Cuevas v. Tung

Filed 11/13/08 Cuevas v. Tung CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIFTH APPELLATE DISTRICT

APPEAL from orders of the Superior Court of Merced County. Ronald W. Hansen, Judge.

Balwinder Singh Tung, in propria persona, for Defendant and Appellant.

Law Office of Douglas E. Schultz and Douglas E. Schultz; Serlin & Whiteford, Mark A. Serlin for Plaintiffs and Respondents.

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Defendant Balwinder Singh Tung (Tung) appeals from the trial courts orders (1) appointing a receiver to sell real property he owned as tenant in common with his wife to satisfy a money judgment entered against him in a civil lawsuit, and (2) approving a stipulation between the receiver and Tungs wife to sell his interest in the property to his wifes parents. Tung raises numerous assertions of error, the primary one being that the property was subject to a homestead exemption. As we shall explain, we will affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In December 1992, plaintiffs and respondents Ramon Cuevas, Josie Rodriguez and Lana Rodriguez (the creditors) filed a lawsuit against Tung arising out of a January 1992 incident involving a physical altercation between the parties. After a court trial, a judgment totaling $100,000 was entered in August 1994 in favor of the creditors and against Tung. The creditors renewed the judgment in March 2003; with accrued interest, the renewed judgment totaled $181,358.58. In May 2003, the creditors recorded an abstract of judgment in the Merced County Recorders Office reflecting the renewed judgment.

On November 8, 2006, a writ of execution was issued and delivered to the Merced County Sheriff with directions to enforce the judgment. The writ further stated that judgment was entered for the sale of real property described as: 8815 Lander Ave., Hilmar, CA 95324; A.P.N. 015-010-004 (the property). On December 6, 2006, Tung filed a motion, in propria persona,^[1]in which he claimed the property was exempt from levy because he was entitled to a homestead exemption. Tung, who stated he had been incarcerated since January 6, 1992, explained that the property had a loan on it and he was not its sole owner. In early January 2007, the sheriff returned the writ to the court without action because the creditors terminated the levy.

On May 25, 2007, the creditors filed a motion for an order authorizing the sale of the property by execution through appointment of a receiver. The creditors asked that a receiver be appointed to sell the property so it could be sold through normal marketing means, rather than at an execution sale, in the hope of maximizing the sales price. In a declaration accompanying the motion, an attorney for the creditors stated he went to the property and spoke with the occupants. The attorney explained that Tung was not there because he was in prison and none of Tungs family lived at the property, which third parties were renting from Tungs family. The attorney obtained a drive-by appraisal of $315,000 and stated that liens of record having priority over respondents lien did not total more than $102,000, thereby leaving significant equity from which to pay the judgment.

Tung filed an opposition to the motion in which he argued (1) the court was required to declare a homestead exemption on the property because his December 2006 motion for a homestead exemption was never opposed and no hearing was held on it; and (2) there was no equity in the property that could be used to satisfy the judgment because the propertys appraised value did not exceed the amount of the homestead exemption plus the liens on the property, which he claimed totaled over $450,000. In reply, the creditors pointed out that Tung did not submit any declaration or documentation evidencing the loan balances secured by the property and asserted he was not entitled to the homestead exemption because the property was being rented out and Tung had not lived there since 1992.

At the July 19, 2007 hearing on the motion, at which only the creditors attorney appeared, the trial court stated it had read and considered the moving documents and Tungs opposition and found it would be in the parties best interest to appoint a receiver to collect the judgment. The trial court questioned the creditors attorney about Tungs wifes interest in the property. The attorney responded that the entire property could be sold to satisfy the judgment because the community was liable for the debt. He also pointed out Tungs wife had an opportunity to appear at the hearing and oppose the motion, but did not. The attorney explained there was no compelling evidence of a homestead exemption because (1) the evidence showed that neither Tung nor his family was living on the property, and (2) no party who may be entitled to claim a homestead exemption, other than Tung, filed a homestead claim. The trial court then granted the motion and appointed a receiver to sell the property.

On August 3, 2007, Tungs wife filed a motion for reconsideration of the order appointing a receiver. In a declaration, Tungs wife asserted her parents transferred the property to her and Tung in 1982; community funds were not used to purchase the property; and she and Tung held title to the property as tenants in common. She also stated she did not wish to sell her interest in the property because she derived rental income from it that she used to support herself and her two sons. She contended the creditors could not use her interest in the property to satisfy the judgment because the property was not community property. She further contended reconsideration of the order appointing a receiver was proper because the facts of her separate interest in the property were not brought before the trial court during the motion and she did not attend the hearing. She requested the court vacate its prior order. The creditors opposed the motion for reconsideration, arguing it was untimely and she could have raised her arguments at the hearing. The trial court subsequently granted Tungs wifes ex parte application for an order staying appointment of the receiver to sell the property pending the hearing on her motion for reconsideration.

