(PS) Three Lakes Design v. Savala ( 2021 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 THREE LAKES DESIGN, No. 2:17–cv–01757–MCE–CKD (PS) 12 Plaintiff-Judgment ORDER Creditor, 13 (ECF No. 58) v. 14 GINA SAVALA, 15 Defendant-Judgment 16 Debtor. 17 18 Before the court is a renewed motion by plaintiff-judgment creditor Three Lakes Design 19 for an earnings withholding order against the spouse of defendant-judgment debtor Gina Savala.1 20 (ECF No. 58.) The motion is brought as part of Three Lakes’ ongoing effort to collect the 21 judgment entered against Ms. Savala in this copyright infringement case. A hearing on the 22 motion was held remotely on September 1, 2021, at which plaintiff’s counsel Mark Serlin 23 appeared for Three Lakes. (ECF No. 60.) Defendant Savala did not appear, despite several 24 efforts to notify her of the proceeding. (Id.; ECF No. 59; Docket text entries dated 8/20/2021 and 25 8/25/2021.) For the following reasons, the court GRANTS the motion. 26 27 1 Because defendant is self-represented and the motion is related to collection of judgment, the matter is referred to the undersigned pursuant to Local Rules 302(c)(11) & (21) and 28 U.S.C. 28 § 636(b)(1). 1 BACKGROUND 2 In August 2019, the court granted default judgment for Three Lakes, awarding it $115,000 3 in statutory damages, plus post-judgment interest, for Ms. Savala’s infringement of 23 4 photographs copyrighted to Three Lakes. (ECF Nos. 31 (findings and recommendations), 35 5 (order adopting findings and recommendations), 36 (judgment), 47 (amended judgment2).) The 6 court found that Three Lakes3 adequately alleged that Ms. Savala used its copyrighted images on 7 her social media platforms and websites without permission. (ECF No. 31 at 5.) Specifically, the 8 amended complaint alleged that between April and July 2017 Ms. Savala reposted Three Lakes’ 9 images for profit for her own business, Candy Couture Shop. (ECF No. 19 at 3-28.) Judgement 10 was entered against “Defendant Gina Savala, individually, and her marital community, dba Candy 11 Couture Shop.” (ECF Nos. 46, 47, hereinafter “Copyright Judgment.”) 12 A writ of execution to enforce the judgment was issued on August 30, 2019 (ECF No. 43), 13 and on September 10, 2019, Three Lakes first moved for an earnings withholding order against 14 Ms. Savala’s husband, Gilbert Anthony Savala III (ECF No. 44). For most of the litigation of this 15 case, the court was unable to successfully deliver mail to Ms. Savala’s address of record. 16 However, both Ms. and Mr. Savala appeared in person at the hearing on the earnings withholding 17 motion on October 9, 2019 before the undersigned. (ECF No. 45.) At the hearing, Ms. Savala 18 informed the court and opposing counsel that she and her husband were about to file for 19 bankruptcy and stated that they had only learned of the hearing through their bankruptcy attorney. 20 The undersigned accordingly continued the hearing so that Three Lakes’ counsel could confer 21 with the Savalas’ bankruptcy counsel. (Id.) 22 On November 8, 2019, Three Lakes notified the court that the action was automatically 23 stayed due to the Savalas filing for Chapter 7 bankruptcy on October 17, 2019. (ECF No. 48, 24 Notice of Stay; In re: Gina Luisa Savala and Gilbert Anthony Savala, III, No. 19-26462 (U.S. 25 2 After Three Lakes moved for attorneys’ fees, the judgment was amended to reflect that Ms. Savala owed $115,000 in statutory damages, post-judgment interest, plus $27,496.00 in attorneys’ 26 fees and $561.80 in costs. (ECF Nos. 46, 47.) 27 3 Three Lakes was founded in April 2016 for the purpose of designing and selling jewelry and 28 supporting autism research. (ECF No. 19 ¶¶ 7, 9.) 1 Bankr. E.D. Cal.).) An independent review of the bankruptcy proceedings indicates that in 2 December 2020, the Savalas received a discharge of their debts; however, in an underlying 3 adversary proceeding in the bankruptcy court the Savalas and Three Lakes stipulated that only 4 $11,000 of the Copyright Judgment would be deemed non-dischargeable. Three Lakes Design v. 5 Savala, No. 19-26462, Adv. Pro. No. 20-2005 (U.S. Bankr. E.D. Cal.), ECF No. 83 at 2. Under 6 the stipulation—which the bankruptcy court approved (ECF No. 58.3 at 3-4)—the Savalas were 7 to repay the $11,000 debt via consecutive monthly payments of $500. (Adv. Pro. No. 20-2005, 8 ECF No. 83 at 2.) 9 Repayment broke down somewhere along the way because on March 1, 2021, in this court 10 Three Lakes sought and obtained an updated writ of execution reflecting that $10,056.59 11 remained due on the Copyright Judgment. (ECF No. 52.) Several months later, on July 23, 2021, 12 Three Lakes renewed its motion for an earnings withholding order against Mr. Savala. (ECF 13 No. 58.) 