Opinion
D074281
11-27-2019
CONRAD J. BRAUN, Plaintiff and Respondent, v. KENNETH J. MOSER, Defendant and Appellant.
Kenneth J. Moser, in pro. per., for Defendant and Appellant. Conrad J. Braun, in pro. per.; Law Offices of Joshua D. Mackenroth and Joshua D. Mackenroth for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2013-00041628-CU-FR-CTL) APPEAL from an order of the Superior Court of San Diego County, John S. Meyer, Judge. Affirmed. Kenneth J. Moser, in pro. per., for Defendant and Appellant. Conrad J. Braun, in pro. per.; Law Offices of Joshua D. Mackenroth and Joshua D. Mackenroth for Plaintiff and Respondent.
As part of a long-running series of legal disputes, Conrad J. Braun sued Kenneth J. Moser for defamation and other claims. Moser prevailed and obtained an award of attorney fees and costs. To satisfy the judgment, Moser attempted to levy funds owed to Braun by his business, HomeyTel, Inc. After HomeyTel did not turn over any funds, Moser moved the trial court under Code of Civil Procedure section 701.020 to establish HomeyTel's direct liability. The trial court denied the motion.
Further statutory references are to the Code of Civil Procedure unless otherwise stated.
Moser appeals. He contends the court erred by considering Braun's opposition to the motion and by denying the motion on its merits. We disagree and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
After Braun filed suit, Moser responded with an anti-SLAPP motion. Moser was partially successful, and the trial court awarded him approximately $25,000 in attorney fees. Moser obtained a writ of execution on the award and, in October 2016, he caused HomeyTel to be served with a notice of levy against any "independent contractor payments owed" to Braun. Moser also caused a wage garnishment order to be served on HomeyTel. Braun, on behalf of HomeyTel, responded that HomeyTel "holds neither any property nor any obligations in favor of [Braun]," and that Braun was not a HomeyTel employee.
Moser prevailed in the litigation and claimed recoverable costs of approximately $11,000. He obtained a second writ of execution and caused HomeyTel to be served with another notice of levy in September 2017. Braun, on behalf of HomeyTel, again responded that HomeyTel "holds neither any property nor any obligations in favor of [Braun]."
Unpersuaded by HomeyTel's responses, Moser moved for an order establishing HomeyTel's direct liability under section 701.020. Moser pointed out that Braun's complaint described himself as an employee of HomeyTel as late as 2015. In support of his motion, Moser also submitted a 2016 fee waiver application Braun had filed in a federal appellate court, which listed HomeyTel as Braun's employer and claimed $1,900 per month in employment income.
Moser obtained HomeyTel's bank account statements from January 2016 through February 2017. The statements showed tens of thousands of dollars in monthly deposits and withdrawals. The bulk of the withdrawals and other debits were credit card payments, cash withdrawals, and international wire transfers. Certain entries, apparently for a Discover credit card, reflect the notation "INDN: BRAUN CONRAD." These entries totaled approximately $18,000. Other debits included payments to retail stores like Target, Home Depot, and Macy's, as well as Progressive Insurance. Based on these facts, Moser argued that HomeyTel had made payments to Braun for personal expenses, which should have been subject to garnishment or levy.
Braun opposed the motion. He contended that Moser had failed to show that HomeyTel did not comply with the garnishment or levy. Braun argued that the bank account statements were outdated and, in any event, did not show that any payments were made for personal rather than business expenses. He claimed that he was the president of HomeyTel and therefore had the authority to purchase business assets on its behalf. He argued that the fee waiver, in and of itself, did not show that HomeyTel had made payments to him personally.
The trial court denied Moser's motion to hold HomeyTel liable. It found, "Moser has not demonstrated that HomeyTel, Inc. currently has any property in its possession or control that would be subject to levy. HomeyTel responded to the writ of execution and garnishments. The banking records submitted are over one year old and provide little evidentiary support to establish that the funds that used to be in the account were used for Braun's personal expenses." Moser appeals.
