Court Opinion

ID: 9902110
Source: CourtListenerOpinion
Date Created: 2023-11-23 00:01:47.217026+00
Date Added: 2024-06-11T09:21:45.703057
License: Public Domain

Filed 11/22/23 West Central Produce v. Lazar CA2/3
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 THREE

 WEST CENTRAL PRODUCE, INC.,                                       B324060

           Plaintiff,                                              Los Angeles County
                                                                   Super. Ct. No.
           v.                                                      21NWCV00179

 TARA LAZAR et al.,

           Defendants and Respondents;

 WCP Parent, LLC,

           Movant and Appellant.

     APPEAL from an order of the Superior Court of
Los Angeles County, Olivia Rosales, Judge. Affirmed.

      Buchalter, Matthew L. Seror and Robert M. Dato
for Movant and Appellant.

         No appearance for Defendants and Respondents.
                     _________________________
       WCP Parent, LLC has a perfected security interest in
the assets of plaintiff West Central Produce, Inc. (West Central),
including West Central’s claims against its former customers,
defendants Tara Lazar, Toucans Palm Springs, Inc., and Mister
Lyons, LLC (collectively Lazar). Pacific American Fish Co., Inc.
(Pacific American) is a judgment creditor of West Central. It filed
a notice of judgment lien in this action. West Central and Lazar
reached a settlement of their claims, and Lazar filed a motion
for an order approving the settlement as having been made in
good faith. A few days before that hearing, the same trial judge
ordered WCP Parent’s security interest in a money judgment
in favor of West Central, in another matter, had priority over
Pacific American’s judgment lien. WCP Parent did not learn
of the good faith settlement hearing in this action until then.
As a result, it appeared but hadn’t been able to file proof of
its senior claim. The trial court approved the settlement and
ordered the settlement funds were to be disbursed to Pacific
American in partial satisfaction of its judgment against
West Central.
       About two months later, based on the hearing date it
had been able to reserve, WCP Parent filed a motion to intervene
under Code of Civil Procedure1 section 387. The trial court
denied the motion finding WCP Parent had not shown West
Central was unable to represent its interests adequately to
warrant mandatory intervention, and denying permissive
intervention as WCP Parent’s motion was untimely.

1    Undesignated statutory references are to the Code of Civil
Procedure.

                                2
       WCP Parent contends the trial court erred as the
undisputed evidence showed West Central did not adequately
protect WCP Parent’s interests, WCP Parent filed its motion
based on the soonest available hearing date that would
accommodate the court’s and counsel’s calendars, and it would
be “absurd” to hold WCP Parent had a priority over Pacific
American in one case but not in another. We find no prejudicial
error and therefore affirm.
         FACTS AND PROCEDURAL BACKGROUND
       In 2018, under separate agreements, HSBC Bank USA,
National Association (HSBC) made a loan to West Central and
extended a line of credit to it. The loan and line of credit were
secured by all of West Central’s personal property, including
accounts receivable, under a security agreement and related
documents executed at the same time as the agreements. HSBC
filed three UCC financing statements with the Secretary of State
in connection with the loan and line of credit. The loan and
line of credit were amended in 2019.
       On August 5, 2020, HSBC assigned the loan, line of credit,
and security agreements, related notes, and UCC financing
statements to WCP Parent. The assignment included any
contract claims HSBC had against West Central. Under the
assignment, WCP Parent had the same priority and lien rights
as HSBC, including the security interest in all of West Central’s
property. The three UCC financing statements were amended
to identify WCP Parent as the sole holder of the security interest
in West Central’s property. The amendments were filed. After
the assignment, WCP Parent advanced no further funds to West
Central. WCP Parent’s secured claims against West Central
are worth almost $28 million with interest continuing to accrue.

