Opinion
D072472
04-24-2018
HERITAGE CUSTOM ESTATES ASSOCIATION, Plaintiff and Appellant, v. DAVID L. HERMSEN, Defendant and Respondent.
Law Offices of Howard F. Burns and Howard F. Burns for Plaintiff and Appellant. Fitzmaurice & Demergian and David K. Demergian for Defendant 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 37-2016-00028785-CU-PT-NC) APPEAL from orders of the Superior Court of San Diego County, Jacqueline M. Stern, Judge. Affirmed. Law Offices of Howard F. Burns and Howard F. Burns for Plaintiff and Appellant. Fitzmaurice & Demergian and David K. Demergian for Defendant and Respondent.
Heritage Custom Estates Association (Heritage) obtained a judgment against Kevin Tucker for unpaid homeowner's dues and assessments, and the Sheriff of San Diego County (the Sheriff) seized personal property from a residence owned by Tucker to satisfy the judgment. David Hermsen was leasing the residence from Tucker at the time and filed a third party claim to right of possession of the seized property. In response, Heritage filed a petition to determine the validity of Hermsen's third party claim.
The trial court dismissed Heritage's petition because a hearing was not held within the statutory period set forth in Code of Civil Procedure section 720.310, subdivision (c), and ordered that the property be returned to Hermsen. Heritage filed notice of its intent to appeal the order denying its petition and asked the trial court to stay the order releasing the property to Hermsen pending the appeal. The court agreed to do so, but on the condition that Heritage post an appeals bond in the amount of $22,000.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
On appeal, Heritage argues the trial court erred by: (1) dismissing the petition to determine the validity of Hermsen's third party claim, and (2) requiring Heritage to post a bond. We conclude the trial court did not err in either regard and, therefore, affirm the court's orders.
FACTUAL AND PROCEDURAL BACKGROUND
Heritage is the homeowner's association for Heritage Custom Estates, a residential real estate development. In 2007, Heritage obtained a judgment against Tucker for approximately $24,000 in unpaid homeowner's dues and assessments. Tucker did not pay the judgment and, in early 2016, Heritage obtained a writ of execution for approximately $45,000, including interest on the original judgment, as well as an ex parte order directing the Sheriff to seize certain personal property of Tucker's from a residence in Poway to satisfy the judgment. In accordance with the order, the Sheriff seized the property on June 21, 2016.
Heritage obtained the judgment in an action assigned to a different judge than the lawsuit at issue in this appeal; specifically, in San Diego Superior Court Case No. IN053684 (hereinafter, the "underlying action"). Hermsen is not a party to the underlying action.
On July 7, 2016, Hermsen filed a third party claim asserting a right to possess the property the Sheriff removed from the residence. Hermsen stated that he resided at the property pursuant to a written lease with Stage Coach Venture, LLC (Stage Coach)—a corporation set up and wholly owned by Tucker to manage the Poway residence—and that he had an oral agreement with Stage Coach and Tucker permitting him to use and possess the personal property in the residence while residing there. He attached a written agreement in support of his claims that indicates he leased the property on a month-to-month basis beginning on March 1, 2015 for $750 per month, and an agreement that he would be available to coordinate and supervise third parties performing repairs and renovations on the property at no cost to Stage Coach. The written agreement does not indicate whether the lease includes any furnishings or personal property.
Hermsen filed an undertaking along with his third party claim, as required by section 720.620, subdivision (b), but Heritage objected to the undertaking as insufficient. The court agreed the undertaking was insufficient and ordered Hermsen to submit a new undertaking with additional sureties. Hermsen filed the requisite undertaking with the Sheriff on August 4, 2016.
Approximately 15 days later, on August 19, 2016, Heritage filed a petition to determine the validity of Hermsen's third party claim of possessory interest in the seized property. Pursuant to section 720.310, subdivision (c), a hearing had to occur within 20 days after the filing of the petition, or by September 8, 2016, "unless continued by the court for good cause shown." The court scheduled a hearing on the petition for October 14, 2016. Heritage made no effort to ask for an earlier hearing date, or to request that the court make a finding of good cause to continue the hearing beyond the 20 days specified under section 720.310, subdivision (c).
In the interim, Tucker filed a motion in the underlying action to set aside the judgment Heritage was attempting to enforce by seizing Tucker's property. On August 30, the court in the underlying action stayed the judgment and quashed any outstanding writs of execution pending a ruling on Tucker's motion.
