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Johnson v. E-Z Insurance Brokerage

June 22, 2009

WESTON JOHNSON ET AL., PLAINTIFFS AND RESPONDENTS,
v.
E-Z INSURANCE BROKERAGE, INC., ET AL., DEFENDANTS; SHAHIN MOSAFERI, CLAIMANT AND APPELLANT.
WESTON JOHNSON ET AL., PLAINTIFFS AND RESPONDENTS,
v.
FARAMARZ KIASI, DEFENDANT AND APPELLANT.



Appeal from orders of the Superior Court of Orange County, Robert D. Monarch, Judge. (Retired judge of the Orange Super. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) Affirmed. (Super. Ct. No. 724328).

The opinion of the court was delivered by: Fybel, J.

CERTIFIED FOR PUBLICATION

OPINION

INTRODUCTION

In these consolidated appeals, Shahin Mosaferi appeals from the order denying her petition to determine the validity of her third party claim, and Faramarz Kiasi appeals from the order denying his motion to set aside and vacate a default and default judgment. Both appeals arise out of a default judgment obtained by Weston Johnson, Wendy Johnson, and Larry Johnson (the Johnsons) against Kiasi in 1996 as a discovery sanction. The default judgment resulted in a judgment lien against real property owned by Kiasi. In 1999, after filing for bankruptcy, Kiasi conveyed the real property by quitclaim deed to Mosaferi without the authorization of the bankruptcy court or trustee.

In 2006, the Johnsons filed an application for renewal of the judgment. In her petition to determine validity of third party claim, Mosaferi argued the renewal did not extend the duration of the judgment lien against the property because the Johnsons did not personally serve the application for renewal on her pursuant to Code of Civil Procedure section 683.180. The trial court denied the petition and, in appeal No. G040241, we affirm. We hold Mosaferi was not a transferee of the property entitled to personal service of the application for renewal of the judgment because Kiasi, having filed a chapter 7 bankruptcy petition, had no interest in the property to convey to her. When Kiasi's bankruptcy proceeding closed, title to the property revested in Kiasi, and did not vest in Mosaferi, because the doctrine of after-acquired title does not apply to quitclaim deeds.

In 2008, Kiasi moved to set aside and vacate the default and default judgment entered in 1996 on the ground they were wrongly entered on an ex parte basis as a terminating sanction for misuse of the discovery process. The trial court denied the motion, and, in appeal No. G040433, we affirm. The default and default judgment were voidable, not void, and, therefore, under Code of Civil Procedure section 473, subdivision (b), a motion to set them aside had to be brought within six months of entry. Kiasi's motion, made 12 years after entry of the default and default judgment, was untimely.

FACTS AND PROCEEDINGS IN THE TRIAL COURT

I. Default and Default Judgment

In 1994, Weston Johnson and Wendy Johnson filed a complaint against Kiasi and E-Z Insurance Brokerage, Inc. (E-Z). The first amended complaint, filed in 1995, added Larry Johnson as a plaintiff and sought relief for breach of contract, fraud, and other causes of action. In the first amended complaint, the Johnsons alleged Kiasi, acting through E-Z, purported to sell them automobile insurance, and the Johnsons paid premiums on the policies that Kiasi supposedly procured for them. When the Johnsons incurred losses and attempted to recover under the policies, they learned the policies did not exist, leaving them with uninsured losses.

In June 1996, the Johnsons moved to compel Kiasi and E-Z to appear for their depositions and produce documents. The trial court granted the motion and set a hearing on an order to show cause regarding contempt for July 3, 1996 in the event the depositions were not completed by that date.

Kiasi appeared for his deposition but did not produce the documents requested. On July 3, 1996, at the hearing on the order to show cause regarding contempt, the court ordered Kiasi and E-Z to appear for deposition and produce documents without objection, and imposed monetary sanctions against them. The court stated it would entertain a motion regarding terminating sanctions if the monetary sanctions were not paid within 30 days.

Kiasi and E-Z did not comply with the court's order. On August 13, 1996, the Johnsons' counsel notified Kiasi's counsel that if documents were not produced by the next day, the Johnsons would seek terminating sanctions. No documents were produced. On August 14, the Johnsons' counsel provided ex parte notice to Kiasi and E-Z's counsel of an application to strike the answer or for evidentiary or monetary sanctions to be brought the next day.

On August 15, 1996, the Johnsons applied ex parte for an order to strike Kiasi and E-Z's answer or, alternatively, for further evidentiary or monetary sanctions. The trial court granted the application, struck Kiasi and E-Z's answer, and ordered Kiasi and E-Z to pay the Johnsons $1,500 in sanctions. Counsel for Kiasi and E-Z did not appear at the ex parte hearing, but were given notice of the court's order.

On December 20, 1996, following a default prove-up, a default and default judgment were entered against Kiasi and E-Z. The judgment awarded the Johnsons $159,871.35 in compensatory damages, punitive damages, costs, and attorney fees.

In enforcing the judgment, the Johnsons found only one asset of Kiasi: real property in Anaheim (the Property). In February 1997, the Johnsons had an abstract of judgment recorded against the Property and obtained a judgment lien against it. The Johnsons determined a forced sale of the Property would yield little, if any, proceeds because it was heavily encumbered and therefore decided to wait for the Property to increase in value.

II. Kiasi's Bankruptcy

Kiasi filed a chapter 13 bankruptcy petition in July 1998. The Johnsons filed opposition to Kiasi's chapter 13 plan. In December 1998, the bankruptcy court dismissed the petition.

Kiasi filed a chapter 7 bankruptcy petition in February 1999. The petition listed the Johnsons as unsecured creditors, but they were not given notice of the petition and did not ...


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