                                3
       On February 5, 2021, Pacific American obtained a money
judgment against West Central for just over $51,000. It filed a
notice of lien in several pending matters including in the current
action (on July 15, 2021) and in West Central Produce v. Blanca
Investments (Los Angeles Super. Ct. No. 21NWCV00104)
(Blanca). The same judicial officer presided over both actions.
Blanca, like this action, involved West Central’s efforts to
collect a debt from a former customer. WCP Parent and Pacific
American both asserted competing claims to West Central’s
assets in that action.
       On May 26, 2022, the court issued a detailed ruling
in the Blanca case finding WCP Parent’s security interest in
West Central’s property was “entitled to priority” over Pacific
American’s judgment lien. The court granted WCP Parent’s
third-party claim to the entire judgment amount, almost
$101,000. WCP Parent’s counsel in Blanca was the same
as in the current action.
       Meanwhile, Lazar settled this action with West Central
for $25,000 and filed a motion for an order finding the settlement
was made in good faith, to be heard on June 1, 2022. As part of
that motion, Lazar asked the court to determine the payee of the
settlement funds. WCP Parent did not learn of the hearing until
after the court issued the May 26, 2022 order in Blanca, just days
before June 1. WCP Parent’s counsel attended the hearing,2
but WCP Parent had no “opportunity to file papers in this action

2     At oral argument, WCP Parent’s counsel stated he did
not know whether the attorney who attended the hearing was
permitted to make an appearance or to address the court.

                                4
establishing its senior security interest over the assets of
West Central.”
       At the June 1, 2022 hearing, the court granted Lazar’s
unopposed motion and approved the good faith settlement of
West Central’s claims for $25,000. The court noted that, despite
challenging its validity, West Central had presented “no evidence
or argument” as to why Pacific American’s judgment lien
was not valid. The court thus ordered the settlement funds
to be disbursed to Pacific American in partial satisfaction of its
judgment against West Central. The settlement funds were sent
to Pacific American’s counsel by certified mail on July 8, 2022.
       After the June 1 hearing, WCP Parent “research[ed],
prepare[d] and file[d]” a motion to intervene. August 25, 2022
was one of the first hearing dates available on the court’s
calendar that also was available for WCP Parent’s counsel.
Counsel reserved that hearing date and filed the motion
the required 16 court days beforehand, on August 3, 2022.
       WCP Parent argued it was entitled to mandatory
intervention because West Central failed to protect its interests,
or, alternatively, to permissive intervention because its priority
interest in the settlement distribution was clear given the
court’s ruling in Blanca. Lazar opposed the motion, arguing
WCP Parent’s motion was untimely, as, even assuming it was
unaware of the good faith settlement motion until after the
Blanca hearing, it waited more than two months to file its motion
without giving a valid reason for the delay. In reply, WCP Parent
argued it was undisputed West Central provided it no notice
of the good faith settlement motion, and WCP Parent moved
promptly to file its motion once it knew its interests were
not being protected.

                                5
       The court heard WCP Parent’s motion on September 1,
2022. The court asked WCP Parent’s counsel why he hadn’t filed
an ex parte application to stay disbursement of the settlement
check until his client’s motion to intervene could be heard.
Counsel stated his practice always had been to reserve an
available hearing date first and then to file the motion based on
the reserved date. In other words, counsel’s filing of the motion
to intervene “was driven by” the available hearing date. Because
the issue was one of money only, WCP Parent’s counsel did
not believe the issue rose to the “the level of exigency that [he]
need[ed] to rush into court and jump everybody else who has
been waiting in the motion calendar line to cut in line essentially.
No one is moving boxes out of the backdoor of the warehouse
that I need to get in there immediately.”
       Lazar’s counsel agreed with the court and argued
this was “an issue with WCP Parent and West Central . . .
not communicating,” and the settlement proceeds had been
disbursed. Counsel also noted her client already had to pay
her to appear at “multiple, extra, additional court hearings and
to write this [opposition].” The court took the matter under
submission.
       On September 30, 2022, the court issued a written order
denying the motion to intervene. The court found WCP Parent
did not meet the requirements for mandatory intervention. The
court cited authorities from the Ninth Circuit for the proposition
that where an applicant for intervention’s interest is identical
to, or has the same objective as, that of a party, the applicant
must make a compelling showing of inadequate representation.
(Citing, League of United Latin American Citizens v. Wilson
(9th Cir. 1997) 131 F.3d 1297, 1305, and Perry v. Proposition 8

