Green v. Douglas Emmett Management CA2/5 ( 2024 )

Filed 10/28/24 Green v. Douglas Emmett Management CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
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8.1115(b). This opinion has not been certified for publication or ordered published for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
PAULA GREEN, B330681
Plaintiff, (Los Angeles County
Super. Ct. No.
v. 20STCV31115)
DOUGLAS EMMETT
MANAGEMENT, LLC, et al.
Defendants;
MATTHEW GREEN et al.,
Objectors and Appellants.
APPEALS from orders of the Superior Court of Los Angeles
County, Timothy Patrick Dillon, Judge. Reversed.
Michelman & Robinson and Jon-Jamison Hill for Objector
and Appellant Matthew Green.
Robert Green, in pro. per., Objector and Appellant.
Caldwell Law Firm and Larry Caldwell for Plaintiff.
Dinsmore & Shohl, Jeffrey R. Witham and Gina Kripotos
for Defendants.
Matthew Green (Matthew) and Robert Green (Robert)
obtained a judgment against their sister Paula Green (Paula) in a
prior case. They filed notices of judgment liens in this case,
which started when Paula filed a civil complaint against two
entities that were her landlord: Douglas Emmett Management,
LLC (Douglas Emmett) and Barrington Pacific, LLC (Barrington
Pacific) (collectively, Landlord). When Paula and Landlord
agreed to settle the case, counsel for Landlord sent Paula’s
attorney a check that the attorney agreed in writing not to
redeem until the trial court approved the settlement. Instead of
waiting as agreed, however, Paula’s attorney deposited the check
and refused to return the money. We consider whether Landlord
is liable to Matthew and Robert under a judgement enforcement
statute, Code of Civil Procedure section 708.470, for transferring
money to Paula that Matthew and Robert contend is subject to
their judgment liens.1
1
Undesignated statutory references that follow are to the
Code of Civil Procedure.
2
I. BACKGROUND
A. Prior Litigation
Paula, Matthew, and Robert are the adult children of
Dorothy Green (Dorothy) and Irwin Green (Irwin), who
established the Irwin L. Green and Dorothy L. Green Revocable
1998 Trust (the Trust). Probate litigation ensued after Irwin’s
death, and the probate court eventually removed Dorothy as
trustee of the Trust and ordered Dorothy and Paula to return
Trust assets with interest. The trial court also ordered Paula to
return money obtained by undue influence and to pay damages.
Appeals followed, and the eventual result was a probate court
judgment requiring Dorothy “and/or” Paula to pay the trustee
over $2.9 million, Paula to pay the trustee over $450,000, and
Dorothy and Paula to pay Matthew and Robert over $1.4 million
in attorney fees and expenses.
B. Paula’s Lawsuit Against, and Purported Settlement
with, the Landlord
Paula commenced this action in August 2020. Her
complaint against Landlord asserted causes of action for breach
of contract, premises liability, negligence, and intentional torts
based on an alleged bedbug infestation and water leak in the
apartment where she was living.
Matthew and Robert filed notices of lien in this litigation in
March 2021.2 They made use of the Judicial Council’s form
Notice of Lien (AT-180, EJ-185) and attached the aforementioned
2
Robert filed an amended notice of lien in May 2022. The
amended notice appears to be identical to the original notice.
3
judgment from the prior litigation.3 There are no signed proofs of
service in the appellate record, but it is undisputed Landlord and
Paula had notice of the judgment liens.
Paula and Landlord participated in a mediation in August
2022 and agreed to settle the lawsuit. The parties executed a
settlement agreement in which Paula agreed to release her
claims against Landlord in exchange for $275,000.
On September 1, 2022, Landlord’s attorney sent Paula’s
attorney, Larry Caldwell (Caldwell), an email stating the
settlement check would be delivered to his office via Federal
Express later that day. Landlord’s attorney’s email confirmed an
earlier telephone discussion to the effect that, “in light of the
liens filed by Matthew and Robert . . . , [Paula] w[ould] file a
motion for Court approval of the settlement” and “[p]ending
instructions from the Court,” Caldwell would “not cash or deposit
the check . . . .” Caldwell agreed to these conditions in a reply
email.
