Filed 8/12/26 Garcia v. Buena Creek Properties CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
ALFREDO GARCIA, B351178
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC407124)
v.
BUENA CREEK
PROPERTIES, L.P.,
Defendant and
Respondent.
APPEAL from an order of the Superior Court of the County
of Los Angeles, Michael Schultz, Judge. Affirmed.
Morse Mehrban for Plaintiff and Appellant.
Julander, Brown & Bollard, Dirk O. Julander, M. Adam
Tate, and Catherine A. Close, for Defendant and Respondent.
I. INTRODUCTION
Plaintiff Alfredo Garcia appeals from an order granting a
motion to quash a writ of execution filed by defendant Buena
Creek Properties, L.P. (Buena Creek), the judgment debtor.
According to plaintiff, the trial court erred by concluding that the
assignee of plaintiff’s judgment, a suspended corporation, lacked
the capacity to reassign the judgment to plaintiff for collection.
We affirm.
II. PROCEDURAL BACKGROUND
A. Judgment
On February 10, 2010, the trial court held a bench trial on
plaintiff’s complaint alleging two causes of action for violation of
the Disabled Persons Act (Civ. Code, §§ 54 and 54.1) and the
Unruh Civil Rights Act (Civ. Code, § 51, et seq.). Plaintiff alleged
he was “a wheel-chair bound individual[ who] could not use the
mirror in the restroom [of defendant’s restaurant] because it was
mounted too high” in violation of both Acts.
On May 10, 2010, the trial court filed a statement of
decision and judgment finding in favor of plaintiff on both causes
of action and awarding him $4,000 in damages.
On August 19, 2010, the trial court entered an order
awarding plaintiff attorney fees, increasing the total amount of
the judgment to $22,342.50.
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B. Assignment and Renewal
On April 18, 2011, Ex Parte Collection Services, LLC
(Collection Services) filed an acknowledgment of assignment of
judgment1 stating that plaintiff had assigned his interest in the
May 10, 2010, judgment and August 19, 2010, fee award to
Collection Services2 and making that entity the assignee of
record with standing to enforce the judgment.
On July 30, 2019, Collection Services filed an application
for renewal of judgment as the assignee of the May 10, 2010,
judgment and August 19, 2010, fee award. And, on August 29,
2019, the clerk issued a notice of renewal of judgment advising
defendant that “[t]his renewal extends the period of
1 Code of Civil Procedure section 681.020 prescribes the
requirements for an assignee to enforce a judgment: “An
assignee of a judgment is not entitled to enforce the judgment
under this title unless an acknowledgment of assignment of
judgment to that assignee has been filed or the assignee has
otherwise become an assignee of record under Section 673.” Code
of Civil Procedure section 673, subdivision (a) provides: “An
assignee of a right represented by a judgment may become an
assignee of record by filing with the clerk of the court which
entered the judgment an acknowledgment of assignment of
judgment.” “These statutes, read together, specify requirements
for an assignee to obtain standing as a judgment creditor to
enforce a judgment under the Enforcement of Judgments Law.”
(California Coastal Com. v. Allen (2008) 167 Cal.App.4th 322,
327.)
2 The assignment agreement between plaintiff and Collection
Services is not in our record.
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enforceability of the judgment until 10 years from the date the
application for renewal was filed.” (Boldface omitted.)
C. Motion for Order Reassigning Judgment
On August 16, 2024, plaintiff filed a motion seeking an
order reassigning the judgment to him. In his declaration in
support of the motion, plaintiff explained: “On October 1, 2020,
the California Secretary of State suspended the Assignee of
Record’s [(Collection Services’s)] powers and privileges ... for
nonpayment of taxes to the Franchise Tax Board. As a result,
[Collection Services] is now legally unable to collect or enforce the
judgment on [my] behalf.” He argued that, “[a]lthough [he]
assigned his judgment to [Collection Services] for enforcement
pursuant to Civil Code section 954, he retained an equitable
interest in the judgment.” He therefore concluded that
“[Collection Services’s] refusal to reassign [his] judgment back to
him for enforcement constitute[d] a breach of its fiduciary duty to
[him]. … Under such circumstances, the [c]ourt is well within its
authority to issue an order reassigning the judgment back to
[plaintiff].”
