The 12 Tribes of Israel, U.S.A. v. Barnum CA2/5

Filed 5/4/23 The 12 Tribes of Israel, U.S.A. v. Barnum CA2/5
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California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
THE 12 TRIBES OF ISRAEL, B315528
U.S.A., INC.,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. No. BC574481)
v.
KATRINA BARNUM,
Defendant and Appellant.
APPEAL from orders of the Superior Court of Los Angeles
County, Elaine Lu, Judge. Affirmed.
Kerendian & Associates, Shab Kerendian and Edrin
Shamtob for Defendant and Appellant.
Westwood Lawyers and Lottie Cohen for Plaintiff and
Respondent.
___________________________
Katrina Barnum appeals from orders that directed the sale
of her ownership interest in two properties to satisfy a judgment
against her. The only issue on appeal is whether the trial court
correctly determined the priority between a recorded judgment
lien and two recorded deeds of trust securing attorney fees
Barnum allegedly incurred. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A series of transactions leading back some 40 years affects
our analysis of the present claims. This is the second appeal
between the parties. The background information we describe is
taken from the previous appellate opinion, Twelve Tribes of Isr. v.
Barnum (Mar. 17, 2022, B299838) [nonpub. opn.] 2022 WL
804783 (Tribe I).
Respondent is The 12 Tribes of Israel, U.S.A., Inc. (the
Tribe), a Los Angeles religious organization that appellant’s
husband, Wilhelm Grafrath, led for many years. In 1985, certain
members of the similarly-named Twelve Tribes of Israel, U.S.A.,
Inc. of New York, moved to California and formed the Tribe in
Los Angeles. Initially, the Tribe was an unincorporated religious
organization, governed by the rules set up by its headquarters in
New York. The Tribe formally incorporated in California in 1998.
(Tribe I, supra, B299838 at p. *4.)
1. The Highland Park Property
In 1997, appellant’s husband purchased on behalf of the
Tribe real property in Highland Park as “a married man as his
sole & separate property.” Appellant quitclaimed any interest
she had in the property to him. It was common for members of
the Tribe to lend their credit in the acquisition of real property
and hold the property in trust for the organization. Appellant’s
husband agreed to transfer the property to the Tribe after the
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mortgage was fully paid. The Tribe paid the down payment,
mortgage, taxes, insurance, repairs, and improvements to the
property for the next 17 years. It used the property as its
headquarters and place of worship. (Tribe I, supra, B299838 at
pp. *4-*5.)
In 2006, appellant’s husband was deported to Germany,
following a felony conviction for child molestation. After his
departure, the Tribe continued to use the property as its
headquarters and to pay the related costs for it. In 2014,
appellant quietly listed the property for sale, pursuant to a power
of attorney executed by her husband. (Tribe I, supra, B299838 at
p. *5.)
The Tribe filed suit against both appellant and her
husband seeking to halt the sale on the grounds the Tribe had
equitable rights to the property and/or the right to recoup the
payments it had been making. Appellant accepted an offer on the
property, but the pending lawsuit threatened to derail the
closing. Appellant met with members of the Tribe and promised
to transfer the net proceeds of the sale to the organization, in
exchange for their dismissal of the pending lawsuit. The Tribe
dismissed the lawsuit and escrow successfully closed on the
property. Appellant paid none of the proceeds to the Tribe.
(Tribe I, supra, B299838 at pp. *6-*7.)
After the sale proceeds were deposited into her and her
husband’s joint bank account, she paid from that account the
delinquent property taxes on four properties she owned or
partially owned with her brother, which we call the La Brea
Avenue property, the Chesley Avenue property, the Long Street
property and the San Gabriel property. Two of these properties—
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San Gabriel and La Brea Avenue—were set to be sold in a tax
auction within two weeks of her payment of the property taxes.