Tungs wifes motion for reconsideration was heard on September 12, 2007. The court granted the motion and suspended the receivership with respect to sale of the property except that the receiver may proceed with selling Defendant Balwinder Tungs interest as a tenant in common. The court set a half-day trial for November 19, 2007, to determine the nature of Tungs wifes interest in the property, and allowed the parties to conduct further discovery.

On October 11, 2007, Tung filed an application to stay the sale of his interest in the property and vacate the September 12 order. Tung asked that the sale of his interest be stayed until his release from prison or he could obtain private counsel, and asserted he and his family would suffer irreparable harm if his interest was sold before his release. Tung further argued the court did not have jurisdiction to issue its July 19 or September 12, 2007 orders because the homestead exemption automatically applied due to the trial courts failure to hold a hearing on his December 2006 motion for a homestead exemption, and there was no equity in the property because the liens on the property exceeded its value.

On October 23, 2007, Tung filed a notice of appeal from the July 19, 2007 order appointing the receiver. The trial court denied Tungs October 11, 2007, application for a stay on November 6, 2007.

On November 19, 2007, the court approved a stipulation between the creditors, Tungs wife, and the receiver, regarding Tungs wifes interest in the property. The stipulation provided that Tungs wifes parents, the Johals, would pay the receiver $40,000 in exchange for a receivers deed upon execution sale which conveyed to them all of Tungs right, title and interest in and to the property. The stipulation required the creditors to file an acknowledgement of partial satisfaction of the judgment upon receipt of the proceeds net of the receivers fees and costs.

That same day, the trial court also considered and denied another motion Tung filed to dismiss the action. In that motion, Tung asserted the action should be dismissed because (1) the homestead exemption automatically applied due to the creditors failure to promptly oppose his December 2006 motion for a homestead exemption and the trial courts failure to hold a hearing on that motion; and (2) the creditors had not exercised diligence in enforcing the judgment.

On January 2, 2008, Tung filed a second notice of appeal, stating he also was appealing from the November 19, 2007 order.

On January 3, 2008, the receiver filed a motion for approval of the receivers final accounting. In the final report filed with the motion, the receiver explained that after meeting with the respective personnel in the case, it was decided to enter into a settlement agreement with the Johals for the sale of Tungs interest in the property, and a receivers deed was delivered in exchange for a $40,000 cashiers check. The receiver listed his time and expenses, which totaled $2,767.70, and stated that left $37,232.20 available for distribution to the creditors attorney upon order of the court. No opposition to the motion was filed and following a hearing on January 28, 2008, the trial court granted the motion.

On February 7, 2008, the trial court issued a written order approving the receivers final accounting and report, which stated the court: (1) granted the motion in all respects; (2) approved the receivers final accounting and report; (3) discharged the receiver and exonerated his bondsmen; (4) approved the receivers fees and costs of $2,767.70; and (5) ordered the receiver to disburse the remaining $37,232.20 to the creditors attorneys trust account for the creditors benefit. Tung did not file a notice of appeal from this order.

DISCUSSION

In his appeal, Tung raises numerous challenges to the validity of the trial courts actions of appointing a receiver, ordering the sale of his interest in the property, failing to find that the property is subject to a homestead exemption, approving the stipulation to sell his interest to his wifes parents, and approving the receivers final accounting. Tung asks us to (1) reverse the order or judgment and refund the $40,000, (2) order the buyers to deliver the deed back, (3) declare his interest in the property exempt from collection due to the homestead exemption, (4) award him damages for the underlying lawsuit, as well as sanctions, (5) declare all proceedings after January 8, 2007 invalid, and (6) dismiss the action.^[2]

The creditors contend we should dismiss this appeal as moot. They assert we cannot fashion any order reversing the trial courts orders to appoint the receiver to sell the property or prevent the propertys sale because (1) the receiver sold Tungs interest in the property pursuant to court order, (2) the court approved the receivers final accounting, and (3) Tung failed to post an appeal bond staying the orders he is appealing. They further assert that Tung has not provided any statutory authority which authorizes us to order the other relief he requested.