Heritage incorrectly identifies the date of the stay as August 20. Heritage failed to provide a record citation and the record reflects that the stay order was issued August 30.
The trial court held the hearing on Heritage's petition as scheduled on October 14. The court denied the petition without prejudice, identifying two grounds for its ruling: (1) the hearing was not held within 20 days of filing the petition as required by section 720.310, subdivision (c); and (2) the judge in the underlying action had stayed the judgment in that case and quashed any outstanding writs of execution.
Heritage did not appeal the October 14 order. Instead, Heritage obtained another hearing on the same petition, scheduled for May 26, 2017. Before that hearing, on May 9, 2017, the court in the underlying action denied Tucker's motion to set aside the judgment and, accordingly, lifted the stay, issued another writ of execution, and ordered the Sheriff to continue holding the seized property until further order of the court. Also on May 9, Heritage appeared ex parte before the trial court to request a "continuance" of the May 26 hearing on its petition beyond the 20-day period set forth in the statute. Although Heritage's ex parte was styled as a request for a "continuance" of the hearing, the contents of its request indicate Heritage was asking the court to determine that good cause existed to hear the petition beyond the 20-day period required under section 720.310. The court ruled on Heritage's ex parte request by issuing a minute order stating the hearing on the petition remained on calendar for May 26, 2017.
Appellant did not provide a transcript for this ex parte appearance, and there is no further indication in the record as to the basis for the court's ruling.
At the May 26 hearing, the court denied the petition again because "[t]he hearing on the petition was not scheduled according to the time requirements of [section] 720.310(c)." The court ordered the Sheriff to release the property at issue to Hermsen, but stayed service of the order on the Sheriff for 20 days.
On June 14, 2017, Heritage filed its notice of appeal and on June 15, the last day of the 20-day stay, Heritage moved ex parte for a more permanent stay pending the present appeal. Hermsen did not oppose the stay but argued section 917.2 required Heritage to post an undertaking, or appeals bond, in support of the stay. The court agreed with Hermsen and stayed the case on the condition that Heritage post an appeals bond in the amount of $22,000.
DISCUSSION
I. The Court Did Not Err by Dismissing Heritage's Petition
Heritage asserts the trial court erred by denying its petition despite a showing of good cause to hear the petition outside the 20-day period established by section 720.310, subdivision (c). We reject Heritage's claims.
A. Third Party Claim Procedures and Standard of Review
"The purpose of third party claims is to give a quick and effectual remedy to third parties whose property has been levied upon by mistake." (Regency Outdoor Advertising, Inc. v. Carolina Lanes, Inc. (1995) 31 Cal.App.4th 1323, 1329.) When personal property is levied under a writ of execution, a third party may make a third party claim alleging a right to possess the levied property. (§ 720.110.) Within five days after the third party files such a claim, the levying officer must serve a copy of the claim, and any related undertaking, on the creditor. (§ 720.140, subd. (a).) Within 15 days of the filing of a third party claim, or an associated undertaking, the creditor may petition the court for a hearing to determine the validity of the third party claim.
In accordance with the statute, "[t]he hearing [on the petition] shall be held within 20 days after the filing of the petition unless continued by the court for good cause shown." (§ 720.310, subd. (c).) We afford the trial court wide discretion in deciding whether to grant a continuance pursuant to section 720.310 and will not disturb the decision absent a clear abuse of discretion. (Oak Knoll Broadcasting Corp. v. Hudgings (1969) 275 Cal.App.2d 563, 566 (Oak Knoll).)
Here, Heritage frames the issue of whether there was "good cause" to continue the hearing as one of statutory interpretation and argues we should apply a de novo standard of review. (See Pineda v. Williams-Sonoma Stores, Inc. (2011) 51 Cal.4th 524, 529 (Pineda).) While we agree matters of statutory interpretation are subject to de novo review, Heritage's arguments relate primarily to the application (not interpretation) of section 720.310. To the extent it is necessary to do so, we will interpret the terms of the statute de novo, but will review the trial court's application of the statute in the present case for an abuse of discretion.
B. Analysis
Giving the words of the statute their ordinary and plain meaning, section 720.310 requires that a hearing be held on a petition to determine the validity of a third party claim within 20 days after the creditor files the petition with the levying officer, unless the court continues the hearing for good cause shown. (§ 720.310; Pineda, supra, 51 Cal.4th at p. 529.) Heritage concedes a hearing was not held within 20 days of filing its petition. Thus, the only issue before us is whether the trial court abused its discretion when it refused to find good cause to allow the hearing on Heritage's petition to occur beyond the 20-day period. We conclude the trial court acted well within its discretion in denying Heritage's petition, and we reject all of Heritage's arguments to the contrary.
