement.

Thus, the Court DENIES Judgment Creditor’s request for an order of the court for sale of the interest of Judgment Debtor in the Properties to satisfy judgment in favor of Judgment Creditor.