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Hokojitsugyo Co., Ltd. v. Federal Insurance Co.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA


June 5, 2008

HOKOJITSUGYO COMPANY, LTD., PLAINTIFF,
v.
FEDERAL INSURANCE COMPANY, DEFENDANT.

The opinion of the court was delivered by: Hayes, Judge

ORDER REQUESTING FURTHER BRIEFING

Pending before the Court are the applications for disbursement of judgment proceeds pursuant to CAL. CODE CIV. P. §§ 708.410 et seq. filed by Otay Project, LLC (Doc. # 302), Century Surety Company (Doc. # 303), and Duckor, Spradling, Metzger & Wynne (Docs. # 291, 304).

BACKGROUND

On December 13, 2004, Plaintiffs Hokojitsugyo Company, Ltd. (Hoko) and David Blackburn (Blackburn) filed a Complaint against Defendant Federal Insurance Company (Federal) for breach of contract and bad faith in the California State Superior Court in San Diego, California. See (Doc. # 1). On January 14, 2005, Defendant Federal removed the case to this Court. (Doc. # 1).

On December 12, 2005, Plaintiffs filed a First Amended Complaint terminating Plaintiff Blackburn, and adding as a Plaintiff 350 West Ash, LLC (350 W.A.). (Doc. # 34). The First Amended Complaint asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, negligent infliction to prospective economic advantage, and declaratory relief. (Doc. # 34).

On January 26, 2006, Defendant Federal moved for summary judgment on each of the claims asserted by Hoko and 350 W.A. (Doc. # 43). On May 1, 2006, the Court granted Defendant's motion for summary judgment with respect to all of the claims asserted by Plaintiff 350 W.A., as well as with respect to Plaintiff Hoko's claims for declaratory relief and negligent infliction to prospective economic advantage. (Doc. # 101). As of May 1, 2006, only Plaintiff Hoko's claims for breach of contract and breach of the implied covenant of good faith and fair dealing remained pending in this action. See (Doc. # 101).

On January 11, 2008, Plaintiff Hoko served an Offer of Compromise pursuant to CAL. CODE CIV. P. § 998 upon Defendant Federal for $999,999.00. See (Docs. # 298, 300). On January 25, 2008, Defendant Federal accepted Hoko's Offer of Compromise. See (Doc. # 300).

On January 28, 2008, Century Surety Company (Century) filed a notice of judgment lien against 350 W.A. and Blackburn. (Doc. # 273). On January 31, 2008, Duckor, Spradling, Metzger & Wynne law corporation (Duckor) filed a notice of judgment lien against Blackburn. (Doc. # 288). On February 21, 2008, Duckor filed a notice of contractual lien for attorneys' fees against 350 W.A. and Blackburn. (Doc. # 291). On February 27, 2008, Otay Project, LLC (Otay) filed a notice of contractual lien against Blackburn and 350 W.A. (Doc. # 293). Otay's notice also claimed "a security interest in any funds paid to Blackburn, 350 W.A., or Hokojitsugyo Company, Ltd." (Doc. # 293 at 1).

On April 15, 2008, the Court entered Judgment in favor of Hoko and against Federal in the amount of $999,999.00. (Doc. # 300). The Court ordered enforcement of the judgment to be held in abeyance pending adjudication of the rights of the lien holders. (Doc. # 300). On April 15, 2008, the Court set a briefing schedule for application to the court for judgment proceeds pursuant to the California judgment lien statutes, CAL. CIV. CODE §§ 708.410 et seq. (Doc. # 301).

On April 28, 2008, claimants Century, Otay, and Duckor filed applications for judgment proceeds. (Docs. # 302, 303, 304).

REQUEST FOR FURTHER BRIEFING

On April 15, 2008, this Court set a briefing schedule to allow the lien claimants to apply to the Court for judgment proceeds pursuant to California's judgment lien statutes, CAL. CIV. CODE §§ 708.410 et seq. California's judgment lien statutes permit "a judgment creditor who has a money judgment against a judgment debtor who is a party to a pending action or special proceeding" to obtain a statutory judgment lien in the pending action or special proceeding. CAL. CODE CIV. P. § 708.410(a) (emphasis added); Brown v. Superior Court, 116 Cal. App. 4th 320, 326 (2004); see also Abatti v. Eldridge, 103 Cal. App. 3d 484, 487 (1980) (judgment creditor can reach interests of judgment debtor even if judgment debtor is defendant, as opposed to plaintiff, in pending action or special proceeding); Fleet Credit Corp. v. TML Bus Sales, 65 F.3d 119, 121-122 (9th Cir. 1995) (same).

The judgment in this case is in favor of a single party, Plaintiff Hoko. Each of the judgment and contractual liens in this case names either 350 W.A. or Blackburn as the judgment debtor. See (Docs. # 273, 288, 291, 293). The docket in this case, however, reflects that neither 350 W.A. nor Blackburn are parties in this case. See (Docs. # 1, 34, 101). Accordingly, the Court hereby requests further briefing which addresses whether this Court has the power to adjudicate judgment or contractual liens against persons or companies who are not parties to this case. In addition, and assuming the Court has the power to adjudicate liens against non-parties, the Court requests additional briefing addressing whether this Court has the power to adjudicate contractual liens in this proceeding. See Brown, 116 Cal. App. 4th at 330-31.

Any party or lien holder may file a brief responsive to this Order on or before Friday, June 13, 2008. If a party or lien holder chooses to file a brief, the brief shall be no longer than 10 pages.

IT IS SO ORDERED.

WILLIAM Q. HAYES United States District Judge

20080605

© 1992-2008 VersusLaw Inc.



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