Bagby v. Davis

DOUGLAS A. BAGBY, Plaintiff and Appellant, v. JOSEPH DANIEL DAVIS, Defendant and Respondent.

B320533

California Court of Appeals, Second District, Fourth Division

December 13, 2022

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Los Angeles County No. BC663174 Bruce G. Iwasaki, Judge. Affirmed.

Law Offices of Douglas A. Bagby and Douglas A. Bagby, in pro per., for Plaintiff and Appellant.

Nemecek & Cole and Frank W. Nemecek; Benedon &amp Serlin, Gerald M. Serlin and Mark Schaeffer for Defendant and Respondent.

STONE J. ^[*]

INTRODUCTION

Plaintiff Douglas Bagby appeals from the trial court's order denying a motion to enforce the amended judgment in favor of Bagby and against defendant Joseph Daniel Davis. We affirm and conclude that Bagby failed to follow the procedural mechanisms required to enforce the judgment.

FACTUAL AND PROCEDURAL HISTORY

In May 2017, Bagby filed a complaint against Davis for legal malpractice and breach of contract based on Davis's representation of Bagby in a personal injury action. The complaint alleged that, as a result of Davis's failure "to comply with his legal and ethical obligations to [Bagby], [Bagby] sustained damages in excess of $5 million or such other and further amount, as [would] be shown according to proof at . . . trial." When Davis failed to respond to the complaint, default was entered in August 2017. On September 25, 2018, the court entered a default judgment awarding Bagby $27,146,021.41. Davis appealed.

While the appeal from the default judgment was pending, on November 1, 2018, Bagby obtained an order to appear for examination (order to appear), which required Davis to appear in the trial court for a judgment debtor examination on March 13, 2019. On March 3, 2019, Davis was served with the order to appear. Davis did not appear on the original date of March 13, 2019, but sat for an examination on June 17 and 28, 2019.

In July 2017, Davis had formed Blue Globe Finance, LLC, a limited liability company located in Nevis in the Caribbean (hereafter the Nevis Island LLC). On April 30, 2019, Davis invested $3.8 million in the Nevis Island LLC.

On January 24, 2020, this court held that the default judgment was void to the extent it exceeded the $5 million demand in the complaint. (Bagby v. Davis (Jan. 24, 2020, B294081) [nonpub. opn.].) After vacating the default judgment, this court remanded the matter to the trial court to enter a new default judgment limiting Bagby's damages to $5 million, or vacate the default and permit Bagby to file and serve an amended complaint to seek additional damages. On remand, Bagby elected to accept the amended default judgment, and on July 23, 2020, the trial court entered the amended default judgment of $5 million in favor of Bagby and against Davis.

On August 13, 2020, Bagby recorded an abstract of judgment for the July 23, 2020 amended judgment in Riverside County, where Davis owned a real property located in Indian Wells (hereafter, Indian Wells property).

On February 7, 2022, Bagby filed a motion in Los Angeles County superior court to enforce the amended judgment, requesting that the trial court order (1) the sale of the Indian Wells property (including an order restraining Davis from transferring "furniture and furnishings and art" located in the residence) and (2) the return of $3.5 million^[1] Davis had transferred to the Nevis Island LLC, outside the jurisdiction of United States courts.

At the hearing, the trial court denied the motion, concluding that it had "no authority to enforce the amended judgment in the manner sought by [Bagby], as [Bagby] has other legal remedies under the Enforcement of Judgment[s] Law [E]L] and the Uniform Voidable Transactions Act [UVTA] [Civil Code section 3439 et seq.]."

DISCUSSION

There is no dispute that Bagby has an enforceable (amended) judgment. What is in dispute is the means by which Bagby moved to enforce the judgment. On appeal, Bagby contends the trial court abused its discretion by failing to order (1) the sale of the Indian Wells property; and (2) the repatriation of $3.5 million Davis invested in the Nevis Island LLC after being served with the order to appear for his judgment debtor examination. In opposition, Davis argues Bagby was required to follow the EJL to obtain an order of sale for the Indian Wells property. In seeking the return of the $3.5 million Davis argues Bagby was required to file a separate lawsuit asserting a UVTA claim. We conclude the trial court acted within its discretion in denying Bagby's motion to enforce the amended judgment.

