Judge Teresa A. Beaudet, Case BC630866 2023-03-14 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.

The Court denies the request for judicial notice filed in support of Plaintiff’s reply. The Court notes that “[t]he general rule of motion practice…is that new evidence is not permitted with reply papers.” (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537.)

As set forth above, 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.”

As set forth above, 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.)

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’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 seeks another 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.)

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.”

Plaintiff asserts that it 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 it “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.)

Plaintiff also 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.) 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.”

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 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.) Saffran and Haroush have not attached the August 20, 2001 Agreement.

Harrosh also states 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.)

In addition, Safran and Harrosh note that Code of Civil Procedure sections 708.510 and 708.520, relied upon by Plaintiff, refer to a “judgment debtor.” Plaintiff does not respond to this point in the reply.

In the reply, Plaintiff asserts that the Judgment in this action is a community property debt that may be enforced against Harrosh and her separate property. Plaintiff notes, as set forth above, that “[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).) Harrosh notes in her declaration that she has been married to Safran for 22 years. (Harrosh Decl., ¶ 2.) Plaintiff asserts that Harrosh is thus liable for the October 25, 2018 Judgment because it was entered against her husband during their marriage. But as Safran and Harrosh note in the opposition (and as set forth above), “[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 does not address this provision in the reply. As discussed below, the Court will require the parties to address whether this section applies to a community debt incurred by a spouse or only to a separate property debt incurred by a spouse.

Plaintiff also asserts that “[b]ecause Harrosh is licensed by the DRE to conduct real estate transactions and earn commissions therefrom under [Safran’s] DRE broker license…any money Harrosh earns in such a capacity is earned by [Safran].” (Reply at p. 4:21-24.)[1] Plaintiff cites to California Real Estate Loans, Inc. v. Wallace (1993) 18 Cal.App.4th 1575, 1581, where the Court of Appeal noted that “for purposes of liability to third parties for torts, a real estate salesperson is the agent of the broker who employs him or her.” Plaintiff does not appear to cite to legal authority indicating that any money Harrosh earns in the capacity of a salesperson is also earned by Safran. In any event, the instant motion seeks an order allowing Plaintiff to garnish the wages of Harrosh, not Safran.

Plaintiff also notes that Harrosh’s declaration provides that Safran’s “participation in the business of Sapir is minimal, probably less than an hour a month, for which he and I have agreed he is not entitled to and he does not receive compensation.” (Harrosh Decl., ¶ 7.) Plaintiff asserts that “Harrosh’s statement about Debtor’s involvement in Sapir Realty and Weichert are completely contradicted by Debtor himself and Sapir Realty’s marketing efforts.” (Reply at p. 7:9-10.) Plaintiff also asserts that “Debtor may not delegate his authority and responsibility to act as the responsible broker for Sapir Realty to Harrosh, a salesperson.” (Reply at p. 5:12-14.) Plaintiff does not explain the ramification of these allegation as to the effort to garnish Harrosh’s wages and assign Harrosh’s interest in the subject funds to Plaintiff.

Plaintiff also argues that the separate property agreement is evidence of Safran and Harrosh’s efforts to defraud creditors. Plaintiff notes that the 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. The Court is concerned by this timing.

Because Plaintiff has provided additional evidence in connection with the Reply, the Court will permit a surreply by Harrosh and Safran as set forth below.

Based on the foregoing, the hearing on the motion is continued to ____________, 2023 at 10:00 a.m. in Dept. 50. On or before ___________, 2023, Defendants 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). Courtesy copies of the surreply and the supplemental brief must be delivered to Sept. 50 concurrently with their filing.

[1]In connection with the motion, Plaintiff states that “Harrosh is listed on the [California Department of Real Estate] as a salesperson for Sapir Realty under [Safran’s] license.” (Medioni Decl., ¶ 14.)

DANIEL PEREZ, Plaintiff, vs. JOSEPH SAFRAN, et al. Defendants.	Case No.:	BC630866
	Hearing Date:	March 14, 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