Court Opinion

ID: 6338172
Source: CourtListenerOpinion
Date Created: 2022-05-05 19:02:41.062041+00
Date Added: 2024-06-11T09:25:09.711825
License: Public Domain

Filed 5/5/22
               CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                SECOND APPELLATE DISTRICT

                          DIVISION TWO

CRYSTAL BERGSTROM,                     B309154

       Plaintiff and Appellant,        (Los Angeles County
                                       Super. Ct. No. BS109380)
       v.

ZIONS BANCORPORATION,
N.A.,

     Defendant and
Respondent.

     APPEAL from an order of the Superior Court of Los
Angeles County, Ruth Ann Kwan, Judge. Reversed and
remanded with directions.

       Crystal Bergstrom, in pro. per., for Plaintiff and Appellant.
       Dykema Gossett and Brian H. Newman for Defendant and
Respondent.
                              ******
       A judgment creditor seeking to seize funds in bank
accounts held by the judgment debtor’s spouse served a notice of
levy on the bank’s agent for service of process. Although the
notice of levy form unambiguously listed the bank as the party to
be served, the agent misread the form and rejected it. By the
time the agent informed the bank of its mistake and the bank
then froze the funds, the spouse had all but drained the accounts.
The Enforcement of Judgments Law (Code Civ. Proc., § 680.010
et seq.)1 provides that a third person’s “fail[ure] or refus[al]” to
deliver property subject to a levy “without good cause” renders
the third person “liable to the judgment creditor” for the amounts
withdrawn and covered by the levy. (§ 701.020, subd. (a).) In
deciding whether the bank is liable to the judgment creditor for
the agent’s mistake in this case, we must answer two questions:
(1) When does an agent’s mistake constitute “good cause” that
therefore excuses its principal’s failure to deliver property subject
to a levy, and (2) was the agent negligent in this case for
misreading the form? Because “good cause” exists if a third party
does “not know or have reason to know of the levy” (§ 701.010,
subd. (c)), because the “reason to know” standard looks to what “a
reasonable person . . . would have inferred” (Doe v. City of Los
Angeles (2007) 42 Cal.4th 531, 547 (Doe)), and because an agent’s
knowledge is imputed to its principal (Civ. Code, § 2332), we hold
that “good cause” exists only when the agent’s mistake that
causes the agent (and, hence, the principal) to not have reason to

1    All further statutory references are to the Code of Civil
Procedure unless otherwise indicated.

                                  2
know of the levy is a mistake that a reasonable person would
make—in other words, when the agent’s mistake does not
amount to negligence. Further, because the agent in this case
was negligent in misreading the standardized form it was served
with, the agent for service of process—and hence its principal, the
bank—had reason to know of the levy, such that the bank is
liable to the judgment creditor for some (though not all) of the
funds withdrawn. Accordingly, we reverse the trial court’s ruling
in the bank’s favor and remand for further proceedings.
         FACTS AND PROCEDURAL BACKGROUND
I.     Facts
       A.    Underlying judgment
       In 2007, a Nevada state court entered a $2.1 million
judgment against Northamerican Sureties, Ltd. (Northamerican)
and Robert S. Michaels (Michaels). By April 2019, the amount of
the judgment—with interest and costs—had blossomed to
$4,064,012.61.
       B.    Attempts to collect on judgment
             1.    Tying the bank accounts to the judgment debtor
       In August 2007, Crystal Bergstrom (plaintiff) was assigned
the judgment, thereby stepping into the shoes of the judgment
creditor.
       In 2019, plaintiff learned that Michaels’ wife—Cheryl
Pitcock (Pitcock)—was the sole or coholder of two Los Angeles-
based bank accounts at Zions Bancorporation, N.A. (Zions). As of
April 1, 2019,2 the bank account ending in 1130 had a balance of
$117,372.35, and the bank account ending in 9928 had a balance
of $638.62.

