Grabowski v. Rutan & Tucker
Filed 2/24/12 Grabowski v. Rutan & Tucker CA4/3
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH
APPELLATE DISTRICT
DIVISION
THREE
LAURENCE L. GRABOWSKI,
Defendant and Appellant,
v.
RUTAN & TUCKER,
Plaintiff and Respondent.
G044438
(Super. Ct. No. 00CC14365)
O P I N I O N
Appeal from a
postjudgment order of the Superior Court
of
County, John C. Gastelum, Judge. Reversed.
Larry R. Marshall (Pro
Hac Vice); Thomas Whitelaw & Tyler, J. Russell Tyler, Jr. and Carolyn N. Ko
for Defendant and Appellant.
Rutan & Tucker,
Stephen A. Ellis and Hanni Pichel for Plaintiff and Respondent.
The
law firm Rutan & Tucker (Rutan) obtained a default judgment against
Laurence L. Grabowski (Grabowski) after he failed to pay his legal fees or honor
his promissory note to pay legal fees.
Approximately five years later, Rutan learned Grabowski was going to
receive a large settlement arising out of litigation involving a business
dispute against his brother, Patrick Grabowski, and other family members
(hereafter collectively referred to as Patrick). Rutan filed a notice of lien in the pending
family business dispute (hereafter the Orange County Litigation). After the court ordered the parties to
prepare a final judgment in that case, Rutan filed a “motion for order for
satisfaction of [the] judgment lien.”
The court granted the motion over Grabowski’s and Patrick’s
objections. A few months later,
Grabowski filed a motion to set aside the default and default judgment claiming
it was void because he was not properly served with a
determined the lien was valid.
In this appeal,
Grabowski challenges the order granting Rutan’s motion for an order to satisfy
the lien. In a separate appeal,
Grabowski disputed the later order denying his motion to set aside the
default. (Grabowski v. Rutan & Tucker (February 24, 2012) G044968 [nonpub. opn.] (
validity of the default judgment that formed the basis of the lien. In our concurrently filed opinion,
rejected this argument as lacking merit.
That analysis is incorporated by reference into this opinion.
The
remaining issue to be considered in this appeal was raised for the first time
in Grabowski’s reply brief. He argued
there was one other reason to set aside the order granting satisfaction of the
lien. Namely, he suggested that because
the parties failed to prepare a final judgment in the Orange County Litigation
case, the court could not issue an order for satisfaction of the lien “under
the judgment” under Code of Civil Procedure section 708.470.
improper argument made for the first time in his reply brief (
Com. (2002) 103 Cal.App.4th 1324, 1329, fn. 5), we will exercise our
discretion and consider it because Rutan will not be prejudiced, having
addressed the issue in the respondent’s brief.
The
order granting the motion for satisfaction of the lien is reversed and
remanded. On remand, the trial court
shall enforce its previous order requesting Patrick to prepare a final written
judgment, and thereafter it can issue the order for satisfaction of the lien
“under the judgment” pursuant to section 708.470, subdivision (a).
I
We judicially notice our concurrently filed opinion (
opn.]), and adopt and incorporate by
reference the facts delineated and discussion contained therein. (Evid. Code, §§ 452, 459.) Suffice it to say, several years ago Rutan
filed a lawsuit and obtained a default and default judgment against Grabowski based
on his failure to pay legal bills.
On April 16, 2010, Rutan entered a notice of lien in
the Orange County Litigation action between Grabowski and Patrick. As required by section 708.410, Rutan filed
and served the notice of the lien and a copy of its default judgment by mail to
all the parties. On April 20, 2010, the
trial court (Judge Josephine S. Tucker) granted Patrick’s section 664.6 motion
for an order to enforce a 2007 oral settlement agreement between Grabowski and
Patrick in the Orange County Litigation.
According to the
parties, the terms of the settlement awarded Grabowski $400,000 immediately
plus another $2 million in $10,000 monthly installments. However, our record does not contain direct
evidence of settlement and Judge Tucker’s order did not discuss the terms of
the settlement. Rather, the April 20, 2010 minute order
stated: “Judgment will be entered in
accordance with the terms of the oral settlement. Moving parties are to prepare the judgment
containing the terms of the oral agreement that was placed on the record. [¶]
The request for an order of fees and costs to be deducted from the
settlement is denied.” As permitted by
section 664.6, the court noted it retained jurisdiction over the parties to
enforce the settlement until full performance.