First, in claiming error with respect to the May 2017 hearing, Heritage overlooks the significance of the prior proceeding in October 2016. The trial court had already denied the petition for failure to comply with the statute once, on October 14, 2016, and Heritage never appealed that decision. Heritage cites no authority allowing serial attempts to comply with the requirements of section 720.310. Although the trial court indicated its October 2016 ruling was made "without prejudice," no additional facts were raised in May 2017 to alter the court's prior determination. In addition to making no effort to obtain a hearing date within the statutory 20-day period, Heritage waited approximately nine months after filing the petition before it even asked the court—at the May 9 ex parte—to find good cause to hold a hearing beyond the 20-day period. We find no abuse of discretion in the court declining to find good cause to hear the petition on this second attempt, well past the statutory timeframe.
The court declined to address the issue of good cause during the May 9 ex parte, opting instead to hear from the parties at the scheduled hearing on May 26. Although the trial court did not specifically address the issue of good cause in its ruling following the May 26 hearing, it is apparent the court rejected Heritage's claim when it denied the petition as untimely within the meaning of section 720.310, subdivision (c).
Second, we reject Heritage's claim that the stay in the underlying action precluded Heritage from complying with the statute's mandatory deadline for a hearing on its petition. If Heritage believed the stay precluded a hearing on its petition, it could have moved ex parte for a continuance of the hearing on that ground when the stay first issued in August 2016 instead of waiting for the October hearing, and then waiting again until the stay was lifted in May of the following year. Having failed to make any effort to seek a continuance before the statutory period ran, or to contest the court's previous October 14 order denying its petition, Heritage cannot now point to the stay as good cause for extending the statutory timeline. Heritage contends there is no reason to believe the court would have granted a continuance even if it had made the request in a timely manner based on the court's failure to grant its May 9, 2017 ex parte request. We cannot evaluate the reasoning behind the court's May 9, 2017 ruling because Heritage did not provide a transcript or adequate substitute in the record on appeal. (See Aguilar v. Avis Rent A Car System, Inc. (1999) 21 Cal.4th 121, 132 (Aguilar) [appellant has the burden to provide an adequate record on appeal].) Regardless, though, the trial court had broad discretion to grant or deny a continuance in accordance with section 720.310, subdivision (c), and we will not speculate as to how the court might have ruled had Heritage made the request in a timely manner. (Oak Knoll, supra, 275 Cal.App.2d at p. 566.)
Third, neither the trial court's caseload, nor any purported conflict with the more general notice requirements of section 1005, subdivision (b), excuse Heritage from complying with the directives of section 720.310. Heritage contends it is essentially impossible for a creditor to comply with the statute because the court's heavy caseload precludes scheduling a hearing within 20 days. Similarly, Heritage contends the 20-day limitation conflicts with the requirement that all moving papers be served at least 16 court days before the hearing, increased by 5 calendar days depending on the method of service. (See § 1005, subd. (b).) As Heritage concedes, however, creditors can file an ex parte request and address these scheduling and hearing issues with the court. The court can grant an order shortening time for hearing the petition (so that it is heard within the 20-day timeframe), adjust the service deadlines under section 1005, and/or find good cause to hold the hearing beyond the 20-day period (or set the matter for an expedited hearing to address the issue of good cause if the court prefers not to address these issues on an ex parte basis). Heritage argues it is inefficient and a waste of judicial resources to require the moving party to file such ex parte requests, but changing the statutory timelines to promote judicial efficiency is a matter for the Legislature, not the appellate courts, to address. (See People v. Rubalcava (2000) 23 Cal.4th 322, 333 (Rubalcava) [explaining that rewriting legislation is not the role of the judiciary].)
Next, Heritage suggests we adopt the approach used under section 425.16, commonly referred to as the "anti-SLAPP" statute. Section 425.16, subdivision (f) provides that a special motion to strike "shall be scheduled by the clerk of the court for a hearing not more than 30 days after the service of the motion unless the docket conditions of the court require a later hearing." Courts are "not permitted to deny the [anti-SLAPP] motion on the ground that the hearing was not scheduled within 30 days of service of the motion . . . ." (Karnazes v. Ares (2016) 244 Cal.App.4th 344, 352.) We reject Heritage's request to adopt what Heritage refers to as "a similarly lenient definition of good cause." The express language of the statute at issue here is different, and contains no provision allowing a hearing beyond the specified statutory time period based on the conditions of the court's calendar. As stated, any suggested changes to section 720.310 are for the Legislature, not this court, to consider. (See Rubalcava, supra, 23 Cal.4th at p. 333.)
