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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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 SOUTHERN DISTRICT OF CALIFORNIA 8 9 Case No.: 17-mc-0527 GATEWAY COMMERCIAL FINANCE, LLC, 10 11 Plaintiff, 12 v. 13 ORDER RE: THIRD PARTY CLAIM OF WILLIAM W. FISHER TO OWNERSHIP OF LEVIED PROPERTY NRG BUILDING & CONSULTING, INC. and SANDRA J. FISHER, 14 Defendants. 15 16 17 Before the Court is a third-party claim of William W. Fisher to ownership of 18 levied property, and an opposition by plaintiff/ judgment creditor Gateway 19 Commercial Finance, LLC (“Gateway”), to the third-party claim. (ECF No. 10.) The 20 parties filed supplemental briefs (ECF Nos. 15, 19, 20) and presented additional 21 evidence and argument at hearings on July 24, 2017, and July 31, 2017. For the 22 reasons discussed below, the Court finds that Mr. Fisher has established a valid 23 third-party claim to ownership of the levied funds. 24 I. BACKGROUND 25 On January 10, 2017, the United States District Court for the Southern 26 District of Florida entered a consent final judgment in favor of Gateway and against 27 NRG Building and Consulting, Inc. and Sandra J. Fisher in the amount of 28 $75,256.89. On April 17, 2017, Gateway registered the judgment in this District 1 17-mc-0527 1 and began enforcement proceedings. (ECF No. 1.) 2 On June 1, 2017, the U.S. Marshal served a writ of execution on Chase 3 Bank, which in turn levied $5,449.12 from a savings account held in the names of 4 William W. Fisher and Sandra J. Fisher. Gateway Opp. (ECF No. 10) at ¶ 2. 5 On June 15, 2017, the Marshal received a third-party claim from Mr. Fisher 6 in which he asserts that he, not Ms. Fisher, is the owner of the funds in the levied 7 account. See id. ¶ 3; Third-Party Claim of William W. Fisher (ECF No. 10 at 5). 8 He states in a supporting declaration that he is Ms. Fisher’s 82-year-old father, that 9 the funds in the account are his, and that they consist of his income from odd jobs 10 and Social Security benefits deposited to a Chase checking account and 11 periodically transferred to the levied savings account. Id. ¶ 5. He says he added 12 his daughter’s name to his accounts so she could help him manage his finances 13 when he became unable to do so himself. Id. ¶ 6. 14 On June 26, 2017, Gateway filed an opposition and petition for hearing on 15 the merits of Mr. Fisher’s third-party claim, arguing that Mr. Fisher’s evidence was 16 insufficient to show the levied funds were his. See Gateway Opp. 17 On July 24 and 31, 2017, the Court held hearings at which the parties 18 presented additional evidence and argument on the validity of Mr. Fisher’s third- 19 party claim. Mr. Fisher testified that he added his daughter’s name to the Chase 20 account in approximately 2009 because he was having debilitating health 21 problems and needed her help managing his finances. 22 declaration testimony that all of the funds deposited in the account were his, except 23 that in addition to the income from odd jobs and Social Security benefits, he said 24 the account also contained roughly $4,600.00 that represented a portion of the 25 proceeds of the sale of a Kubota tractor. Pl.’s Exs. 1, 5. He testified that the tractor 26 had belonged to him, and that he sold it to a cash buyer in August 2016 for 27 $5,000.00, with the help of Ms. Fisher, who posted a listing on her Craiglist account 28 on his behalf. Pl.’s Ex. 3, Invoice No. 300893; Pl.’s Ex. 7. He reiterated his 2 17-mc-0527 1 Ms. Fisher testified that she had never deposited money into the savings 2 account or withdrawn funds from it, and that she had only accessed her father’s 3 account to pay his bills online when he was ill. She concurred that the Kubota 4 tractor belonged to her father, and said that although she helped him sell it using 5 her Craigslist account, neither she nor her company, judgment debtor NRG 6 Building & Consulting, Inc., had any ownership interest in it. 7 Gateway argued at the conclusion of the hearing that Mr. Fisher’s evidence 8 was not credible and failed to meet his burden of proof to show the validity of his 9 claim. It argued Mr. Fisher’s testimony that he earned income from odd carpentry 10 jobs should be discredited, since he lacked a contractor’s license. Gateway also 11 called into question whether Mr. Fisher had credibly established ownership of the 12 Kubota tractor. 13 declaration, and suggested the testimony that the tractor was sold in a cash 14 transaction was inherently suspicious. It also argued that because the tractor had 15 sat on Ms. Fisher’s property for several years and was sold using her Craigslist 16 account, it may have actually belonged to Ms. Fisher. 