Filed 10/2/23 Glaser Weil etc. v. Downs CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION ONE

GLASER WEIL FINK HOWARD 

AVCHEN & SHAPIRO LLP,

Plaintiff and Respondent,

v.

GARY P. DOWNS,

Defendant and Appellant.

 B324408

 (Los Angeles County

 Super. Ct. No. BC506921, 

 BC619678)

APPEAL from an order of the Superior Court of 

Los Angeles County, Curtis A. Kin, Judge. Affirmed. 

Gary P. Downs, in pro. per., for Defendant and Appellant.

Glaser Weil Fink Howard Jordan & Shapiro, 

Michael Cypers and Elizabeth G. Chilton for Plaintiff and

Respondent.

____________________________
2

In a prior appeal, we held that a security interest granted 

by William E. Rice to his counsel, Glaser Weil Fink Howard 

Avchen & Shapiro LLP (Glaser Weil),

1 had first-in-time priority 

over a charging order obtained by judgment creditor Gary P. 

Downs. (Rice v. Downs (2021) 73 Cal.App.5th 213 (Rice III).) We 

remanded for the trial court to make findings regarding the scope 

of Glaser Weil’s security interest, including whether that interest

covered the same property subject to Downs’ charging order, and

under what conditions Glaser Weil could collect the collateral. 

On remand, the trial court found the security interest 

applied to the same collateral as the charging order, and Glaser 

Weil was entitled to collect that collateral because, inter alia, 

Rice had filed a bankruptcy petition, a specified event of default 

under the security agreement. Accordingly, the trial court denied 

Downs’ motion to enforce the charging order against the 

collateral to which Glaser Weil was entitled.

Downs appeals from the trial court’s order, arguing the 

security agreement is invalid, and the bankruptcy did not 

constitute an event of default under the circumstances of this 

case. We reject these arguments and affirm.

BACKGROUND

1. Original judgment and charging order

In a business dispute between Downs and Rice, an 

arbitrator issued a decision that, inter alia, awarded Downs 

hundreds of thousands of dollars in attorney fees. The trial court 

confirmed the award and entered judgment in June 2015. On 

1 Glaser Weil has since changed its name to Glaser Weil 

Fink Howard Jordan & Shapiro LLP.
3

appeal from that judgment, we affirmed the fees award but held 

that certain of Rice’s cross-claims should not have been compelled 

to arbitration, and therefore could proceed in court. (Rice v. 

Downs (2016) 248 Cal.App.4th 175, 179–180 (Rice I).)

Rice then filed a first amended complaint in the trial court

reasserting his claims and adding new claims based on business 

transactions in Hawaii. The trial court denied Downs’ motion to 

compel arbitration of the Hawaii-related claims and Downs 

appealed—we will refer to that appeal as Rice II. Rice attempted 

to proceed with his non-Hawaii-related claims despite the appeal, 

but the trial court agreed with Downs the proper course was to 

stay all proceedings pending a decision in Rice II. 

In April 2018, while Rice II was still pending, Downs moved 

for a charging order directing various limited liability companies

(LLCs) of which Rice was a member to pay any distributions to 

which Rice was entitled directly to Downs until the judgment 

confirming the arbitration award was satisfied. One of the LLCs 

included in the charging order motion was Triton Community 

Development LLC (Triton), a company of which Rice was founder 

and sole managing member. 

The trial court denied the charging order motion, ruling 

that the order staying the proceedings while Rice II was pending 

also applied to Downs’ attempt to enforce the judgment.

We issued our opinion in Rice II in July 2019, and the 

remittitur issued on September 23, 2019.2 (Rice v. Downs

(July 23, 2019, B286296) [nonpub. opn.].) On October 3, 2019, 

Downs again moved for a charging order against Triton and other 

LLCs affiliated with Rice. This time the trial court granted the 

2 The holding of Rice II is not relevant to this appeal.
4

motion, issuing a charging order requiring the LLCs to “pay any 

money or property due or to become due to [Rice] directly to 

[Downs]” until the judgment was paid.

2. Proceedings to enforce the charging order

On January 27, 2020, Rice filed for chapter 11 bankruptcy. 

In that proceeding, he disclosed that in February 2020, Triton 

had paid $450,000 to Glaser Weil, the firm representing Rice in 

his litigation against Downs. The bankruptcy court dismissed 

Rice’s case in April 2020, finding that “in the interest of judicial 

economy, the parties should continue to litigate in state court.”

