Universal Home Improvement
v. Robertson
Filed 1/28/14 Universal Home Improvement v. Robertson CA1/2
OFFICIAL REPORTS
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 This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115.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
FIRST APPELLATE DISTRICT
DIVISION TWO
UNIVERSAL HOME IMPROVEMENT, INC.,
Plaintiff and
Respondent,
v.
JAMES ROBERTSON et al.,
Defendants and
Appellants.
A138995
(San Mateo County
Super. Ct. No.
CIV495673)
INTRODUCTION
Defendants and judgment debtors
James and Katherine Robertson appeal
from an order of the San
Mateo County Superior Court, denying
James’s claim of exemption from wage garnishment. Defendants contend the court erred in denying
the claim of exemption of earnings necessary for the support of the judgment
debtor and his family. (Code Civ. Proc., § 706.051, subd. (b).
statutory requisites by filing the claim of exemption and financial statement (§§ 706.105, subd. (b)), that the
only evidence in the record was the financial declaration of James in support
of the claim of exemption, and that the court was therefore required to apply
the presumption the judgment debtor fairly and honestly claimed the exemption
in the absence of evidence of fraudulent purpose. Finally, defendants contend that even if
plaintiff’s specific objections to particular expenditures were properly
denied, they would amount to only $210, so that even removing that amount, a
shortfall of more than $1,800 between defendants’ income and expenses would
make those items irrelevant.
Plaintiff Universal Home
Improvement, Inc. argues that because the record before us does not contain a
reporter’s transcript of the hearing, defendants
cannot challenge the sufficiency of the evidence on appeal. Plaintiff further contends defendants have
waived the issues raised by this appeal by failing to first present them to the
trial court. Alternatively, plaintiff
argues substantial evidence supports the order denying the claim of
exemption. Finally, plaintiff seeks
sanctions for the filing of a frivolous appeal and for defendants’ failure to
include in the record a “register of actions†required by Rules 8.122(b)(1) and
8.124(b)
We shall affirm the order and deny
the request for sanctions.
BACKGROUND
On January 28, 2013,
title="">[3] an
amended judgment was entered in favor of plaintiff on its third amended
complaint for breach of contract against defendants. The judgment awarded plaintiff a total of
$5,230,014.62 (including a $40,000 punitive damages award, costs and
prejudgment interest), plus $472,840.50 in attorney fees. Various proceedings in connection with
enforcement of the judgment followed, including bench warrants issued for the
arrest of defendants (later recalled, and then reissued) for failing to appear
at examinations. On or about March 4, a
writ of execution for money issued to Placer County in the
amount of $5,280,190.42.
On March 7, plaintiff filed a
separate complaint to set aside fraudulent transfer, to establish conspiracy,
and to impose constructive trust
against defendant Katherine Robertson, contending that in April 2012, less than
one month following trial and the initial judgment in favor of plaintiff, she
had transferred her real property in Mariposa County to her sister, for no or
inadequate consideration. (
Katherine M. Robertson et al. (Super. Ct. Mariposa Co., 2013, No.CIV-10323.) On June 24, after the court’s denial of
defendants’ claim of exemption, plaintiff dismissed this fraudulent conveyance
action against Katherine Robertson, without prejudice.
In mid-April, defendant James
Robertson filed with the Placer County Sheriff a claim of exemption (wage garnishment),
accompanied by a financial statement that was executed under penalty of perjury
by both defendants. In the claim of
exemption, James stated under penalty of perjury that all earnings were needed
to support himself and his family. The
accompanying financial statement reported defendants’ monthly take-home pay
(minus payroll deductions) as $2,195.73.
Subsection (d) asking for “Other money I get each month from (
$3,800, cash as “0â€, checking, savings and credit union accounts as “0â€, and real estate equity as “0â€. They reported monthly expenses for defendants
and other dependents as $4,280. (Among
other things, these expenses included $100 for “school, child care,†$50 for
“entertainment,†and $60 for “installment payments.†Defendants failed to include the “creditor’s
name†or the “balance owed†for the $60 monthly installment payment.)
