Gateway Commercial Finance, LLC v. NRG Building and Consulting, Inc.

Filing 25

ORDER re: Third Party Claim of William W. Fisher to Ownership of Levied Property. Signed by Judge Barry Ted Moskowitz on 08/07/2017.(ajs)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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Case No.: 17-mc-0527
GATEWAY COMMERCIAL
FINANCE, LLC,

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Plaintiff,

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v.

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ORDER RE: THIRD PARTY CLAIM
OF WILLIAM W. FISHER TO
OWNERSHIP OF LEVIED
PROPERTY

NRG BUILDING & CONSULTING,
INC. and SANDRA J. FISHER,

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Defendants.

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Before the Court is a third-party claim of William W. Fisher to ownership of

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levied property, and an opposition by plaintiff/ judgment creditor Gateway

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Commercial Finance, LLC (“Gateway”), to the third-party claim. (ECF No. 10.) The

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parties filed supplemental briefs (ECF Nos. 15, 19, 20) and presented additional

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evidence and argument at hearings on July 24, 2017, and July 31, 2017. For the

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reasons discussed below, the Court finds that Mr. Fisher has established a valid

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third-party claim to ownership of the levied funds.

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I.

BACKGROUND

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On January 10, 2017, the United States District Court for the Southern

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District of Florida entered a consent final judgment in favor of Gateway and against

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NRG Building and Consulting, Inc. and Sandra J. Fisher in the amount of

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$75,256.89. On April 17, 2017, Gateway registered the judgment in this District
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and began enforcement proceedings. (ECF No. 1.)

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On June 1, 2017, the U.S. Marshal served a writ of execution on Chase

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Bank, which in turn levied $5,449.12 from a savings account held in the names of

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William W. Fisher and Sandra J. Fisher. Gateway Opp. (ECF No. 10) at ¶ 2.

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On June 15, 2017, the Marshal received a third-party claim from Mr. Fisher

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in which he asserts that he, not Ms. Fisher, is the owner of the funds in the levied

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account. See id. ¶ 3; Third-Party Claim of William W. Fisher (ECF No. 10 at 5).

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He states in a supporting declaration that he is Ms. Fisher’s 82-year-old father, that

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the funds in the account are his, and that they consist of his income from odd jobs

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and Social Security benefits deposited to a Chase checking account and

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periodically transferred to the levied savings account. Id. ¶ 5. He says he added

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his daughter’s name to his accounts so she could help him manage his finances

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when he became unable to do so himself. Id. ¶ 6.

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On June 26, 2017, Gateway filed an opposition and petition for hearing on

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the merits of Mr. Fisher’s third-party claim, arguing that Mr. Fisher’s evidence was

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insufficient to show the levied funds were his. See Gateway Opp.

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On July 24 and 31, 2017, the Court held hearings at which the parties

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presented additional evidence and argument on the validity of Mr. Fisher’s third-

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party claim. Mr. Fisher testified that he added his daughter’s name to the Chase

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account in approximately 2009 because he was having debilitating health

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problems and needed her help managing his finances.

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declaration testimony that all of the funds deposited in the account were his, except

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that in addition to the income from odd jobs and Social Security benefits, he said

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the account also contained roughly $4,600.00 that represented a portion of the

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proceeds of the sale of a Kubota tractor. Pl.’s Exs. 1, 5. He testified that the tractor

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had belonged to him, and that he sold it to a cash buyer in August 2016 for

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$5,000.00, with the help of Ms. Fisher, who posted a listing on her Craiglist account

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on his behalf. Pl.’s Ex. 3, Invoice No. 300893; Pl.’s Ex. 7.

He reiterated his

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Ms. Fisher testified that she had never deposited money into the savings

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account or withdrawn funds from it, and that she had only accessed her father’s

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account to pay his bills online when he was ill. She concurred that the Kubota

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tractor belonged to her father, and said that although she helped him sell it using

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her Craigslist account, neither she nor her company, judgment debtor NRG

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Building & Consulting, Inc., had any ownership interest in it.

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Gateway argued at the conclusion of the hearing that Mr. Fisher’s evidence

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was not credible and failed to meet his burden of proof to show the validity of his

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claim. It argued Mr. Fisher’s testimony that he earned income from odd carpentry

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jobs should be discredited, since he lacked a contractor’s license. Gateway also

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called into question whether Mr. Fisher had credibly established ownership of the

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Kubota tractor.

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declaration, and suggested the testimony that the tractor was sold in a cash

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transaction was inherently suspicious. It also argued that because the tractor had

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sat on Ms. Fisher’s property for several years and was sold using her Craigslist

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account, it may have actually belonged to Ms. Fisher.

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II.

