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Lincoln Benefit Life Co. v. Dallal

United States District Court, C.D. California

October 25, 2019

Lincoln Benefit Life Company
Alexander Dallal, et al.

          Present: The Honorable MICHAEL W. FITZGERALD, U.S. District Judge



         Before the Court is Plaintiff Lincoln Benefit Life Company's (“LBLC”) Motion for a Temporary Restraining Order and Order to Show Cause re a Preliminary Injunction, filed on September 23, 2019 (“Motion”). (Docket No. 195). Defendants Alexander Dallal and Claire Dallal filed an opposition to the Motion on September 30, 2019. (Docket No. 196). LBLC filed a reply on October 7, 2019. (Docket No. 199).

         The Court has read and considered the parties' submissions, and held a hearing on October 21, 2019.

         For the reasons discussed below, the Court GRANTS LBLC's Motion. Defendants must place $919, 290.49 in an escrow account within 10 days. If they do not, Defendants are enjoined from (1) further transferring or encumbering the five properties at issue; (2) transferring or encumbering any ownership interest in any of the LLCs that hold title to the five properties at issue; or (3) further accessing or dispersing any funds from any loans or lines of credit secured by the five properties at issue. As stated at the hearing, the Order will be mooted by the Court's issuance of the final judgment against Defendants.


         For the purposes of this Order, the Court will only focus on the factual allegations relevant to this dispute.

         In August 2018, LBLC obtained a jury verdict of $919, 290.49 in fraud and punitive damages against Defendants. (Motion at 2). LBLC alleged that Defendants had engaged in rampant long-term-care insurance fraud, and the jury ruled in favor of LBLC. (Id.). The final judgment has not yet issued. In the meantime, LBLC claims that Defendants have been transferring real estate assets and taking other actions in order to become judgment proof. (Id.). Specifically, Plaintiffs allege that Defendants “executed quitclaim deeds, transferred property to their children, and set up four different LLCs to hold their real estate assets.” (Id. at 1). Plaintiffs also allege that Defendants “took out nearly $1 million in lines of credit, depleting the equity in their properties” which were “part of their $4 million net worth at trial, which formed the basis for the punitive damages verdict.” (Id.).

         Specifically, LBLC asserts that Defendants have transferred their assets, including five properties (the “Properties”), into newly formed LLCs. (Id. at 14). Additionally, LBLC alleges that Defendants have taken out loans on the Properties amounting close to $1 million, diminishing the Properties' values. (Id. at 14-15). Further, LBLC asserts that Defendants issued 10 quitclaim deeds for transfers of their Properties into and out of trusts, into and out of the LLCs they formed, and as gifts to their children for little to no consideration. (Id. at 15).

         Defendants do not dispute the facts as outlined by LBLC in terms of what Defendants have done with the Properties and their other asserts. Instead, Defendants dispute the inferences LBLC attempts to draw from that activity. Specifically, Defendants argue that they are “elderly individuals with ongoing health concerns” who are “facing their own mortality.” (Opposition at 3). Defendants characterize the actions they have been taking with their assets as “simply to properly organize the estate and secure better terms on existing loans, access the equity of the properties to cover maintenance and related expenses, cover medical and other living expenses (including legal fees), prepare for the judgment in this case, and to provide for their children.” (Id. at 3-4) (citing Declaration of Claire Dallal ¶ 12).


         In conjunction with their Motion, LBLC requests that the Court take judicial notice of various deeds related to Defendants' properties. (See Request for Judicial Notice, Docket No. 195-1 (“RJN”)). Defendants did not file an opposition or response to the RJN. The Court may take judicial notice of matters of public record, including public deeds. Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006); Hotel Employees & Rest. Employees Local 2 v. Vista Inn Mgmt. Co., 393 F.Supp.2d 972, 978 (N.D. Cal. 2005) (“Unimpeached and certified copies of deeds have been widely held proper subjects of judicial notice.”).

         Defendants do not oppose the RJN, nor do they dispute any of the facts LBLC asks ...

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