Defendant opposed, arguing that (1) because plaintiff’s
counsel was also attorney of record for Collection Services, the
motion was “ethically problematic as it [was] brought by an
attorney on behalf of one client, to the [detriment] of another;”
(2) because the agent for service of process for Collection Services,
Julie Mehrban, had the same last name as plaintiff’s counsel, and
counsel was also one of the organizers of Collection Services,
defendant questioned whether the motion was being “made in an
attempt to circumvent a divorce decree;” (3) plaintiff had failed to
show that he retained any interest in the judgment once it was
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assigned; and (4) the trial court could not adjudicate plaintiff’s
claim against Collection Services as that entity was not a party to
the proceeding.
On October 8, 2024, the trial court held a hearing on the
motion and denied it, ruling that plaintiff had “failed to provide
any legal authority supporting the reassignment. [Collection
Services] is not a party before this [c]ourt, nor did the [c]ourt
cause the assignment to occur; therefore, the [c]ourt does not
have jurisdiction to modify the assignment and/or reassign
[plaintiff] to the judgment.”
D. Reassignment of Judgment and Writ of Execution
On November 18, 2024, plaintiff filed an acknowledgment
of reassignment of judgment which identified the judgment
entered on “May 10, 2010, supplemented by an attorney fee
award on August 19, 2010, in the total amount of $22,342.50” and
“renewed on July 30, 2019[,] in the amount of $44,451.13.” The
acknowledgment provided that “[Collection Services] hereby
reassigns its right, title, and interest in the judgment consisting
of any unpaid amount thereunder back to [plaintiff].” The notice
was signed by “Julie Mehrban, Authorized Agent”.
On April 11, 2025, the clerk issued a writ of execution on
the judgment entered on May 10, 2010, and renewed on July 30,
2019, in the principal amount of $44,451.13 which, with costs and
accrued interest from the date of renewal added, totaled
$73,687.62.
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E. Motion to Quash Writ of Execution
On August 25, 2025, defendant filed a motion to quash the
writ of execution. According to defendant, plaintiff had served a
notice of levy on one of its commercial tenants, causing the tenant
to withhold rent payments. Defendant argued that the writ of
execution was unenforceable because, before Collection Services
purported to reassign the judgment to plaintiff, it had been
suspended by the Secretary of State on October 1, 2020, for
nonpayment of taxes. Defendant therefore argued that
“Collection Services lacked the legal authority to assign the
judgment at any point during its suspension … .” Defendant also
argued that because an “assignee of a claim from a suspended
entity inherits the assignor’s legal incapacity,” plaintiff “was not
legally capable of obtaining the [w]rit of [e]xecution upon which
the [n]otices of [l]evy are predicated … .”
On September 5, 2025, plaintiff filed his opposition to the
motion to quash. According to plaintiff’s supporting declaration,
at the time he executed the assignment of the judgment,
Collection Services “did not pay [him] and [he] did not receive any
consideration or money for the assignment. Instead, [Collection
Services] was to receive a percentage of any portion of the
judgment it collected on [his] behalf. [He] never sold [his]
judgment to [Collection Services] [¶] … [or] transferred to [it]
any equitable title to, interest in, or ownership of [his] judgment
by way of the assignment. [He] simply made [Collection Services
his] agent for purposes of collecting [his] judgment.” Plaintiff
argued that because he retained ownership of and equitable title
to the judgment, Collection Services reassigned only the legal
right to enforce the judgment, not ownership. Plaintiff also
argued that granting the motion to quash would constitute an
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unlawful taking of private property without compensation by the
judicial branch.
Following defendant’s reply, the trial court held a hearing
on the motion to quash. That same day, the court granted the
motion, quashed the writ of execution, and vacated any levies
issued pursuant to the writ. According to the court, the fact that
plaintiff retained an equitable interest in the judgment was
irrelevant because he admitted that he assigned the judgment to
Collection Services and that entity had its corporate powers
suspended prior to the purported reassignment. The court
concluded that “[p]laintiff [did] not cite any authority affirming
that the Acknowledgement of Reassignment filed by [Collection
Services had] any effect if it had been suspended four years
earlier and remain[ed] suspended.” The court also concluded that
“no constitutional ‘taking’ [was] involved for purposes of the U.S.
and California Constitutions, because the state [was] not taking a
judgment that [p]laintiff agreed to assign to another entity, who
refuses to reassign it back to [p]laintiff.”