The court explained Patrick’s motion for an order for attorney fees and
costs required evidence there was a breach of the settlement agreement. Moreover, the court noted there was no
evidence establishing the amount of fees and costs incurred.
Several months later, on
July 12, 2010, Rutan filed a motion for an order for satisfaction of the lien
under section 708.470. Both sides of the
Orange County Litigation opposed the motion.
Patrick’s opposition noted the motion was premature. He advised the court that no party had
prepared the written judgment and consequently there was “no judgment upon
which Rutan can satisfy its lien.” In
addition, Patrick asserted Grabowski was not entitled to any money until he
performed all the terms of the settlement agreement. Alternatively, he argued the hearing on
Rutan’s motion should be rescheduled to coincide with the hearing on his motion
regarding allocation of the settlement proceeds. He explained his accounting fees and attorney
fees should have priority over Rutan’s judgment lien.
Grabowski filed a
separate opposition to the motion. He
also argued the motion was premature due to the lack of a written
judgment. In addition, he asserted
Rutan’s default judgment was void because Grabowski was never personally served
with Rutan’s complaint.
On September 7, 2010,
the trial court (Judge John C. Gastelum) granted the motion for an order for
satisfaction of the lien. In its ruling
the court stated, “The opposition argument overlooks the fact that the [c]ourt
previously heard defendants’ motion to enforce the settlement, brought under .
. . section 664.6. (Section 664.6
specifically authorizes a motion for an order ‘enter[ing] judgment pursuant to
the terms of the settlement’
. . . Grabowski’s argument that the defaultjudgment on which the lien is based is ineffective . . . because service was
never made on him and it was ‘rejected’ by the Missouri court . . . has no
merit. The judgment is good in
California regardless of whether it was entered as a sister state judgment in
Missouri. If . . . Grabowski seeks to
have it set aside for lack of jurisdiction, he will have to make the
appropriate motion in this court.”
Grabowski appealed the
court’s ruling. Several months later he
prepared and filed in superior court a motion to set aside the default and
default judgment due to improper service.
We affirmed the trial court’s denial of this motion in
opn.].
II
We need only briefly
touch on Grabowski’s argument the default and default judgment were void on
their face. To begin with, Grabowski
devotes his entire opening brief to this issue but it seems he has forgotten
the procedural history of this case. His
appellate brief and appendix improperly contain information and documents that
were not before the trial court when it considered Rutan’s motion for an order
for satisfaction of the judgment. As
properly noted by Rutan, the court rejected Grabowski’s jurisdictional
challenge because it was not properly supported. Grabowski did not file a motion to set aside
the default and default judgment until several months later.
In any event, we have
considered and rejected this jurisdictional argument in Grabowski I, supra, G044968 [nonpub. opn.]. We incorporate by reference our analysis and
conclusion on this issue. We conclude
Rutan’s “other evidence” Grabowski received the summons and complaint were
sufficient and the resulting default judgment was valid on its face.
B.
No Final Judgment in the Orange County Litigation
It
is undisputed Judge Tucker ordered the entry of judgment in accordance with the
terms of the settlement pursuant to section 664.6. She specifically ordered Patrick to prepare
the final judgment. Patrick did not
comply with the court’s order, and it appears from this record that neither
side prepared a final judgment. As we
will explain, this omission requires reversal of the trial court’s order but
our reversal should not be viewed as an endorsement of such dishonest and
unfair litigation tactics. The Legislative
scheme is clearly designed to protect judgment creditors, and we do not condone
the waste of taxpayer money and judicial resources created by such attorney
gamesmanship.
There is no dispute
Rutan obtained a valid lien in the pending Orange County Litigation. Pursuant to section 708.410, Rutan filed a
notice of lien to protect its interest in any award or money of property
awarded in Grabowski’s favor. Section
708.410, subdivision (a), provides, “A judgment creditor who has a money
judgment against a judgment debtor who is a party to a pending action or
special proceeding may obtain a lien . . . to the extent required to satisfy
the judgment creditor’s money judgment . . . .”
Subdivision (d), explains, “For the purpose of this article, an action
or special proceeding is pending until the time for appeal from the judgment
has expired or, if an appeal is filed, until the appeal has been finally
determined.”
