3123 SMB v. Horn CA2/7 ( 2021 )

Filed 12/14/21 3123 SMB v. Horn CA2/7
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
3123 SMB LLC et al., B309412
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC682318)
v.
STEVEN J. HORN,
Defendant and Respondent.
APPEAL from an amended judgment of the Superior Court
of Los Angeles County, David Sotelo, Judge. Reversed.
Law Office of David Knieriem and David Knieriem; Kling
Law Firm and Anthony N. Kling for Plaintiffs and Appellants.
Skane Mills and Jonathan Belaga; Valerie F. Horn &
Associates and Valerie F. Horn; and Law Offices of Steven J.
Horn and Steven J. Horn for Defendant and Respondent.
INTRODUCTION
Steven J. Horn obtained a judgment confirming an
arbitration award against Anthony Kling (Kling) and Mary J.
Kling. Kling appealed from the judgment. (Kling v. Horn
(Dec. 14, 2021, B305967) [nonpub. opn.] (Kling I).) While that
appeal was pending, the trial court granted a motion by Horn to
amend the judgment to add three entities as judgment debtors:
3123 SMB LLC, Lincoln Corporation, and Kling Corporation (the
Kling Entities). The court ruled the entities were alter egos of
the Klings and amended the judgment. The Kling Entities
appealed from the amended judgment—the subject of this appeal
(Kling II). But because Kling had already filed a notice of appeal
from the original judgment, the trial court did not have
jurisdiction to amend the judgment. One judgment, two appeals:
What to do? We affirm in Kling I and reverse in Kling II.
FACTUAL AND PROCEDURAL BACKGROUND
As discussed in more detail in our opinion in Kling I, supra,
B305967, this action arises from a fee dispute between Horn, an
attorney, and the Klings, his former clients.1 (Kling is also an
attorney.) In September 2014 Horn initiated an arbitration with
the American Arbitration Association (AAA) against the Klings.
An arbitrator eventually issued an award in September 2018 in
1 Horn represented the Klings in a lawsuit—Kling in his
individual capacity and as the trustee of his trust, but Mary
Kling only as the trustee of her named trust. All references to
the Klings are to the Klings in those capacities.
2
favor of Horn and against the Klings and the Kling Entities.
Horn filed a petition to confirm the award, and the Klings filed a
petition to vacate the award. The trial court granted Horn’s
petition to confirm the award against the Klings (but not against
the Kling Entities), denied the Klings’ petition to vacate the
award, and in March 2020, entered judgment in favor of Horn
and against the Klings.
Shortly after the court entered the judgment, Horn filed a
motion to amend the judgment to add the Kling Entities as
judgment debtors (although not as alter egos of Kling). Before
the trial court ruled on the motion, Kling filed a notice of appeal
from the judgment. The Klings then opposed Horn’s motion to
amend the judgment, arguing (among other things) the trial
court did not have jurisdiction to amend the judgment while the
appeal was pending.
The trial court granted Horn’s motion. The court ruled that
it retained jurisdiction to amend the judgment under Code of
Civil Procedure section 917.1, subdivision (a)(1), which provides
that, “[u]nless an undertaking is given, the perfecting of an
appeal shall not stay enforcement of the judgment or order in the
trial court if the judgment or order is for . . . [¶] . . . [m]oney or
the payment of money . . . .”2 The court also ruled each of the
Kling Entities was an alter ego of the Klings and “had the
opportunity to ‘litigate’ the matter.” The court entered an
amended judgment, from which the Kling Entities timely filed
this appeal.
2 Undesignated statutory references are to the Code of Civil
Procedure.
3
DISCUSSION
We asked the parties under Government Code section
68081 to brief whether the trial court had jurisdiction to amend
the judgment to add the Kling Entities after Kling filed his notice
of appeal from the judgment. Horn argues the trial court had
jurisdiction to add judgment debtors to the judgment while the
judgment was on appeal “because it ensured that justice would be
done and there was no undertaking posted [to] stay enforcement
of the judgment pending appeal.” Kling asserts the “lone
reported case to address this issue” ultimately “declined to
specifically address” it. We conclude that, because the trial court
did not have jurisdiction, the amended judgment is void and must
be reversed.3
A. Section 916 Deprived the Trial Court of Jurisdiction
To Amend the Judgment
Section 916 provides that, unless a listed exception applies,
“the perfecting of an appeal stays proceedings in the trial court
upon the judgment or order appealed from or upon the matters
embraced therein or affected thereby, including enforcement of
the judgment or order, but the trial court may proceed upon any
other matter embraced in the action and not affected by the
judgment or order.” “[S]ection 916, as a matter of logic and
3 A “void judgment or order is appealable if that judgment or
order is otherwise appealable.” (Varian Medical Systems, Inc. v.