2. The Judgment Establishing the Constructive Trust
The Tribe first sought to reopen the lawsuit it had
previously dismissed when appellant represented she would
make payment of the monies due. When that was not successful,
on March 15, 2015, the Tribe filed a new action against appellant
for breach of contract and promissory fraud. The present appeal
arises from this lawsuit. The case eventually proceeded to a
bench trial, bifurcated for liability and punitive damages. In the
liability phase, the trial court found in favor of the Tribe on both
causes of action. The court awarded compensatory damages of
$375,000 for each claim and imposed a constructive trust.
On January 25, 2019, the trial court (Hon. Holly E. Kendig)
issued an interlocutory judgment in favor of the Tribe in the
amount of $375,000 plus pre- and post-judgment interest. The
court further ordered a constructive trust placed on appellant’s
joint bank account with her husband and over the four properties
to which appellant had funneled proceeds of the sale of the
Highland Park property. The interlocutory judgment included
the following: “This judgment may be recorded with the Los
Angeles County Recorder’s Office to establish the constructive
trust upon those four real properties in favor of Plaintiff, The 12
Tribes of Israel, U.S.A., Inc.” On January 29, 2019, the Tribe
recorded the January 25th interlocutory judgment with the Los
Angeles County Recorder.
Sometime after the liability phase of the trial was
completed, appellant retained Kerendian & Associates, Inc. to
represent her in the punitive damages phase of the trial.
Kerendian agreed to secure its fees through deeds of trust
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executed by appellant against her interest in the same four
properties identified in the interlocutory judgment. On
February 8, 2019 (after the Tribe recorded the interlocutory
judgment), Kerendian recorded a deed of trust for unspecified
attorney fees on each of the four properties over which the trial
court had imposed the constructive trust.
The court ultimately awarded the Tribe punitive damages
in the amount of $180,000. On May 23, 2019, an amended
judgment was entered in favor of the Tribe. On June 4, 2019, the
Tribe recorded Judicial Council form EJ-001, a form abstract of
judgment, with the Los Angeles County Recorder’s Office. The
abstract of judgment showed a total judgment of $724,520.51,
reflecting compensatory damages plus punitive damages and
interest to date. The abstract of judgment listed appellant’s real
property in the county but did not indicate that a constructive
trust had been imposed on these properties.
Appellant appealed the May 23, 2019 judgment. In Tribe I,
our colleagues in Division 4 affirmed the judgment as to the
breach of contract cause of action, but reversed the promissory
fraud claim finding it barred by the litigation privilege. (Tribe I,
supra, B299838 at pp. *20–*22.) The appellate court also
reversed the punitive damages award which had been based on
the now reversed promissory fraud claim. (Id. at p. *30.)
Although the appellate court referred to the constructive trust in
its discussion of why it affirmed the breach of contract cause of
action, the court did not expressly affirm or reverse the
imposition of the trust. The appellate court did conclude its
disposition of the appeal with: “The judgment is affirmed in all
other respects.” (Id. at p. *31.)
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After the remittitur issued, the Tribe submitted to the trial
court a proposed third amended judgment striking the
promissory fraud and punitive damages awards to conform to the
Tribe I remittitur. On July 29, 2022, the trial court signed the
proposed third amended judgment. It declined appellant’s
request to strike the imposition of the constructive trust, finding
it lacked jurisdiction to do so. “ ‘The trial court is empowered to
act only in accordance with the direction of the reviewing court;
action which does not conform to those directions is void.’ ”
(Ayyad v. Sprint Spectrum, L.P. (2012) 210 Cal.App.4th 851, 859,
quoting Hampton v. Superior Court (1952) 38 Cal.2d 652, 655.)
The trial court explained, “The Court of Appeal very clearly
reversed only the promissory fraud claim and the award of
punitive damages. The Court of Appeal has already affirmed the
judgment ‘in all other respects,’ including the imposition of the
constructive trust. [¶] Indeed, the Court of Appeal also expressly
addressed an alternate basis to affirm the judgment, including
the imposition of constructive trust: ‘estoppel may be applied
where necessary to prevent either unconscionable injury or
unjust enrichment (ibid.) and justify the imposition of a
constructive trust. (Mazzera v. Wolf (1947) 30 Cal.2d 531, 535.)