                                 6
Official Proponents (9th Cir. 2009) 587 F.3d 947, 951.)3 The
court found WCP Parent had made “no such showing.” The court
explained, “WCP Parent’s interests in this action are identical
to that of Plaintiff West Central Produce’s interests. In fact,
WCP Parent’s interest in the litigation did not arise until after
the settlement had been finalized, because without any monetary
award in favor [of] Plaintiff West Central Produce, WCP Parent
has no actual interest in the action. There is no showing that
Plaintiff West Central Produce is unable to adequately represent
WCP Parent—it[s] senior lienholder’s—parallel and identical
interests here.”
      Although the court found WCP Parent satisfied the
standing requirements for permissive intervention, it held
the application was untimely. The court found, at a minimum,
WCP Parent was aware of its interest in this litigation by June 1,
2022, when it had notice the court had approved the good faith
settlement and designated Pacific American as the settlement
funds payee. Given WCP Parent did not file its motion until
two months later—and almost one month after the settlement
funds had been disbursed—and did not seek ex parte relief
to expedite or specially set a hearing on its motion to intervene,
the court found the motion untimely. The court also found
the parties would be prejudiced by WCP Parent’s delayed
intervention, as it sought “to reopen the case and risk[ed]

3     Section 387 “ ‘was modeled after and is “virtually identical”
to rule 24 of the Federal Rules of Civil Procedure.’ [Citations.]
Thus, ‘[i]n assessing [the] requirements’ for mandatory
intervention, ‘[courts] may take guidance from federal law.’ ”
(Crestwood Behavioral Health, Inc. v. Lacy (2021) 70 Cal. App.5th
560, 573 (Crestwood).)

                                7
disturbing the settlement agreed to by the parties.” Plus, the
settlement proceeds already had been disbursed. WCP Parent
appealed.
                           DISCUSSION
       WCP Parent argues it established a right to mandatory
intervention, and, in any event, the trial court abused its
discretion in denying WCP Parent permissive intervention
and finding its motion to intervene untimely. WCP Parent’s
appeal is unopposed.
1.     Applicable law and standards of review
       Nonparty intervention under section 387 is “mandatory
(as of right) or permissive.” (Hodge v. Kirkpatrick Development,
Inc. (2005) 130 Cal.App.4th 540, 547.) The right to mandatory
intervention is triggered by a “timely application” and a showing
that the proposed intervenor, as relevant here, has “an interest
relating to the property or transaction that is the subject of the
action and [where] that person is so situated that the disposition
of the action may impair or impede that person’s ability to
protect that interest, unless that person’s interest is adequately
represented by one or more of the existing parties.” (§ 387, subd.
(d)(1)(B).) “In other words, to establish a right to mandatory
intervention, the nonparty must: (1) show a protectable interest
in the subject of the action, (2) demonstrate that the disposition
of the action may impair or impede its ability to protect that
interest; and (3) demonstrate that its interests are not adequately
represented by the existing parties.” (Carlsbad Police Officers
Assn. v. City of Carlsbad (2020) 49 Cal.App.5th 135, 148
(Carlsbad Police Officers).) Although the right to intervene
under this section “ ‘should be liberally construed in favor
of intervention’ ” (Crestwood, supra, 70 Cal. App. 5th at p. 572),