3
The Judicial Council form states, among other things, that
“[n]o compromise, dismissal, settlement, or satisfaction of this
action or proceeding or any of the rights of the [debtor] to money
or property under any judgment procured in this action or
proceeding may be entered into by or on behalf of that person,
and that person may not enforce any rights to money or property
under any judgment procured in this action or proceeding by a
writ or otherwise, unless one of the following requirements is
satisfied: [¶] a. the prior approval by order of the court in this
action or proceeding has been obtained; [¶] b. the written consent
of the [creditor] has been obtained or that person has released the
lien; or [¶] c. the money judgment of the [creditor] has been
satisfied.”
4
Paula filed a motion to approve the settlement about a
week later. Paula sought approval of the agreement and
distribution of $274,000 to Caldwell “as payment of attorneys’
fees owed . . . on this case and other cases brought against her by
the Green brothers, and secured by written attorneys’ liens in
favor of [Caldwell’s law firm].”4
Matthew opposed Paula’s motion to approve the settlement
and argued, among other things, that a separate action was
needed to establish the validity and priority of Caldwell’s
attorney liens. Paula responded by withdrawing her motion. In
her notice of withdrawal of the motion, Paula suggested
Matthew’s arguments regarding the trial court’s jurisdiction to
make findings regarding the validity and priority of Caldwell’s
attorney liens “w[ould] likely require a [m]otion seeking different
relief, accompanied by, potentially, a much different
[m]emorandum of [p]oints and [a]uthorities in support.”
A few days later, Paula filed a trial setting conference
report in which she stated she “ha[d] decided not to proceed with
the proposed settlement agreement.” Paula “now kn[e]w” she
and Landlord “did not have th[e] legal capacity or right to enter
into a binding settlement agreement” without court approval.
Paula indicated that “[i]nstead of proceeding with the proposed
settlement agreement, and seeking approval of it, [she] plan[ned]
to file a [m]otion for permission to dismiss this action . . . without
a settlement.”
Following Paula’s apparent disavowal of the settlement,
Landlord filed an ex parte application for an order directing
4
The remaining $1,000 was to cover court fees that had been
waived.
5
Paula and Caldwell to return the $275,000. Landlord explained
that, rather than waiting for court approval as agreed, Caldwell
cashed the settlement check on September 12, 2022.5 Paula
opposed the ex parte application and argued, among other things,
that the check amounted to a “voluntary payment” because she
and Landlord lacked capacity to enter into a binding settlement
agreement. She further argued that neither Caldwell nor
Landlord’s attorney was authorized to enter into a “professional
courtesy/’gentlemen’s agreement’” to postpone depositing the
check. The trial court denied the ex parte application without
prejudice to Landlord filing a noticed motion.
C. Motions Regarding the Status of the Litigation and
the Settlement Funds
In December 2022, Matthew, Robert, Landlord, and Paula
filed motions regarding the status of the litigation and the
settlement funds. Although this appeal concerns only the trial
court’s denial of Matthew and Robert’s motions, the other
motions provide context for the trial court’s ruling.
Paula filed a motion for leave to dismiss the action “in its
entirety with prejudice pursuant to the terms of [the]
5
Also on September 12, 2022, the trial court moved the
hearing on the motion to approve the settlement from November
2, 2022, to October 11, 2022. Inexplicably, Caldwell sent
Landlord’s attorney an email claiming that, “[a]t the hearing
today, the court approved the amount of the settlement and
vacated the trial date. The only remaining issue to be resolved is
how the $275,000 is to be divided as between Paula/[Caldwell]
and the Green Brothers. The hearing on that issue is set for
October 11, 2022 ....... ”
6
[s]ettlement [a]greement.” Notwithstanding her statements in
the trial setting conference report and arguments in opposition to
Landlord’s ex parte application, Paula contended the settlement
agreement was effective and no court approval was required
because Matthew and Robert’s judgment liens were invalid.
