Judge Teresa A. Beaudet, Case Number: BC30866, Date: 2023-07-20 Tentative Ruling

Plaintiff Daniel Perez (“Plaintiff”) filed this action against Defendants Joseph Safran (“Safran”) and One Capital Group, Inc. (jointly, “Defendants”) on August 17, 2016. The Complaint asserts causes of action for (1) breach of written contract, (2) open book account, (3) money had and received, (4) unjust enrichment, (5) conversion, (6) fraud in the inducement, and (7) equitable relief.

On October 25, 2018, the Court entered a Judgment in this action indicating that “judgment is entered in favor of Plaintiff Daniel Perez (“Plaintiff”) and against defendants Joseph Safran, an individual (“Safran”) and One Capital Group, Inc., a California Corporation (“One Capital”) jointly and severally, in the sum of $190,000.00.”

Plaintiff now moves for (1) an order allowing Plaintiff to garnish the wages of Karen Harrosh (“Harrosh”), the spouse of Safran; (2) an order to assign Harrosh’s interest in certain funds from third parties, including, but not limited to, Sapir Realty Corporation, and the tenant(s) occupying the real property commonly known as 5930 Beeman Avenue, Valley Village, California 91607, to Plaintiff, to the extent necessary to pay the judgment entered in this action in full, including accrued interest through the date of payment; and (3) an order restraining Harrosh and any representative, agent, employee or attorney of Harrosh and any person(s) in active concert and participating with Harrosh from encumbering, assigning, disposing of, or spending the specified funds and/or all rights to payment thereunder. Safran and Harrosh oppose.

On March 14, 2023, the Court issued an Order in this matter continuing the hearing on the instant motion to May 4, 2023. The Court’s March 14, 2023 Order provides, inter alia, that “[o]n or before 4/26, 2023, Safran and Harrosh may file and serve a surreply with a supporting declaration of up to 10 pages that will address the issues raised in the Reply as well as the impact of Family Code section 913(b)(1), the existence of an August 20, 2001 Agreement and the timing of the June 5, 2018 Agreement. On or before that same date, Plaintiff may file and serve a supplemental brief of up to 3 pages regarding the meaning and scope of Family Code section 913(b)(1)…The court also asks the parties to address (a) whether Plaintiff needs a judgment against Harrosh in order to proceed against what she claims are her separate property assets, and (b) whether Pl. must pursue a fraudulent conveyance or similar type of action against Harrosh if Pl. seeks to establish that the June 5, 2018 agreement is unenforceable.”

On April 26, 2023, Harrosh and Safran filed a Supplemental Memorandum of Points and Authorities in Opposition to Motion to Garnish Wages of Spouse and for Assignment Order Against Spouse. On April 26, 2023, Plaintiff filed a Supplemental Brief in Support of Motion for Order to Garnish Wages of Spouse of Judgment Debtor and for Assignment Order Against Spouse.

On May 4, 2023, the Court issued an Order continuing the hearing on the instant motion to July 20, 2023. The Court’s May 4, 2023 Order provides, inter alia, that “[o]n or before 6/1, 2023, Plaintiff may file and serve a surreply with a supporting declaration of up to 10 pages that will address the issues identified above. No briefing or evidence may be provided on any other issue. A courtesy copy of the surreply must be delivered to Dept. 50 concurrently with its filing.”[1] The docket does not show that Plaintiff filed any surreply.

The Court grants Plaintiff’s request for judicial notice filed in support of Plaintiff’s reply as to Exhibits 16, 17, 18, 24, 26, 27, 28, 29, and 30. The Court denies Plaintiff’s request for judicial notice filed in support of Plaintiff’s reply as to Exhibits 19, 20, 21, and 22.

The Court grants Plaintiff’s request for judicial notice filed in support of Plaintiff’s supplemental brief in support of the motion.

As set forth above and in the Court’s May 4, 2023 Order, on October 25, 2018, Plaintiff obtained a Judgment against Defendants, jointly and severally, in the sum of $190,000.00. Plaintiff notes that on August 23, 2022, a writ of execution was issued on the Judgment in the total amount of $262,597.70, including interest. Plaintiff indicates that no payments have been made towards the Judgment. (Medioni Decl., ¶ 9.)

As discussed, Plaintiff seeks three separate orders. First, Plaintiff seeks “[a]n order allowing Creditor to garnish the wages of [Harrosh]…pursuant to Code of Civil Procedure § 706.109.” (Mot. at p. 2:2-4.) Code of Civil Procedure section 706.109 provides that, “[a]n earnings withholding order may not be issued against the earnings of the spouse of the judgment debtor except by court order upon noticed motion.”