In light of the trial court’s findings on the issue of fraud, and
imposition of a constructive trust to avoid unjust enrichment, we
[the Court of Appeal in Tribe 1] find this doctrine to be an
additional ground justifying affirmance of the trial court’s finding
in favor of the Tribe on its contract cause of action.’ ”
3. The Tribe’s Efforts to Enforce the Judgment
While the Tribe I appeal was pending, the Tribe attempted
to force the sale of appellant’s partial interest in the La Brea and
Chesley Avenue properties to satisfy the May 23, 2019 judgment
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awarding punitive damages along with compensatory damages
and creation of the constructive trust.1 Appellant had not posted
an undertaking in the Tribe I appeal, citing liquidity issues, and
the judgment was not otherwise stayed.2
On December 10, 2020, the trial court issued a writ of
execution directing enforcement of the May 23, 2019 judgment
against appellant. A notice of levy was sent to appellant and the
Tribe on January 12, 2021, as to the La Brea Avenue property
and on January 22, 2021, as to the Chesley property.
On February 1, 2021, the Tribe filed an ex parte application
pursuant to Code of Civil Procedure section 704.770 for an order
to show cause why an order for sale should not issue. The Tribe
noted in its ex parte application that the properties were
encumbered by the following senior debt: the Chesley property
had a mortgage of less than $30,000 and the La Brea property
had outstanding property taxes in the approximate amount of
$9,000 and a previous judgment lien of approximately $3,200.
The Tribe asserted the deeds of trust in favor of law firm
1 Appellant and her brother held title as “KATRINA M.
BARNUM-GRAFRATH and LESLIE EDWIN BARNUM, tenants
in common as their sole and separate property.” Code of Civil
Procedure section 704.820, subdivision (a) provides that “[a]t an
execution sale of a dwelling, the interest of the judgment debtor
in the dwelling and not the dwelling shall be sold” if the dwelling
is owned by the judgment debtor as a tenant in common.
2 Appellant filed a motion to stay enforcement of the
judgment pending appeal or for waiver of the undertaking, which
was to be heard with the Tribe’s ex parte application for sale of
the properties. The trial court’s order on appellant’s motion is
not in the record but we assume the motion was denied because
the court granted the application for sale of the properties.
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Kerendian were junior to its judgment lien because the
interlocutory judgment was recorded first in time. Appellant
opposed the application, arguing, among other things, that her
attorney’s deeds of trust were superior and senior to the Tribe’s
judgment lien because they were recorded before the abstract of
judgment had been recorded. Appellant’s counsel disclosed that
its fees, secured by the deeds of trust, totaled $332,000.
On May 24, 2021, the trial court (Hon. Elaine Lu) granted
the Tribe’s ex parte application and on May 25, 2021, issued an
order for sale of appellant’s ownership interest in the properties.
In its ruling, the trial court found that the Tribe’s judgment lien
was superior to Kerendian’s deeds of trust under California’s
race-notice statutes because the interlocutory judgment imposing
the constructive trust was recorded on January 29, 2019, while
Kerendian’s deeds of trust were recorded 10 days later, on
February 8, 2019. (Civil Code, § 1214, et seq.)
The court rejected appellant’s argument that, pursuant to
Code of Civil Procedure section 697.310, subdivision (a), the
Tribe’s judgment lien was not really a lien until the Tribe filed an
abstract of judgment on June 4, 2019. The court concluded the
requirement that an abstract of judgment be filed, rather than a
certified copy of the judgment, only applied to money judgments.
Because the judgment imposed a constructive trust, Civil Code
sections 2223 and 2224 governed over Code of Civil Procedure
section 697.310, subdivision (a).
Appellant timely appealed from the May 24, 2021 and
May 25, 2021 orders.