                                8
“that right is conditioned on a court’s initial determination that
the application to intervene is timely” (Carlsbad Police Officers,
at p. 148).
       Permissive intervention, on the other hand, is available if,
again, “ ‘upon timely application’ . . . : ‘(1) the proper procedures
have been followed; (2) the nonparty has a direct and immediate
interest in the action; (3) the intervention will not enlarge the
issues in the litigation; and (4) the reasons for the intervention
outweigh any opposition by the parties presently in the action.’ ”
(Carlsbad Police Officers, supra, 49 Cal.App.5th at p. 148, citing
§ 387, subd. (d)(2).)
       “When mandatory intervention ‘is sought, because “the
would-be intervenor may be seriously harmed if intervention
is denied, courts should be reluctant to dismiss such a request
for intervention as untimely, even though they might deny
the request if the intervention were merely permissive.” ’ ”
(Crestwood, supra, 70 Cal.App.5th at pp. 574–575 [court abused
its discretion in denying application for mandatory intervention
as untimely based on 100-day delay where real parties and
trial court had identified no prejudice from the delay]; see also
Truck Ins. Exchange v. Superior Court (1997) 60 Cal.App.4th
342, 351 (Truck Ins. Exchange) [“timeliness is hardly a reason
to bar intervention when a direct interest is demonstrated and
the real parties in interest have not shown any prejudice other
than being required to prove their case”].)
       The standard of review for mandatory intervention is
unsettled—either the abuse of discretion or de novo standard
applies. (Crestwood, supra, 70 Cal.App.5th at p. 573.) A
“ ‘determination of the timeliness of intervention’ is reviewed
‘for an abuse of discretion’ ” (ibid.), as is denial of permissive

                                  9
intervention (Truck Ins. Exchange, supra, 60 Cal.App.4th at
p. 345).
2.     WCP Parent’s interests were not adequately
       represented
       The trial court found WCP Parent did not meet the
requirements for mandatory intervention, “[n]otwithstanding
the parties’ arguments concerning timeliness.” WCP Parent
undisputedly had a protectable interest in the action, as a senior
lienholder to West Central’s assets, which would include any
funds it recovered from Lazar. The disposition of this action
also undisputedly impaired WCP Parent’s ability to protect
that interest, as the court ordered the funds disbursed to
Pacific American without considering WCP Parent’s senior
interest in West Central’s assets. The court nonetheless found
WCP Parent failed to demonstrate West Central would be
“unable to adequately represent WCP Parent—it’s senior
lienholder’s—parallel and identical interests here.” Setting aside
the issue of timeliness for now, we conclude the court erred in
finding WCP Parent did not “meet the standards for mandatory
intervention.”
       WCP Parent shared the same interest as West Central
in this action—to recover monies Lazar owed West Central. As
the court correctly noted, WCP Parent’s interest in this litigation
did not arise until the parties finalized their settlement requiring
Lazar to pay $25,000. The court found, as WCP Parent’s counsel
had argued, WCP Parent would have had no actual interest
in the litigation without a monetary award in favor of

                                10
West Central.4 Once that settlement was reached, however,
West Central’s and WCP Parent’s interests diverged.
       West Central is indebted to both Pacific American and
WCP Parent, and Pacific American and WCP Parent each have
claimed a senior interest in West Central’s assets. None of
their interests were aligned at that point. Presumably, as it
denied the validity and enforceability of Pacific American’s lien,
West Central wanted Lazar to pay it the $25,000. Moreover,
whether the proceeds were disbursed to Pacific American or to
WCP Parent, they partially would satisfy a debt West Central
owed. West Central thus had no incentive to assert WCP
Parent’s interest, as its senior lienholder, at the good faith
settlement hearing—to argue the court should designate
WCP Parent as the settlement funds payee.
       In any event, the evidence demonstrates WCP Parent
made a compelling showing that its interests were not adequately
represented by the current parties. It is undisputed West
Central did not give WCP Parent notice that the parties had
settled or of the upcoming good faith settlement hearing.5 And,
WCP Parent’s counsel declared WCP Parent did not learn of
the settlement or the hearing until just a few days before June 1,
2022. Thus, until then, it was unaware it had an interest in

4      This is also the reason why WCP Parent was not aware
that it had an interest in this action until it learned of the good
faith settlement hearing, and the parties were not adequately
representing that interest.
5    In its opposition to the motion to intervene, Lazar also
argued it was not its duty or responsibility “to give notice of the
pending good faith settlement motion to a nonparty such as
WCP Parent.”