On May 1, 2020, Downs moved in the trial court to enforce 

the charging order, contending Triton’s payment to Glaser Weil 

violated the order.

In opposition, Rice claimed that months before Downs 

moved for the charging order in October 2019, Triton had entered 

into an agreement with Glaser Weil to become a co-obligor on 

Rice’s debt to the law firm. Simultaneous with that agreement, 

Rice had granted Glaser Weil a security interest in his 

membership in Triton, which Glaser Weil had perfected by filing 

a UCC financing statement with the Secretary of State.

As evidence of these transactions, Rice filed a declaration 

summarizing the terms of Triton’s agreement with Glaser Weil to 

become co-obligor on Rice’s debt, and Rice’s agreement with 

Glaser Weil granting the security interest. A Glaser Weil partner 

also filed a declaration summarizing the terms of the security 

interest, and attached the UCC financing statement filed with 

the Secretary of State. The agreements themselves were not

provided to the trial court. 

Rice argued that Triton’s payment to Glaser Weil was not a 

distribution to Rice subject to the charging order, but rather “a 
5

payment made by Triton to satisfy its own debt” as co-obligor on 

Rice’s debt. Alternatively, to the extent the payment was a 

distribution to Rice, Rice argued Glaser Weil’s perfected security 

interest in Triton had first-in-time priority over Downs’ charging 

order.

In reply, Downs argued that Triton’s payment to Glaser 

Weil was for legal services provided to Rice, and therefore was a 

distribution subject to the charging order. He further argued, 

inter alia, that the security interest had no effect absent a 

default, which had not occurred, and that it would be inequitable 

to allow Rice to use Triton to evade the charging order because 

Triton was Rice’s alter ego. 

After several hearings, the trial court ruled in Downs’ 

favor. The court found Triton was Rice’s alter ego, thus rejecting 

the argument that Triton’s payment to Glaser Weil was for 

Triton’s own obligations. The court agreed in theory that Glaser 

Weil’s security interest in Triton had priority over the charging 

order, but found Downs nonetheless had priority based on his 

earlier, unsuccessful motion for a charging order. The court 

further ruled under its equitable powers that the payment was 

improper and in contravention of the charging order. The court 

ordered Glaser Weil to pay Downs $450,000. 

3. Rice III

Glaser Weil appealed, and we reversed the disgorgement 

order in an opinion certified for partial publication. (Rice III, 

supra, 73 Cal.App.5th at pp. 217–218.) We agreed with Downs 

that Triton’s payment to Glaser Weil was effectively a 

distribution to Rice, and therefore subject to the charging order. 

(Id. at pp. 225–229.) We held, however, that Glaser Weil’s 

security interest had priority over the charging order, because 
6

Glaser Weil had perfected that interest before Downs moved for 

the charging order in October 2019. (Id. at p. 231.) Downs’ first, 

unsuccessful motion for a charging order did not grant him 

priority because the denial of that motion extinguished Downs’ 

lien. (Id. at p. 230, citing Code Civ. Proc. § 708.320, subd. (b).) In 

the unpublished portion of the opinion, we held that, assuming 

arguendo the trial court under its equitable authority could 

override the statutory priority of a security interest, there was no 

equitable basis to do so under the circumstances of the case.

In reaching our holding, we noted that when the trial court 

ruled in Downs’ favor under its equitable authority, it never 

made any factual findings as to the scope of Glaser Weil’s 

security interest. (Rice III, supra, 73 Cal.App.5th at p. 235.) 

Specifically, the trial court never determined whether the 

security interest covered the same property subject to the 

charging order. (Ibid.) Nor had the trial court determined under 

what conditions Glaser Weil could enforce the security interest, 

including whether Rice first had to default on his debt, as Downs 

argued. (Ibid.) We therefore remanded “for the trial court to 

determine the terms of Glaser Weil’s security interest.” (Ibid.) 

We “express[ed] no opinion as to the scope of that inquiry, 

including whether the trial court may or should allow additional 

evidence.” (Ibid.) 

4. Evidence presented on remand

Following the remittitur in Rice III, Glaser Weil and Downs

filed memoranda and supporting declarations in the trial court

addressing the issues to be considered on remand. Glaser Weil 

included a copy of the agreement granting the security interest. 