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DISCUSSION
1. Respondent’s Motion to Dismiss Is Denied
On January 3, 2023, after briefing in the present appeal
was completed, the Tribe moved to dismiss the appeal, arguing it
was moot because the writ of execution underlying the May 24
and May 25, 2021 orders had expired on December 9, 2022.
Because appellant had not filed an undertaking in connection
with the present appeal, the Tribe secured a new writ of
execution on November 1, 2022, and filed it with the trial court
on December 5, 2022. The Tribe also applied for new orders for
sale of appellant’s real properties in connection with the new writ
of execution. On December 22, 2022, the trial court issued an
order to show cause for the sale of real properties. Appellant
opposed dismissal, arguing the trial court’s order on the priority
of liens remains in effect regardless of the expiration of the writ
of execution and defeats mootness.
“As a rule, courts will generally exercise their discretion to
review a moot case when ‘the case presents an issue of broad
public interest that is likely to recur,’ ‘when there may be a
recurrence of the controversy between the parties,’ or ‘when a
material question remains for the court's determination.’ ” (In re
D.P. (2023) 14 Cal.5th 266, 282.) Here, the same controversy
between the same parties is likely to recur with new writs of
execution and orders for sale. Additionally, a resolution of lien
priority now may impact future buyers and sellers. (Rudick v.
State Bd. of Optometry (2019) 41 Cal.App.5th 77, 88–89.)
Whether or not the Tribe is successful in its attempts to sell
appellant’s interest in the properties, the issue of who will be
paid first from the proceeds remains.
The motion to dismiss is denied.
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2. The Trial Court Properly Determined the Judgment
Lien Was Senior to the Deeds of Trust
The sole issue on appeal is whether the trial court correctly
determined that the Tribe’s judgment lien is senior to attorney
Kerendian’s deeds of trust. Appellant argues that only an
“abstract of judgment,” rather than a certified copy of the
judgment, may create a cognizable lien pursuant to Code of Civil
Procedure section 697.310 (CCP 697.310). The answer turns on
the significance of the recording of the interlocutory judgment.
For ease of reference, we recite a brief chronology of events
related to the interlocutory and amended judgments, the abstract
of judgment, and the post-judgment activities:
January 25, 2019: The trial court issues an interlocutory
judgment creating a constructive trust
over four properties partially or wholly
owned by appellant.
January 29, 2019: The Tribe records the interlocutory
judgment.
February 8, 2019: Kerendian records a deed of trust for each
of the four properties identified in the
interlocutory judgment as subject to the
constructive trust.
May 23, 2019: The trial court enters an amended
judgment that includes the punitive
damages award in favor of the Tribe as
well as the previously-awarded
compensatory damages and the
constructive trust.
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June 4, 2019: The Tribe records an abstract of judgment
reflecting compensatory damages plus
punitive damages and interest to date.
The abstract of judgment does not specify
a constructive trust has been created.
Appellant urges us to ignore the January 29, 2019
recording of the certified copy of the interlocutory judgment
awarding compensatory damages and establishing the
constructive trust.3 By appellant’s calculation, Kerendian’s deeds
of trust, recorded on February 8, 2019, are senior by several
months to the Tribe’s abstract of judgment, recorded on June 4,
2019.
The Tribe relies on its January 29, 2019 recording of the
interlocutory judgment, contending it created a valid
encumbrance that is senior to the deeds of trust recorded 10 days
later. This recording gave notice to Kerendian of the Tribe’s prior
interest in the La Brea and Chesley properties under applicable
race-notice statutes. We agree.
3 Appellant contends the holding in Tribe I eliminated the
constructive trust because it was imposed as a remedy for the
stricken promissory fraud claim. As we have observed, the trial
court disagreed with appellant’s interpretation of Tribe I on this
point and declined to strike the constructive trust from the
judgment. Appellant’s appeal (case No. B322802) was dismissed
on December 8, 2022, pursuant to California Rules of Court, rule
8.140(a) after she failed to designate the record or pay reporter
fees. The judgment became final 30 days after the involuntary
dismissal. (Cal. Rules of Court, rule 8.264(b)(1).) We have no
appellate jurisdiction over that matter. (Woodridge Escondido
Property Owners Assn. v. Nielsen (2005) 130 Cal.App.4th 559,
577.)