Plaintiff filed a notice of opposition
to claim of exemption (wage garnishment)†on April 26, stating the earnings
were “partially exempt†and that the “amount not exempt per month is: $548.93.†This sum equals 25 percent of defendants’
claimed income. (California law limits
the amount of earnings which may be garnished in satisfaction of a judgment to
no more than 25 percent of a worker’s “disposable earnings.â€) (§ 706.050; Barnhill v. Robert Saunders & Co. (1981) 125 Cal.App.3d 1,
6 and fn. 2; see also 15 U.S.C. § 1673.)
Plaintiff specified in its notice of opposition that it objected to the
exemption because: “None of the alleged
expenses are substantiated by documentary evidence. In addition, considering that the debtor
indicates that his spouse is not employed, the purported child care expenses
are not necessary. In addition, the
debtor’s unidentified installment payments and entertainment expenses are not
necessary for the support of the debtor and the debtor’s family.†On April 26, plaintiff filed and served
defendants with a notice of motion for an order determining the claim of
exemption to be heard on May 22. Defendants failed to appear at the May 22 hearing. The court denied the judgment debtors’ claim
of exemption and directed the levying officer to release any earnings held to
the judgment creditor for payment on the judgment. This timely appeal followed and we granted
defendants’ motion for calendar preference.
DISCUSSION
The parties dispute whether the
record designated by defendants was adequate.
Plaintiff contends that in the absence of a reporter’s transcript of the
hearing, defendants may not mount a challenge to the sufficiency of the
evidence, citing Maria P. v. Riles (1987)
43 Cal.3d 1281, 1295-1296 [refusing to remand to the trial court to determine
whether the court used the lodestar method to determine attorney fees where the
complaining party failed to supply a reporter’s transcript or settled statement]
and Estate of Fain (1999) 75
Cal.App.4th 973, 992 [“Where no reporter’s transcript has been provided and no
error is apparent on the face of the existing appellate record, the judgment
must be conclusively presumed correct as
to all evidentiary matters. To put it another way, it is presumed
that the unreported trial testimony would demonstrate the absence of
error. [Citation.] The effect of this rule is that an appellant
who attacks a judgment but supplies no reporter’s transcript will be precluded
from raising an argument as to the sufficiency of the evidence. [Citations.]â€].
Defendants counter that the issue is
a matter of law, because plaintiff did not present any evidence in support of
its opposition to the claim of exemption and because Rule 3.1306
requires with respect to motions that, “[e]vidence received at a law and motion
hearing must be by declaration or request for judicial notice without testimony
or cross-examination, unless the court orders otherwise for good cause shown.†(Rule 3.1306 (a).) The introduction of oral evidence (except in
rebuttal to oral evidence presented by the other party) requires prior notice
and “a written statement stating the nature and extent of the evidence proposed
to be introduced . . . .†(Rule 3.1306
(b).) A party’s request for judicial
notice requires the party to “provide the court and each party with a copy of
the material. If the material is part of
a file in the court in which the matter is being heard, the party must: [¶] . . . Specify in
writing the part of the court file sought to be judicially noticed.†(Rule 3.1306 (c).)
We do not agree with defendants that
no reporter’s transcript is required on motions proceedings. (See Maria
P. v. Riles, supra, 43 Cal.3d at pp. 1295-1296 [attorney fee motion brought
on declarations].) However, the absence
of a reporter’s transcript of the claim of exemption motion in this case is not
necessarily fatal to defendants’ challenge.
As stated above, the rules regarding hearings on motions generally
require that evidence be by declaration or request for judicial notice and that
permission for oral testimony must be secured in advance of the hearing through
a written statement of the nature and extent of the evidence proposed to be
introduced. (Rule 3.1306.) Plaintiff does not contend and the record
does not indicate it either sought or obtained such permission. The question, then, is whether resolution of
the appeal requires consideration of any part of the oral proceedings. (See Eisenberg et al., Civil Appeals and
Writs (The Rutter Group 2013) ¶ 4:18, p. 4-6; Chodos v. Cole (2012) 210 Cal.App.4th 692, 699-700; Rule 8.120 (b).)