SLAPP is an acronym for "strategic lawsuit against public participation." (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57.)
Finally, Heritage relies on Wilson v. Sunshine Meat & Liquor Co. (1983) 34 Cal.3d 554, 562 (Wilson) and Chavez v. 24 Hour Fitness USA, Inc. (2015) 238 Cal.App.4th 632, 644 (Chavez) to assert that there is a strong public policy favoring deciding cases on their merits instead of on procedural grounds, and that we should apply that policy here. However, neither Wilson nor Chavez suggest that reversal is appropriate in the present case.
In Wilson, the statute at issue stated, " '[t]he court, in its discretion, may dismiss an action . . . if it is not brought to trial within two years.' " (Wilson, supra, 34 Cal.3d at p. 559, italics added.) By contrast, the 20-day period set forth in section 720.310 is not discretionary and the court correctly dismissed the petition in the absence of a timely motion to continue the hearing for good cause shown. Moreover, the court in Wilson explained, "[t]he more compelling policy favoring resolution on the merits will only prevail where plaintiff makes some showing of excusable delay." (Wilson, at pp. 562-563 [upholding court's denial of plaintiff's motion to advance trial where there were approximately two months remaining before expiration of the five-year mandatory dismissal period and plaintiff had conducted no discovery].) Here, Heritage offers no explanation for failing to make an ex parte request for a determination of good cause under the statute until nearly nine months after it filed its petition and, thus, has not made an adequate showing of excusable delay.
Heritage also argues Hermsen did nothing in the intervening nine-month period to move up the hearing date, but it was Heritage, not Hermsen, that filed the petition and it was Heritage's obligation to ensure compliance with the applicable statutory requirements.
In Chavez, the appellate court reversed the trial court's refusal to grant a continuance of a summary judgment motion after concluding the strong public policy favoring disposition on the merits outweighed the competing interest in favoring judicial economy. (Chavez, supra, 238 Cal.App.4th at pp. 644-645.) There, unlike the case at hand, the court concluded the plaintiffs had demonstrated a reasonable excuse for their delay and the appellate court also noted several other factors that weighed in favor of continuing the summary judgment motion to permit additional discovery. (Ibid.) These factors are not relevant here, and Chavez is not instructive.
In sum, Heritage provides no convincing reason or legal authority to disregard the statute's plain language, or to excuse Heritage's failure to comply with the statute's clear dictates. The trial court did not err by dismissing Heritage's petition because a hearing on the petition was not scheduled in accordance with the time requirement of section 720.310, subdivision (c).
II. The Court Did Not Err by Requiring Heritage to Post an Appeals Bond
Heritage contends the trial court erred by requiring an appeals bond, and that the case was, instead, automatically stayed without a bond by its notice of appeal pursuant to section 916, subdivision (a).
Section 916, subdivision (a) states, in part, "the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order . . . ." Section 917.2 provides an exception to this general rule and states that "[t]he perfecting of an appeal shall not stay enforcement of the judgment or order of the trial court if the judgment or order appealed from directs the assignment or delivery of personal property, including documents, whether by the appellant or another party to the action, or the sale of personal property upon the foreclosure of a mortgage, or other lien thereon," unless the appellant provides an undertaking in an amount set by the court and agrees "that if the judgment or order appealed from is affirmed, or the appeal is withdrawn or dismissed, the appellant shall pay the damage suffered to such property and the value of the use of such property for the period of the delay caused by the appeal." (Italics added.)
Here, the trial court specifically ordered that the seized property be released to Hermsen and, thus, directed the "delivery of personal property" to a party. (§ 917.2.) Heritage nevertheless contends the order does not fall within section 917.2 because it directs the Sheriff, and not Heritage or another party, to deliver the property to Hermsen. Hermsen contends section 917.2 is applicable because the Sheriff is either acting at the direction of Heritage or is, itself, a party to the underlying petition. We agree with Hermsen that the Sheriff's involvement does not operate to make section 917.2 inapplicable here.