17 II. It pointed out that he had not mentioned the tractor in his DISCUSSION 18 Pursuant to Fed. R. Civ. P. 69(a), these judgment enforcement proceedings 19 are governed by California law. Fed. R. Civ. P. 69(a); Credit Suisse v. United 20 States Dist. Ct., 130 F.3d 1342, 1344 (9th Cir. 1997). California Code of Civil 21 Procedure §§ 720.010, et seq., establishes a claims procedure by which third 22 parties can assert a claim of ownership or interest in property levied upon under a 23 writ of execution. See Cal. Code Civ. Pro. § 720.110. The third party must file 24 with the levying authority a claim that includes (1) the name and address of the 25 claimant; (2) a description of the property; (3) a description of the interest claimed, 26 including the facts on which the claim is based; (4) an estimate of the market value 27 of the interest claimed, Cal. Code Civ. Pro. § 720.130(a), as well as a copy of any 28 writing on which the claim is based, § 720.130(b). 3 17-mc-0527 1 After a third-party claim is filed, the creditor may petition the court for a 2 hearing to determine the validity of the third-party claim and the proper disposition 3 of the property that is the subject of the claim. Cal. Code Civ. Pro. § 720.310(a). 4 At the hearing, the third party has the burden of proving an interest in the property 5 by a preponderance of the evidence. Cal. Code Civ. Pro. § 720.360; United Pac. 6 Energy Operations & Consulting, Inc. v. Gas & Oil Techs., Inc., No. 1:11-cv-00756- 7 OWW-SMS, 2011 U.S. Dist. LEXIS 112905, at *7 (E.D. Cal. Sept. 30, 2011). If the 8 third party presents evidence that it owns the property in question, the burden shifts 9 to the creditor to establish that the third-party’s interest is invalid or inferior to the 10 creditor’s interest in the property. Oxford Street Props., LLC v. Rehab. Assocs., 11 LLC, 206 Cal. App. 4th 297, 307 (2012). At the conclusion of the hearing, the court 12 must determine the validity of the third-party claim and “may order the disposition 13 of the property or its proceeds in accordance with the respective interests of the 14 parties.” Cal. Code Civ. Pro. § 720.390; Whitehouse v. Six Corp., 40 Cal. App. 4th 15 527, 534 (1995). 16 Mr. Fisher contends that even though the levied account bears his daughter’s 17 name, he has a claim of ownership superior to Gateway’s interest because all of 18 the funds deposited in the account were his. Generally speaking, “a judgment or 19 levy reaches only the interest of the debtor in the property because a judgment 20 creditor can acquire no greater right in the property levied upon than that of its 21 judgment debtor.” Regency Outdoor Advertising, Inc. v. Carolina Lanes, Inc., 31 22 Cal. App. 4th 1323, 1330 (1995). “An account is nothing more than a contract of 23 deposit of funds between a depositor and a financial institution,” Lee v. Yang, 111 24 Cal. App. 4th 481, 490 (2003). Multiple-party bank accounts are regulated by the 25 California Multiple-Party Accounts Law (“CAMPAL”), Part 2 of Division 5 of the 26 California Probate Code, § 5100, et seq. See Cal. Fin. Code § 6800. CAMPAL 27 contains provisions prescribing contractual language that should be used to create 28 particular types of multiple-party accounts. See, e.g., Cal. Probate Code § 5132 4 17-mc-0527 1 (identifying various types of multiple-party accounts), § 5203 (setting forth 2 contractual language to be set forth in the “signature card, passbook, contract, or 3 instrument evidencing an account” to create particular types of multiple-party 4 accounts). 5 Here, although Gateway characterizes the levied savings account as a “joint 6 account,” it is not clear from the evidence what type of account it was. Neither the 7 contract creating the account, nor the instrument by which Ms. Fisher was added 8 to it, are in evidence. See Cal. Probate Code § 5203 (providing that a joint bank 9 account is created by including the words “[t]his account or certificate is owned by 10 the named parties. Upon the death of any of them, ownership passes to the 11 survivor(s)” in the “signature card, passbook, contract, or instrument evidencing an 12 account”). Mr. Fisher testified “it was not a joint bank account.” Although the bank 13 statement attached to Mr. Fisher’s declaration identifies the account signatories as 14 “William W Fisher or Sandra J Fisher,” see Decl. Wm. Fisher, Ex. A, the use of the 15 word “or” between the names on a bank account does not presumptively create a 16 joint account. Manti v. Gunari, 5 Cal. App. 3d 442, 447 (1970) (“the use of the 17 word ‘or’ does not create a joint tenancy”); Estate of Fisher, 198 Cal. App. 3d 418, 18 427 (1988) (same). 19 Regardless of the type of account, however, under CAMPAL, “[a]n account 20 belongs, during the lifetime of all parties, to the parties in proportion to the net 21 contributions by each, unless there is clear and convincing evidence of a different 22 intent.” Cal. Probate Code § 5301(a); see Lee, 111 Cal. App. 4th at 490, 491 23 (noting that “at any point in time the sums on deposit in an account belong to a 24 party in proportion to his or her net contribution” and holding that the “creation of a 25 joint account does not result in a completed gift to the cotenant; rather, the gift 26 occurs when the nondepositing party makes a withdrawal from the account”). 