2     Unless otherwise indicated, all further date references are
to the year 2019.

                                3
       At that time, Corporation Service Company (CSC) was
acting as Zions’s agent for service of process for California-based
matters.
       On March 29, plaintiff obtained a writ of execution in the
amount of $4,944,759.25 from the Los Angeles Superior Court.
             2.    Levy and failure to acquire funds
       On April 2, plaintiff had a process server serve CSC with
(1) the writ of execution, (2) a notice of levy on “all accounts
standing in the name of” Northamerican, Michaels, or Pitcock, (3)
a spousal affidavit attesting that Pitcock was Michaels’s spouse,
and (4) a blank memorandum of garnishee form listing “ZB,
National Association”3 as the “garnishee.”
       The notice of levy is a one-page standardized form that in
this case had the following information filled in:
       •     Among a series of boxes in the top third of the form,
the notice of levy had a box that listed the “PLAINTIFF” as
“Judicial Judgment Enforcement Services” (which is plaintiff’s
company) and the “DEFENDANT” as “Northamerican Sureties,
Ltd., and Robert S. Michaels.”
       •     Immediately under the boxes, the notice of levy
stated: “TO THE PERSON NOTIFIED (name): ZB, NATIONAL
ASSOCIATION.”
       •     Beneath that notification, the notice of levy stated
that “[t]he property to be levied upon is described . . . as . . . [a]ll
accounts in the name of [Northamerican], and/or [Michaels],
and/or his spouse [Pitcock] . . . .”

3     At the time the levy was executed, Zions was trading under
the name ZB National Association. It has since changed its
name.

                                   4
       By the time CSC received the notice of levy, someone had
underlined the words “Northamerican Sureties, Ltd.” in the box
listing the “PLAINTIFF” and “DEFENDANT.”
       When CSC received the notice of levy and accompanying
documents, its employee glanced only at the underlined words
“Northamerican Sureties, Ltd.” Based on the “common practice
of process servers to underline in ink the party to which a legal
document is directed when the document is being served,” CSC’s
employee mistakenly believed that the underlined words
highlighted the party to be served with the levy, and on that
basis rejected the notice of levy because its principal was Zions,
not Northamerican. On April 3, CSC mailed a letter notifying
plaintiff of the rejection.
       Plaintiff received CSC’s letter on April 9 and immediately
called CSC to inform CSC of its mistake. CSC e-mailed Zions
later that day to inform Zions of the levy.
       Pursuant to Zions’s internal policy, Zions did not freeze the
money in Pitcock’s accounts until 4 p.m. the following day, April
10.
              3.    Pitcock’s withdrawals
       On April 3, Pitcock withdrew $15,000 from the account
ending in 1130 by writing a check to an LLC she controlled.
       On April 10, at 2:19 p.m., Pitcock withdrew (1) $102,172.35
from the account ending in 1130 by writing a check to the same
LLC she controlled, and (2) $438.62 from the account ending in
9528 by writing a check to herself.
       Because all of these withdrawals occurred before 4:00 p.m.
on April 10, Zions had not yet frozen the funds.

                                 5
       After deducting costs and fees from the $200 remaining in
both accounts, Zions ultimately cut plaintiff a check for $83
pursuant to the levy.
II.    Procedural Background
       In January 2020, plaintiff filed a motion for a court order
imposing third party liability on Zions for its noncompliance with
the April 2 notice of levy. Plaintiff sought to hold Zions liable for
the $117,815.97 Pitcock was able to withdraw on April 3 and
April 10 due to Zions’s delay in freezing the funds in the accounts
plaintiff controlled.
       After two rounds of briefing and two hearings, the trial
court denied plaintiff’s motion. In its written ruling, the court
ruled that (1) Zions had “good cause” for not freezing the funds in
Pitcock’s accounts before April 9 because neither it, nor CSC, was
“negligent” in misreading the notice of levy due to the “custom
and practice” of assuming that whatever was underlined was the
party to whom the notice was addressed; (2) Pitcock’s ability to
drain the accounts was an event that was largely plaintiff’s fault
because, in the court’s view, plaintiff had been “substantially
responsible for CSC’s week-long delay” in correcting its error; and
(3) Zions acted “promptly” by freezing the funds by 4:00 p.m. of
the day after it obtained actual notice of the levy because the
term “promptly” grants third parties “some amount of leeway.”
At the second hearing, the court stated that Zions should not be
liable because it did not “blantant[ly]” or “willful[ly]” refuse or fail
to implement the levy.
       Plaintiff filed this timely appeal.