I. Sale of the Indian Wells Property

"Detailed statutory provisions govern the manner and extent to which civil judgments are enforceable." (Imperial Bank v. Pim Electric, Inc. (1995) 33 Cal.App.4th 540, 546 (Imperial Bank).) The EJL "is a comprehensive scheme governing the enforcement of all civil judgments in California." (Ibid.; see Code Civ. Proc., §§ 680.010-724.260; 681.010, subd. (a).)^[2]Specifically, the execution of sales of real property is governed by the EJL. (§ 681.010, subd. (d); Imperial Bank, supra, at p. 546.)

After obtaining a money judgment, the judgment creditor creates a judgment lien by recording an abstract of judgment in the office of the county recorder of the county where the real property is located. (§ 697.310, subd. (a); see Dang v. Smith (2010) 190 Cal.App.4th 646, 651; Meyer v. Sheh (2022) 74 Cal.App.5th 830, 837.) "After obtaining a judgment lien, the creditor must take additional steps to collect on the judgment, and the usual method is to levy on specific property by writ of execution. [Citation.]" (Grothe v. Cortlandt Corp. (1992) 11 Cal.App.4th 1313, 1320-1321.)

The judgment creditor obtains from the clerk of court^[3] a writ of execution, directed to the sheriff or marshal in the county where the levy is to be made, to enforce the judgment. (§§ 699.510, 699.520.) The creditor delivers the writ to the levying officer with instructions including a description of the property to be levied upon. (§ 687.010, subd. (a)(1).) The officer levies on real property by recording a copy of the writ and a notice of levy with the county recorder "where the real property is located." (§ 700.015, subd. (a).) The levy creates an execution lien on the property. (§ 697.710.) Service of a copy of the writ and notice of levy on the judgment debtor triggers a 120-day grace period during which the debtor may redeem the property from the lien. (§ 701.545.) Only after this period expires may the levying officer then proceed to notice the property for sale. (§ 701.540 et seq.)

Additional steps are required where, as here, the judgment debtor asserts a "homestead exemption" with respect to the real property at issue.^[4]When there is a homestead exemption claim, the judgment creditor is required to obtain a court order for sale after a noticed hearing before the real property can be sold. (See §§ 704.740, subd. (a), 704.770; Wells Fargo Financial Leasing, Inc. v. D & M Cabinets (2009) 177 Cal.App.4th 59, 68; Ahart, Cal. Practice Guide: Enforcing Judgments & Debts (The Rutter Group 2022) ¶ 6:756.) In addition, if the real property "is located in a county other than the county where the judgment was entered: . . . [t]he judgment creditor shall apply to the superior court of the county where the [real property] is located." (§ 704.750, subd. (b)(1).) The main purpose of this hearing procedure is to determine whether the real property is subject to the homestead exemption, and to ensure that the debtor is paid the amount of the exemption if the property is sold. (See § 704.780, subd. (b); Ahart, supra, ¶ 6:756.)

Here, Bagby recorded an abstract of judgment on the Indian Wells property in Riverside County. Although that recording had the effect of creating a judgment lien on the property (§ 697.310, subd. (a)), it was only the first necessary step. Bagby has not followed any of the additional required steps under the EJL, such as obtaining a writ of execution and delivering it to the sheriff or marshal with instructions. Further, Bagby did not follow the statutorily mandated procedure in challenging the application of the homestead exemption on the property. In particular, he failed to bring the necessary proceeding in the superior court in Riverside County, where the Indian Wells property is located. (§ 704.750, subd. (b)(1).) Bagby provides no legal authority permitting him to circumvent the EJL in his request for a court order directing the sale of the property. Therefore, we conclude the trial court did not abuse its discretion in declining to order the sale of the property based on its finding that Bagby failed to comply with the EJL procedures for enforcing his money judgment against the property.

II. Davis's $3.5 Million Transfer to the Nevis Island LLC

Bagby contends the trial court erred by failing to order Davis to obtain and repatriate the $3.5 million transferred to the Nevis Island LLC. We reject each of Bagby's bases for this claim.

First Bagby argues Davis's transfer of the $3.5 million to the Nevis Island LLC violated the UVTA, Civil Code section 3439 et seq., which governs claims for fraudulent transfer. "The purpose of the UVTA is to prevent debtors from placing, beyond the reach of creditors, property that should be made available to satisfy a debt. [Citation.] A creditor may set aside a transfer as fraudulent . . . by showing actual fraud . . . or by showing constructive fraud . . . . [Citations.] As a remedy, the creditor may obtain avoidance of the transfer, an attachment or other provisional remedy, and, subject to applicable principles and rules, an injunction or a receiver. [Citation.]" (Chen v. Berenjian (2019) 33 Cal.App.5th 811, 817, fn. omitted; see Civ. Code, §§...