Delfino (2005) 35 Cal.4th 180, 200; see Phelan v. Superior Court
(1950) 35 Cal.2d 363, 366; Young v. Tri-City Healthcare Dist.
(2012) 210 Cal.App.4th 35, 51; In re Marriage of Micalizio (1988)
199 Cal.App.3d 662, 670, fn. 2.)
4
policy, divests the trial court of jurisdiction over the subject
matter on appeal—i.e., jurisdiction in its fundamental sense.”
(Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180,
198 (Varian); see Vosburg v. Vosburg (1902) 137 Cal. 493, 496;
Hopkins & Carley v. Gens (2011) 200 Cal.App.4th 1401, 1409;
Davis v. Thayer (1980) 113 Cal.App.3d 892, 912.) The “filing of a
notice of appeal deprives the trial court of jurisdiction of the
cause and vests jurisdiction with the appellate court until the
reviewing court issues a remittitur.” (In re Anna S. (2010)
180 Cal.App.4th 1489, 1499.) “The purpose of the automatic stay
. . . ‘is to protect the appellate court’s jurisdiction by preserving
the status quo until the appeal is decided’” and to “‘prevent[ ] the
trial court from rendering an appeal futile by altering the
appealed judgment or order by conducting other proceedings that
may affect it.’” (Varian, at p. 189; accord, LAOSD Asbestos Cases
(2018) 28 Cal.App.5th 862, 872; Elsea v. Saberi (1992)
4 Cal.App.4th 625, 629.)
“When triggered, [section 916] bars all proceedings” in the
trial court “that ‘directly or indirectly seek to “enforce, vacate or
modify [the] appealed judgment”’” (LAOSD Asbestos Cases, supra,
28 Cal.App.5th at p. 872; see Varian, supra, 35 Cal.4th at p. 189),
and generally divests the trial court of the “‘power to amend or
correct its judgment . . . .’” (Vosburg v. Vosburg, supra, 137 Cal.
at p. 496; accord, Davis v. Thayer, supra, 113 Cal.App.3d at
p. 912; Estate of Hirschberg (1964) 224 Cal.App.2d 449, 466-467;
Huskey v. Berini (1955) 135 Cal.App.2d 613, 617; Linstead v.
Superior Court (1936) 17 Cal.App.2d 9, 12; see Pazderka v.
Caballeros Dimas Alang, Inc. (1998) 62 Cal.App.4th 658, 666 [“an
appeal from a judgment order strips the trial court of any
authority to rule on the judgment”].) There is little dispute here
5
that, absent an applicable exception, section 916 precluded the
trial court from amending the judgment while that judgment was
under review in this court.
It is true, as Kling (for some reason) suggests, the court
may correct a “clerical error” in a judgment, even after a party
perfects an appeal, “when the mistake is obvious from the other
parts of the record and the proper correction can be made
therefrom.” (Crawford v. Meadows (1921) 55 Cal.App. 4, 11; see
Lang v. Superior Court (1961) 198 Cal.App.2d 16, 17-18; Lewis v.
Firestone (1959) 170 Cal.App.2d 129, 139-140.) And the trial
court’s amendment to the judgment adding the Kling Entities as
judgment debtors was a correction of sorts. The court’s authority
to amend a judgment “‘“‘to add additional judgment debtors on
the ground that a person or entity is the alter ego of the original
judgment debtor . . . “‘is an equitable procedure based on the
theory that the court is . . . inserting the correct name of the real
defendant.’”’”’” (Favila v. Pasquarella (2021) 65 Cal.App.5th 934,
942; accord, Rubio v. CIA Wheel Group (2021) 63 Cal.App.5th 82,
101; Lopez v. Escamilla (2020) 48 Cal.App.5th 763, 766.) But it
was not a correction of a mere clerical error.