As Eisenberg explains: “If there was no testimonial evidence in the
trial court proceedings, it is usually unnecessary to designate a reporter’s
transcript of oral argument in connection with various motions. . . .†(Eisenberg et al., Civil Appeals and Writs,
the record, we conclusively presume the judgment is correct as to all
evidentiary matters—that is, that the absence of error would have been shown by
the unreported proceedings. (
However, where the claimed error does appear on the face of the record,
we will not presume that it was cured by some proceeding not appearing in the
transcript. (Id. at ¶ 4:54, p. 4-14.) We
deny plaintiff’s invitation to dismiss this appeal or to summarily affirm it on
the basis of the absence of a reporter’s transcript. Still, we do not agree with defendants that
error appears on the face of the record or that the issues presented here must
be determined as a matter of law.
Defendants assert that absent
additional evidence, the court was required to apply the presumption that a
judgment debtor honestly and fairly claims an exemption from enforcement of a
judgment. (Independence Bank v. Heller (1969) 275 Cal.App.2d 84, 87.) Two important caveats inform this rule. The first is that the burden of proof is upon
the party claiming the exemption (§ 703.580, subd. (b) [“At a hearing
under this section, the exemption claimant has the burden of proofâ€].) The second is that the presumption only
applies in the absence of a fraudulent purpose.
In Independence Bank v. Heller, the
debtor claimed the property (luxurious furnishings) was exempt as “necessary
household furniture†under former section 690.2.
(Id.
at pp. 85-86.) The Court of Appeal
affirmed the order of the trial court that most of the furniture and
furnishings were exempt and that several statutes and pictures were subject to
execution. (Id. at p. 86.) The appellate
court “presumed†the debtor “intended to pay the judgment . . . as
soon as he was able to pay it; he did not invest his money in the furniture for
the purpose of putting it beyond the reach of his creditors and had no intent
or purpose to defraud them.†(
established facts under the presumption in favor of fair and honest dealing and
against fraud, in the absence of evidence
contradictory of the presumptions. It
was not incumbent upon [the debtor] to introduce evidence that he had honest
intentions, and he introduced none; the bank introduced no evidence which
tended to prove that [the debtor] acted with a fraudulent purpose. [¶] In view of the presumed good faith
of [the debtor] and the court’s application of the law to the implied findings
upon the factual issue and because the exemption laws should be liberally
construed we have concluded the order should be affirmed.†(Id. at
p. 87, italics added.) The appellate
court deferred to the trial court’s implied findings, recognizing that “the
claim of exemption created a purely factual question as to what [was] necessary
household furniture†(id. at p.89)
and concluding it was proper for the trial court “to
consider and give due weight to the testimony of [the debtor] that he had
furnished his apartment in a manner to which he had been long accustomed†(
The court below was not required to
make findings in support of its determination.
(§ 703.580, subd. (d).) Giving
due deference to the determination of the trial court, we conclude the record
before us would support an implied finding that defendants acted with a
“fraudulent purpose†in submitting their claim of exemption, sufficient to
rebut the presumption that such claim was honestly and fairly presented. Plaintiff has provided no authority for its
assertion below that documentary evidence supporting defendants’ claim of
exemption was required to establish
such claim.
title="">[6] Nevertheless, the absence of any documents
substantiating defendants’ claim of exemption is a factor the court could
consider, among others, in determining whether defendants’ purpose was
fraudulent. The court could also
consider on the question of defendants’ honesty and fair dealing, their failure
to identify the person or entity to whom they claimed they owed a monthly
installment payment. More tellingly, the
court could determine the failure to respond
at all (even by entering a “0â€to the question asking for
defendants’ claim of ongoing expenses in an amount twice their claimed income from all sources, constituted
circumstantial evidence that the claim of exemption and financial statement did
not present an honest or fair picture of defendants’ real financial state.
inference that defendants’ claim of exemption was submitted with a fraudulent
purpose and that defendants did not sufficiently carry their burden of proof of
the claimed exemption. (§ 703.580,
subd. (b).)
DISPOSITION
The order denying defendants’ claim
of exemption is affirmed. Plaintiff’s
request for sanctions is denied. Each
party shall bear their own costs on this appeal.
_________________________
Kline,
P.J.
We concur:
_________________________
Richman, J.
_________________________
Brick, J,*
* Judge of the Alameda County Superior
Court, assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
Unless otherwise indicated, statutory references are to the Code of Civil
Procedure, and citation references to “Rules†are to the California Rules of
Court.
name="_ftn2" title=""> [2]
We note that while defendants did not list the register of actions in their
designation of the record on appeal, the clerk’s transcript before us does
contain a “Register of Actions†for this case.
