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United Pacific Energy Operations and Consulting, Inc. v. Gas and Oil Technologies, Inc.

United States District Court, E.D. California

October 7, 2014

UNITED PACIFIC ENERGY OPERATIONS AND CONSULTING, INC., AND PAUL GILLER, Plaintiffs,
v.
GAS AND OIL TECHNOLOGIES, INC., et al., Defendants.

ORDER DENYING APPLICATION FOR RELEASE OF LEVY

LAWRENCE J. O'NEILL, District Judge.

I FACTUAL AND PROCEDURAL BACKGROUND

This case, previously assigned to a different District Judge, concerns execution of a judgment entered in a Central District of California case, United Pacific Energy Operations and Consulting, Inc. v. Gas and Oil Technologies, Inc., No. CV 07-4436 CJC (RNBx) ("CDCA Case"). In the CDCA Case, judgment was entered on May 2, 2008 in the amount of $2, 456, 000.00 in favor of United Pacific Energy Operations and Consulting, Inc. ("UPEOC") and Paul Giller and against Gas and Oil Technologies, Inc., Western States International, Inc. ("WSI"), and United Pacific Energy Corporation ("CDCA Judgment"). See Doc. 1 at 4.

The instant case was initiated by the filing on January 5, 2009 of a "Registration of Foreign Judgment" and "Request for Issuance of Writ Execution" by UPEOC. Docs. 1. 1-1. On February 3, 2009, the Clerk of Court of the Eastern District of California issued a writ of execution, reflecting the substance of the CDCA Judgment plus interest ("EDCA Writ of Execution"). Doc. 5.

Pursuant to the EDCA Writ of Execution, the United States Marshal's Service ("USMS") recorded two "Notices of Levy" with the Kern County Recorder's office against WSI, [1] encumbering two separate oil and gas leases[2] ("the leases") in which WSI ostensibly held an interest. See Doc. 144 at ¶ 3.

On April 14, 2011, a second writ of execution issued. Doc. 9. Pursuant to that writ, a USMS Deputy "posted a notice of sale" of the leases on April 28, 2011. See Doc. 144 at ¶ 4.

On May 6, 2011, Defendant Tearlach Resources LTD ("Tearlach") filed a third party claim pursuant to California Code of Civil Procedure § 720.110, asserting an ownership interest in the leases. See Doc. 17 (explaining that the third party claim was erroneously filed in the CDCA Case). On May 21, 2011, UPEOC filed a petition to invalidate Tearlach's third party claim. See Doc. 17. Two days later, on May 23, 2011, UPEOC moved for an ex parte temporary restraining order ("TRO") requesting, among other things, that the USMS be enjoined from releasing, surrendering, or cancelling any lien or other security interest of UPEOC in the leases. Doc. 19-2. The request for a TRO was granted on May 23, 2011, and this Court enjoined the USMS from "releasing any lien or other security interest of the Plaintiff UPEOC in any properties levied upon by the USMS on behalf of Plaintiff UPEOC, " including the leases. Doc. 21. The USMS, learning of the third party claim, did not proceed with the sale of the leases. Doc. 144 at 2.

The TRO was later converted to a preliminary injunction, precluding the USMS from "releasing the Leases" until "by further order the Court dissolves such preliminary injunction in connection with a final resolution of the Petition." Doc. 40 at ¶ 4.

After numerous pretrial proceedings and a trial, Senior District Judge Oliver W. Wanger denied Tearlach's ownership claim, as well as UPEOC's petition to invalidate Tearlach's third party claim because the status of Tearlach's claim had not been adjudicated. Docs. 93 & 94. The preliminary injunction was never formally dissolved, but the case was closed and the parties appealed. Doc. 95. The appeal was dismissed on August 28, 2012. Doc. 110 at 2.

On February 6, 2014, Tearlach filed an application for an order from this Court in which it requested: (1) that this Court direct USMS to release to Tearlach $36, 000 previously seized funds and (2) that this Court adjudicate that Tearlach holds a 100% interest in the federal oil leases. See Doc. 111-1 at 2; see also Doc. 118 at 2.

The Court declined to rule on Tearlach's application "without providing an opportunity to others claiming an interest in the funds and leases to respond to the application, " ordered Tearlach to serve the judgment debtors, and ordered "any response to [Tearlach's] application to be filed and served no later than March 13, 2014." Doc. 114 at 2. No response or opposition to Tearlach's application was filed by the March 13, 2014 deadline. Accordingly, on March 25, 2013, the Court ordered the USMS to release the funds. Doc. 116 at 2.

On May 8, 2014, Tearlach filed a proposed order concerning the leases. Doc. 118. The Court adopted the proposed order on May 12, 2014, which ordered "and adjudicated that Tearlach... holds all right, title, and interest in One-Hundred Percent (100%) [in the leases]." Doc. 120 at 2.

On June 10, 2014, WSI filed "objections and [a] request to vacate all recent orders granted by this Court since February 6, 2014." Doc. 122 at 1. WSI objected "to everything that has transpired" since February 6, 2014, on the ground that neither it nor its counsel received "[n]otice of anything occurring in this Court beginning February 6, 2014 to the present." Id. at 2. WSI claimed that Tearlach intentionally "failed to give notice to [WSI and its counsel]." Id. WSI further asserted that Tearlach's May 8, 2014 proposed order "was not presented to the Court pursuant to lawful notice, a hearing, an opportunity for a hearing, or any presentation of competent evidence... [and was not] properly before the Court via a motion and pleadings." Id.

On June 12, 2014, Tearlach filed an opposition (Doc. 126) to which WSI replied on June 16, 2014. Doc. 127. On June 16, 2014, Tearlach filed a series of objections to WSI's reply (Doc. 128) ...


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