The creditors correctly point out that Tung was required to post a bond or undertaking in order to stay the order appointing a receiver pending appeal. (Code of Civ. Proc., 917.1.)^[3] Tungs failure to do so means that despite the filing of his notice of appeal in October 2007, the receiver retained the power to enter into the stipulation to sell Tungs interest in the property and the trial court retained the power to approve both the stipulation and the receivers final accounting.^[4]

An order appointing a receiver is not subject to appellate review after the receiver has settled accounts and been discharged because once the receiver has completed his or her duties and been discharged, the receiver and the court have lost control of the subject matter of the receivership. (Kato v. Busick (1916) 174 Cal. 118, 121; see also Scoville v. De Bretteville (1942) 50 Cal.App.2d 633.) Since the trial court here approved the receivers final accounting and discharged him, the order appointing the receiver to sell Tungs property interest is not reviewable. Under the same rationale, there is no reason for us to review the order approving the stipulation, at least with respect to the sale of the property, since the sale contemplated by the stipulation has been completed.

The creditors, however, have not shown that post-judgment events have caused all of the issues Tung has raised to become moot or that Tung cannot be granted any effective relief should he prevail on appeal. (People v. Stark (2005) 131 Cal.App.4th 184, 200; see also Reserve Ins. Co. v. Pisciotta (1982) 30 Cal.3d 800, 813, Consol. etc. Corp. v. United A. etc. Workers (1946) 27 Cal.2d 859, 863.) Although the receiver has been discharged and the court has lost control of the property, thereby precluding us from ordering the property be returned to Tung, the creditors have not shown that we cannot order the creditors to return to Tung the money paid to them in partial satisfaction of the judgment should he be entitled to it. Accordingly, we will address Tungs arguments that pertain to his claim he is entitled to the money paid for his interest in the property.

The only argument Tung asserts that would require return of the money to him is his claim that he is entitled to a homestead exemption. Section 697.310, subdivision (a) allows a creditor to obtain a judgment lien on real property the debtor owns by recording an abstract of judgment with the county recorder. The judgment lien attaches to all real property interests in the county where the lien was created. ( 697.340, subd. (a).) If the debtors home is sold in order to satisfy the judgment, the debtor may be eligible for an automatic homestead exemption of up to $150,000 on the sale proceeds. ( 704.730; see SBAM Partners v. Cheng Miin Wang (2008) 164 Cal.App.4th 903, 907-908 & fn. 4.) The homestead character of the property is determined as of the date of attachment of the judgment lien, which for property owned at the time of recordation occurs when the lien is created. (Id. at p. 907.)

For the homestead exemption to apply, the judgment debtor, or the judgment debtors spouse, must have resided in the dwelling continuously from the time the judgment lien attached until either the dwellings sale or the judicial determination that the exemption applies. (In re Cumberbatch (Bankr. C.D.Cal. 2003) 302 B.R. 675, 678;  704.710, subd. (c) [defines homestead as the principal dwelling (1) in which the judgment debtor or the judgment debtors spouse resided on the date the judgment creditors lien attached to the dwelling, and (2) in which the judgment debtor or the judgment debtors spouse resided continuously thereafter until the date of the court determination that the dwelling is a homestead. ...]) If the county tax assessors records do not show a current homeowners exemption, the judgment debtor bears the burden of proof as to whether the dwelling is a homestead; if such exemption is on file, it is the judgment creditors burden to show the dwelling is not a homestead. ( 704.780, subd. (a)(1); see In re Morse (1995) 11 Cal.4th 184, 202.)

Here, the judgment lien attached to the property on May 2, 2003, when the creditors recorded the abstract of judgment. The evidence the creditors presented at the July 19, 2007 hearing showed that Tung had not lived on the property since 1992, none of Tungs family lived on the property, and the property was being rented to third parties. In opposing the creditors motion, Tung did not submit any contradictory evidence. Since the evidence shows that neither Tung nor his wife lived on the property continuously from May 2, 2003 until July 19, 2007, when the trial court impliedly found that the homeowners exemption did not apply, Tung is not entitled to a homeowners exemption. The trial court did not err in so finding.

Tung contends the trial court did not have the authority to decide at the July 19, 2007 hearing whether the homestead exemption applied because Tung had filed a motion on December 6, 2006, in response to the November 2006 writ of execution, in which he claimed the property was exempt from levy under the homestead exemption. Tung states that under section 703.550, the creditors were required to oppose his claim of exemption within 10 days after service of his claim, and under section 703.570, the court was required to hold a hearing on his exemption claim within 20 days. Tung asserts the failure to do those things resulted in an automatic finding that the homestead exemption applies to the property, which bound the trial court, and precluded it, from determining at the July 19, 2007, hearing that the homestead exemption did not apply. We disagree.