It pointed out that he had not mentioned the tractor in his

DISCUSSION

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Pursuant to Fed. R. Civ. P. 69(a), these judgment enforcement proceedings

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are governed by California law. Fed. R. Civ. P. 69(a); Credit Suisse v. United

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States Dist. Ct., 130 F.3d 1342, 1344 (9th Cir. 1997). California Code of Civil

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Procedure §§ 720.010, et seq., establishes a claims procedure by which third

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parties can assert a claim of ownership or interest in property levied upon under a

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writ of execution. See Cal. Code Civ. Pro. § 720.110. The third party must file

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with the levying authority a claim that includes (1) the name and address of the

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claimant; (2) a description of the property; (3) a description of the interest claimed,

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including the facts on which the claim is based; (4) an estimate of the market value

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of the interest claimed, Cal. Code Civ. Pro. § 720.130(a), as well as a copy of any

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writing on which the claim is based, § 720.130(b).
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After a third-party claim is filed, the creditor may petition the court for a

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hearing to determine the validity of the third-party claim and the proper disposition

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of the property that is the subject of the claim. Cal. Code Civ. Pro. § 720.310(a).

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At the hearing, the third party has the burden of proving an interest in the property

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by a preponderance of the evidence. Cal. Code Civ. Pro. § 720.360; United Pac.

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Energy Operations & Consulting, Inc. v. Gas & Oil Techs., Inc., No. 1:11-cv-00756-

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OWW-SMS, 2011 U.S. Dist. LEXIS 112905, at *7 (E.D. Cal. Sept. 30, 2011). If the

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third party presents evidence that it owns the property in question, the burden shifts

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to the creditor to establish that the third-party’s interest is invalid or inferior to the

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creditor’s interest in the property. Oxford Street Props., LLC v. Rehab. Assocs.,

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LLC, 206 Cal. App. 4th 297, 307 (2012). At the conclusion of the hearing, the court

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must determine the validity of the third-party claim and “may order the disposition

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of the property or its proceeds in accordance with the respective interests of the

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parties.” Cal. Code Civ. Pro. § 720.390; Whitehouse v. Six Corp., 40 Cal. App. 4th

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527, 534 (1995).

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Mr. Fisher contends that even though the levied account bears his daughter’s

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name, he has a claim of ownership superior to Gateway’s interest because all of

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the funds deposited in the account were his. Generally speaking, “a judgment or

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levy reaches only the interest of the debtor in the property because a judgment

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creditor can acquire no greater right in the property levied upon than that of its

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judgment debtor.” Regency Outdoor Advertising, Inc. v. Carolina Lanes, Inc., 31

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Cal. App. 4th 1323, 1330 (1995). “An account is nothing more than a contract of

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deposit of funds between a depositor and a financial institution,” Lee v. Yang, 111

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Cal. App. 4th 481, 490 (2003). Multiple-party bank accounts are regulated by the

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California Multiple-Party Accounts Law (“CAMPAL”), Part 2 of Division 5 of the

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California Probate Code, § 5100, et seq. See Cal. Fin. Code § 6800. CAMPAL

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contains provisions prescribing contractual language that should be used to create

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particular types of multiple-party accounts. See, e.g., Cal. Probate Code § 5132
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(identifying various types of multiple-party accounts), § 5203 (setting forth

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contractual language to be set forth in the “signature card, passbook, contract, or

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instrument evidencing an account” to create particular types of multiple-party

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accounts).

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Here, although Gateway characterizes the levied savings account as a “joint

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account,” it is not clear from the evidence what type of account it was. Neither the

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contract creating the account, nor the instrument by which Ms. Fisher was added

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to it, are in evidence. See Cal. Probate Code § 5203 (providing that a joint bank

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account is created by including the words “[t]his account or certificate is owned by

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the named parties. Upon the death of any of them, ownership passes to the

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survivor(s)” in the “signature card, passbook, contract, or instrument evidencing an

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account”). Mr. Fisher testified “it was not a joint bank account.” Although the bank

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statement attached to Mr. Fisher’s declaration identifies the account signatories as

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“William W Fisher or Sandra J Fisher,” see Decl. Wm. Fisher, Ex. A, the use of the

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word “or” between the names on a bank account does not presumptively create a

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joint account. Manti v. Gunari, 5 Cal. App. 3d 442, 447 (1970) (“the use of the

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word ‘or’ does not create a joint tenancy”); Estate of Fisher, 198 Cal. App. 3d 418,

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427 (1988) (same).

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Regardless of the type of account, however, under CAMPAL, “[a]n account

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belongs, during the lifetime of all parties, to the parties in proportion to the net

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contributions by each, unless there is clear and convincing evidence of a different

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intent.” Cal. Probate Code § 5301(a); see Lee, 111 Cal. App. 4th at 490, 491

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(noting that “at any point in time the sums on deposit in an account belong to a

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party in proportion to his or her net contribution” and holding that the “creation of a

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joint account does not result in a completed gift to the cotenant; rather, the gift

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occurs when the nondepositing party makes a withdrawal from the account”).