III. DISCUSSION
A. Standard of Review
Plaintiff challenges the trial court’s conclusion that
Collection Services, as a suspended corporation, lacked the legal
capacity3 to reassign the right to enforce the judgment. Because
3 “Suspension of corporate powers results in a lack of
capacity to sue, not a lack of standing to sue. [Footnote omitted.]
[Citations.] [¶] ‘There is a difference between the capacity to
sue, which is the right to come into court, and the standing to
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the facts relevant to Collection Services’s capacity to reassign are
undisputed, we review the court’s conclusion de novo. (See
Tansavatdi v. City of Rancho Palos Verdes (2023) 14 Cal.5th 639,
652 [“Because this issue involves a pure question of law, we apply
a de novo standard of review”]; Cal-Western Business Services,
Inc. v. Corning Capital Group (2013) 221 Cal.App.4th 304, 309–
310 [“[T]he proper interpretation of a statute, and its application
to undisputed facts, presents a question of law subject to de novo
review”] (Cal-Western).)
B. Legal Principles
1. Assignments of Judgments
“Civil Code section 954 states that ‘[a] thing in action,
arising out of the violation of a right of property, or out of an
obligation, may be transferred by the owner.’ One commonly
used method of transfer is an assignment. [Citation.] ‘A
judgment creditor may assign the right represented by the
judgment to a third person. [Citations.] In doing so, the
sue, which is the right to relief in court.’ [Citation.] ‘Incapacity is
merely a legal disability, such as infancy or insanity, which
deprives a party of the right to come into court. The right to
relief, on the other hand, goes to the existence of a cause of
action. It is not a plea in abatement, as is lack of capacity to sue.’
[Citation.] [Footnote omitted.] Our Supreme Court has
specifically stated that ‘a plea of lack of capacity of a corporation
to maintain an action by reason of a suspension of corporate
powers for nonpayment of its taxes “is a plea in abatement which
is not favored in law [and] is to be strictly construed … .”’
[Citation.]” (Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th
1599, 1603–1604.)
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judgment creditor assigns the debt upon which the judgment is
based. [Citation.] Through such an assignment, the assignee
ordinarily acquires all the rights and remedies possessed by the
assignor for the enforcement of the debt, subject, however, to the
defenses that the judgment debtor had against the assignor.
[Citation.]’ [Citation.] This is consistent with the general rule
that ‘“[t]he assignee ‘stands in the shoes’ of the assignor, taking
his rights and remedies, subject to any defenses which the obligor
has against the assignor prior to notice of the assignment.”’
[Citations.]” (Cal-Western, supra, 221 Cal.App.4th at pp. 310–
311.)
2. Suspended Corporations
“Revenue and Taxation Code section 23301 provides that
‘the corporate powers, rights and privileges of a domestic
taxpayer may be suspended’ if it fails to pay ‘any tax, penalty, or
interest … that is due and payable’ to the Franchise Tax Board.
Except for filing an application for tax-exempt status or
amending the articles of incorporation to establish a new
corporate name, ‘a suspended corporation is disqualified from
exercising any right, power or privilege.’ [Citations.]
Consequently, ‘[d]uring the period that a corporation is
suspended for failure to pay taxes, it may not prosecute or defend
an action [citation], appeal from an adverse judgment [citation],
seek a writ of mandate [citation], or renew a judgment obtained
prior to suspension [citation].’ [Citations.] The purpose of
Revenue and Taxation Code section 23301 ‘is to “prohibit the
delinquent corporation from enjoying the ordinary privileges of a
going concern” [citation], and to pressure it to pay its taxes
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[citation].’ [Citation.]” (Cal-Western, supra, 224 Cal.App.4th at
p. 310.)
