Judge Stephen P. Pfahler, Case Number: BC701546, Date: 2024-03-15 Tentative Ruling

Judge: Stephen P. Pfahler, Case: BC701546, Date: 2024-03-15 Tentative Ruling

Case Number: BC701546 Hearing Date: March 15, 2024 Dept: 68

Dept. 68

Date: 3-15-24

Case # BC701546

Trial Date: N/A

STAY ENFORCEMENT ON JUDGMENT

MOVING PARTY: Defendants, Fame Housing Corporation, et al.

RESPONDING PARTY: Plaintiffs, Denise Brown, et al.

RELIEF REQUESTED

Motion to Stay Enforcement of the Judgment

SUMMARY OF ACTION & PROCEDURAL HISTORY

On April 11, 2018, Plaintiffs Denise Brown, Dean Brown, and Solon Escobar filed a breach of contract and wage and hour action against defendants FAME Housing Corporation, FAME Assistance Corporation, and FAME Good Shepherd Center Housing Development Corporation. On November 17, 2023, the court issued a tentative statement of decision finding in favor of all three plaintiffs:

1. Judgment shall be entered in favor of Plaintiff Denise Brown in the total amount of $1,177,889.08. The Award in favor of Denise Brown is against Defendants (1) FAME Housing Corporation, (2) FAME Assistance Corporation and (3) FAME Good Shepherd Corporation, jointly and severally. 2. Judgment shall be entered in favor of Plaintiff Dean E. Brown in the total amount of $28,203.20. The Award in favor of Dean E. Brown is against Defendants (1) FAME Housing Corporation and (2) FAME Assistance Corporation, jointly and severally 3. Judgment shall be entered in favor of Plaintiff Solon Escobar in the total amount of $29,715.02. The Award in favor of Solon Escobar is against Defendants (1) FAME Housing Corporation (2) FAME Assistance Corporation, jointly and severally. On December 29, 2023, the court entered judgment.

RULING: Denied.

Evidentiary Objections to the Declaration of Robert Shaw, Sandra Deloza Rodriguez, and Peggy Hill: Overruled.

On January 9, 2024, the clerk issued a writ of execution on the $1,180.833.46 judgment. On January 31, 2024, the court heard the ex parte motion of defendant/judgment debtors to “issue and a release order vacating illegal levies placed upon Defendants’ bank accounts,” and ordered the Los Angeles County Sheriff to “maintain the levies in place,” with a bar on any party to “use, transfer, or dispose of levies pending the subject hearing.” On February 5, 2024, the court reiterated the order for preservation of the status quo via the stay on the judgment collection activities and the enforcement of the judgment pending the March 15, 2024, hearing, while providing the parties leave to conduct discovery and file any attorneys’ fees motion.

The court ordered supplemental briefing. Defendants/Judgment Debtors FAME Housing Corporation, FAME Assistance Corporation, and FAME Good Shepherd Center Housing Development Corporation (FAME) request a stay from any enforcement on any accounts, due to a denial of the right to levy the subject accounts and therefore outside the scope of statutory enforcement. FAME specifically disclaims ownership of the funds in said accounts and instead insists all funds belong or are “pledged” to third party non-judgment debtors. Plaintiffs/Judgment Creditors in opposition challenge the notice of the motion, maintain all levies are statutorily compliant, and Defendants/Judgment Debtors present no basis for exemption. (Plaintiffs also submitted a late filed, uninvited supplemental declaration, which the court declines to consider in that it is again untimely, and FAME was deprived of an opportunity to respond.) FAME in reply contend the represented collection efforts rely on “demonstrably false” information. FAME reiterates the procedural requirements, and contends superior rights to the funds overcome any judgment levy.

The court first addresses the February 23, 2024, Notice of Appeal on the judgment, and February 27, 2024, filed Notice of filing of Notice of Appeal. The “perfecting” of an appeal imposes an automatic stay on the case on “matters embraced therein…but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” (Code Civ. Proc., § 916, subd. (a).) Defendants present no argument or a notice of stay following the appeal, or otherwise indicate an effort to stay enforcement of the judgment pending the appeal. The court declines to make any determination without a presented request. The court therefore proceeds with the hearing. (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 189; Henry M. Lee Law Corp. v. Superior Court (2012) 204 Cal.App.4th 1375, 1383-1384.)

FAME seek relief on grounds the funds are not subject to execution. The motion relies on general statements of exemption. “Except as otherwise provided by statute, property of the judgment debtor that is not assignable or transferable is not subject to enforcement of a money judgment.” (Code Civ. Proc., § 695.030, subd. (a).) “Property that is not subject to enforcement of a money judgment is exempt without making a claim.” (Code Civ. Proc., § 704.210.) FAME relies on an interrelated argument, whereby the funds are assumed exempt. Instead of complying with statutory rules for attachment, FAME contends Plaintiffs only obtained their writ through the clerk, and violated due process rights due to the lack of a noticed hearing.

Factually, FAME represents the lack of ownership over the funds in the levied accounts, due to its role as a non-profit management entity, with a lack of any equity interest in the managed properties. The two levied accounts with city National Bank contain tenant security deposits, which under federal, state, and city rules require security said deposits placed into separate interest earning accounts in order to prevent any commingling with grant revenue accounts. Notwithstanding the identified separate security accounts, FAME states said security deposit accounts are used for payment of utilities and maintenance. Additionally, FAME also apparently maintains separately designated Operating and Payroll Accounts, with funds also used for disbursement to tenants for certain services, such as transportation with Los Angeles County Metropolitan Transportation Authority (LACMTA). The Operating and Payroll Accounts receive revenue from grants, such as from LACMTA, as well as rent and lease income revenue from “headquarters,” FAME Assistance Corporation Renaissance Building. On September 23, 2023, FAME also entered into a second deed of trust assigning “right, title and interest in and to all current future Leases and Rents” to third parties WestAdams and BRG.