DISCUSSION
"Detailed statutory provisions govern the manner and extent to which civil judgments are enforceable. In 1982, following the recommendations of the California Law Revision Commission, the Enforcement of Judgments Law (EJL) was enacted. The EJL appears in sections 680.101 through 724.260 and is a comprehensive scheme governing the enforcement of all civil judgments in California." (Imperial Bank v. Pim Electric, Inc. (1995) 33 Cal.App.4th 540, 546.)
In general, "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." (§ 699.510, subd. (a).) "A writ requires the levying officer . . . to enforce the judgment." (Vineyard v. Sisson (1990) 223 Cal.App.3d 931, 939.) In order to facilitate enforcement, the judgment creditor must, among other things, identify and describe for the levying officer the property to be levied upon. (§ 687.010, subd. (a).)
If the property to be levied upon is tangible personal property in the possession of a third person (including money, Code Civ. Proc, § 680.370), "the levying officer shall personally serve a copy of the writ of execution and a notice of levy on the third person." (Id., § 700.040, subd. (a).) If the property to be levied upon is an account receivable or general intangible, "the levying officer shall personally serve a copy of the writ of execution and a notice of levy on the account debtor." (Id., § 700.170, subd. (a).) An account receivable includes, among other things, "a right to payment of a monetary obligation, whether or not earned by performance . . . for services rendered or to be rendered . . . ." (Cal. U. Com. Code, § 9102, subd. (a)(2), adopted by Code Civ. Proc., § 680.130.)
Service of the writ of execution and notice of levy requires a third person to "deliver to the levying officer any of the property levied upon that is in the possession or under the control of the third person at the time of levy unless the third person claims the right to possession of the property." (§ 701.010, subd. (b)(1).) If the levy involves an obligation, the third person is required to deliver to the levying officer "[t]he amount of the obligation levied upon that is due and payable to the judgment debtor at the time of the levy" and "[a]mounts that become due and payable to the judgment debtor on the obligation levied upon during the period of the execution lien." (§ 701.010, subd. (b)(2); see § 701.050.)
The third person may refuse or fail to comply with these obligations if it has good cause to do so. (§ 701.010, subd. (b).) Good cause includes a showing that the third person did not know or have reason to know of the levy. (§ 701.010, subd. (c).) " 'Good cause' also effectively includes a good faith claim of ownership or the right to possession of the property involved as against the judgment debtor. And, as to any debt levied upon, it effectively includes a good faith denial of the debt or dispute as to its amount, or a claim of priority over the judgment creditor's lien." (Ahart, Cal. Practice Guide: Enforcing Judgments & Debts (The Rutter Group 2019) ¶ 6:576.)
A third person served with a writ of execution and notice of levy must generally provide the levying officer with a sworn garnishee's memorandum, including descriptions of property of the judgment debtor held by the third person, the amount and terms of any obligation, and any claims and rights of other persons to the property. (§ 701.030, subd. (b).) If the third person does not hold any property or obligations in favor of the judgment debtor, the memorandum should so state. (§ 701.030, subd. (b)(7).)
A third person who is required to deliver property or make payments to the levying officer, but who fails or refuses to do so without good cause, may be directly liable to the judgment creditor. (§ 701.020, subd. (a).) This liability is limited to the value of the judgment debtor's interest in the property or payments, or the amount necessary to satisfy the judgment, whichever is smaller. (Ibid.)
A leading practice guide advises that a judgment creditor may file a noticed motion under section 701.020 to impose direct liability on the third person. (See Ahart, Cal. Practice Guide: Enforcing Judgments, supra, ¶ 6:577.) In a prior case, this court considered such a motion without disapproving the procedure. (See National Financial Lending, LLC v. Superior Court (2013) 222 Cal.App.4th 262, 267, 275.) We noted, however, "According to the Law Revision Commission comment, a judgment creditor may enforce the liability imposed by section 701.020 either pursuant to examination proceedings under [section 708.110 et seq.] or by way of a separate creditor's suit under [section 708.210 et seq.]. (16 Cal. Law Revision Com. Rep. (1982) p. 1349.)" (Id. at p. 271; see Ilshin Investment Co., Ltd. v. Buena Vista Home Entertainment, Inc. (2011) 195 Cal.App.4th 612, 630, fn. 32 (Ilshin).)