The
lien provides Rutan with several important benefits. Relevant to this case, “One purpose of the
lien is to establish and preserve the judgment creditor’s priority to the money
and property the judgment debtor may receive from the pending action. [Citation.]”
(Oldham v. California Capital
Fund, Inc. (2003) 109 Cal.App.4th 421, 430.) In addition, the legislative scheme expressly
prevents certain types of collusion that could result in harm to the judgment
creditor’s interests. For example, if
the lien is not satisfied or released, the judgment debtor may not enter into
any compromise, dismissal, settlement, or satisfaction of the pending action,
and may not enforce any judgment recovered in the action, without the judgment
creditor’s written consent or a court order.
(§ 708.440, subd. (a).) If a
settlement is structured to evade a judgment creditor’s lien, the court may
exercise its discretion and refuse to approve the settlement.
Section
708.470 permits the judgment creditor to seek an order for satisfaction of the
lien, giving the judgment creditor further protection. Section 708.470, subdivision (a), provides,
“If the judgment debtor is entitled to money or property under the judgment in
the action . . . and a lien created under this article exists, upon application
of any party to the action or special proceeding, the court may order that the
judgment debtor’s rights to money or property under the judgment be applied to the satisfaction of the lien
created under this article as ordered by the court.” (Italics added.) Once the judgment creditor applies for and
receives an order stating it has rights “under the judgment” then section
708.470, subdivision (b), provides the court can order the party having control
of the property to satisfy the lien “[if] the judgment determines the judgment debtor has an interest in
property.” (Italics added.) If that party should improperly transfer
property that was subject to the lien, the court can order that party to
directly pay the creditor damages.
(§ 708.470, subd. (c).)
Obviously,
the above statutory provision requires entry of a written judgment. Specifically, the statute requires a final
judgment determination the judgment debtor has an interest in property that can
be applied to the satisfaction of the lien.
In this case, Judge Gastelum properly recognized Judge Tucker had
ordered a judgment be entered in accordance with the terms of the
settlement. However, she did not enter a
formal judgment. Instead, Judge Tucker
ordered Patrick to prepare the judgment setting forth the rights of the
parities for her signature. When Rutan
filed its motion, Judge Gastelum should have either issued his own written
judgment, or enforced the prior court order that Patrick prepare the judgment,
before ordering satisfaction of the lien from property purportedly awarded to
Grabowski.
We recognize the parties
do not dispute Grabowski was entitled to money under the terms of their oral
settlement. Nevertheless, we cannot
construe Judge Tucker’s minute order as being the final judgment in the action. Because the rights of each party were
resolved by an oral settlement, and not a jury verdict or court trial, the
minute order does not actually reflect the conditions of payment or what items
are recoverable in the action. Contrary
to Rutan’s contention, this case is not analogous to cases where the parties
have prematurely appealed from the order granting the section 664.6
motion. (See Hines v. Lukes (2008) 167 Cal.App.4th 1174, 1183 [appellate court
can entertain a premature appeal].)
While in those cases an appellate court can amend the section 664.6 order
to include an appealable judgment to facilitate review of that order, the same
cannot be said for the review of what is essentially a postjudgment order. Simply stated, we cannot create the legal
fiction of a final judgment to affirm Judge Gastelum’s order for satisfaction
of a lien.
We reverse the order for
satisfaction of a lien as being prematurely entered. We note a lien filed under section 708.410
remains pending in an action until the time for appeal expires or an appeal is
finally determined. (§ 708.410,
subd. (d).) Because the judgment has not
yet been entered in this case, the lien will retain its priority, determined
according to the date the notice of lien was filed. (Civ. Code, § 2897.)
When this case is
remanded, the trial court must either enforce the prior order that Patrick
prepare a written judgment, or the trial court can issue its own final judgment
setting forth all the settlement terms and rights of the parties. Thereafter, the court may re-enter the order
for satisfaction of the lien.
III
The order is reversed
and the case remanded for further proceedings.
Respondent’s motion requesting this court take judicial notice of
several court documents is denied as they were not necessary to decide the
appeal. In the interests of justice,
each side shall bear their own costs on appeal.
(Cal. Rules of Court, rule 8.278(a)(5).)
O’LEARY,
P. J.
WE CONCUR:
BEDSWORTH, J.
ARONSON, J.
references are to the Code of Civil Procedure, unless otherwise indicated.