                                   6
                           DISCUSSION
I.    The Pertinent Law, Generally
      The propriety of the trial court’s ruling lies at the
intersection of two bodies of law: (1) the Enforcement of
Judgments Law, and (2) the law of agency.
      A.     The Enforcement of Judgments Law
      California’s Enforcement of Judgments Law (Law) is a
“‘comprehensive and precisely detailed scheme’ governing
enforcement of money judgments” in California. (Kono v. Meeker
(2011) 196 Cal.App.4th 81, 86.) “As a general rule, the Law
authorizes a creditor holding a ‘money judgment’ to ‘enforce’ that
judgment against ‘all property of the judgment debtor . . . .’”
(O’Brien v. AMBS Diagnostics, LLC (2016) 246 Cal.App.4th 942,
947, quoting §§ 695.010, subd. (a), 699.710.)
             1.    A judgment creditor’s power to levy
      When a creditor has a judgment in its favor against a
debtor, the creditor seeking to enforce that judgment against the
debtor’s property must (1) obtain a writ of execution from the trial
court, which is directed to the sheriff or other levying officer and
authorizes them to enforce the judgment (§§ 699.510, subd. (a),
699.520), and (2) complete and serve a notice of levy, which is
directed to the judgment debtor or third person holding the
debtor’s property and notifies them of their duties and rights (§
699.540). (See Meyer v. Sheh (2022) 74 Cal.App.5th 830, 837-
838.)
      When the debtor’s property is in the possession of a third
person (such as a financial institution), the judgment creditor
may serve the writ of execution and the notice of levy upon the
third person; once it does, the third person “shall” “at the time of
the levy or promptly thereafter” “deliver to the levying officer any

                                 7
of the [judgment debtor’s] property levied upon that is in the
[third person’s] possession” or “control”4 (1) “unless the third
person claims the right to possession of the [judgment debtor’s]
property,” or (2) “[u]nless the third person [otherwise] has good
cause for failure or refusal” to comply with the levy. (§ 701.010,
subds. (a) & (b)(1).) For purposes of the second exception, “‘good
cause’ includes, but is not limited to, a showing that the third
person did not know or have reason to know of the levy from all of
the facts and circumstances known to the third person.” (§
701.010, subd. (c).)
       When the third person is a “financial institution” and the
property to be levied is a deposit account with that institution,
the procedures to be followed turn on whose name is on the
account. When the account is in the judgment debtor’s name, the
judgment creditor must follow the procedures applicable to any
levy served on a third person and must also serve the judgment
debtor with notice of the levy. (§§ 700.140, subd. (a), 699.550.)
When the account is in the name of someone other than the
judgment debtor, the judgment creditor must not only follow the
procedures applicable to any levy served on a third person and
serve the judgment debtor with notice of the levy, but must also
(1) obtain “a court order authorizing the levy” unless, as
pertinent here, the account is in the name of the “judgment
debtor’s spouse or registered domestic partner,” in which case an
“affidavit” attesting to the relationship will suffice, and (2) serve
the account holder with notice of the levy. (§ 700.160, subds. (a),
(b)(2).) The financial institution where the account is held may

