The Board of Trustees et al v. Castillo et al

Filing 22

FINDINGS and RECOMMENDATIONS Recommending That Defendant's Claim of Exemption be Denied re 8 ; Objections Due Within Fourteen (14) Days signed by Magistrate Judge Erica P. Grosjean on 12/8/2015. (Martinez, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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THE BOARD OF TRUSTEES, in their
capacities as Trustees of the CEMENT
MASONS HEALTH AND WELFARE TRUST
FUND FOR NORTHERN CALIFORNIA;
CEMENT MASONS PENSION TRUST FUND
FOR NORTHERN CALIFORNIA; CEMENT
MASONS VACATION/HOLIDAY TRUST
FUND FOR NORTHERN CALIFORNIA; and
CEMENT MASONS APPRENTICESHIP AND
TRAINING TRUST FUND FOR NORTHERN
CALIFORNIA,

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FINDINGS AND
RECOMMENDATIONS
RECOMMENDING THAT
DEFENDANT’S CLAIM OF
EXEMPTION BE DENIED
OBJECTIONS DUE WITHIN FOURTEEN
(14) DAYS
(ECF No. 8)

Plaintiffs,

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Case No. 1:15-mc-00037---EPG

v.
SAMUEL MAGANA CASTILLO, individually
and doing business as CONCRETE BY SMC;
and CONCRETE BY SMC,
Defendants.

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Plaintiffs’ Motion for Order Determining Claim of Exemption came on for hearing on

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December 4, 2015 at 10:00 a.m. in the Courtroom of United States Magistrate Judge Erica P.

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Grosjean of the United States District Court for the Eastern District of California, located at 2500

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Tulare Street, Department 10, Fresno, California. Plaintiffs THE BOARD OF TRUSTEES, in
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their capacities as Trustees of the CEMENT MASONS HEALTH AND WELFARE TRUST

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FUND FOR NORTHERN CALIFORNIA; CEMENT MASONS PENSION TRUST FUND FOR

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NORTHERN CALIFORNIA; CEMENT MASONS VACATION/HOLIDAY TRUST FUND

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FOR NORTHERN CALIFORNIA; and CEMENT MASONS APPRENTICESHIP AND

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TRAINING TRUST FUND FOR NORTHERN CALIFORNIA (hereinafter “Trust Funds” or

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“Plaintiffs”) were represented by Tracy Mainguy of Weinberg, Roger & Rosenfeld, who appeared

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telephonically; Defendant made no appearance.

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I.

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BACKGROUND
On May 7, 2015, Plaintiffs were awarded judgment against Defendants in the amount of

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$119,279.52 by the U.S. District Court for the Northern District of California. On June 25, 2015,

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Plaintiffs registered the judgment in the U.S. District Court for the Eastern District of California

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pursuant to 28 U.S.C. § 1963. Based on the writ of execution that was issued in response to the

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registration, Plaintiffs asked the U.S. Marshal Service to personally serve a levy for contract

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receivables on Dale Atkins Contractor, a contractor for whom Defendants had performed

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subcontracting work. On July 17, 2015, the U.S. Marshal Service served the levy on Joel Atkins

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of Atkins Enterprises, who promptly contacted Plaintiffs and informed them that he had no

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relationship with Dale Atkins Contractor.

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On August 11, 2015, Plaintiffs asked the U.S. Marshal Service to serve the levy on Dale

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Atkins Contractor. Service was accomplished on September 3, 2015. On September 17, 2015,

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Plaintiffs contacted the U.S. Marshal Service to determine if anything had been received in

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response to the levy and were told that the U.S. Marshal Service was holding $13,580.00 that had

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been remitted by Dale Atkins Contractor. The U.S. Marshal Service indicated, however, that it

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was holding the funds to see if Defendants would be filing a Claim of Exemption with respect to

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the levied property. On October 21, 2015, Plaintiffs had not received any claim of exemption

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and again contacted the U.S. Marshal Service to inquire. The U.S. Marshal Service then informed

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Plaintiffs that they were holding the funds based on the claim of exemption from July 28, 2015,

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The U.S. Marshal Service had apparently received a claim of exemption with respect to the first levy (the
erroneously served levy) on July 28, 2015.

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although they had not served that claim of exemption on Plaintiffs (and had not told Plaintiffs that

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the July 28 claim of exemption would apply to the levy when Plaintiffs had called on September

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17). The U.S. Marshal Service finally served the Claim of Exemption on Plaintiffs on October 28,

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2015.

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The Claim of Exemption asserts that the funds should be exempt from levy because they

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fall within the exemptions set forth under California Code of Civil Procedure §§ 695.060,

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704.010, 704.020, 704.030, 704.040, 704.050, 704.060, 704.070, 704.100, 704.210, 704.720,

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704.740. The Claim is dated September 14, 2015, although the date is handwritten on the form

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next to the earlier date of July 28, 2015. No financial statement is attached to the Claim of

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Exemption, nor is there any description of the facts supporting the Claim.

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II.