                                 11
the action that needed to be protected. As WCP Parent’s counsel
explained at the hearing, “If [Lazar] was going to default[,] and
no money was going to be paid in this case, then [WCP Parent’s]
interest is not being not protected.” But when WCP Parent
learned of the good faith settlement motion, it then “realized
that there was money to be paid,” and West Central was not
protecting WCP Parent’s interest.
        WCP Parent was unable to assert its senior security
interest in the settlement proceeds at the June 1 hearing
because it had learned of the hearing too late to “file papers
. . . establishing its senior security interest over the assets of
West Central.” As there had been no need for it to petition
to intervene earlier, it “ ‘lack[ed] any standing to the action.’ ”
(Carlsbad Police Officers, supra, 49 Cal.App.5th at p. 148.)
Nor did West Central “indicate[ ] [WCP Parent] had a senior
security interest” in the settlement funds at the hearing. WCP
Parent’s interest thus was not before the court. Finally, it is
undisputed WCP Parent’s interest was not protected as the court
determined Pacific American was the settlement funds payee
without considering WCP Parent’s interest.
        Accordingly—whether considering the issue de novo or
for an abuse of discretion—we conclude the trial court erred in
finding WCP Parent failed to demonstrate its interests were not
adequately represented by West Central. WCP Parent thus was
entitled to intervene in this action as of right if its application
was timely. (Carlsbad Police Officers, supra, 49 Cal.App.5th
at p. 148.)
3.      Timeliness
        In the context of intervention, “ ‘[t]imeliness is determined
by the totality of the circumstances facing would-be intervenors,

                                 12
with a focus on three primary factors: “(1) the stage of the
proceeding at which an applicant seeks to intervene; (2) the
prejudice to other parties; and (3) the reason for the delay.” ’ ”
(Crestwood, supra, 70 Cal.App.5th at p. 574.) “ ‘ “[D]elay in itself
does not make a request for intervention untimely.” ’ ” (Ibid.)
       “Although the totality of the circumstances should be
considered, ‘prejudice to existing parties is “the most important
consideration in deciding whether a motion for intervention is
timely.” ’ [Citation.] This does not, however, include prejudice
that would result from allowing intervention. [Citation.] Rather,
only the ‘ “prejudice caused by the movant’s delay” ’ should be
considered.” (Crestwood, supra, 70 Cal.App.5th at pp. 574–575
[prejudice from having to relitigate order resulted “from the
fact of intervention—and not from the . . . delay in seeking
intervention”].) Moreover, “the timeliness of a motion to
intervene under section 387 should be determined based on
the date the proposed interveners knew or should have known
their interests in the litigation were not being adequately
represented.” (Ziani Homeowners Assn. v. Brookfield Ziani LLC
(2015) 243 Cal.App.4th 274, 282.)
       The court found WCP Parent’s motion untimely in the
context of considering its alternative application for permissive
intervention. In making that finding, the court acknowledged,
“Although requests for mandatory intervention are not often
denied on grounds of untimeliness, the standard is not the same
with respect to ruling upon the timeliness of an application
for permissive intervention.” Indeed, “[w]hen mandatory
intervention ‘is sought, because “the would-be intervenor may
be seriously harmed if intervention is denied, courts should be
reluctant to dismiss such a request for intervention as untimely,

                                13
even though they might deny the request if the intervention
were merely permissive.” ’ ” (Crestwood, supra, 70 Cal.App.5th
at p. 574.)
       Under the unique procedural posture of this case,
we conclude the court did not abuse its discretion in finding
WCP Parent’s motion to intervene untimely. We also conclude
WCP Parent’s delay supports the court’s denial of its motion
to intervene despite our conclusion that it otherwise satisfied
the requirements for mandatory intervention.
       Section 387 explicitly permits a party to seek leave to
intervene by ex parte application: “A nonparty shall petition
the court for leave to intervene by noticed motion or ex parte
application.” (§ 387, subd. (c), italics added.) As the court noted,
WCP Parent could have filed an ex parte application to ask the
court to stay disbursement of the settlement proceeds pending
a hearing on its motion to intervene. It is admirable that counsel
did not consider “an issue of $25,000 between the parties” as
an exigent circumstance. In this instance, however, where the
disbursement of the settlement funds could occur at any time,
and WCP Parent wanted to assert its right to payment of
those funds, WCP Parent’s failure to seek ex parte relief was
unreasonable.
       In Crestwood, the court reversed the denial of the Labor
Commissioner’s motion for mandatory intervention as untimely
where the Labor Commissioner delayed 100 days from learning
the court had stayed her investigation of an employee’s complaint
pending an arbitration the employer successfully had compelled,
before moving to intervene to vacate that order. (Crestwood,
supra, 70 Cal.App.5th at pp. 569–570, 573.) There, however,
the Labor Commissioner had sought ex parte relief and had