4    Within 10 days after service, the third person must also
complete a garnishee’s memorandum. (§ 701.030.)

                                 8
observe a 15-day holding period before releasing any funds to the
judgment creditor. (§ 700.160, subd. (c).)
       Once the financial institution is properly served as detailed
above, an execution lien “arises” as to the “amounts in [the]
deposit account at the time of service on the financial
institution.” (§ 700.140, subds. (b) & (c).) While this lien is in
effect, the financial institution is not to “honor a withdrawal
request or a check or other order for the payment of money from
the deposit account” unless there still will be “sufficient funds . . .
available to cover the levy” (id., subd. (d)), and the institution
cannot be held liable to the depositor for doing so (id., subd. (e)).
This limitation on the financial institution’s discretion is an
express statutory exception to the usual duty of a financial
institution to honor its contractual relationship with its depositor
even when third parties might make a claim against funds in a
depositor’s account. (Grover v. Bay View Bank (2001) 87
Cal.App.4th 452, 456 [noting bank’s obligations to depositor
except when the Law applies]; Chazen v. Centennial Bank (1998)
61 Cal.App.4th 532, 537, 539, 542; Fin. Code, § 1450, subd. (b)
[obligating banks to honor depositor’s checks absent an
“appropriate order against the bank from a court”].)
              2.    Consequence of not obeying a valid levy
       If the financial institution (as a third person) “fails or
refuses” to “deliver property to the levying officer” “without good
cause to do so,” the financial institution “is liable to the judgment
creditor for” the amount of the levy. (§ 701.020, subd. (a).)
       B.     The law of agency
       It is a fundamental tenet of agency law that a principal is
deemed to know what its agent knows while acting within the
scope of the agent’s authority. (Civ. Code, § 2332 [“As against a

                                   9
principal, both principal and agent are deemed to have notice of
whatever either has notice of . . .”]; Chapman College v. Wagener
(1955) 45 Cal.2d 796, 802 [“The general rule of agency is that
notice to or knowledge possessed by an agent is imputable to the
principal.”].) This presumption of “imputed knowledge” applies
to what the agent subjectively does know as well as what the
agent reasonably should know. (Roche v. Hyde (2020) 51
Cal.App.5th 757, 797-798 (Roche); Hall v. Rockcliff Realtors
(2013) 215 Cal.App.4th 1134, 1141 (Hall).) This presumption is
also “irrebuttable.” (Roche, at p. 797.) As to what an agent
subjectively knows, agents have “a legal duty to disclose
information obtained in the course of the agency and material to
the subject matter of the agency, and the agent will be presumed
to have fulfilled this duty.” (Triple A Management Co. v. Frisone
(1999) 69 Cal.App.4th 520, 534-535; Sands v. Eagle Oil &
Refining Co. (1948) 83 Cal.App.2d 312, 319.) As to what an agent
reasonably should know, the agent’s negligence in not acquiring
information that it reasonably should have acquired is chargeable
to the principal as well. (Civ. Code, § 2338 [“a principal is
responsible to third persons for the negligence of his agent in the
transaction of business of the agency”]; Hall, at p. 1140.)
II.    Analysis
       Plaintiff argues that the trial court erred in denying her
motion to hold Zions responsible for the full amount of money
Pitcock withdrew from her accounts at Zions. That motion was
grounded in section 701.020, which imposes liability only if Zions,
as the third person served with a notice of levy addressed to it,
“fail[ed] or refuse[d]” to “deliver” the money in Pitcock’s accounts
“without good cause to do so.” (§ 701.020, subd. (a).) Because it
is factually undisputed that CSC is Zions’s agent for service of