For an example of a separate creditor's suit, see Ilshin, supra, 195 Cal.App.4th at page 626. For an example of examination proceedings, see Evans v. Paye (1995) 32 Cal.App.4th 265, 271 (Evans). We discuss Evans in some detail below.
Here, the judgment creditor (Moser) filed a motion under section 701.020, rather than pursuing examination proceedings or a separate creditor's suit. The third person (HomeyTel) did not appear, and the judgment debtor (Braun) did not object on this procedural ground. On appeal, no party has raised the issue of the proper procedure. We therefore have no occasion here to consider whether a motion under section 701.020 is sufficient to impose direct liability. We will assume for purposes of our opinion that it is sufficient.
We review the trial court's express and implied factual determinations for substantial evidence. "When the trial court has resolved a disputed factual issue, the appellate courts review the ruling according to the substantial evidence rule. If the trial court's resolution of the factual issue is supported by substantial evidence, it must be affirmed." (Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632 (Winograd).) We review the trial court's interpretation of law de novo. (People ex. rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 432.) " 'A judgment or order of the lower court is presumed correct.' " (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) "The burden of demonstrating error rests on the appellant." (Winograd, at p. 632.)
As an initial matter, Moser contends the trial court erred by considering Braun's opposition brief because HomeyTel was a suspended corporation. The opposition brief, however, was filed on behalf of Braun, not HomeyTel. (The same is true of the respondent's brief submitted by Braun on appeal.) Moser does not explain why the court erred by considering an opposition filed by Braun, who is not a corporation, suspended or otherwise. His unsupported claim of error is unpersuasive. (See Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836, 852 (Benach) ["When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived."].) Moser likewise provides no authority for his request to strike Braun's opposition brief in this appeal. We therefore decline to do so. (See ibid.) Even if we were to strike its filing, it would not change our disposition. (See Griffin v. The Haunted Hotel, Inc. (2015) 242 Cal.App.4th 490, 505 ["In fact, if a respondent in a civil case files no brief at all, we still examine the record to see if it supports any claims of error made by the appellant."]; Smith v. Smith (2012) 208 Cal.App.4th 1074, 1077-1078.)
Substantively, relying on Evans, supra, 32 Cal.App.4th at page 269, Moser argues that the trial court was required to undertake a two-step process to resolve his motion: first, the court must determine whether the judgment creditor (Moser) had presented prima facie evidence that the third person (HomeyTel) is holding money or property on account for the judgment debtor (Braun); and if so, the burden shifts to HomeyTel to show by a preponderance of the evidence that his or her denial of the debt is made in "good faith." Moser misreads Evans, and his attempt to apply its framework to his motion has no merit.
Evans considered an order made after a third-party examination proceeding under section 708.120, subdivision (a). (Evans, supra, 32 Cal.App.4th at p. 271.) The primary issue in Evans was whether the trial court could determine the existence of the debt in such a proceeding or whether the judgment creditor was required to bring a separate creditor's suit. (Id. at pp. 275-276.) The trial court's ability to determine the existence of a debt in a third-party examination proceeding is limited by section 708.180, which requires a separate creditor's suit if the third party's denial of the debt or claim of interest is made in "good faith" and one of several conditions is satisfied. Evans confirmed that, if the denial is not made in good faith or if none of the conditions is satisfied, the trial court may determine the existence of the debt in the examination proceeding without the need for a separate creditor's suit. (Evans, at p. 280.)
The statute provides, in relevant part, "The court may not make the determination [of the existence of the debt] if the third person's claim is made in good faith and any of the following conditions is satisfied: [¶] (1) The court would not be a proper court for the trial of an independent civil action (including a creditor's suit) for the determination of the interests in the property or the existence of the debt, and the third person objects to the determination of the matter under subdivision (a). [¶] (2) At the time an order for examination pursuant to Section 708.120 is served on the third person a civil action (including a creditor's suit) is pending with respect to the interests in the property or the existence of the debt. [¶] (3) The court determines that the interests in the property or the existence of the debt should be determined in a creditor's suit." (§ 708.180, subd. (b).) --------
Evans then turned to the proper procedure for determining this threshold issue. It explained, "Although section 708.180 does not expressly assign the burden of demonstrating the good faith of the third person's claim, the statute is structured in a way that the third person's good faith denial of an alleged debt, coupled with the existence of any of the other conditions specified in subdivision (b), constitutes a defense to the plaintiff's request to determine the existence of the debt by way of the summary proceeding permitted by section 708.180. Thus, the statute contemplates that the third person has the burden to prove his or her denial of a debt was made in good faith." (Evans, supra, 32 Cal.App.4th at p. 281.)