14 As with the earlier motion, Three Lakes’ motion is brought under California Code of Civil 15 Procedure § 706.109 as incorporated in Federal Rule of Civil Procedure 69. The accompanying 16 declaration by Three Lakes’ counsel Mark Serlin avers that Ms. Savala has made only “partial 17 payment” on the non-discharged portion of the Copyright Judgment, which remains unsatisfied. 18 (ECF No. 58.3 ¶ 4.) At the hearing, counsel indicated that Three Lakes is seeking to collect 19 $11,000 to $13,000, after factoring in costs and fees incurred in the collection efforts. Counsel 20 further avers in the declaration that Mr. Savala has been married to defendant-judgment debtor 21 Ms. Savala for “over ten years” based on Ms. Savala’s admissions in sworn bankruptcy 22 schedules, her testimony in a bankruptcy deposition, and a recent telephone conversation with 23 Mr. Savala. (Id. ¶ 3.) 24 DISCUSSION 25 A. Wage Withholding Law & Procedure 26 Under Federal Rule of Civil Procedure 69, a money judgment is enforced by a writ of 27 execution, and the procedure on execution and in supplementary proceedings in aid of execution 28 “must accord with the procedure of the state in which the court is located,” except to the extent a 1 federal statute applies. Fed. R. Civ. P. 69(a)(1). 2 California law provides that a judgment creditor may satisfy a money judgment against 3 the judgment debtor and/or the community property interest of the spouse as well as obligations 4 owed to the other spouse that are community property. Cal. Code Civ. Proc. §§ 695.020(a)-(b), 5 699.710, 700.140. 6 California’s Wage Garnishment Law “provides the exclusive judicial procedure by which 7 a judgment creditor can execute against the wages of a judgment debtor[.]” Cal. State 8 Emps.’Ass’n v. California, 198 Cal. App. 3d 374, 377 (1988); Cal. Civ. Proc. Code §§ 706.010– 9 706.154. The Wage Garnishment Law sets out detailed steps for requesting a withholding order, 10 notifying the employer and the judgment debtor, and asserting and resolving claims for 11 exemptions. 12 Where a judgment creditor seeks to withhold the judgment debtor’s own wages, a court 13 order is not required to start the process. The judgment creditor simply applies ex parte directly 14 to the “levying officer”—that is, the sheriff or marshal in the county where the judgment debtor’s 15 employer is to be served—for an earnings withholding order. Cal. Civ. Proc. Code § 706.102(a); 16 see id. § 701.121 (specifying required contents of application); Judicial Council form WG-001 17 (Application for Earnings Withholding Order). The levying officer then issues the order, serves it 18 on the employer, and serves notice on the judgment debtor. See Cal. Civ. Proc. Code 19 §§ 706.102(a), 706.122 (contents of notice to employee/judgment debtor), 706.125 (contents of 20 order). 21 However, “[a]n earnings withholding order may not issue against earnings of the 22 judgment debtor’s spouse unless a court order is obtained upon noticed motion.” Cal. Code Civ. 23 Proc. § 706.109 (emphasis added). Thus, the order Three Lakes seeks by this motion is an 24 intermediary order that it will then present, along with its application for an earnings withholding 25 order, to the appropriate levying officer who will then issue the withholding order itself. See 26 Choice Hotels Int’l, Inc. v. Penta Denver, LLC, 2015 WL 3830691, at *3 (N.D. Cal. June 19, 27 2015) (“[T]he Wage Garnishment Law . . . requires a court order before a judgment creditor may 28 apply for the withholding order itself with the appropriate levying officer.”). 1 Except for requiring court authorization to seek an earnings withholding order, it appears 2 that the remainder of the Wage Garnishment Law procedures apply with equal force to 3 withholding wages of a judgment debtor’s spouse. Thus, the application for the earnings 4 withholding order and the withholding order itself will account for the automatic statutory 5 withholdings cap that at least 75% of an employee’s disposable earnings are exempt from 6 earnings withholding orders. See Cal. Code Civ. Proc. §§ 706.050 (setting maximums), 706.011 7 (“Disposable earnings” means the portion of an individual’s earnings that remains after deducting 8 all amounts required to be withheld by law.”); see also 15 U.S.C. § 1673 (federal restriction on 9 garnishment). And upon notice of the issuance