Court Opinion

ID: 4657132
Source: CourtListenerOpinion
Date Created: 2021-02-03 19:02:16.102945+00
Date Added: 2024-06-11T08:01:11.385110
License: Public Domain

Filed 2/2/21 Direct Capital Corporation v. Brooks CA3
                                           NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
                                      THIRD APPELLATE DISTRICT
                                                    (San Joaquin)
                                                            ----

 DIRECT CAPITAL CORPORATION,                                                                   C089980

                    Plaintiff and Respondent,                                      (Super. Ct. No. STK-CV-
                                                                                     UBC-2014-0006707)
           v.

 MARY BROOKS,

                    Defendant;

 GRANT L.C. BROOKS,

                    Appellant.

         This is the second appeal filed by defendant Grant Brooks (Grant) after the trial
court issued a wage garnishment order for a debt incurred by his then spouse (Mary

                                                             1
Brooks, with many aliases, hereafter Mary).1 In the first appeal, we affirmed the
garnishment order, upholding the trial court’s finding that a debt incurred by Grant’s
attorney-spouse for office computer equipment was for the “necessaries of life” for that
particular marriage within the meaning of Family Code section 9142 because the spouse’s
law practice generated community property income. (Direct Capital Corp. v. Brooks
(2017) 14 Cal.App.5th 1168, 1170 (Direct Capital).) The garnishment order was
affirmed without prejudice to a motion in the trial court to vacate or modify it based on
the terms of a divorce judgment entered after the notice of appeal was filed. (Id. at pp.
1170, 1178.)
        In this appeal, Grant contends the trial court erred in denying his motion to
vacate/set aside the garnishment order. We requested supplemental briefing to address
whether Grant’s motion is predicated on an erroneous interpretation of section 916, a
question that was neither raised nor resolved in the trial court, and not addressed by either
party in the initial briefing on appeal. As we will explain, we conclude that the answer to
this question is “yes”; accordingly, Grant’s motion fails on its merits and we affirm.
                                     BACKGROUND
        Garnishment Order and Divorce Judgment
        The following is taken from the prior opinion we issued in this case. (Direct
Capital, supra, 14 Cal.App.5th 1168.)3

1  Because Mary and Grant shared the same surname at all relevant times related to the
issuance of the garnishment order, we refer to each by their first name in order to avoid
confusion.
2   Undesignated statutory references are to the Family Code.
3 On our own motion, we take judicial notice of our prior opinion. (Evid. Code, § 452,
subd. (d).)

                                              2
       In 2013 plaintiff Direct Capital Corporation (DCC) leased computer equipment to
Mary, a since-disbarred Kansas attorney, who practiced immigration law in Stockton.
(Direct Capital, supra, 14 Cal.App.5th at p. 1171.) After Mary did not pay, DCC sued
her and obtained a judgment for nearly $40,000. (Ibid.) DCC later moved to garnish the
wages of her attorney husband, Grant. (Ibid.) DCC alleged that when the debt was
incurred, the marriage was intact, and the judgment thereon (grown to over $43,000 with
interest) was a community obligation. (Ibid.)
       After a hearing, the trial court issued a garnishment order, finding that the debt
was a community property obligation, and “ ‘there is evidence that the Computers were
for necessities of life as it went to the wage earnings for the community. ” (Direct
Capital, supra, 14 Cal.App.5th at p. 1171.) The court then stayed that order, pending
appeal, and Grant timely appealed from the garnishment order. (Ibid.) Thereafter, a
divorce judgment was entered, and we granted Grant’s request to take judicial notice of
the relevant documents showing the terms thereof. (Ibid.)
       Prior Opinion
       On August 30, 2017, we issued an opinion disposing of Grant’s first appeal, which
was modified on September 22, 2017. (Direct Capital, supra, 14 Cal.App.5th 1168.) In
the published portion of that opinion, we began our analysis by explaining that,
notwithstanding the general rule that a married person’s separate property is not liable for
debts incurred by his or her spouse during marriage, “ ‘a married person is personally
liable for the following debts incurred by the person’s spouse during marriage: [¶] (1) A
debt incurred for necessaries of life of the person’s spouse before the date of separation
of the spouses. [¶] (2) Except as provided in Section 4302, a debt incurred for common
necessaries of life of the person’s spouse after the date of separation of the spouses.’ ”