Plaintiff seeks a second order “[t]o assign Harrosh’s interest, right to payment due, or to become due, rent, referral fees, fees for services, contingency fees, royalties, commissions, payments in general, payments from sales, payments from leases, payments from refinances, payment from loan originations, payments from relocations, payments from a patent or copyright, advances, accounts receivable, general intangibles (as defined by Commercial Code Section 9102(a)(42)), judgments, instruments (as defined by Code of Civil Procedure Section 708.510(a) and the comment to Section 708.510), etc. (the ‘Funds’) from all third parties, including, but not limited to, Sapir Realty Corporation, a California corporation and doing business as Weichert, Realtors – All Stars, and the tenant(s) occupying the real property commonly known as 5930 Beeman Avenue, Valley Village, California 91607, to Creditor to the extent necessary to pay the judgment entered in this action in full, including accrued interest through the date of payment.” (Mot. at p. 2:5-16, citing Code of Civil Procedure section 708.510.)

Code of Civil Procedure section 708.510, subdivision (a) provides that “[e]xcept as otherwise provided by law, upon application of the judgment creditor on noticed motion, the court may order the judgment debtor to assign to the judgment creditor or to a receiver appointed pursuant to Article 7 (commencing with Section 708.610) all or part of a right to payment due or to become due, whether or not the right is conditioned on future developments, including but not limited to the following types of payments: (1) Wages due from the federal government that are not subject to withholding under an earnings withholding order. (2) Rents. (3) Commissions. (4) Royalties. (5) Payments due from a patent or copyright. (6) Insurance policy loan value.” Pursuant to Code of Civil Procedure section 708.510, subdivision (d), “[a] right to payment may be assigned pursuant to this article only to the extent necessary to satisfy the money judgment.”

Third, Plaintiff seeks an order “[r]estraining Harrosh and any representative, agent, employee or attorney of Harrosh and any person(s) in active concert and participating with Harrosh from encumbering, assigning, disposing of or spending the Funds and/or all rights to payment thereunder.” (Mot. at p. 2:17-20, citing Code of Civil Procedure section 708.520.) Code of Civil Procedure section 708.520, subdivision (a) provides that “[w]hen an application is made pursuant to Section 708.510 or thereafter, the judgment creditor may apply to the court for an order restraining the judgment debtor from assigning or otherwise disposing of the right to payment that is sought to be assigned. The application shall be made on noticed motion if the court so directs or a court rule so requires. Otherwise, it may be made ex parte.”

As an initial matter, Safran and Harrosh note that Code of Civil Procedure sections 708.510 and 708.520, relied upon by Plaintiff, refer to a “judgment debtor.” Harrosh is not the judgment debtor in this action. Plaintiff does not respond to this point in his reply or supplemental brief. Thus, the only authority Plaintiff appears to rely upon in support of the motion is Code of Civil Procedure section 706.109. (See Mot. at p. 2:2-4.) As set forth above, this provision provides that “[a]n earnings withholding order may not be issued against the earnings of the spouse of the judgment debtor except by court order upon noticed motion.” (Code Civ. Proc., § 706.109.)

Plaintiff’s counsel indicates that on November 6, 2019, he conducted the third-party examination (“ORAP”) of Harrosh, and that during the ORAP, Harrosh testified that she was married to Safran and had been married to Safran for at least 15 years. (Medioni Decl., ¶ 5.) Plaintiff notes that “[e]xcept as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.” (Fam. Code, § 760.) In addition, “[e]xcept as otherwise expressly provided by statute, the community estate is liable for a debt incurred by either spouse before or during marriage, regardless of which spouse has the management and control of the property and regardless of whether one or both spouses are parties to the debt or to a judgment for the debt.” (Fam. Code, § 910, subd. (a).)

Plaintiff asserts that he is aware of two revenue streams flowing to Harrosh. First, Plaintiff asserts that Harrosh works for and/or owns Sapir Realty Corporation, a California corporation (“Sapir Realty”), doing business as Weichert, Realtors – All Stars (“Weichert”), and that Sapir Realty is a real estate brokerage firm that buys, sells, and manages real estate. (Medioni Decl., ¶ 11.) Plaintiff states that Sapir Realty’s statement of information filed with the California Secretary of State on or about November 13, 2019, lists Harrosh as the Chief Executive Officer, Secretary, Chief Financial Officer, Director, and agent for service of process for the company. (Medioni Decl., ¶ 12, Ex. 8.)