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a. Standard of Review
We review de novo the trial court’s determination of
priority between the Tribe’s judgment lien and Kerendian’s deeds
of trust. This is a question of law. The pertinent facts are
undisputed, and the question of priorities involves the application
of statutes to undisputed facts. (Lozada v. City and County of
San Francisco (2006) 145 Cal.App.4th 1139, 1148–1149
[application of statute to undisputed facts presents question of
law subject to de novo review on appeal].)
b. The Relevant Recording Statutes
The California real property recording system gives priority
to the person whose instrument is first recorded, if that person is
a bona fide purchaser or encumbrancer without notice of prior
interests. Any subsequently recorded instrument is junior. (Civil
Code, §§ 1107, 1213–1215.) Thus, the beneficiary of a deed of
trust on property acquires his or her title or lien subject to all
previous transfers of title and previously created liens and
encumbrances of which he or she has actual or constructive
knowledge. (Civil Code, §§ 1213, 1217.)
Government Code section 27201 requires the recorder to
“upon payment of proper fees and taxes, accept for recordation
any instrument, paper, or notice that is authorized or required by
. . . court order to be recorded . . . if the instrument, paper, or
notice contains sufficient information to be indexed as provided
by statute, meets recording requirements of state statutes and
local ordinances, and is photographically reproducible.” Any
written “instrument” (aside from a will) that affects the title to or
possession of real property can be recorded if it otherwise
conforms to the procedural requirements of the recording laws.
(Civ. Code, § 1215.) An “instrument” is “a written paper signed
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by a person or persons transferring the title to, or giving a lien on
real property, or giving a right to a debt or duty.” (Gov. Code,
§ 27279.)
Government Code section 27282, subdivision (a)(1)
specifically permits “a judgment affecting the title to or
possession of real property, authenticated by the certificate of the
clerk of the court in which the judgment was rendered” to be
recorded “without acknowledgment, certificate of
acknowledgement, or further proof.” (Italics added.) Government
Code section 27326 likewise requires a county recorder to file and
record “certified copies of final judgments or decrees partitioning
or affecting the title or possession of real property, any part of
which is situated in his [or her] county. From the time of filing
with the recorder for record, the certified copy of the judgment or
decree imparts notice to all persons of its contents, and any
subsequent purchaser, mortgagee, and lienholder purchases and
takes with the same notice and effect as if the copy of the decree
were a duly recorded deed, grant, or transfer.”
The Enforcement of Judgments Law (Code Civ. Proc.,
§ 680.010, et seq.) sets out the procedural requirements for the
enforcement of money judgments and nonmoney judgments.
“ ‘Money judgment’ means that part of a judgment that requires
the payment of money.” (Code Civ. Proc., § 680.270.) Nonmoney
judgments include judgments for possession or sale of real or
personal property. (Code Civ. Proc., § 712.010, et seq.) CCP
697.310, relating to money judgments only, provides: “Except as
otherwise provided by statute, a judgment lien on real property is
created under this section by recording an abstract of a money
judgment with the county recorder.”
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By contrast, when a money judgment is included in a
judgment for possession or sale of real property, Code of Civil
Procedure section 712.040 governs enforcement of the money and
nonmoney portions of the judgment. It provides: “A writ of
possession or sale may be enforced as a writ of execution to
satisfy any money judgment included in the judgment for
possession or sale.”4 (Code Civ. Proc., § 712,040, subd. (a).)
c. Analysis
Appellant relies on CCP 697.310 and Behniwal v. Mix
(2007) 147 Cal.App.4th 621 (Behniwal) to argue that only an
abstract of judgment, not a certified copy of a judgment, may
create a lien sufficient to provide notice under the recording
statutes. According to appellant, the recording of the
interlocutory judgment on January 29, 2019 had no legal force or
effect because it is not an abstract of judgment. Not so.