Landlord filed a motion for an order directing Paula and
Caldwell “to return to [the Landlord]’s counsel a settlement
payment in the amount of $275,000 conditionally delivered to
[Caldwell].”
Matthew and Robert filed motions for entry of judgment
against the Landlord pursuant to section 708.470, subdivision (c),
which gives judgment creditors a remedy against a party that
pays money or transfers property that is subject to a judgment
lien to a judgment debtor.6
The trial court ruled on the various motions in March 2023.
The court denied Paula’s motion to dismiss the action pursuant to
the settlement agreement because, among other things, it
determined Matthew and Robert’s judgment liens are valid and
enforceable and, as a result, any settlement would ultimately
require the court’s approval. The trial court further held that,
“[a]s everyone, including [Paula] and Caldwell[ ] recognize[d],”
6
The statute provides: “If the court determines that a party
(other than the judgment debtor) having notice of the lien created
under this article has transferred property that was subject to
the lien or has paid an amount to the judgment debtor that was
subject to the lien, the court shall render judgment against the
party in an amount equal to the lesser of the following: [¶] (1) The
value of the judgment debtor’s interest in the property or the
amount paid the judgment debtor. [¶] (2) The amount of the
judgment creditor’s lien created under this article.”
7
Caldwell would need to file a separate action to establish any
attorney lien.
The trial court denied Matthew and Robert’s motions for
judgment against Landlord based on the court’s determination
that the Landlord did not pay money or transfer property to
Paula within the meaning of section 708.470, subdivision (c). The
trial court determined “[t]he transmission of the funds was
conditional” based on Paula’s agreement to “hold the funds
in . . . trust until court approval after a noticed motion.”
Landlord, in the court’s view, “acted reasonably” and “could not
have anticipated that [Paula] would deposit the settlement check
notwithstanding the agreement confirmed in writing between
counsel and the lack of the statutorily-required court approval.”
The trial court granted Landlord’s motion “insofar as it
[sought] the return of the $275,000 settlement payment.” The
trial court found it “difficult to understand [Paula’s] flip-flopping
positions” as to the status of the settlement agreement but
determined she had “short-circuited the lawful process of seeking
court approval of the settlement and then, if necessary, Caldwell
filing a separate action” concerning his attorney lien. There was
“no doubt that Caldwell was acting as [Paula’s] authorized agent
when he cashed the $275,000 check and made unsupportable
arguments in [the trial] court.”
Paula did not return the $275,000 to Landlord. Instead,
she moved to vacate that portion of the trial court’s order
requiring her to do so. The court granted that motion and
vacated its March 2023 order to the extent that it required Paula
to return the $275,000 to the Landlord. The court ruled Landlord
“may assert causes of action in a cross-complaint and affirmative
defenses in an answer” concerning the $275,000.
8
Landlord thereafter filed a cross-complaint alleging causes
of action for declaratory relief, conversion, unjust enrichment,
violation of Penal Code section 496, fraudulent transfer,
constructive fraudulent transfer, and breach of fiduciary duty.
Landlord also amended its answer to Paula’s complaint to assert
affirmative defenses related to her retention of the $275,000.7
II. DISCUSSION
Matthew and Robert challenge the trial court’s conclusion
that Landlord’s delivery of the check to Caldwell was not a
payment of money subject to their judgment liens within the
meaning of section 708.470, subdivision (c). That challenge is
well taken, and we further hold the funds Landlord paid were
“subject to” Matthew and Robert’s liens. Reversal is accordingly
required. Nothing we say in this opinion expresses a view on
whether Landlord may maintain an action against Caldwell (or
Paula) to recoup the sum it will be required to pay pursuant to
this opinion.