                                10
process and that CSC received a notice of levy addressed to Zions
on April 2 but, due to CSC’s mistake in reading the notice, Zions
did not freeze Pitcock’s accounts until 4:00 pm on April 10,
Zions’s liability under section 701.020 turns on three questions:
(1) did CSC’s mistake constitute “good cause” for Zions not to
freeze Pitcock’s accounts “at the time of levy [on April 2] or
promptly thereafter” (and instead to delay in freezing Pitcock’s
accounts until April 10), (2) if “good cause” turns on whether or
not CSC was negligent in misreading the notice of levy, was CSC
negligent, and (3) if CSC (and, by dint of agency law, Zions) were
negligent, to what remedy is plaintiff entitled?
       A.     Did CSC’s mistake constitute “good cause”?
       Whether CSC’s mistake constitutes “good cause” turns
partly on a challenging issue of statutory construction and partly
on the application of that interpretation to undisputed facts. We
review both types of issues de novo. (People v. Superior Court
(Sahlolbei) (2017) 3 Cal.5th 230, 234 [statutory interpretation];
Boling v. Public Employment Relations Bd. (2018) 5 Cal.5th 898,
912 [application of law to undisputed facts].)
       Section 701.020 excuses a third person from liability for its
“fail[ure] or refus[al]” to comply with a notice of levy absent “good
cause,” but does not in that section define “good cause.” (§
701.020, sub. (a).) Fortunately, “good cause” is defined in the
closely related section that spells out the third person’s statutory
duty to comply with a notice of levy absent “good cause.” (§
701.010, subd. (c).) Because these two statutes deal with the
same duty of the third person to respond to levies, the definition
of “good cause” used by one applies with equal force to the other.
(J.M. v. Huntington Beach Union High School Dist. (2017) 2
Cal.5th 648, 654 (J.M.) [“‘If the statutory language is

                                 11
unambiguous, we presume the Legislature meant what it said,
and the plain meaning of the statute controls.’ [Citation.]”];
Wilcox v. Birtwhistle (1999) 21 Cal.4th 973, 979 [“words or
phrases given a particular meaning in one part of a statute must
be given the same meaning in another part of the statute”]; see
also Pacific Southwest Realty Co. v. County of Los Angeles (1991)
1 Cal.4th 155, 167 [statutes in pari materia must be
harmonized].)
      The pertinent definition of “good cause” defines the term as
“includ[ing], but . . . not limited to, a showing that the third
person did not know or have reason to know of the levy from all
the facts and circumstances known to the third person.” (§
701.010, subd. (c), italics added.)
      What a third person “know[s]” generally refers to their
actual, subjective knowledge. (E.g., Deutsch v. Masonic Homes of
California, Inc (2008) 164 Cal.App.4th 748, 773 (Deutsch) [“‘knew’
refers to actual knowledge”]; Da-Green Electronics, Ltd. v. Bank
of Yorba Linda (9th Cir. 1989) 891 F.2d 1396, 1399.) Because
substantial evidence supports the trial court’s implicit finding
that CSC did not actually, subjectively know that the notice of
levy was properly addressed to Zions until April 9, CSC—and, by
imputation, Zions—“did not know” of the levy until April 9.
(People v. Hughes (2002) 27 Cal.4th 287, 327 [factual findings
reviewed for substantial evidence]).
      What a third person has “reason to know” generally refers
to whether “after examining the facts in the [third person’s]
possession, a reasonable person of ordinary intelligence . . . would
have inferred the existence of the ultimate fact at issue or
regarded its existence as so highly probable as to conduct himself
or herself as if it did exist.” (Doe, supra, 42 Cal.4th at p. 547,

