Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-01678/USCOURTS-casd-3_15-cv-01678-4/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

TEXTRON FINANCIAL CORP.,

Plaintiff,

CASE NO. 15cv1678-LAB (DHB)

ORDER GRANTING RESTRAINING

vs. ORDER

MICHAEL S. GALLEGOS,

Defendant.

The Court ordered Michael Gallegos to respond to SPE LO’s request for a restraining

order by December 7, 2016. (Dkt. 167.) He didn’t. 

The Court construes his failure to oppose “as consent to granting the motion.”

Standing Order ¶ 4; Local Rule 7.1; see Rovio Entm't Ltd. v. Royal Plush Toys, Inc., 907 F.

Supp. 2d 1086, 1101 (N.D. Cal. 2012) (cautioning that “failure to file an opposition” will be

interpreted as consent to granting injunction); see United States v. Warren, 601 F.2d 471,

473 (9th Cir. 1979).

The Court also finds SPE LO demonstrated good cause and made a showing of need

for the restraining order. Unless a federal law says otherwise, the judgment collection

process “must accord with the procedure of the state where the court is located.” Fed. R. Civ.

P. 69(a). California law provides that when, as here, a creditor moves for assignment, he

or she may also “apply to the court for an order restraining the judgment debtor from

assigning or otherwise disposing of the right to payment” by making a “showing of need for

the order.” Cal.Code Civ. P. § 708.520. Courts have found that this standard is easily met.

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For example, issuing a Section 708 restraining order is appropriate where the debtor hasn’t

made voluntary payments, or, has attempted to avoid payments. See, e.g., Innovation

Ventures, LLC v. N2G Distrib., Inc., 2014 WL 10384606, at *6 (C.D. Cal. May 1, 2014); UMG

Recordings, Inc. v. BCD Music Grp., Inc., 2009 WL 2213678, at *3 (C.D. Cal. July 9, 2009).

Here, SPE LO offered troubling evidence that Gallegos may use his business entities

to hide money to avoid complying with the court-ordered judgment against him. For example,

Gallegos claimed no income on his tax returns, maintains personal bank accounts with

monthly averages around $1,000, and told SPE LO his only source of money in the past year

was from Richard Becka and John Gallegos. (Dkt.93-1 at 6.) Yet, Gallegos owns a $7 million

home in La Jolla, finances a Tesla, and pays thousands for school tuition. SPE LO’s

evidence suggests Gallegos finances his lifestyle through business checking accounts that

show massive sums of money moving around—e.g., deposits for $200,000 and $400,000

from Union City Hotel. (Dkt. 93-3 at 120, 143). SPE LO owns the rights to a $21 million

judgment against Gallegos, but hasn’t obtained more than $10,000 in five years. See Legal

Additions LLC v. Kowalksi, 2011 WL 3156724, at *3 (N.D. Cal. July 26, 2011) (granting

restraining order where debtors avoided judgment for a year). SPE LO has met the low

threshold for a Section 708 restraining order.

The Court restrains Gallegos from assigning, or otherwise disposing of, his rights to

payment from the 122 entities SPE LO identified (Dkt. 93-1 at 10–15), and from taking any

action that might prevent SPE LO’s collection efforts until the Court decides the motion for

assignment. The Court warns Gallegos that if he fails to comply with this order, the Court

won’t hesitate to hold him in contempt of court. Cal. Civ. Proc. Code § 708.520(d).

IT IS SO ORDERED.

DATED: DECEMBER 12, 2016

HONORABLE LARRY ALAN Burns

United States District Judge

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