Under the agreement, Rice assigned to Glaser Weil “as 

collateral security, all of [Rice’s] right, title and interest in the 
7

following property . . . .” The “following property” included one 

hundred percent of Rice’s membership in Triton, which the 

agreement referred to as the “Pledged Interests” (boldface &

italics omitted). The property further included, inter alia, “all 

ownership interests, membership interests, shares, securities, 

moneys, instruments or property representing a dividend, a 

distribution or return of capital upon or in respect of the Pledged 

Interests,” and “all rights of [Rice] to receive moneys or 

distributions with respect to the Pledged Interests due and to 

become due under or pursuant to the Relevant Documents. . . .”

“Relevant Documents” was defined as “the Operating Agreement 

and all other organizational documents of [Triton].” 

The agreement provided that, “[s]o long as no Event of 

Default shall have occurred and be continuing, [Rice] shall have 

the right to exercise all of [Rice’s] rights under the Relevant 

Documents . . . including the right to exercise any and all voting 

rights, [and] the right to receive distributions on the Collateral to 

cause all revenues generated by the Property to be applied in 

accordance with the terms and provisions of” the amended 

engagement letter. In the amended engagement letter, as 

explained in the security interest agreement, Glaser Weil agreed 

to defer payment of certain legal fees. 

Should an event of default occur, however, the agreement 

provided that “so long as such Event of Default shall 

continue, . . . all distributions on the Collateral shall be paid 

directly to [Glaser Weil]” and be applied to Rice’s debt to the firm. 

The agreement listed a number of “Events of Default,” 

including “Failure of [Rice] to make any payment required under 

the Engagement Letters . . . within ten (10) calendar days after 

written notice from [Glaser Weil].” Other events of default 
8

included, inter alia, “[a] petition in bankruptcy is filed by or 

against [Rice].” 

A declaration from a Glaser Weil partner asserted that on 

February 21, 2020, the firm’s managing partner e-mailed Rice

demanding Triton pay $500,000 towards Rice’s outstanding legal 

fees by February 29, 2020. Triton paid the $450,000 at issue in 

the instant case on or about February 28, 2020. 

5. The trial court’s ruling

After a hearing, the trial court issued a written order 

denying Downs’ motion to enforce the charging order. The court 

found the security interest Rice granted to Glaser Weil 

encompassed distributions from Triton, the same distributions 

covered by the charging order. Because Rice III had held the 

$450,000 constituted a distribution from Triton to Rice, and 

further that the security interest had priority over the charging 

order, Glaser Weil, not Downs, was entitled to that distribution. 

The trial court rejected Downs’ argument that Glaser 

Weil’s security interest was never triggered because there had 

been no event of default. Citing California Uniform Commercial 

Code section 9609, subdivision (c), the court ruled that default 

was not required if the parties had agreed otherwise, and Rice, by 

arranging Triton’s payment to Glaser Weil, had “agreed to Glaser 

Weil’s enforcement of the Security Agreement.” To the extent an 

event of default was required under the security agreement, the 

trial court found Rice’s filing for chapter 11 bankruptcy satisfied 

this requirement. 

The trial court declined to address Downs’ arguments 

concerning a fraudulent conveyance. The court found that “[a]ny 

argument regarding Rice’s intent in entering into the Security 

Agreement with Glaser Weil or filing for bankruptcy with respect 
9

to the Charging Order is beyond the scope of the Court of 

Appeal’s directions on remand.”

Downs timely appealed. 

DISCUSSION

As an initial matter, Glaser Weil disputes some of Downs’ 

arguments on appeal on the basis that those arguments exceed 

the scope of our remand in Rice III, or that Downs lacks standing 

to challenge provisions of the security agreement. We assume 

without deciding that Downs’ arguments are both within the 

proper scope of our remand and that he has standing to make 

those arguments. 

The trial court’s ruling in this case involved contractual

and statutory interpretation on undisputed facts. Our review is 

de novo. (See The Fifth Day, LLC v. Bolotin (2009) 

172 Cal.App.4th 939, 946–947.) Under that standard, we agree 

with the trial court’s ruling.

Downs does not dispute, nor could he, that the collateral 

defined under the security agreement includes Triton’s 

distributions to Rice. Assuming arguendo Glaser Weil can only 

enforce the security agreement following the occurrence of an 

event of default, an issue we do not decide, Rice’s filing of a 

bankruptcy petition qualified as an event of default under the 

terms of the security agreement. Upon the filing of that 

bankruptcy petition, therefore, Glaser Weil became entitled to all 

distributions from Triton to Rice.