The issuance of the writ itself constitutes a ministerial act. (In re Marriage of Farner (1989) 216 Cal.App.3d 1370, 1376 [“The clerk acts in a ministerial capacity and has no discretion to refuse issuance of the writ when confronted with an unconditional judgment, in ordinary form”].)

(a) Subject to subdivision (b), after entry of a money judgment, a writ of execution shall be issued by the clerk of the court, upon application of the judgment creditor, and shall be directed to the levying officer in the county where the levy is to be made and to any registered process server. The clerk of the court shall give priority to the application for, and issuance of, writs of execution on orders or judgments for child support and spousal support. A separate writ shall be issued for each county where a levy is to be made. Writs may be issued successively until the money judgment is satisfied, except that a new writ may not be issued for a county until the expiration of 180 days after the issuance of a prior writ for that county unless the prior writ is first returned....

(d) In any case where the writ of execution lists any name other than that listed on the judgment, the person in possession or control of the levied property, if other than the judgment debtor, shall not pay to the levying officer the amount or deliver the property being levied upon until being notified to do so by the levying officer. The levying officer may not require the person, if other than the judgment debtor, in possession or control of the levied property to pay the amount or deliver the property levied upon until the expiration of 15 days after service of notice of levy.

Code Civ. Proc., § 699.510

The court finds no wrongful conduct in the issuance of the writ based on the judgment from the court. (Code Civ. Proc., §§ 699.510, 700.140, subd. (a),700.160, subd. (a).) The court also shows no basis of an invalid writ based on any purported exemption. “In any case where property has been levied upon and, pursuant to a levy, a copy of the writ of execution and a notice of levy are required by statute to be posted or to be served on or mailed to the judgment debtor or other person, failure to post, serve, or mail the copy of the writ and the notice does not affect the execution lien created by the levy. Failure to serve on or mail to the judgment debtor a list of exemptions does not affect the execution lien created by the levy.” (Code Civ. Proc., § 699.550.)

The notice requirements relied upon by FAME appear in the exemption section.

“(a) Money in the judgment debtor's deposit account in an amount equal to or less than the minimum basic standard of adequate care for a family of four for Region 1, established by Section 11452 of the Welfare and Institutions Code and as annually adjusted by the State Department of Social Services pursuant to Section 11453 of the Welfare and Institutions Code, is exempt without making a claim. ...

(e)(1) The exemption applies per debtor, not per account.

(2) If a judgment debtor holds an interest in multiple accounts at a single financial institution, the judgment creditor or judgment debtor may file an ex parte application in the superior court in which the judgment was entered for a hearing to establish how and to which account the exemption should be applied. Subject to a service of an order issued in that hearing, if any, the financial institution may determine how and to which account the exemption should be applied. This paragraph does not create a cause of action against a judgment creditor who executes a levy or against a financial institution that complies with a levy pursuant to the court's determination.

(3) If a judgment debtor holds an interest in multiple accounts at two or more financial institutions, the judgment creditor shall, and the judgment debtor may, file an ex parte application in the superior court in which the judgment was entered for a hearing to establish how and to which account the exemption should be applied. Subject to a service of an order issued in that hearing, if any, the financial institutions shall comply with the levy subject to the exemption. This paragraph does not create a cause of action against a judgment creditor who executes a levy or against a financial institution which complies with a levy pursuant to the court's determination.”

(Code Civ. Proc., § 704.220.)

Nothing in the motion or reply itself actually establishes any basis of exemption under the “minimum basic standard of adequate care for a family of four for Region 1, established by Section 11452 of the Welfare and Institutions Code and as annually adjusted by the State Department of Social Services pursuant to Section 11453 of the Welfare and Institutions Code.” Exemptions are limited to “natural persons” not corporate entities. (Code Civ. Proc., § 703.020, subd. (a).) Exemptions begin with Code of Civil Procedure section 704.210. Thus, reliance on this section in no way establishes compliance with the following section.

Even assuming such an exemption applied, the motion and reply provide no basis of support requiring a proactive ex parte hearing for issuance of the writ and execution via the Los Angeles County Sheriff. The motion itself otherwise lacks any support for a claim of exemption. (Code Civ. Proc., §§ 703.520, 720.110, et seq.) Furthermore, any claims of a superior right to the funds lacks support, notwithstanding the dispute in the reply. (Cal. U. Com. Code, §§ 9304, 9332; Code Civ. Proc., § 697.590; see Orix Financial Services, Inc. v. Kovacs (2008) 167 Cal.App.4th 242, 250.) In reviewing the statement of decision and subsequent judgment, the court only addressed the contract and wage claims, without any consideration of potential judgment collection. The court finds no basis for a proactive requirement to clear any potential exemptions prior to serving the writ of execution.

The court therefore denies the motion on grounds of any procedural challenge caused from the ministerial issuance of the writ itself. As for the denial of ownership of the levied funds, the court also finds a lack of support. Again, nothing in the record shows any third party filed claim of exemption on any levied amount. Nothing precluded FAME or any of the identified third parties from seeking an exemption. The motion otherwise lacks sufficient legal support for relief from collection simply based on declarations in support. [See Declarations of Edwin Rush, Robert Shaw, Peggy Hill, Sandra Deloza Rodriguez.]

Plaintiff to give notice.