of the forthcoming earnings withholding order, 10 the spouse may claim a further exemption for “the portion of the . . . earnings that the judgment 11 debtor [or, in this scenario, the spouse] proves is necessary for the support of the [spouse’s] 12 family supported in whole or in part by the [spouse.]” Cal. Code Civ. Proc. § 706.051(b). To 13 claim this exemption for “necessaries,” the judgment debtor/employee spouse must file with the 14 levying officer “an original and one copy of (1) the judgment debtor’s claim of exemption and 15 (2) the judgment debtor’s financial statement.” Cal. Civ. Proc. Code § 706.105(b). These 16 procedures will also be explained in the notice the levying officer will provide to the employee. 17 See id. § 706.122. 18 The filing of any claim of exemption then triggers a series of deadlines for the judgment 19 creditor to oppose the exemption claim and to request a court hearing, if desired. Id. 20 §§ 706.105(c)(3), (d), (e). If the judgment creditor does not timely oppose, the levying officer 21 will inform the employer that the earnings withholding order is either terminated or modified, 22 depending on the degree of exemption claimed. Id. § 706.105(f). 23 At the current preliminary stage in the wage garnishment procedure, the court understands 24 its role as ensuring that the alleged spouse is truly the judgment debtor’s spouse and that the 25 earnings are community property that can be used to pay the judgment debtor’s debt. See, e.g., 26 Campbell v. Simmonds, 2005 WL 896293, at *1-2 (Cal. Ct. App. Apr. 19, 2005) (affirming trial 27 court’s order allowing wage garnishment against judgment debtor’s spouse after finding that they 28 were married before tort occurred). 1 B. Community Property 2 Under California law, subject to certain exceptions not relevant to this case, “all property, 3 real or personal, wherever situated, acquired by a married person during the marriage while 4 domiciled in this state is community property.” Cal. Fam. Code § 760. “Community property is 5 subject to enforcement of a money judgment as provided in the Family Code.” Cal. Civ. Proc. 6 Code § 695.020(a). 7 Section 910(a) of the Family Code provides: “Except as otherwise expressly provided by 8 statute, the community estate is liable for a debt incurred by either spouse before or during 9 marriage, regardless of which spouse has the management and control of the property and 10 regardless of whether one or both spouses are parties to the debt or to a judgment for the debt.” 11 Cal. Fam. Code § 910(a). Section 911(a) provides in relevant part: “The earnings of a married 12 person during marriage are not liable for a debt incurred by the person’s spouse before marriage.” 13 Cal. Fam. Code § 911(a). And Section 903(b) provides that a debt is “incurred” in the case of a 14 tort “at the time the tort occurs.” Cal. Fam. Code § 903(b). 15 “Under the above statutes, whether [Mr. Savala’s] wages could be subject to garnishment 16 for [Ms. Savala]’s debt depend[s] on whether [s]he incurred the debt before their marriage.” 17 Campbell, 2005 WL 896293, at *2. Ms. Savala’s infringing acts occurred between April and July 18 2017, and according to plaintiff’s counsel’s declaration, the Savalas have been married since at 19 least 2011. Given Ms. Savala’s failure to appear or otherwise respond to this motion, the court 20 declines to require further substantiation of the duration of the Savalas’ marriage. Thus, the court 21 finds that Ms. Savala’s debt was incurred while married to Mr. Savala. See Petrella v. Metro- 22 Goldwyn-Mayer, Inc., 572 U.S. 663, 671 (2014) (“Each time an infringing work is reproduced or 23 distributed, the infringer commits a new wrong. Each wrong gives rise to a discrete claim that 24 accrues at the time the wrong occurs.” (alterations omitted)). And Mr. Savala’s wages, as 25 community property, can be garnished in satisfaction of that judgment. 26 //// 27 //// 28 //// ] Accordingly, IT IS ORDERED THAT: 2 1. Plaintiffs motion for an earnings withholding order against the spouse of the judgment 3 debtor (ECF No. 58) is GRANTED; and 4 2. Pursuant to Federal Rule of Civil Procedure 69 and California Code of Civil Procedure 5 §§ 695.020 and 706.109, an earnings withholding order shall be issued against the 6 earnings of Gilbert Anthony Savala III, the spouse of judgment debtor Gina Savala. 7 || Dated: September 1, 2021 / a8 } i | Ld , a ce CAROLYNK. DELANEY 9 UNITED STATES MAGISTRATE JUDGE 10 1] 12 || 19.1757-three lakes 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28