Second, Plaintiff asserts that on August 7, 2020, Harrosh purchased the real property commonly known as 5930 Beeman Avenue, Valley Village, California 91607 (the “Property”) for $1,200,000.00. (Medioni Decl., ¶ 6.) Plaintiff’s counsel indicates that in or about November, 2022, he instructed Plaintiff’s process server to serve Harrosh and Safran at the Property with orders to appear for examination. (Medioni Decl., ¶ 19.) Plaintiff’s process server indicated that on November 20, 2022, a woman who identified herself as “Leah” answered the door and informed the process server that Harrosh and Safran do not reside at the Property and that she has been leasing the Property for approximately two years. (Medioni Decl., ¶ 19.) Plaintiff asserts that he “presumes that the occupant pays [Safran] and/or Harrosh rent for the use of the Property. However, since title to the Property is held in Harrosh’s name only, the instant assignment order is necessary for Creditor to obtain rents due to Harrosh from the tenant for the Property.” (Mot. at p. 10:7-10.)

In the opposition, Safran and Harrosh assert that “the ‘funds’ are Harrosh’s separate property, which is not liable for the Judgment against Safran.” (Opp’n at p. 3:6-7.) They note that pursuant to Family Code section 850, subdivision (a), “[s]ubject to Sections 851 to 853, inclusive, married persons may by agreement or transfer, with or without consideration, do any of the following: (a) Transmute community property to separate property of either spouse.” (See also In re Brace (2020) 9 Cal.5th 903, 914, “for property acquired on or after January 1, 1985, married persons may change—i.e., transmute—the character of property from community to separate, or vice versa, if the transmutation is 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.” [Internal quotations omitted].) In addition, pursuant to Family Code section 913, subdivision (b)(1), “[e]xcept as otherwise provided by statute: (1) The separate property of a married person is not liable for a debt incurred by the person’s spouse before or during marriage.”

Harrosh indicates that “all of [her] income and property are, by agreement, [her] separate property, as reflected by the agreement which [Safran] and [Harrosh] entered into…” (Harrosh Decl., ¶ 4.) Exhibit 1 to Harrosh’s Declaration is a Separate Property Agreement between Harrosh and Safran, which provides that the agreement shall be effective as of and at all times after June 5, 2018. (Harrosh Decl., ¶ 4, Ex. 1, ¶ 18.) The June 5, 2018 Separate Property Agreement provides, inter alia, that “[t]his Agreement is intended to reaffirm that certain Agreement dated August 20th, 2001, between Harrosh and Safran, whereby, amongst other things, both parties agreed that all property obtained prior to, or during the course of the marriage forever, and always, be the individual and respective party’s sole and separate property. This Agreement shall also define, establish, transmute and confirm that, except as may otherwise be specifically agreed in writing, any interest of either of the parties in Sapir Realty Corporation, a California corporation, dba Weichert Realtors – Allstars (‘Sapir’), is and shall be Harrosh’s separate property…” (Harrosh Decl., ¶ 4, Ex. 1, ¶ 1.)

Safran and Harrosh also filed a Supplemental Declaration of Karen Harrosh in connection with their supplemental brief. Harrosh’s supplemental declaration provides “[o]n or about August 20, 2001, my husband, Joseph Safran…and I entered into the Separate Property Agreement attached hereto as Exhibit 1.” (Suppl. Harrosh Decl., ¶ 2, Ex. 1.) Harrosh also states that “[s]ince 2001, we have each always treated our own earnings and income as separate property, depositing them and maintaining them in separate bank accounts, each in our own names.” (Suppl. Harrosh Decl., ¶ 2.) The August 20, 2001 “Separate Property Agreement” provides, inter alia, that it is “[e]ffective on and forever after August 20, 2001,” and that “[t]his Agreement is intended to define, establish, transmute, and confirm that, unless Harrosh and Safran specifically agree in writing, any and all real, personal, tangible, or intangible property, tangible or intangible assets, goodwill, stocks, bonds, or any type of income, dividends, profits, payments, notes receivable, and wages are now and forever separate property. This Agreement is not made in contemplation of a separation or marital dissolution.” (Suppl. Harrosh Decl., ¶ 2, Ex. 1, ¶ 1.)