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Here, Mr. Fisher and his daughter both testified that all of the funds deposited in

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the account were his, including the proceeds from the sale of the Kubota tractor;
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that Ms. Fisher never made any of the deposits or withdrawals and only accessed

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the account to pay her father’s bills online; and that Mr. Fisher’s intent in adding

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her name to the account was merely to facilitate her management of his affairs

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when he was incapacitated. Under § 5301(a), this undisputed evidence was

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sufficient to establish Mr. Fisher’s ownership of the levied account. See Banc of

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America Leasing & Capital, LLC v. Sferas Inc., No. B224787, 2011 WL 1744943

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(Cal. App. 2011) (unpublished) (trial court properly upheld third-party claim where

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claimant showed he had contributed all funds held in an account he shared with

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the judgment debtor).

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Gateway relies on California Probate Code § 5134(b) in an effort to dispel

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the conclusion that the account belonged to Mr. Fisher. Gateway Suppl. Br. (ECF

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No. 20) at 2. Section 5134 defines “net contribution”—the term used in § 5301(a)—

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and provides in pertinent part that:

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(a) “Net contribution” of a party to an account as of any given time is the sum

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of all of the following:

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(1) All deposits thereto made by or for the party, less all withdrawals

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made by or for the party that have not been paid to or applied to the use of

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any other party.

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(2) A pro rata share of any interest or dividends earned, whether or not
included in the current balance.
(3) Any proceeds of deposit life insurance added to the account by

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reason of the death of the party whose net contribution is in question.

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(b) In the absence of proof otherwise:

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(1) Only parties who have a present right of withdrawal shall be
considered as having a net contribution.
(2) The net contribution of each of the parties having a present right of
withdrawal is deemed to be an equal amount.
Contrary to Gateway’s argument, it is subsection (a) of § 5134, not subsection (b),
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that applies here. Mr. Fisher’s evidence established that all of the deposits to, and

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withdrawals from, the levied savings account were made by or for him. Under

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§ 5134(a)(1), this evidence established that all of the net contributions to the

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account were his. Gateway relies on § 5134(b), arguing that because Ms. Fisher

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testified she had the ability to withdraw money from her father’s savings account,

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she had a “present right of withdrawal” and should be deemed to have an equal

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share in the net contributions to the account. Yet Gateway’s reliance on § 5134(b)

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is misplaced. Subsection (b) of § 5134 creates presumptions that apply only “[i]n

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the absence of proof otherwise” of the actual amount of net contributions. Cal.

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Probate Code § 5134(b) (emphasis added); see id., Law Revision Comm’n

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Comments (subsection (b) “provides a clear rule concerning the amount of ‘net

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contribution’ in the absence of proof of a different amount”) (emphasis added).

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Here, there is no absence of proof regarding the source or amount of each of the

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signatories’ net contributions to the account, so there is no evidentiary gap to fill

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with the presumptions set forth in § 5134(b).

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Because Mr. Fisher established ownership of the levied account, the burden

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shifted to Gateway to establish it had a superior interest in it. Gateway tried to

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meet its burden by questioning the credibility of Mr. Fisher’s evidence, but the

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Court found its arguments unpersuasive. Gateway’s contention that Ms. Fisher

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may have been the real owner of the tractor because the tractor sat on her property

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for a period of time, and because she helped sell it using her Craigslist account,

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amounted to speculation. The phone number provided in the Craigslist listing was

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Mr. Fisher’s. The fact that the tractor was sold for cash is not inherently incredible,

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particularly since Mr. Fisher was able to produce his copy of the invoice for the

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transaction.

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For the same reasons, Gateway failed to demonstrate that the Kubota

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tractor was property of Ms. Fisher on which it had a secured lien. See Chrysler

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Credit Corp. v. Superior Court, 17 Cal. App. 4th 1303, 1311 (1993) (“[T]he general
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rule is that the secured party … has the burden of tracing funds received from the

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sales of collateral so as to show that they are in fact the identifiable proceeds of

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those sales.”).

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In sum, the Court finds that Mr. Fisher has proved by a preponderance of the

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evidence that he is the owner of the funds in the levied account. Therefore, his

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third-party claim is valid.

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III.

CONCLUSION AND ORDER

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For the reasons discussed above, the Court finds that William W. Fisher has

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a valid third-party claim and is entitled to the return of the levied funds. Three court

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days after the entry of this order, assuming there are no objections, the Court will

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issue an order directing the U.S. Marshal to return the funds to Mr. Fisher.

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IT IS SO ORDERED.
Dated: August 7, 2017

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