                                12
italics added; Deutsch, supra, 164 Cal.App.4th at p. 773 [same];
Santillan v. Roman Catholic Bishop of Fresno (2012) 202
Cal.App.4th 708, 717-718 (Santillan) [same].) Although the
“reason to know” standard is a species of constructive knowledge,
it is a stricter species because “reason to know” turns solely on
what a reasonable person would know based on the “facts in [his
or her] possession” (and thus, unlike other species of constructive
knowledge, imposes no duty to inquire and obtain additional
facts). (Santillan, at pp. 717-718 [“‘reason to know’ . . . does not
mean ‘inquiry notice’”]; cf. Civ. Code, § 19 [defining “constructive
notice” as “actual notice of circumstances sufficient to put a
prudent person upon inquiry as to a particular fact”].) What is
more, a “reasonable person” standard is synonymous with a
negligence standard because “‘ordinary negligence’ . . . consists of
a failure to exercise the degree of care in a given situation that a
reasonable person under similar circumstances would employ . . .
.” (City of Santa Barbara v. Superior Court (2007) 41 Cal.4th
747, 753, italics added; Bellman v. San Francisco High School
Dist. (1938) 11 Cal.2d 576, 589; Anderson v. Fitness Internat.,
LLC (2016) 4 Cal.App.5th 867, 881.) Consequently, whether a
third person has a “reason to know” turns on whether, based
solely on the “facts in [its] possession,” the third party was
negligent for not inferring the existence of the ultimate fact: If
the third person acted reasonably (and hence, not negligently),
then it would not have “reason to know” because a “reasonable
person of ordinary intelligence” would not have inferred the fact
of notice; but if the third person acted unreasonably (and hence,
negligently), then it would have reason to know.
        The trial court and Zions offer two competing standards
other than negligence to define “good cause.”

                                 13
       In its oral comments, the trial court suggested that “good
cause” existed only when the third person “blatant[ly]” or
“willful[ly]” failed to know of the levy. We reject this suggestion
for two reasons. First, this suggestion was nowhere in the court’s
written ruling, and a court’s oral comments inconsistent with its
written ruling are generally disregarded. (E.g., Jespersen v.
Zubiate-Beauchamp (2003) 114 Cal.App.4th 624, 633 [“a judge’s
comments in oral argument may never be used to impeach the
final order”].) Second, adopting this suggestion would require us
to swap out the statute’s “reason to know” standard and
substitute in its place a “willful” or “blatant” refusal standard; we
are generally not allowed to make such substitutions. (J.M.,
supra, 2 Cal.5th at p. 657, fn. 7 [“It is not for us to rewrite . . .
statute[s]”].)
       Zions argues that a third person acts with “good cause” as
long as it does not have actual knowledge of the levy. We reject
this argument for two reasons. First, this argument ignores that
the statutory definition of “good cause” requires proof that the
third party “did not know” and that the third party did not “have
reason to know.” (§ 701.010, subd. (c).) Zions is essentially
asking us to lop off the second part of the definition; this we
cannot do. (Kulshrestha v. First Union Commercial Corp. (2004)
33 Cal.4th 601, 611 [“courts may not excise words from
statutes”].) Second, having the definition of “good cause” turn
solely on a lack of actual knowledge would lead to an absurd
result, which is to be avoided. (People v. Bullard (2020) 9 Cal.5th
94, 106 [courts must “choose a reasonable interpretation that
avoids absurd consequences that could not have possibly been
intended”].) If actual knowledge were the sole test, third persons
could escape liability by negligently declining to read notices of

                                 14
levy or, worse yet, taking actions to remain willfully ignorant of
such notices; either way, the third person would not “know” of the
levy. Even more troubling, because a judgment creditor is
statutorily required to also serve the account holder and
judgment debtor with the notice of levy, a definition of “good
cause” that makes a third person’s duty to comply with a notice
turn on its actual knowledge would make it far more likely that
the judgment debtor or account holder would be able to drain the
account before the third person bothers to acquire actual
knowledge of the levy and freezes the funds at issue. Such a
result is inimical to the purpose of the Law, which is to
facilitate—not obstruct—the judgment creditor’s collection of the
funds in those accounts. (Western Oil & Gas Assn. v. Monterey
Bay Unified Air Pollution Control Bd. (1989) 49 Cal.3d 408, 425
[“A court should not adopt a statutory construction that will lead
to results contrary to the Legislature’s apparent purpose.”].)
       B.    Was CSC negligent in making its mistake?
       Under the Law, a financial institution has a duty to a
judgment creditor to accept a notice of levy and, if it is valid and
applies to one of the institution’s customers, freeze any funds
subject to the ensuing execution lien. (§ 700.140.) As a result,
whether CSC was negligent turns on whether it breached that
duty. Whether there was a breach turns on the applicable
“standard of care” to which CSC’s conduct must conform.
(Issakhani v. Shadow Glen Homeowners Assn. (2021) 63
Cal.App.5th 917, 934.) The “default” standard of care is the
general duty to act reasonably. (Ibid.; Regents of University of
California v. Superior Court (2018) 4 Cal.5th 607, 619 [“In
general, each person has a duty to act with reasonable care under
the circumstances”]; Vasilenko v. Grace Family Church (2017) 3