Therefore, in order to reach this threshold issue, the judgment creditor must only present prima facie evidence of the existence of a debt by the third person to the judgment debtor. (Evans, supra, 32 Cal.App.4th at p. 282.) If the judgment creditor makes this prima facie showing, "the burden shifts to the third person to establish by a preponderance of the evidence that his or her denial of the debt is made in good faith." (Ibid.) Importantly, this procedure concerns only the threshold issue, i.e., whether the court may determine the existence of the debt in the examination proceeding. If the trial court finds that the third party's denial is not in good faith, the only direct consequence of that finding is that the trial court may determine the existence of the debt in the examination proceeding, and a separate creditor's suit is not required. (§ 708.180.)
Here, Moser brought a motion to determine HomeyTel's liability directly under section 701.020, rather than an examination proceeding as in Evans. The threshold determination of whether the trial court could determine the existence of the debt was not at issue. The two-step procedure in Evans has no application. Moser's contention that the trial court erred by failing to follow Evans, determine whether Moser had presented a prima facie case, and then shift the burden to HomeyTel to show good faith, is unpersuasive.
The substantive issue, the existence of the debt, remains Moser's obligation to prove. The statute states, "If a third person is required by this article to deliver property to the levying officer or to make payments to the levying officer and the third party fails or refuses without good cause to do so, the third party is liable to the judgment creditor . . . ." (§ 701.020, subd. (a).) A predicate to third-party liability is therefore an obligation by the third person to deliver property or make payments, which requires (in the circumstances here) an underlying debt or obligation to the judgment debtor. It is an element of his claim that the judgment creditor must prove. (See ibid.; see also § 708.280, subd. (b) [allocating burden of proof in separate creditor's suits].)
Because he focuses on Evans, Moser does not directly address whether the court erred by determining that HomeyTel did not pay Braun's personal expenses (and therefore owed no obligation to him). Because he has failed to offer reasoned argument or authority on this issue, we treat the point as waived. (Benach, supra, 149 Cal.App.4th at p. 852.) And, based on our review, whether viewed as an issue of substantial evidence (see Winograd, supra, 68 Cal.App.4th at p. 632) or a failure of proof (see Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc. (2011) 196 Cal.App.4th 456, 466), Moser has not demonstrated reversible error even considering the merits of his argument. HomeyTel denied the existence of any debt or obligation, under oath, in its garnishee's memoranda in response to the notices of levy. (§ 701.030, subd. (b).) Although the bank account statements were subject to multiple interpretations, the trial court could reasonably find that they did not show that HomeyTel had paid personal expenses or otherwise transferred funds to Braun. As an officer of HomeyTel, it is reasonable to see Braun's name listed in connection with business expenses. Moser's assertion that the Discover card was only used by Braun personally is speculative. And, the charges at retail stores such as Target, Home Depot, and Macy's, as well as Progressive Insurance, could reasonably be business expenses. The trial court was not required by this evidence to find that they were for Braun's personal use. The appellate fee waiver indicates that HomeyTel had made payments to Braun in the past, but on substantial evidence review we do not reweigh the evidence. Based on our review of the entire record, the trial court could reasonably have determined that Moser had not met his burden of showing that HomeyTel had a debt or obligation to Braun that would have been subject to the levy.
We agree with Moser that the trial court's apparent focus on whether HomeyTel "currently" had any property in its possession or control that would be subject to levy was too narrow. The relevant issue, as noted, is whether HomeyTel had a debt or obligation to Braun at the time of the levy. But, any error in this regard was not prejudicial because the trial court's further factual finding that HomeyTel had not paid Braun's personal expenses necessarily shows that the court found no evidence of a debt or obligation at the relevant time.
DISPOSITION
The order is affirmed.
GUERRERO, J. WE CONCUR: McCONNELL, P. J. IRION, J.