7
Landlord moves to augment the record on appeal to include
(1) a joint stipulation to permit the filing of the cross-complaint
and first amended answer to Paula’s complaint, (2) the cross-
complaint, and (3) the first amended answer. Paula moves to
augment the record on appeal to include (1) her motion to vacate
the trial court’s order for her to return the $275,000 to Landlord,
(2) Landlord’s opposition, (3) her reply, and (4) a corrected notice
of ruling on the motion. We construe these motions as requests
for judicial notice and grant them. (Evid. Code, §§ 452, subd. (d),
459, subd. (a).)
9
A. Statutory Framework and Standard of Review
The Enforcement of Judgments Law (§ 680.010 et seq.)
permits a party in whose favor a judgment is entered (a
“judgment creditor”) to obtain a lien in a pending action involving
the party that must pay the judgment (a “judgment debtor”).
Section 708.410, subdivision (a) authorizes such a lien, “to the
extent required to satisfy the judgment creditor’s money
judgment, on both of the following: [¶] (1) Any cause of action of
such judgment debtor for money or property that is the subject of
the action or proceeding. [¶] (2) The rights of such judgment
debtor to money or property under any judgment subsequently
procured in the action or proceeding.”
Once the judgment creditor files and serves notice of the
lien, any “compromise, dismissal, settlement, or satisfaction of
the pending action” requires either court approval or the
judgment creditor’s written consent. (§ 708.440, subd. (a).) To
obtain court approval of a settlement, the judgment debtor must
file a noticed motion. (§ 708.440, subd. (b).) After a hearing, the
trial court “may, in its discretion, . . . make an order . . . that may
include such terms and conditions as the court deems necessary.”
(§ 708.440, subd. (b).)
This appeal requires resolution of a separate, narrow issue
involving the provision of the Enforcement of Judgments Law
that governs circumstances in which a judgment debtor receives
money or property subject to the lien without the required
approval or consent. As mentioned earlier in the margin, section
708.470, subdivision (c) provides that “[i]f the court determines
that a party (other than the judgment debtor) having notice of
the lien created under this article has transferred property that
was subject to the lien or has paid an amount to the judgment
10
debtor that was subject to the lien, the court shall render
judgment against the party in an amount equal to the lesser of
the following: [¶] (1) The value of the judgment debtor’s interest
in the property or the amount paid the judgment debtor. [¶] (2)
The amount of the judgment creditor’s lien created under this
article.” Relief under section 708.470 does not require a finding
of collusion between the payor and the judgment debtor. (Gilman
v. Dalby (2021) 61 Cal.App.5th 923, 936.)
If a trial court finds that a party with notice of a lien has
made a payment or transfer to the judgment debtor of property
subject to the lien, however, the court shall enter judgment
against them. (§ 708.470, subd. (c).) The factual elements of this
analysis—i.e., whether the party had notice and whether there
was a payment or transfer—are reviewed for substantial
evidence. (Lynch v. California Coastal Com. (2017) 3 Cal.5th
470, 476 [holding that factual questions are typically reviewed for
substantial evidence].) Where these factual conditions are
satisfied, “the question on appeal is whether or not, as a matter of
law, the trial court complied with the applicable statutory law.”8
(Casa Eva I Homeowners Assn. v. Ani Construction & Tile, Inc.
(2005) 134 Cal.App.4th 771, 778.)
8
The trial court’s approval of a settlement and imposition of
terms and conditions under section 708.440 is reviewed for abuse
of discretion. (Pangborn Plumbing Corp. v. Carruthers &
Skiffington (2002) 97 Cal.App.4th 1039, 1048-1049.) The parties
here mistakenly suggest the same standard applies to the trial
court’s denial of a motion for judgment under section 708.470,
subdivision (c).
11
B. Section 708.740 Applies to the $275,000 Paid by
Landlord to Caldwell
In its construction of section 708.470, subdivision (c)’s
limiting language, the trial court erroneously focused on the
verbs (i.e., transfer and payment) rather than their objects (i.e.,
property and money subject to the lien). There is nothing in the
language of section 708.470, subdivision (c) to suggest it does not
apply to conditional transfers or payments. (See In re Marriage
of Katz (1991) 234 Cal.App.3d 1711, 1720-1721 [emphasizing that
although “[t]ransfer of property is not defined in section 708.470,”
the word “transfer” has been construed in other contexts to
include “the changing of . . . control or possession”].) More
practically, attaching conditions to a transfer or payment does
not necessarily safeguard the interests of a judgment creditor. If
a payor could insulate itself from liability under section 708.470,
subdivision (c) merely by attaching conditions to any payment to
a judgment debtor, the remedy provided by this statute would be
illusory.