Downs argues Glaser Weil’s security interest is invalid 

because Glaser Weil never conferred any value on Triton, the 

entity that paid the money. Downs cites California Uniform 

Commercial Code section 9203, subdivision (b), which provides 

that a security interest is enforceable only if, inter alia, the 
10

debtor has authenticated a security agreement that provides a 

description of the collateral, the debtor has rights in that 

collateral, and “value has been given.” 

As we held in Rice III, although Triton directly paid Glaser 

Weil, that payment was in partial satisfaction of Rice’s debt to 

Glaser Weil and therefore constituted a distribution to Rice. 

(Rice III, supra, 73 Cal.App.5th at pp. 227–228.) Triton’s 

distributions to Rice constituted collateral under the security 

agreement executed by Rice, collateral to which Rice had rights. 

Glaser Weil provided value to Rice in the form of legal services 

and an agreement to defer unpaid legal bills. The security 

interest therefore was valid under California Uniform

Commercial Code section 9203, subdivision (b), without need for 

Glaser Weil to provide value to Triton.

In a similar vein, Downs argues Triton “received no 

consideration for entering into this . . . grant of a security 

interest.” Triton was not party to the security agreement; rather, 

Rice assigned his personal interest in Triton, including the right 

to receive distributions, to Glaser Weil. It was Rice, as party to 

the agreement, that received consideration, not Triton. To the 

extent Downs argues that Triton received no consideration for the 

separate agreement under which it became co-obligor on Rice’s 

debt to Glaser Weil, that agreement is not at issue in this case, 

and has no bearing on the validity of the security agreement.

Downs disputes the bankruptcy constituted a valid event of 

default, raising several arguments. He contends the parties 

never “intended the 2020 Rice Bankruptcy filing to be an Event of 

Default under the Security Agreement.” In support, he cites 

filings by Rice in the bankruptcy court stating avoidance of the

charging order was “[o]ne of the principal reasons” for the 
11

bankruptcy petition.

3 Further, Downs notes that Glaser Weil 

continued to represent Rice in the state court during and after 

the bankruptcy proceedings, and never asserted the bankruptcy 

constituted an event of default. From this, Downs argues the 

bankruptcy petition had nothing to do with Rice’s debt to Glaser 

Weil, and therefore could not be an event of default under the 

security agreement.

The plain, unambiguous language of the security 

agreement identifies as an event of default “[a] petition in 

bankruptcy . . . filed by or against [Rice].” There are no 

limitations or qualifications on this event of default based on

Rice’s intent in filing the petition, and nothing suggesting a 

bankruptcy petition can only be an event of default if motivated 

by Rice’s debt to Glaser Weil as opposed to another creditor.

Downs’s interpretation also is not reasonable. A 

bankruptcy petition is usually a sign one or more creditors are 

moving in, which is precisely when a primary lienholder would 

need to assert its rights to collateral. It is thus not logical to 

conclude that the parties intended to limit events of default to 

bankruptcies arising solely from Rice’s debt to Glaser Weil, as 

opposed to other creditors like Downs seeking the same 

collateral.

Downs argues Glaser Weil has waived any right to assert 

the bankruptcy as an event of default given that the firm

3 Here and elsewhere in his appellate briefing, Downs

does not cite to supporting documents in the record, instead 

citing to his own briefing in the trial court that in turn cites 

purportedly supporting documents. Although we could deem his 

arguments forfeited for failure to properly cite the record, we 

decline to do so.
12

continued to represent Rice after the bankruptcy filing. Downs 

characterizes this as continued performance in the face of a 

contractual breach, thus waiving claim of breach. The events of 

default under the security agreement, however, are not limited to 

breach of contract, and the filing of a bankruptcy petition is one 

such event. Downs’ reliance on legal doctrine regarding 

contractual breaches does not help him. 

Downs argues the bankruptcy court dismissed Rice’s 

petition “as being filed in bad faith, thereby rendering it invalid 

and disqualifying it as an Event of Default . . . .” Downs 

mischaracterizes the record. The bankruptcy court’s order 

dismissing the petition does not refer to, much less make a 

finding of, bad faith. Rather, the bankruptcy court concluded

“that all the real action is in state court, not here,” and “in the 

interest of judicial economy, the parties should continue to 

litigate in state court.” 