“In cases where the assignor of a chose in action is a
suspended corporation, California courts generally have
recognized that the assignee is subject to the same defenses that
could have been asserted against the assignor. … [¶] … ‘[A]n
assignee of a foreign corporation is barred from suing where the
corporation would be barred for failure to comply with the
requirements for doing business in the state.’ [Citation.] ... ‘[T]o
permit an assignee for collection to sue where the corporation is
barred by the statute from doing so would so obviously frustrate
the purpose of the statute that we are unwilling to place such a
narrowly technical construction upon it.’ [Citation.]” (Cal-
Western, supra, 224 Cal.App.4th at pp. 311–312.)
C. Analysis
Although the terms of the assignment agreement are not in
our record, we will assume for purposes of this analysis that
plaintiff assigned to Collection Services only the legal right to
enforce the judgment, not his equitable interest in it. But that
assignment and the subsequent filing of the acknowledgment of
assignment made Collection Services the assignor of record with
the exclusive right to enforce the judgment. As plaintiff admitted
in his motion to compel reassignment to him, he had no right to
enforce the judgment unless and until it was reassigned to him.
But, as plaintiff also admitted, in 2020—prior to any such
reassignment—Collection Services was suspended by the
Secretary of State for failure to pay franchise taxes, meaning it
was disqualified from exercising any right, power, or privilege,
including the right to sue to enforce the judgment.
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Accordingly, when Collection Services, while still
suspended, purported to reassign the judgment to plaintiff in
2024, it had no right to sue to enforce the judgment which it
could transfer back to him. Plaintiff therefore stood in the shoes
of Collection Services and was subject to the same defense of lack
of capacity as it would have been if it had asserted the right to
enforce the judgment through the writ of execution. The trial
court’s ruling that plaintiff lacked such capacity, notwithstanding
the attempted reassignment, was thus correct as a matter of law.
Without citation to authority, plaintiff argues that
Collection Services was his agent and, upon its suspension, the
agency terminated and the right to sue on the judgment
automatically reverted to him by operation of law. We disagree.
In Church Mutual Ins. Co., S.I. v. GuideOne Specialty
Mutual Ins. Co. (2021) 72 Cal.App.5th 1042, 1066, the court,
citing with approval the Restatement 2d of Agency, section 382,
comment d., explained that once an agency is terminated, the
agent’s interest in any property transferred to it also terminates,
at which point, the agent is under an affirmative duty to account
for and return any property or thing of value entrusted to it.
Here, assuming Collection Services was acting merely as
plaintiff’s agent for purposes of collecting on the judgment and
that its suspension operated to terminate that agency, it had an
affirmative duty to transfer any right to enforce the judgment
back to plaintiff. But, as explained, because it was suspended, it
lacked the power to effect such a transfer. Plaintiff’s remedy in
such circumstance was not to seek recourse against the judgment
debtor, but to seek an accounting and a return of anything of
value transferred to Collection Services, including the right to
enforce the judgment. (See Rest.2d Agency, § 382, com. e. [“If the
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agent has failed to account properly, the principal’s remedy may
be by an action on the contract, by an action for money had and
received, or by a bill for an accounting”].)
Finally, we reject plaintiff’s assertion that the trial court’s
ruling violated “the U.S. and California Constitutional provisions
outlawing the taking of private property without compensation
by a governmental body such as the judicial branch. (U.S. Const.,
5th Amend.; Cal. Const., Art. I, § 19.).” Contrary to that
assertion, there was no taking by the judicial branch under these
facts. Plaintiff voluntarily transferred his property to Collection
Services and that entity failed to pay its taxes resulting in
suspension and the lack of legal capacity to sue. There was no
direct government appropriation or physical invasion of private
property involved in plaintiff’s inability to enforce the judgment;
instead, that inability was the result of the conduct of the parties
to the assignment agreement. (See Shaw v. County of Santa
Cruz (2008) 170 Cal.App.4th 229, 259–260 [“‘The paradigmatic
taking requiring just compensation is a direct government
appropriation or physical invasion of private property’—a
categorical taking”].)
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IV. DISPOSITION
The order granting the motion to quash is affirmed.
Defendant is awarded costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
KIM (D.), J.
We concur:
HOFFSTADT, P. J.
MOOR, J.
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