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Century Surety Co. v. 350 W.A.

June 27, 2008

CENTURY SURETY COMPANY, PLAINTIFF,
v.
350 W.A., LLC, ET AL., DEFENDANTS.



The opinion of the court was delivered by: M. James Lorenz United States District Court Judge

ORDER ADOPTING REPORT AND RECOMMENDATION [doc. #174]; DENYING MOTION TO VACATE ATTACHMENT [doc. #105]; GRANTING MOTION FOR ORDER DETERMINING CLAIM OF EXEMPTION [doc. #119]; and GRANTING EX PARTE MOTION FOR HEARING [doc. #177] AND RELATED COUNTERCLAIMS.

The undersigned referred two motions addressing the issue of David A. Blackburn's ("Blackburn") claims of exemption to Magistrate Judge Leo S. Papas pursuant to 28 U.S.C. § 636(b)(1)(B) and Civil Local Rule 72.1(c)(3). Upon the filing of the Report, the parties were given time in which to file objections, if any, with the Court. Defendant/Counterclaimant 350 W.A., LLC ("350"), and counterclaimant Blackburn, and judgment debtors The David A. Blackburn Family Trust, B&H Property Systems, Inc., and 350 West Ash Urban Homes (collectively "Blackburn entities") filed a timely objection. Plaintiff Century Surety Company ("Century") filed a reply to the objection. Having carefully reviewed the matters presented, the Court enters the following decision.

Discussion

A. Background

After the Court granted plaintiff's motion for entry of stipulated judgment and permitted it to execute on the judgment, Century levied writs of attachment on Blackburn's California Bank & Trust account and B&H Property Systems, Inc. Profit Sharing Plan #004's ("B&H Plan") Fidelity Investments account. Blackburn filed an emergency motion to vacate improper attachment [doc. #105] after which plaintiff filed a motion for order determining the claim of exemption [doc. #119]. The motions were fully briefed and taken under submission by the magistrate judge. As noted above, the magistrate judge filed his Report to which Blackburn filed objections. The Court notes that Blackburn's objection includes evidence that was not presented to the magistrate judge for consideration prior to the Report being filed.

B. Standard of Review for Report and Recommendation

The district court's role in reviewing a Magistrate Judge's report and recommendation is set forth in 28 U.S.C. § 636(b)(1). Under this statute, the district court "shall make a de novo determination of those portions of the report . . . to which objection is made," and "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." Id. Under this statute, "the district judge must review the magistrate judge's findings and recommendations de novo if objection is made, but not otherwise." United States v. Reyna-, 328 F.3d 1114, 1121 (9th Cir.) (en banc), cert. denied, 124 S.Ct. 238 (2003).

C. California Bank & Trust Account

Blackburn initially contended that the California Bank & Trust account held in the name of "David A. Blackburn dba The Van Houton Building" was subject to a claim of exemption under California Code of Civil Procedure 487.010 because the funds belonged to 151 LLC and not to Blackburn. But as the magistrate judge noted, and Blackburn acknowledges, a first-party claim of exemption may be made only for the property of a natural person. In this case, the claim of exemption is made for property belonging to a limited liability company. As a result, the Report recommended Blackburn's claim of exemption for this account be denied.

In his objection to the Report, Blackburn states that the "Report has been largely rendered moot by an intervening third party claim by 151 LLC." (Objection at 2.) Because Blackburn has no objection to the Report concerning the California Bank and Trust account, the Court adopts the Report and Blackburn's first-party claim of exemption is denied.

D. Fidelity Investment Account Blackburn objects to the magistrate judge's finding that the Fidelity Investment account held in the name of "David A. Blackburn, Trustee of the B&H Property Systems, Inc. Profit Sharing Plan #004" is not exempt. Blackburn argues that he is entitled to submit additional evidence to show the exempt nature of the profit sharing plan even though it was not provided to the magistrate judge. Blackburn contends he explicit reserved his right to do so.

1. Evidence Presented to the Magistrate Judge

Blackburn contend that the Fidelity Investment Account is a profit-sharing retirement plan that is not subject to attachment under California Code of Civil Procedure ยง ...


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