Our analysis must therefore turn to whether the money the
Landlord paid to Paula “was subject to the lien.” (§ 708.470,
subd. (c).) We hold it was because we believe “subject to” requires
a broad reading in a case of this sort. Specifically, where, as
here, there is an executed settlement agreement that calls for
payment of a sum in exchange for dismissal of an action, a
payment made pursuant to that agreement is “subject to” the lien
because the litigation will conclude (with or without formal entry
of judgment) upon full performance of the agreement. (See, e.g.,
Pangborn, supra, 97 Cal.App.4th at 1057 [party that made a
payment to a judgment debtor pursuant to a settlement
12
agreement liable to a judgment creditor under section 708.470,
subdivision (c)].)
Paula and Caldwell argue against this result, relying on
Casa Eva and believing that case and Pangborn are
irreconcilable. That is incorrect; Casa Eva is just inapposite. In
Casa Eva, a judgment creditor sought to reach funds recovered by
its judgment debtor’s insurer following a series of settlements.
(Casa Eva, supra, 134 Cal.App.4th at 777-778.) The Court of
Appeal held the lack of a judgment precluded relief under section
708.470, subdivisions (a) and (b)—provisions with which we are
not concerned. (Id. at 781.) With respect to section 708.470,
subdivision (c), however, the Court of Appeal did not focus on the
lack of a judgment. Rather, it emphasized that the judgment
debtor had not received any money or property and its insurer’s
recovery was based on an assignment of rights from another
party. (Id. at 782-784.)
If Paula and Caldwell were correct that Landlord’s
payment was not “subject to” a properly noticed lien, the mischief
that would work in this case (and potentially many cases where
settlements call for a payment of funds in exchange for voluntary
dismissal of an action) is obvious. If we were to hold that the
$275,000 payment is not governed by section 708.470, subdivision
(c) because there has not yet been a judgment in the litigation
filed by Paula against Landlord, all that would remain to be done
to avoid Matthew and Robert’s lien after issuance of our opinion
would be for Paula to voluntarily dismiss her lawsuit (or
otherwise fail to prosecute it). That would effectively
consummate the settlement to which the parties agreed: Paula
would have her $275,000 and Landlord would have its dismissal
such that there would be little if any incentive to seek to recoup
13
the funds that Caldwell deposited in apparent contravention of
his agreement with counsel for Landlord.
Insofar as Caldwell and Landlord contend the $275,000
payment cannot be “subject to” Matthew and Robert’s liens
because the settlement between Paula and Landlord violated
section 708.440, subdivision (a), we believe the contention mixes
apples and oranges. We are not concerned in this appeal with
passing judgment on whether the settlement agreement complied
with that statue and the consequences if it did not. We are
concerned only with deciding whether Landlord made a payment
that was “subject to” the liens of which it had notice. As we have
explained, Landlord did.9
9
Paula moves for sanctions against Robert, Matthew, and
Matthew’s attorney for taking a frivolous appeal. (Cal. Rules of
Court, rule 8.276(a)(1).) Naturally, that motion is denied.
14
DISPOSITION
The trial court’s orders denying Matthew and Robert’s
motions for entry of judgment against Douglas Emmett and
Barrington Pacific are reversed and the cause is remanded for
entry of judgment against Douglas Emmett and Barrington
Pacific pursuant to section 708.470, subdivision (c). Matthew and
Robert are awarded costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
BAKER, Acting P. J.
We concur:
KIM, J.
DAVIS, J.*
*
Judge of the Los Angeles County Superior Court, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
15