27 Here, Mr. Fisher and his daughter both testified that all of the funds deposited in 28 the account were his, including the proceeds from the sale of the Kubota tractor; 5 17-mc-0527 1 that Ms. Fisher never made any of the deposits or withdrawals and only accessed 2 the account to pay her father’s bills online; and that Mr. Fisher’s intent in adding 3 her name to the account was merely to facilitate her management of his affairs 4 when he was incapacitated. Under § 5301(a), this undisputed evidence was 5 sufficient to establish Mr. Fisher’s ownership of the levied account. See Banc of 6 America Leasing & Capital, LLC v. Sferas Inc., No. B224787, 2011 WL 1744943 7 (Cal. App. 2011) (unpublished) (trial court properly upheld third-party claim where 8 claimant showed he had contributed all funds held in an account he shared with 9 the judgment debtor). 10 Gateway relies on California Probate Code § 5134(b) in an effort to dispel 11 the conclusion that the account belonged to Mr. Fisher. Gateway Suppl. Br. (ECF 12 No. 20) at 2. Section 5134 defines “net contribution”—the term used in § 5301(a)— 13 and provides in pertinent part that: 14 (a) “Net contribution” of a party to an account as of any given time is the sum 15 of all of the following: 16 (1) All deposits thereto made by or for the party, less all withdrawals 17 made by or for the party that have not been paid to or applied to the use of 18 any other party. 19 20 21 (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 22 reason of the death of the party whose net contribution is in question. 23 (b) In the absence of proof otherwise: 24 25 26 27 28 (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), 6 17-mc-0527 1 that applies here. Mr. Fisher’s evidence established that all of the deposits to, and 2 withdrawals from, the levied savings account were made by or for him. Under 3 § 5134(a)(1), this evidence established that all of the net contributions to the 4 account were his. Gateway relies on § 5134(b), arguing that because Ms. Fisher 5 testified she had the ability to withdraw money from her father’s savings account, 6 she had a “present right of withdrawal” and should be deemed to have an equal 7 share in the net contributions to the account. Yet Gateway’s reliance on § 5134(b) 8 is misplaced. Subsection (b) of § 5134 creates presumptions that apply only “[i]n 9 the absence of proof otherwise” of the actual amount of net contributions. Cal. 10 Probate Code § 5134(b) (emphasis added); see id., Law Revision Comm’n 11 Comments (subsection (b) “provides a clear rule concerning the amount of ‘net 12 contribution’ in the absence of proof of a different amount”) (emphasis added). 13 Here, there is no absence of proof regarding the source or amount of each of the 14 signatories’ net contributions to the account, so there is no evidentiary gap to fill 15 with the presumptions set forth in § 5134(b). 16 Because Mr. Fisher established ownership of the levied account, the burden 17 shifted to Gateway to establish it had a superior interest in it. Gateway tried to 18 meet its burden by questioning the credibility of Mr. Fisher’s evidence, but the 19 Court found its arguments unpersuasive. Gateway’s contention that Ms. Fisher 20 may have been the real owner of the tractor because the tractor sat on her property 21 for a period of time, and because she helped sell it using her Craigslist account, 22 amounted to speculation. The phone number provided in the Craigslist listing was 23 Mr. Fisher’s. The fact that the tractor was sold for cash is not inherently incredible, 24 particularly since Mr. Fisher was able to produce his copy of the invoice for the 25 transaction. 26 For the same reasons, Gateway failed to demonstrate that the Kubota 27 tractor was property of Ms. Fisher on which it had a secured lien. See Chrysler 28 Credit Corp. v. Superior Court, 17 Cal. App. 4th 1303, 1311 (1993) (“[T]he general 7 17-mc-0527 1 rule is that the secured party … has the burden of tracing funds received from the 2 sales of collateral so as to show that they are in fact the identifiable proceeds of 3 those sales.”). 4 In sum, the Court finds that Mr. Fisher has proved by a preponderance of the 5 evidence that he is the owner of the funds in the levied account. Therefore, his 6 third-party claim is valid. 7 III. CONCLUSION AND ORDER 8 For the reasons discussed above, the Court finds that William W. Fisher has 9 a valid third-party claim and is entitled to the return of the levied funds. Three court 10 days after the entry of this order, assuming there are no objections, the Court will 11 issue an order directing the U.S. Marshal to return the funds to Mr. Fisher. 12 13 IT IS SO ORDERED. Dated: August 7, 2017 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 17-mc-0527

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