DISCUSSION
Generally, “all property of [a] judgment debtor is subject to enforcement of a money

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judgment.” Cal. Code Civ. Proc. § 695.010. California law exempts specific kinds of property

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from being taken to fulfill such a judgment, however, “based on the theory that some types of

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property should not be taken to satisfy a judgment.” Ford Motor Credit Co. v. Waters, 166

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Cal.App.4th Supp. 1, 8 (Cal.App.Dep’t Super. Ct. 2008). These exemptions “are wholly statutory

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and cannot be enlarged by the courts.” Id., citing Estate of Brown, 123 Cal. 399 (1899).
To successfully make a claim of exemption, a judgment debtor must make a claim “within

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10 days after the date the notice of levy on the property claimed to be exempt was served on the

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judgment debtor.” Cal. Code Civ. Proc. § 703.520(a). The claim must include, among other

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things: (1) a “description of the property claimed to be exempt”; (2) a “statement of the facts

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necessary to support the claim”; and (3) a “financial statement” if the property is claimed as

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exempt “to the extent necessary for the support of the judgment debtor.” Cal. Code Civ. Proc. §§

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703.520(b); 703.530(a). If a claim of exemption is not made within the statutory parameters, “the

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exemption is waived and the property is subject to enforcement of a money judgment.” Cal. Code

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Civ. Proc. § 703.030(a).

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Under Federal Rule of Civil Procedure 69(a)(1), “[t]he procedure on execution—and in proceedings supplementary
to and in aid of judgment or execution—must accord with the procedure of the state where the court is located, but a
federal statute governs to the extent it applies.”

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As a threshold matter, Defendant’s Claim of Exemption is procedurally defective. In the

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blank designated to describe the property claimed to be exempt, Defendant has merely written a

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list of categories of items (e.g., “household, heirlooms, insurance, automobiles, building

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materials, business license, home, cash, wages, tools, accnt”), rather than a description of the

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specific property he is claiming is exempt (e.g., contract receivables for work performed as a

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contractor). Nor has Defendant attached the required financial statement, despite the fact that he

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asserts in the Claim that his “claim is made pursuant to a provision exempting property to the

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extent necessary for the support of the judgment debtor.” Nor does the Claim appear to have been

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made in a timely fashion. Although the Claim was purportedly made on September 14, 2015, the

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U.S. Marshal Service told Plaintiff that they were still awaiting a claim of exemption as of

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September 17, 2015.

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In addition, the Claim is substantively deficient because it does not demonstrate that any

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of the asserted exemptions applies. In a claim of exemption, “the exemption claimant has the

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burden of proof.” Cal. Code Civ. Proc. § 703.580. Defendant has not furnished any facts or

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argument in support of his claim that the money at issue should be exempt. Defendant did not

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appear at the hearing, despite receiving timely notice in advance of the hearing date, to provide

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evidence of his claim. Rather, Defendant simply checked all the boxes on the Claim of Exemption

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form and provided a laundry list of statutory exemptions, none of which appear to apply to the

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property sought to be claimed here.

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For example, Defendant cites California Code of Civil Procedure § 704.070, the “Paid

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Earnings” exemption, in his claim of exemption. But the amount claimed as exempt does not

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appear to be “earnings” as defined by the statute, which defines “earnings” as “compensation

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payable by an employer to an employee for personal services performed by such employee.” Cal.

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Civ. Proc. § 706.011. Instead, the property appears to be money received by Defendant for

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services performed by him and his employees as a subcontractor for Dale Atkins Contractor.

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(Declaration of Michelle Lauziere in Support of Motion for Order Determining Claim of

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Exemption, Exhs. A, C, ECF Nos. 11-1, 11-3.) The funds are thus receivables, not earnings, and

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are not exempt from enforcement of the judgment. In re Gokey, 152 B.R. 750, 751 (Bankr. N.D.
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Cal. 1993) (“the fact that the debtor had employees clearly takes the funds in question outside of

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the statutory definition of earnings”).

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The other exemptions Defendant cites to are equally inapplicable—the property levied is

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not, among other things, a motor vehicle or equity in a motor vehicle (§ 704.010), household

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furnishings or apparel (§ 704.020), or jewelry, heirlooms, or works of art (§ 704.040). Indeed,

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given the expansive list of exemptions Defendant asserts but the total lack of substantiation for

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any of those exemptions, there is little to suggest that Defendant’s Claim is offered in good faith.

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Equally little suggests that Defendant’s Claim should be granted.

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RECOMMENDATION

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For the reasons set forth above, the Court RECOMMENDS the following:

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1. Defendant’s Claim of Exemption be DENIED in its entirety;

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2. The U.S. Marshal Service be DIRECTED to release the $13,580.00 received from

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Dale Atkins Contractor in response to Plaintiffs’ levy to Plaintiffs and deposit the

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funds into Plaintiffs’ counsel’s trust account.

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The Clerk of the Court is DIRECTED to serve a copy of these Findings and

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Recommendations on Defendant at 1042 East K Avenue, Visalia, California 93292.

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These findings and recommendations will be submitted to the United States District Judge

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assigned to this case pursuant to the provisions of Title 28 of the United States Code section

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636(b)(1). Within fourteen (14) days after being served with these Findings and

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Recommendations, the parties may file written objections with the Court. The document should

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be captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The parties are

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advised that failure to file objections within the specified time may waive the right to appeal the

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District Court’s order. Bastidas v. Chappell, 791 F.3d 1155, 1159 (9th Cir. 2015).

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IT IS SO ORDERED.
Dated:

December 8, 2015

/s/
UNITED STATES MAGISTRATE JUDGE

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