                                14
not filed her application sooner due to the large number of
complaints she had to investigate. (Id. at pp. 571, 575–576.)
Moreover, there was no evidence the arbitration had even begun
and neither the parties nor the trial court had identified any
prejudice due to the delay. (Id. at p. 575.) On appeal, the
employer had claimed prejudice because it would have to
relitigate the order granting its petition to compel arbitration.
The court explained that prejudice resulted “from the fact
of intervention,” not the delay in seeking intervention. (Ibid.)
       Although the delay here also was “relatively short”—
indeed, shorter than that in Crestwood—the procedural posture
of this case is quite different. (Crestwood, supra, 70 Cal.App.5th
at pp. 575–576 [even if Labor Commissioner’s excuse was “not
satisfactory, the first two factors—particularly, the absence of
prejudice—coupled with the relatively short length of the delay
establish that the trial court abused its discretion in finding the
intervention motion untimely”].) Critically, the funds to which
WCP Parent claims a senior security interest were disbursed
almost a month before it moved to intervene to assert that
interest. As WCP Parent notes, Lazar did not explicitly claim
any prejudice due to WCP Parent’s delay. At the hearing,
Lazar’s counsel mentioned the cost of having to appear at
additional hearings, but Lazar would have incurred those
costs if WCP Parent had filed its motion earlier. Nevertheless,
Lazar mentioned the settlement funds had been disbursed.
And the trial court here, unlike that in Crestwood, expressly
found prejudice. The court described WCP Parent’s proposed
intervention as “seek[ing] to reopen the case and risk[ ]
disturbing the settlement agreed to by the parties.” The court
also found that, because the settlement funds had been disbursed

                                15
almost one month before WCP Parent moved to intervene, “the
parties would be further unduly prejudiced by WCP Parent’s
delayed intervention.” The court did not precisely state what
prejudice the parties would suffer. We can infer, however,
proceedings to establish WCP Parent’s priority interest and/or
to “undo” the payment of the settlement proceeds to Pacific
American would require Lazar to expend time and expense that
it otherwise would not have incurred had WCP Parent attempted
to intervene before July 8.
       Finally, the reason courts are reluctant to deny mandatory
intervention as untimely is because the “ ‘ “would-be intervenor
may be seriously harmed if intervention is denied.” ’ ”
(Crestwood, supra, 70 Cal.App.5th at p. 574.) Here, WCP Parent
stood to lose $25,000 if unable to intervene and ask the court
to direct the settlement proceeds be paid to it—based on its
senior security lien—rather than to Pacific American. If WCP
Parent had considered that loss to be serious, then it should
have filed an ex parte application to try to stop the disbursement
of those funds without its participation in the proceeding. It
did not. WCP Parent’s counsel stated he did not know when the
settlement funds would be disbursed but that is precisely why
an ex parte application was necessary. If the loss of those funds
was not serious enough for WCP Parent to seek immediate relief,
then we do not see how the above policy against denying
mandatory intervention based on untimeliness to prevent
“serious[ ] harm” applies here.
       Accordingly, the court did not abuse its discretion in
finding the motion untimely.

                                16
                          DISPOSITION
     The September 30, 2022 order denying WCP Parent, LLC’s
motion for leave to intervene is affirmed. As no respondent
appeared, no costs are awarded.

     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                    EGERTON, J.

We concur:

             LAVIN, Acting P. J.

             ADAMS, J.

                               17