“Clerical error . . . is to be distinguished from judicial error
which [generally] cannot be corrected by amendment.” (In re
Candelario (1970) 3 Cal.3d 702, 705; accord, Aspen Internat.
Capital Corp. v. Marsch (1991) 235 Cal.App.3d 1199, 1204;
Pettigrew v. Grand Rent-A-Car (1984) 154 Cal.App.3d 204, 210.)
“‘The difference between judicial and clerical error rests . . . on
whether [the alleged error] was the deliberate result of judicial
reasoning and determination’” and on “‘whether the error was
made in rendering the judgment, or in recording the judgment
6
rendered.’” (Machado v. Myers (2019) 39 Cal.App.5th 779, 797;
see Candelario, at p. 705; Aspen, at p. 1204.)
Here, the trial court initially decided to confirm the AAA
arbitration award and enter judgment against the Klings but not
the Kling Entities because none of the Kling Entities had signed
an arbitration agreement with Horn and some of the entities did
not exist at the time Horn provided legal services to the Klings.
That ruling was an intentional decision based on the trial court’s
understanding of the law and the facts; it was not an
“inadvertent one made by the court which cannot reasonably be
attributed to the exercise of judicial consideration or discretion.”
(Bowden v. Green (1982) 128 Cal.App.3d 65, 71; see Machado v.
Myers, supra, 39 Cal.App.5th at p. 798 [parties were not asking
the court to correct a clerical error where the parties “were
asking the court to correct the language of the judgment which
the court intentionally adopted”]; Tokio Marine & Fire Ins. Corp.
v. Western Pacific Roofing Corp. (1999) 75 Cal.App.4th 110, 118
[error was not a clerical error where there was “no evidence that
anyone suggested to the trial judge at the time of rendition of
judgment that the [appellants] be named as judgment debtors,”
that “the court had an intent to include them as judgment
debtors,” or that “their name was omitted through mere
inadvertence”].)
The trial court subsequently decided to amend the
judgment, not because of prior inadvertence, but because, in the
court’s opinion, Horn proved under section 187 the Kling Entities
were alter egos of the Klings and could be added as judgment
debtors under such a theory. This was a separate exercise of the
court’s discretionary power based on new facts, not a correction of
a clerical error. (See Epley v. Califro (1958) 49 Cal.2d 849, 854
7
[order setting aside a dismissal was not a correction for
inadvertence or clerical error, but rather “a new decision after
reconsideration of the facts and the applicable legal principles”];
Danko v. O’Reilly (2014) 232 Cal.App.4th 732, 736 [“‘“The
decision to grant an amendment”’” to add a judgment debtor
under an alter ego theory “‘“lies in the sound discretion of the
trial court.”’”]; Greenspan v. LADT LLC (2010) 191 Cal.App.4th
486, 508 [same]; see also Favila v. Pasquarella, supra,
65 Cal.App.5th at p. 947 [stating the requirements for adding a
judgment debtor under an alter ego theory].)4 Indeed, Horn
concedes he “filed a motion to amend the judgment to add [the
Kling Entities] because the trial court’s reasoning in removing
[them] from the judgment was legally incorrect.” The clerical-
mistake exception to section 916 did not apply.
At oral argument, counsel for the Kling entities (who
should be arguing the stay under section 916 applies) cited the
court’s recent decision in Blizzard Energy, Inc. v. Schaefers (2021)
4 At least one court has suggested that amending a judgment
to add a judgment debtor under an alter ego theory corrects a
clerical error, even where the amendment is based on extrinsic
evidence. (See Thomson v. L. C. Roney & Co. (1952)
112 Cal.App.2d 420, 427.) The court in Thomson was discussing
the court’s general authority to amend a judgment to add a
judgment debtor under an alter ego theory, not whether the court
has jurisdiction to do so while the judgment is on appeal. There
is no dispute a trial court generally has authority to make such
an amendment under section 187. (See Favila v. Pasquarella,
supra, 65 Cal.App.5th at p. 942.) But as discussed, such an
amendment is not a clerical error that a court can correct after
the defendant perfects an appeal.
