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Adir International, LLC v. Superior Court (Fusion Industries)

California Court of Appeals, Second District, Third Division

May 29, 2013

ADIR INTERNATIONAL, LLC, Petitioner,
v.
THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent FUSION INDUSTRIES, Real Party in Interest.

ORIGINAL PROCEEDINGS in mandate. Abraham Khan, Judge. Los Angeles County Super. Ct. No. BC451147

Elizabeth T. Van Horn, Assistant General Counsel, for Petitioner.

No appearance for Respondent.

Law Offices of A.J. Glassman and A.J. Glassman for Real Party in Interest.

CROSKEY, Acting P. J.

After the sheriff levied on funds in its bank account, pursuant to a writ of execution, a judgment debtor filed a notice of appeal and a sufficient appeal bond. The debtor gave notice of these documents to the sheriff, in order to prevent the sheriff from disbursing the levied funds to the judgment creditor. However, the debtor failed to file a motion to quash the writ of execution. The sheriff then disbursed the levied funds to the creditor. The debtor filed an ex parte application, requesting the trial court to order the creditor to return the funds erroneously disbursed to it by the sheriff. The trial court denied the order, on the basis that it had no jurisdiction to do so once the funds had been delivered to the creditor. The debtor filed a petition for writ of mandate challenging the trial court’s order. We issued an order to show cause and now deny the petition.

FACTUAL AND PROCEDURAL BACKGROUND[1]

Petitioner Adir International, LLC dba Curacao, filed the instant action against Fusion Industries, which then filed a cross-complaint. The action proceeded to a jury trial, in which Fusion prevailed. The verdict, in an amount exceeding $90, 000, was reached on October 12, 2012. Judgment was entered on November 27, 2012, with notice of entry shortly thereafter.

On December 10, 2012, Fusion, now the judgment creditor, obtained a writ of execution.[2] Fusion filed the writ of execution with the Los Angeles County Sheriff, [3] who was statutorily required to execute it. (Code Civ. Proc., § 699.530, subd. (a).)

On December 12, 2012, Adir International, the judgment debtor, filed a motion for judgment notwithstanding the verdict, which was set to be heard on January 17, 2013. In the meantime, collection efforts continued. The sheriff levied on the debtor’s bank account on December 13, 2012. The levy created an “execution lien” on the property levied. (Code Civ. Proc., § 697.710.) The debtor asserts that it received a copy of the notice of levy on December 31, 2012.[4] At that point, according to the debtor, the sheriff’s website indicated that the funds would be disbursed to the creditor on February 4, 2013. Although the debtor was aware, on December 31, 2012, of the levy on its funds, it took no immediate action to prevent the levied funds from being turned over to the creditor. Instead, on January 17, 2013, the same day as the motion for judgment notwithstanding the verdict was to be heard, it made an ex parte application for a discretionary stay of execution.[5]

On January 17, 2013, the motion for judgment notwithstanding the verdict was denied, as was the ex parte application for discretionary stay.[6] Under Code of Civil Procedure section 917.1, subd. (a)(1), the enforcement of a monetary judgment is stayed by the perfecting of an appeal and the filing of a sufficient undertaking. At the time of the denial of its motion for judgment notwithstanding the verdict, more than two weeks remained for the debtor to perfect an appeal and file an undertaking before the levied funds were to be disbursed to the creditor.

The disbursement was to occur on February 4, 2013, a Monday. On February 1, 2013, the preceding Friday, the debtor filed a notice of appeal and an appeal bond.[7] Under Code of Civil Procedure section 697.040, subdivision (a), one of the effects of the stay which arises from the filing of a notice of appeal and sufficient undertaking is that “[e]xisting [execution] liens... are extinguished.” Furthermore, upon extinguishment of such a lien, property held by a levying officer subject to the lien “shall be released, ” to the debtor, unless certain exceptions, inapplicable here, exist. (Code Civ. Proc., § 697.050.)

Concerned, however, that the sheriff would not know that the liens were extinguished, and would therefore disburse the levied funds to the creditor on the following Monday, the debtor hand served the sheriff with a copy of its notice of appeal and appeal bond.[8] The law is clear that, had the debtor sought an order staying further enforcement of the judgment and directing the sheriff to release the levied funds to the debtor, the court would have been required to issue it. (California Commerce Bank v. Superior Court (1992) 8 Cal.App.4th 582, 587 (CCB).) However, the debtor did not seek such an order. On February 7, 2013, [9] the levied funds were disbursed to the creditor by the sheriff.

On February 13, 2013, the debtor filed an ex parte application for an order requiring the creditor to return the erroneously disbursed funds. Relying exclusively on CCB, the debtor argued that, under the trial court’s residual authority over the enforcement of judgments, [10] the court had the power to order the creditor to return to the debtor funds which ...


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