In the underlying action, Heritage obtained a writ of execution and an ex parte order directing the Sheriff to seize the property at issue pursuant to section 699.030. When a judgment debtor fails to deliver personal property subject to a writ of execution and a demand from a levying officer, section 699.030 permits a judgment creditor to apply ex parte for an order directing a levying officer to seize the property. Section 699.030 provides a collection remedy that allows a judgment creditor to coerce payment from a judgment debtor. (See In re Marciano (Bankr. C.D.Cal. 2010) 446 B.R. 407, 424, fn. 16.) Thus, a sheriff, or other levying officer, that seizes property in accordance with this statutory procedure is acting on behalf of the creditor, at the direction of the court. Further, as Hermsen points out, the governing statutes compel the parties and the court to involve the levying officer throughout the third party claim process. Nothing about these procedures, which were followed in this case, suggests the trial court erred by requiring an appeals bond under section 917.2 here.
Heritage also argues section 917.2 is inapplicable and does not require a bond when, as here, the property is in the possession of a third party rather than the appellant. The court in In re Ringgold (2006) 142 Cal.App.4th 1001 (Ringgold) analyzed a similar argument in a case where the appellant relied on Baar v. Smith (1927) 201 Cal. 87 (Baar), as Heritage does here. The Ringgold court explained that Baar was decided in 1927 under former section 943, which contained different language than the current statute, and therefore is not controlling. Under the current statute, the fact that the property is in the custody of an officer may affect the amount of bond required, but a plain reading of the statute suggests it does not preclude a bond altogether. Thus, despite the holding in Baar and several other similarly decided cases, the court in Ringgold rejected the appellant's argument that section 917.2 does not require a bond when the appellant does not have possession of the property at issue. (See Ringgold, supra, 142 Cal.App.4th at p. 1010.) Heritage's argument here is similarly without merit.
Former section 943 previously stated, " 'If the judgment or order appealed from direct the assignment or delivery of documents or personal property, the execution of the judgment or order cannot be stayed by appeal, unless the things required to be assigned or delivered be placed in the custody of such officer or receiver as the court may appoint, or unless an undertaking be entered into on the part of the appellant, with at least two sureties, and in such amount as the court, or a judge thereof, may direct, to the effect that the appellant will obey the order of the appellate court upon the appeal.' " (Ringgold, supra, 142 Cal.App.4th at p. 1010, italics added.) Section 917.2, on the other hand, now instructs, "[t]he appellant may cause the property to be placed in the custody of an officer designated by the court to abide the order of the reviewing court, and such fact shall be considered by the court in fixing the amount of the undertaking." (§ 917.2, italics added.) --------
Heritage also cites Royal Thrift & Loan Co. v. County Escrow (2004) 123 Cal.App.4th 24, 36-37 (Royal Thrift), but it does not support Heritage's position either. In Royal Thrift, the court analyzed whether an automatic stay was in effect during an appeal from a foreclosure action or whether an appeals bond was necessary to effectuate the stay pursuant to section 917.4, an analogous statute applicable in the context of real property. (Royal Thrift, at p. 36.) The court determined, in the context of section 917.4, that a party that has neither possession nor the right to possession is not required to give a bond, and that appellants did not present any evidence that the mortgagors retained the right to possession during the appeal. (Royal Thrift, at p. 37.) Here, the Sheriff took possession of the property at issue precisely because Heritage asserted a right to the property for the purpose of enforcing its judgment against Tucker. Thus, Heritage did have an interest in the property and its value.
Finally, Heritage asserts the purpose of section 917.2 is to ensure the property will not be damaged, and that purpose is not served here because the property is not in its possession. As an initial matter, it is at least possible that the property would be damaged in some way while in the Sheriff's possession, even if by accident. More importantly, the statute also explicitly states that one purpose of the undertaking is to ensure the appellant will pay "the value of the use of such property for the period of the delay caused by the appeal" if the appellate court affirms the order of the trial court. (§ 917.2.) While this appeal is pending, Hermsen does not have use of the property and at least claims that he is not living in the leased property as a result. Thus, there does appear to be some purpose to requiring a bond under the statute even when the property is in the immediate possession of the Sheriff, as opposed to the appellant.
Accordingly, we conclude that the trial court did not err in requiring Heritage to post a bond to stay enforcement of its orders during the pendency of this appeal.
DISPOSITION
The orders are affirmed. Hermsen is entitled to recover his costs on appeal.
GUERRERO, J. WE CONCUR: HUFFMAN, Acting P. J. NARES, J.