                                15
Cal.5th 1077, 1083; Civ. Code, § 1714, subd. (a).) Although a
determination of breach of the standard of care usually is a
question of fact reviewed for substantial evidence, it may be
resolved as a matter of law “where ‘no reasonable jury could [fail
to] find the defendant[’s]”’ “conduct violate[d] the degree of care
[expected] of him.” (T.H. v. Novartis Pharmaceuticals Corp.
(2017) 4 Cal.5th 145, 188; Lysick v. Walcom (1968) 258
Cal.App.2d 136, 150; Polk v. Los Angeles (1945) 26 Cal.2d 519,
528.)
       Here, we conclude that CSC’s failure to properly read the
notice of levy was unreasonable as a matter of law. As a general
matter, a reasonable person is charged with reading the content
of documents presented to him or her—particularly where, as
here, those documents are legal documents being served; a failure
to do so constitutes negligence. (E.g., Riverisland Cold Storage,
Inc. v. Fresno-Madera Production Credit Assn. (2013) 55 Cal.4th
1169, 1183, fn. 11 [failure to reach “contents of a written
agreement” is “negligent”]; Rosenthal v. Great Western Fin.
Securities (1996) 14 Cal.4th 394, 423 [same]; Widess v. Title Ins.
& Trust. Co. (1931) 112 Cal.App. 343, 347-348 [same]; Frittelli,
Inc. v. 350 North Canon Drive, LP (2011) 202 Cal.App.4th 35, 52
[same].) As an entity whose very job is to read papers served on
it like the standardized one-page notice of levy form—a form that
explicitly requires a judgment creditor to specify, in a fixed
location, the third person subject to the notice of levy as the
“PARTY TO BE NOTIFIED”—CSC’s failure to read the form
properly is even more unreasonable (and hence more negligent).
       The trial court ruled that neither CSC nor (by extension)
Zions was negligent for two reasons. First, the court ruled that
CSC was just following the “custom and practice” of looking at

                                16
whatever was underlined and assuming that the underlined
person or entity was the third person to whom the notice of levy
was directed. Although the common practice of an industry can
be relevant to the standard of care (at least when the standard of
care is not one that requires expert testimony) (e.g., Osborn v.
Irwin Memorial Blood Bank (1992) 5 Cal.App.4th 234, 276-277;
Leonard v. Watsonville Community Hospital (1956) 47 Cal.2d
509, 519-520 (Leonard)), such common practices are not
controlling because “‘[g]eneral negligence cannot be excused on
the ground that others in the same locality practice the same
kind of negligence’” (Leonard, at pp. 519-520, quoting Ales v.
Ryan (1936) 8 Cal.2d 82, 100). The underlining may have been
distracting to CSC, but we refuse to treat it as excusing CSC from
looking at the part of the standardized form specifically meant to
list the party to be served. Second, the court found that plaintiff
is “substantially responsible for CSC’s week-long delay” in
contacting Zions about the notice of levy. To begin, plaintiff’s
subsequent dilatory conduct in being slow in telling CSC that it
misread the notice of levy form does not retroactively make CSC’s
negligent misreading un-negligent. Further, the trial court’s
finding is not supported by substantial evidence because the
record shows that CSC mailed the notice of rejection to plaintiff
on April 3; that plaintiff received the notice on April 9; and that
plaintiff called CSC immediately after receiving the notice on
April 9.
       Zions argues that CSC’s negligence in not properly reading
the notice of levy is not to be imputed to Zions because CSC was
its agent “for service of process, not its general agent.” This
argument is frivolous. CSC was Zions’s agent for service of
process, which is precisely the context in which CSC made its