A judgment debtor may make a claim of exemption after property has been levied upon by filing a claim of exemption with the levying officer within 10 days after the date the notice of levy was served on the judgment debtor. ( 703.510, 703.520.) After being served with a claim of exemption, the judgment creditor who opposes the claim must file with the court a notice of opposition and a notice of motion for an order determining the claim. ( 703.550.) The hearing on such a motion must be held within 20 days of the date the notice of motion was filed with the court. ( 703.570.) If the opposition is not timely filed, the levying officer shall immediately release the property to the extent it is claimed to be exempt. ( 703.550.) If an exemption is not determined within the time provided by section 703.570, the property claimed to be exempt must be released. ( 703.580, subd. (f).)

Here, a writ of execution was issued in November 2006. On December 6, 2006, Tung filed a claim that the property was exempt from levy because he was entitled to a homestead exemption. The creditors did not file an opposition to the motion and no hearing was set to determine the validity of the claimed exemption. Instead, the creditors terminated the levy in January 2007 and the sheriff returned the writ to the court. When the levy was terminated, Tung received the benefit of his exemption claim, i.e. the property was released.

Significantly, sections 703.550 and 703.580, subdivision (f) that provide for release of the property do not state that a binding determination of the exemption claim has been made. Tung has not cited any authority that supports his claim that the creditors could not later ask the court to appoint a receiver to sell the property and, as part of that procedure, have the trial court determine whether Tung was entitled to claim a homestead exemption.^[5] To the contrary, the trial court was required to determine the homestead exemption before ordering the sale of his interest in the property. ( 704.740, subd. (a) [Except as provided in subdivision (b), the interest of a natural person in a dwelling may not be sold under this division to enforce a money judgment except pursuant to a court order for sale obtained under this article and the dwelling exemption shall be determined under this article.].)

In sum, the appeal is moot with respect to the sale of Tungs interest in the property. With respect to Tungs entitlement to the money paid to purchase his interest, the trial court did not err when it determined the homestead exemption did not apply.

DISPOSITION

The trial courts orders are affirmed. Respondents are awarded their costs on appeal.

_____________________

Gomes, J.

WE CONCUR:

_____________________

Wiseman, Acting P.J.

_____________________

Dawson, J.

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^[1]Tung has represented himself throughout the proceedings involving enforcement of the judgment, including this appeal.

^[2]In his reply brief, Tung asks us to strike the creditors reply brief because it is not verified. We decline his request, as there is no requirement that appellate briefs be verified. (See Cal. Rules of Court, rule 8.204.)

^[3]All further statutory references are to the Code of Civil Procedure unless otherwise noted.

^[4]For this reason, Tungs assertion that the trial court erred in approving the stipulation and the receivers final accounting after he filed his notice of appeal is without merit, as the filing of the notice of appeal did not automatically stay the action. We note that Tung is proceeding in this court in forma pauperis. While the trial court has discretion to waive a bond or undertaking for an indigent appellant, Tung did not ask for a waiver in the trial court. (Code Civ. Proc.,  995.240.)

^[5]Tung does cite a number of cases regarding exemption claims and attachment. (Burke v. Superior Court (1969) 71 Cal.2d 276; Kruger v. Wells Fargo Bank (1974) 11 Cal.3d 352; Bank of America v. Salinas Nissan, Inc. (1989) 207 Cal.App.3d 260; Imperial Bank v. Pim Electric, Inc. (1995) 33 Cal.App.4th 540; In re Rolland (Bankr. C.D.Cal. 2004) 317 B.R. 402; In re Gardiner (Bankr. S.D.Cal. 2005) 332 B.R. 891; In re Morgan-Busby (9th Cir. BAP 2002) 272 B.R. 257; In re Payne (9th Cir. BAP 2005) 323 B.R. 723; In re Kim (9th Cir. BAP 2000) 257 B.R. 680.) None of these cases hold, however, that the failure of a creditor to oppose, or the trial court to determine, a homestead exemption claim filed in response to a writ of execution that the creditor eventually terminated bars the trial court from determining the validity of a homestead exemption claim in a later proceeding in which the creditor seeks appointment of a receiver to sell the property.