We acknowledge, as Downs notes, that at one point, the 

bankruptcy court stated that Rice “is not seeking a fresh start; he 

simply wishes to extract from the state court litigation the one 

piece he dislikes,” referring to an attempt by Downs and another 

business associate to oust Rice from a company they all owned. 

This does not amount to a finding of bad faith, nor does Downs 

cite any authority compelling that conclusion.

Downs further questions Glaser Weil’s reliance on the 

bankruptcy as an event of default by arguing that “the 

bankruptcy was filed February 27, 2020 and the payment to 

Glaser was made on February 28, 2020.” Downs contends this 

demonstrates Triton had the funds on hand with the intent to 

pay them to Glaser Weil on Rice’s behalf even absent the 

bankruptcy filing.
13

Again, Downs mischaracterizes the record. Rice filed for 

bankruptcy on January 27, not February 27, 2020. Glaser Weil 

demanded payment from Triton on February 21, almost a month 

after the bankruptcy was filed. The timing of events therefore 

supports, not undercuts, an inference that Glaser Weil made the 

demand because of the bankruptcy petition. At the very least,

the timing of the payment does not indicate that Glaser Weil 

demanded it before an event of default had occurred.

Through all of the above-discussed (and rejected) 

arguments, Downs implies that Glaser Weil’s reliance on the 

bankruptcy filing as an event of default is an ex post facto 

explanation for what otherwise was an inappropriate payment 

from Triton to Glaser Weil or, alternatively, that Glaser Weil and 

Rice deliberately orchestrated the bankruptcy filing to trigger the 

security agreement to avoid the charging order. The evidence 

cited by Downs—(1) Rice’s statements in the bankruptcy court 

that he filed the petition to avoid the charging order, (2) Glaser 

Weil’s continued representation of Rice after the filing of the 

bankruptcy petition, (3) Glaser Weil’s failure to cite expressly the 

bankruptcy petition as the basis for the firm’s demand for 

payment from Triton, and (4) the timing of Triton’s payment 

relative to the filing of the bankruptcy petition—is insufficient to 

support either of Downs’ contentions, for the same reason that 

evidence is insufficient to undercut our holding that the 

bankruptcy petition constituted a valid event of default. 

Further, assuming arguendo Rice and Glaser Weil 

deliberately triggered the default, or Glaser Weil relied on the 

bankruptcy to justify the payment only after the fact, we do not 

see why it matters. Glaser Weil had the right without 

qualification to receive Rice’s distributions from Triton upon the 
14

occurrence of specified events, including a bankruptcy filing. 

Downs cites no authority that a borrower cannot trigger a default

to allow a secured party to collect ahead of another creditor, or

that a secured party cannot claim a default after the fact to 

justify its demand for collateral. Had the security agreement 

required Glaser Weil to make certain declarations or provide 

written notice before asserting its rights based on a bankruptcy 

filing, Downs might have an argument, but Downs identifies no 

such requirement in the security agreement. It is also 

conceivable that in some cases, principles of waiver, estoppel, or 

otherwise might preclude parties from asserting certain rights 

under a security agreement, but as discussed above, Downs has 

failed to persuade us any such principle applies.

Downs argues that if parties can orchestrate defaults or 

rely on them after the fact to trigger security interests, this would 

“leave[ ] the door wide open for friendly borrowers and debtors to 

collude to make up defaults in an effort to defraud unliked

creditors.” We note the only reason Glaser Weil could collect

Triton’s distributions to Rice ahead of Downs is that Glaser Weil 

had first-in-time priority over Downs. If Downs had filed a 

judgment lien or successfully moved for a charging order before 

Glaser Weil obtained its security interest, then Glaser Weil 

would be out of luck regardless of any efforts to trigger a default 

or claim a default retroactively. Downs’ attempt to 

recharacterize this case as about something other than lien 

priority is not well taken.

Downs argues the trial court erred in interpreting 

California Uniform Commercial Code section 9609 to allow 

Glaser Weil to trigger the security interest without a default if 

Rice so agreed. Given our conclusion that Rice’s bankruptcy 
15

petition constituted an event of default, we need not reach this 

argument. We similarly do not reach the parties’ arguments

relating to the existence of other events of default, such as 

nonpayment by Rice following written notice from Glaser Weil. 

DISPOSITION

The order is affirmed. Respondent is awarded its costs on 

appeal.

NOT TO BE PUBLISHED.

BENDIX, J.

We concur:

ROTHSCHILD, P. J.

CHANEY, J.