8
71 Cal.App.5th 832, which held section 916 does not apply to
proceedings under the Sister State Money Judgments Act (see
§ 1710.10 et seq.) because they are “special proceedings, not civil
actions.” (Blizzard Energy, at p. 843.) “Part 2 of the Code of Civil
Procedure,” which includes section 916, “extends generally only
to civil ‘actions,’ and not to ‘special proceedings’” (Agricultural
Labor Relations Bd. v. Tex-Cal Land Management, Inc. (1987)
43 Cal.3d 696, 707), and “‘[h]earings to confirm an arbitration
award are “special proceedings” as contrasted with “actions”’”
(Paramount Unified School Dist. v. Teachers Assn. of Paramount
(1994) 26 Cal.App.4th 1371, 1387; see §§ 22, 23). But an appeal
from a judgment confirming an arbitration award is an appeal
from a judgment in a civil action. (See § 1287.4 [judgment
confirming an arbitration award judgment “has the same force
and effect as, and is subject to all the provisions of law relating
to, a judgment in a civil action of the same jurisdictional
classification”]; § 1294.2 [appeal from a judgment confirming an
arbitration award “shall be taken in the same manner as an
appeal from an order or judgment in a civil action”]; Rubin v.
Western Mutual Ins. Co. (1999) 71 Cal.App.4th 1539, 1547 [“The
express language of section 1287.4 requires that a judgment
imposed after confirmation of an arbitration award be treated as
one in an ordinary civil action.”]; Hall, Goodhue, Haisley &
Barker, Inc. v. Marconi Conf. Center Bd. (1996) 41 Cal.App.4th
1551, 1555 [“the express mandate of section 1287.4 [is] that
judgments confirming arbitration awards are subject to all the
provisions of law relating to a judgment in a civil action”];
Trollope v. Jeffries (1976) 55 Cal.App.3d 816, 823 [“[a]s respects
confirmation, its purpose is to raise the award to the status of a
9
judgment having the same force as judgment in a civil action”].)
Therefore, section 916 applies.
B. Adding the Kling Entities as Judgment Debtors Was
Not Enforcing the Judgment Under Section 917.1
Horn argues the “automatic stay from Code of Civil
Procedure section 916 does not stay enforcement of money
judgments, which are considered collateral matters and are
excepted from the automatic stay.” As discussed, section 917.1,
subdivision (a)(1), does provide an exception to the stay of trial
court proceedings under section 916 for the enforcement of money
judgments not subject to an undertaking, and Kling did not file
an undertaking to stay enforcement of the judgment pending
appeal. Horn argues that the trial court’s amendment adding the
Kling Entities as judgment debtors was a means of enforcing the
judgment and that, under section 917.1, subdivision (a)(1), the
trial court had jurisdiction to amend the judgment.
The language of section 917.1, however, does not support
Horn’s interpretation.5 Section 917.1 uses the term
“enforcement,” not “amendment,” to refer to trial court
proceedings that are not stayed when an appealing party fails to
5 “The law governing the right of an appellant to a stay of
execution pending appeal is totally statutory, created by
legislative enactment. As such, it is subject to the general rules
of statutory construction, including the basic proposition that
such enactments should be construed in accordance with
legislative intent.” (Miller v. Gross (1975) 48 Cal.App.3d 608,
612.) The interpretation of a statute is a question of law we
review de novo. (Smith v. LoanMe, Inc. (2021) 11 Cal.5th 183,
190.)
10
post an undertaking. Conversely, cases repeatedly refer to the
procedure of adding a judgment debtor to a judgment as an alter
ego under section 187 as one to “correct,” “modify,” or “amend”
the judgment, not one to “enforce” it. (See, e.g., Motores De
Mexicali, S. A. v. Superior Court (1958) 51 Cal.2d 172, 174-175;
Favila v. Pasquarella, supra, 65 Cal.App.5th at p. 942;
MSY Trading, Inc. v. Saleen Automotive, Inc. (2020)
51 Cal.App.5th 395, 402; Wolf Metals Inc. v. Rand Pacific Sales
Inc. (2016) 4 Cal.App.5th 698, 703-704; Toho-Towa Co., Ltd. v.
Morgan Creek Productions, Inc. (2013) 217 Cal.App.4th 1096,
1106.)
Moreover, moving to amend a judgment to add an
additional judgment debtor is not part of the law governing
enforcement of judgments. A motion to amend a judgment to add
a judgment debtor is an equitable procedure that derives from
the court’s authority to adopt proceedings necessary to carry its
jurisdiction into effect under section 187. (Favila v. Pasquarella,
supra, 65 Cal.App.5th at p. 942; Triyar Hospitality Management,
LLC v. WSI (II)-HWP, LLC (2020) 57 Cal.App.5th 636, 641;
Highland Springs Conference & Training Center v. City of
Banning (2016) 244 Cal.App.4th 267, 289; NEC Electronics Inc. v.