Harrosh also states in her supplemental declaration that “[t]he Separate Property Agreement attached hereto as Exhibit 3 was also entered into and effective as of June 5, 2018, to supplement, update and reaffirm our 2001 Agreement (as set forth in Paragraph 1 of Exhibit 3), because I wanted to specifically confirm that my investment of my own separate property in Sapir and my earnings and income from Sapir would be my separate property, in the same manner that our earnings, income and property had been separate throughout our marriage.” (Suppl. Harrosh Decl., ¶ 3.) In addition, Harrosh states that in her original declaration that “[t]he property located at 5930 Beeman Avenue, Valley Village, CA 91607 (the ‘Property’) is [Harrosh’s] sole and separate property and [her] family home. There is no tenant at or lease of the Property or rent or income from the Property.” (Harrosh Decl., ¶ 8.) Harrosh asserts that she does “not receive and [is] not entitled to any rent or income in connection with the Property.” (Harrosh Decl., ¶ 8.)

Safran and Harrosh note in the opposition (and as set forth above) that, “[e]xcept as otherwise provided by statute: (1) The separate property of a married person is not liable for a debt incurred by the person’s spouse before or during marriage.” (Fam. Code, § 913, subd. (b)(1).)

Plaintiff asserts in his supplemental brief that “[w]hile [Plaintiff] may concede Family Code section 913(b)(1) could preclude a creditor from enforcing a judgment against the separate property of a non-debtor spouse, given the facts of this case, wherein the debt was incurred by the community prior to the execution of the Separate Property Agreement and in light of the facts and case law provided…demonstrating that the separate property agreement is unenforceable as to [Plaintiff], [Plaintiff] asserts that section 913(b)(1) is inapplicable and does not allow Harrosh to shield community assets from [Plaintiff].” (Plaintiff’s Supplemental Brief at p. 7:7-12.)

In his supplemental brief, Plaintiff cites to State Bd. of Equalization v. Woo (2000) 82 Cal.App.4th 481. In that case, “Doreen H. Y. Woo (appellant) appeal[ed] from an earnings withholding order for taxes. The underlying tax liability stem[med] from delinquent sales taxes in the amount of $ 35,504.43 owed by James K. Ho, appellant’s husband, to respondent State Board of Equalization. Appellant contend[ed] that a marital agreement she entered into with Ho transmuting the couple’s community property to the separate property of each spouse precludes respondent from garnishing her wages.” (Id. at p. 482.) The Woo Court noted that “[i]n 1992, respondent determined that Ho owed taxes, interest and penalties in the amount of $37,419.90 which represented the unpaid sales taxes of the Monsoon Restaurant. In September 1996, Ho filed a complaint seeking a refund of certain payments made towards that tax liability. The trial court sustained respondent’s demurrer to the complaint without leave to amend and entered judgment against Ho. This court affirmed that judgment in an unpublished opinion filed on December 2, 1997, in Ho v. State Bd. of Equalization, A077815.” (Id. at pp. 482-483.) “In July 1995, respondent notified appellant that it would seek an earnings withholding order against her to pay Ho’s tax debt. On November 5, 1995, appellant and Ho entered into a marital agreement transmuting their future earnings to separate property. Appellant subsequently became employed by Wells Fargo Bank, earning approximately $500,000 per year.” (Id. at p. 483.) The Woo Court found as follows:

“[A]ppellant’s attempt to transmute the community property earnings to her separate property constituted a fraudulent transfer. Family Code section 851 provides that ‘[a] transmutation is subject to the laws governing fraudulent transfers.’ Civil Code section 3439.04, subdivision (a) provides that a transfer is fraudulent as to a creditor if it is made ‘with actual intent to hinder, delay, or defraud any creditor of the debtor.’ Here, appellant does not dispute that the community estate was liable for Ho’s tax debt. (See Fam. Code, § 910 [‘community estate is liable for a debt incurred by either spouse before or during marriage’].) Nor does she dispute that she entered into the marital agreement after learning that respondent intended to garnish her wages. Given these facts, the trial court did not err in rejecting appellant’s argument that there was no fraudulent transfer. Ho had a present interest in appellant’s earnings at the time the agreement was executed. Appellant’s attempt to transmute that interest to avoid Ho’s tax debt constituted a fraudulent transfer in violation of Family Code section 851 and Civil Code section 3439.04, subdivision (a).” (State Bd. of Equalization v. Woo, supra, 82 Cal.App.4th at p. 484.)

Plaintiff asserts that here, “[l]ike Woo, based on the time of relevant events in this action, Safran and Harrosh’s post-nuptial agreements to transmute community property was fraudulent and unenforceable.” (Plaintiff’s Suppl. Brief at p. 7:4-6.) Plaintiff notes that the June 5, 2018 Separate Property Agreement is effective as of June 5, 2018 (Harrosh Decl., ¶ 4, Ex. 1, ¶ 18), which is approximately four months prior to the entry of the October 25, 2018 Judgment in this action. As noted in the March 14, 2023 and May 4, 2023 Orders, the Court is concerned by this timing. However, the Court also notes that this argument does not take into account the earlier August 20, 2001 Separate Property Agreement. Safran and Harrosh provided evidence of this agreement in connection with their supplemental brief. (Suppl. Harrosh Decl., ¶ 2, Ex. 1.)