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negligent mistake—that is, as Zions’s agent for service of process.
Thus, CSC’s review of the notice of levy was within the scope of
its agency, and its negligence is accordingly Zions’s negligence.
       C.    What is the appropriate remedy?
       Now that we have determined that CSC is negligent and
that, by virtue of principles of agency law, Zions therefore had
reason to know of plaintiff’s notice of levy, the question then
becomes: To what remedy is plaintiff entitled?
       Section 701.020 entitles the judgment creditor to “the value
of the judgment debtor’s interest in the property,” but only to the
extent that the third person “fails or refuses without good cause”
to deliver property to the levying officer. (§ 701.020, subd. (a).)
Although the execution lien comes into being upon service of the
notice of levy (§ 700.140, subd. (b)), the third person’s duty to
deliver comes into being “at the time of the levy or promptly
thereafter.” (§ 701.010, subd. (a), italics added.) Zions explained
its internal policy of responding to notices of levy by freezing the
affected funds by 4:00 p.m. on the business day after the notice of
levy is served. Because CSC (and hence Zions) had “reason to
know” of the levy on April 2, Zions is responsible for any
withdrawals after 4:00 p.m. the next day—on April 3. Thus,
Zions is not liable for the $15,000 withdrawn by Pitcock prior to
4:00 p.m. on April 3, but is liable for all of the withdrawals
thereafter because Zions thereafter “fail[ed] or refus[ed] without
good cause” to freeze the assets. This makes Zions liable for
Pitcock’s two withdrawals on April 10, which total $102,610.97.
Zions may also be liable for costs and reasonable attorney fees
incurred by the judgment creditor in establishing the liability. (§
701.020, subd. (c).)

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       Plaintiff urges that Zions should be liable for all of the
withdrawals made after she served the notice of levy on April 2;
in her view, the Law requires third parties to freeze funds
“immediately” rather than one business day later pursuant to
what she labels an “arbitrary internal policy” of Zions. We reject
plaintiff’s argument. The statute requires the third person to
deliver the property “at the time of [the] levy or promptly
thereafter.” (§ 701.010, subd. (a), italics added.) If the duty to
deliver was, as plaintiff suggest, instantaneous upon receipt of
the notice of levy, we would be writing the words “or promptly
thereafter” out of the statute. As noted above, this we may not
do. Financial institutions can have hundreds, thousands, if not
tens of thousands, of depositors—and may receive multiple
notices of levy at once in locations all around a state or the
country; to expect instantaneous compliance is not realistic.
Plaintiff has provided no evidence that the one-business-day
delay is unreasonable given these constraints.
                             *     *      *
       Zions raises two further arguments against the imposition
of liability, neither of which has merit. First, Zions argues that it
may not be held liable because plaintiff did not join CSC as a
defendant in her lawsuit. This argument is frivolous. “An agent
is not an indispensable party in litigation between [its] principal
and a third party over the subject matter of the agency.” (Writers
Guild of America, West, Inc. v. Screen Gems, Inc. (1969) 274
Cal.App.2d 367, 374.) Second, Zions argues that it would be
“unfair” to hold Zions liable for CSC’s negligence. We discern no
unfairness. Zions made the decision whom to hire as its agent for
service of process, and our holding in this case does not prejudice
Zions should it seek recourse against CSC for its negligence.

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                         DISPOSITION
      The order is reversed with directions. The trial court is
directed to enter an order awarding plaintiff $102,610.97, and to
conduct a further hearing on whether to award costs and
reasonable attorney fees. Each party is to bear its own costs on
appeal.
      CERTIFIED FOR PUBLICATION.

                                     ______________________, J.
                                     HOFFSTADT

We concur:

_________________________, P. J.
LUI

_________________________, J.
ASHMANN-GERST

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