Hurt (1989) 208 Cal.App.3d 772, 778.) Though it may indirectly
assist the judgment creditor in satisfying the original judgment
(see Wells Fargo Bank, N.A. v. Weinberg (2014) 227 Cal.App.4th
1, 7; Greenspan v. LADT LLC, supra, 191 Cal.App.4th at
pp. 516-517), it is not an enforcement procedure under the
Enforcement of Judgments Law (§ 680.010 et seq.).
In contrast, the Enforcement of Judgments Law, which is
“set out elsewhere in the Code of Civil Procedure and in the
California Rules of Court,” provides “in detail several means of
11
enforcing a judgment, including liens on real and personal
property (§§ 697.010-697.920), writs of execution (§§ 699.010-
701.830), garnishment of wages (§§ 706.010-706.154) and writs of
possession or sale (§§ 712.010-716.030).” (Conservatorship of
McQueen (2014) 59 Cal.4th 602, 609; accord, Highland Springs
Conference & Training Center v. City of Banning (2019)
42 Cal.App.5th 416, 424.) But nowhere does the Enforcement of
Judgments Law “suggest[ ] that the filing and pursuit of an alter
ego motion to amend a judgment to add an additional judgment
debtor . . . constitutes the enforcement of the judgment the
movant seeks to amend.” (Highland Springs, at pp. 425-426; see
id. at pp. 423-425 [provisions in the Code of Civil Procedure
governing “prejudgment costs,” rather than “postjudgment
enforcement costs and fees,” applied to attorneys’ fees sought in
connection with a motion to amend the judgment to add
judgment debtors under an alter ego theory]; but see Oyakawa v.
Gillett (1992) 8 Cal.App.4th 628, 630, fn. 2 [“arguably, the
amendment adding a judgment debtor is simply a matter of
enforcement,” but “[h]owever interesting this issue may be, our
resolution [of the appeal] on other grounds . . . makes it
unnecessary to consider this point”].) Indeed, it is not until the
court grants the motion under section 187 that the judgment
creditor can take any enforcement actions against the new
judgment debtors. (See Highland Springs, at pp. 425-426 [while
the Enforcement of Judgments Laws procedures result, “at least
to some degree, in the satisfaction of the judgment,” a “section
187 motion to amend a judgment to add an additional judgment
debtor,” if granted, “merely allows the judgment creditor to
12
enforce the now-amended judgment against the additional
judgment debtor”].)6
C. The Amended Judgment Must Be Reversed
Because section 916 divested the trial court of jurisdiction
over the subject matter of the judgment, “any ‘proceedings taken
after the notice of appeal was filed are a nullity’” and “void—and
not merely voidable.” (Varian, supra, 35 Cal.4th at pp. 197-198;
see Davis v. Thayer, supra, 113 Cal.App.3d at p. 912.) When
“‘there is an appeal from a void judgment’”—or in this case, a void
amended judgment—our jurisdiction “‘is limited to reversing the
trial court’s void acts.’” (Varian, at p. 200; see Griset v. Fair
Political Practices Com. (2001) 25 Cal.4th 688, 701.) So that is
what we must do here. Of course, because in Kling I we affirm
the judgment confirming the arbitration award, the trial court
will soon have jurisdiction to hear a(nother) motion to amend the
judgment to add additional judgment debtors. (See Favila v.
Pasquarella, supra, 65 Cal.App.5th at p. 949 [a judgment creditor
may add an alter ego as a judgment debtor under section 187 at
any time].)
6 Nor did ensuring “justice be done,” as Horn asserts, give
the trial court jurisdiction to amend the judgment. Though
courts may have power “to pursue whatever course . . . the justice
of the case require[s]” (Bowers v. Dickerson (1861) 18 Cal. 420,
421), the pursuit of justice, without more, does not give courts
jurisdiction where they otherwise lack it.
13
DISPOSITION
The amended judgment is reversed. The parties are to bear
their costs on appeal.
SEGAL, J.
We concur:
PERLUSS, P. J.
FEUER, J.
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