The judgment recorded by the Tribe on January 29, 2019
was not solely a money judgment subject to CCP 697.310. It
included both a money judgment in the form of compensatory
damages and a nonmoney judgment in the form of the creation of
a constructive trust on the properties.5 Neither CCP 697.310 nor
4 “[T]he procedural requirements for issuance of [writs of
possession or sale] are substantially the same as for writs of
execution [relating to money judgments].” (Ahart, Cal. Practice
Guide: Enforcing Judgments & Debts (The Rutter Group 2022)
¶ 6:311, citing Code of Civ. Proc. §§ 712.010, 712.020 and In re
Coy (C.D.Cal. 2016) 552 B.R. 199, 204.)
5 “A constructive trust is a remedy used by a court of equity
to compel a person who has property to which he or she is not
justly entitled to transfer it to the person entitled to it. The trust
is passive, the only duty being to convey the property.”
(13 Witkin, Summary of Cal. Law (11th ed. 2022) Trusts, § 357;
14
Beniwal limit the recording of documents in this setting to an
abstract of judgment. By its express language, CCP 697.310 is
limited to money judgments and does not apply to these
circumstances. Behniwal, relying on CCP 697.310, is inapposite.
It addressed only whether a trial court’s attorney fees order (i.e.,
a money judgment) was superior to all pre-existing liens on
certain real property.6 Behniwal held that it was not. (Behniwal,
supra, 147 Cal.App.4th at p. 636.)
Code of Civil Procedure section 712.040, subdivision (a),
sets out a separate, yet substantially similar, process by which a
party may enforce a money judgment that is included in a
judgment for possession or sale of real property. Code of Civil
Procedure section 712.040 does not require an abstract of
judgment to be filed. Instead, the Government Code requires the
county recorder to accept for recordation any instrument
authorized by court order to be recorded (Gov. Code, § 27201) and
additionally permits the county recorder to record “a judgment
affecting the title to” real property (Gov. Code, § 27282). The
interlocutory judgment itself expressly authorizes the recording
of the interlocutory judgment, per the Government Code.7 Given
Pac. Lumber Co. v. Superior Court (1990) 226 Cal.App.3d 371,
377; Calistoga Civic Club v. City of Calistoga (1983)
143 Cal.App.3d 111, 116–117.)
6 An attorney fees order constitutes a money judgment.
(Felczer v. Apple Inc. (2021) 63 Cal.App.5th 406, 416.)
7 The interlocutory judgment states:
“It is further ordered that a constructive trust in the
amount of the Judgment is imposed upon Katrina Barnum’s [also
known as Katrina Barnum Grafrath] interests in the following
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the clear language of the recording statutes, the judgment
recorded on January 29, 2019 created a valid encumbrance on the
La Brea and Chesley properties that provided notice and was
senior to Kerendian’s deeds of trust.
DISPOSITION
The challenged orders are affirmed. Respondent to recover
its costs on appeal.
RUBIN, P. J.
WE CONCUR:
BAKER, J. MOOR, J.
four legally described real properties until this Judgment is paid,
or until further court order:
A. 815 La Brea Avenue, Inglewood, CA 90302
APN: 4016-006-001
Lot#421 Tract 216, Map MB10- Page 21, Inglewood,
California
B. 2222 Del Mar Avenue, Rosemead, CA 91770
APN: 5277-021-002
Lot #2, Tract 11133, Block B, Rosemead, CA 91770
C. 5727 Chesley Avenue, Los Angeles, CA 90043
APN: 5007-022-006
Lot #67 4, Tract 911, Los Angeles, CA 90043
D. 1008 Long Street, Inglewood, CA 90302
APN: 4013-003-007
Lot #183, Tract 4476, Inglewood, CA 90302
This Judgment may be recorded with the Los Angeles
County Recorder’s Office to establish the constructive trust upon
those four real properties in favor of Plaintiff, The 12 Tribes of
Israel, U.S.A., Inc.”
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