In their supplemental brief, Plaintiffs also assert that “[i]f the Court were inclined to accept the Separate Property Agreement on its face, despite being executed after the debt was incurred and conveniently affirmed while this action was pending and 4 months before judgment was entered, the Separate Property Agreement must be scrutinized under the lens of the Uniform Voidable Transactions Act.” (Plaintiff’s Supplemental Brief at p. 4:17-20.)

In their supplemental brief, Safran and Harrosh note that the instant action was not filed against Harrosh. The action thus does not assert claims against Harrosh under the Uniform Voidable Transactions Act. As noted by Safran and Harrosh in their supplemental brief, in Wisden v. Superior Court (2004) 124 Cal.App.4th 750, 760, the Court of Appeal noted that “it is beyond question that an action to recover a fraudulent conveyance of a determinate sum of money was triable by a jury at common law in England in 1791. No evidence has been adduced that any change in English common law occurred between 1791 and 1850. Consequently, the California Constitution guarantees the right to jury trial in a similar action today.”

Plaintiff asserts in his supplemental brief that “[s]imilar to Woo, this Court may analyze the Separate Property Agreement in light of the requirements of the Uniform Voidable Transactions Act to establish that the Separate Property Agreement is unenforceable. Creditor need not file a separate action against Harrosh to enable this Court to determine the invalidity of the Separate Property Agreement.” (Plaintiff’s Suppl. Brief at p. 7:17-20.) Plaintiff notes that, as set forth above, Code of Civil Procedure section 706.109 provides that “[a]n earnings withholding order may not be issued against the earnings of the spouse of the judgment debtor except by court order upon noticed motion.” Plaintiff asserts that “[a]ccordingly, the procedure for attaching the earnings of a spouse is done by noticed motion and [Plaintiff] does not need a separate judgment against Harrosh.” (Plaintiff’s Suppl. Brief at p. 7:15-16.)

In the May 4, 2023 Order, the Court noted that Plaintiff had not had the opportunity to respond to Safran and Harrosh’s evidence of the August 20, 2001 Separate Property Agreement, which was provided for the first time in connection with Safran and Harrosh’s supplemental brief. The Court thus permitted a surreply by Plaintiff to address the effect of the August 20, 2001 Separate Property Agreement on the revenue Plaintiff asserts Harrosh is receiving from Sapir Realty and the subject Property located at 5930 Beeman Avenue, Valley Village, California 91607. As set forth in the Court’s May 4, 2023 Order, the Court also permitted Plaintiff to address Safran and Harrosh’s assertion that “[a] fraudulent transfer claim is subject to a right to a jury trial…” (Safran and Harrosh’s Suppl. Brief at p. 4:1.)

As set forth above, Plaintiff did not file a surreply in support of the instant motion. In light of the foregoing, particularly the evidence provided of Safran and Harrosh’s earlier August 20, 2001 Separate Property Agreement (and Plaintiff’s failure to address it), the Court does not find that Plaintiff has demonstrated that the Court may grant the instant motion.

[1]In addition, as set forth in the Court’s May 4, 2023 minute order, “[b]ased on the discussion at the hearing regarding the fact that the Court took Judicial Notice of the documents identified in plaintiff’s request for Judicial Notice in support of plaintiff’s supplemental brief in support of the motion and counsel for Safran and Horoush’s lack of objection to taking judicial Notice of the official records, the Court will take Judicial Notice of the official records requested by plaintiff in support of the reply brief and will reconsider whether to take judicial notice of items 4-6 thereof as to whether they qualify as documents that can be judicially noticed.”

DANIEL PEREZ, Plaintiff, vs. JOSEPH SAFRAN, et al. Defendants.	Case No.:	BC630866
	Hearing Date:	July 20, 2023
	Hearing Time:	10:00 a.m.
	[TENTATIVE] ORDER RE: PLAINTIFF DANIEL PEREZ’S MOTION FOR ORDER TO GARNISH WAGES OF SPOUSE OF JUDGMENT DEBTOR AND FOR ASSIGNMENT ORDER AGAINST SPOUSE

Superior Court of California

County of Los Angeles

Department 50