                                              3
(Direct Capital, supra, 14 Cal.App.5th at p. 1172.)4 We noted that because it was
undisputed that the debt in this case was incurred while Mary and Grant were married
and before they separated, Grant was liable for the debt, if the debt was for “necessaries
of life,” as the trial court found. (Ibid.) After discussing the relevant legal authority, we
concluded that the trial court properly granted DCC’s motion to garnish Grant’s wages,
since the court’s finding that computers were necessary for the operation of Mary’s law
practice (which contributed to the marital fisc) was supported by the record. (Id. at pp.
1172-1177.)
        In the unpublished portion of our prior opinion, we considered and rejected
Grant’s claim that we should interpret and apply the terms of the divorce judgment
entered after the notice of appeal was filed.5 (Direct Capital, supra, 14 Cal.App.5th at p.
1170.) In doing so, we explained that issues arising from that judgment are more
property considered by the trial court in the first instance. (Ibid.)
        In light of our conclusions, we affirmed the garnishment order without prejudice
to Grant’s filing of a motion in the trial court to vacate or modify it. (Direct Capital,
supra, 14 Cal.App.5th at p. 1178.) The remittitur was issued on October 31, 2017, and
filed in the trial court on November 3, 2017.

4 As we explained in our prior opinion, a married person’s liability for debts incurred by
a spouse during marriage “does not hinge on the separate or community nature of the
non-debtor’s spouse’s property.” (Direct Capital, supra, 14 Cal.App.5th at p. 1172.)
Instead, the family code “ascribes liability to ‘a married person’ for specific debts
incurred by the debtor-spouse, with different language for debts incurred pre- and
postseparation.” (Ibid.) “ ‘Technically, there is no such thing as a “community debt.”
The question is whether community property [or separate property] is liable for
enforcement of the debt.’ ” (Id. at p. 1172, fn. 3.)
5   The divorce judgment was entered on August 22, 2016.

                                                4
       Motion to Vacate/Set Aside Garnishment Order
       On November 28, 2017, Grant filed a motion to vacate/set aside the garnishment
order based on a “change in circumstances.” He argued that the garnishment order
should be vacated or set aside because the divorce judgment, which incorporates the
terms of the stipulated judgment entered into by the parties, “assigns all liabilities from
Mary Brooks’ Law Practice to her as her separate obligation.” In support of his position,
Grant relied on section 916, subdivision (a)(2) and CMRE Financial Services, Inc. v.
Parton (2010) 184 Cal.App.4th 263. Citing section 771, Grant additionally noted that his
wages became separate property as a matter of law after he separated from Mary.
       DCC filed an opposition, arguing that Grant’s motion should be denied because he
failed to carry his burden of providing a legal and factual basis for vacating or setting
aside the garnishment order. DCC asserted that Grant had failed to show the divorce
judgment, which was entered more than eight months after the garnishment order was
issued, constituted a change in circumstances to justify the relief sought. DCC did not
address the merits of Grant’s motion or cite any authority showing that the motion was
procedurally defective.
       On May 15, 2018, the trial court issued a tentative ruling, which stated, in relevant
part: “[Grant] has failed to identify for the court any legal authority supporting his
motion. While Family Law Code section 916 sets forth rules explaining a married
person’s responsibility for debts and liabilities, it does not state that a judgment of
dissolution is grounds for vacating or setting aside an order in a civil case, nor does it
provide a means, method or standard to vacate or set aside an order in a civil case.
[Grant] has provided no statutory or other authority to support his motion. Since the
Court has not been provided with any guidance regarding what statute or other legal
authority authorizes the court to provide the relief requested, the court cannot make a
proper assessment regarding whether the grounds for relief have been met. Therefore,
the Motion to Vacate is denied.”

                                               5
        At the hearing the next day, the court heard argument from counsel and was
advised that Grant had filed for “federal bankruptcy protection,” i.e., he filed a
bankruptcy petition. After the hearing, the court issued a minute order, which stated, in
relevant part: “Counsel for [Grant] identified Code of Civil Procedure section 1008(b) as
the procedural basis for [his] motion even though [the] basis is not set forth in the
[moving] papers. Counsel for [Grant] further identified Family Code sections 760 and
7716 as grounds for the motion and advised the court that the case of Falley [(sic)] v. City
and County of San Francisco decided by the Ninth Circuit Court of Appeal in November
2017 provided legal support for the motion. Counsel for [Grant] was unable to provide a
citation except 2017 WL 5127716.” (Footnote added.) The minute order directed Grant
to provide the trial court and DCC with the official citation to this case. The order also
stated that DCC could file an opposition addressing the new authority identified by Grant
and the validity of the procedural basis for Grant’s motion.7
        Less than a week later, Grant filed a supplemental brief and attached a copy of the
new authority. The “authority,” Fallay v. City and County of San Francisco (N.D. Cal.
2017) 2017 U.S. Dist. Lexis 183673 (Fallay), is an unpublished order issued by a federal
district court. In his briefing, Grant incorrectly asserted that a federal district court case
can be cited as controlling authority.
        In his supplemental brief, Grant argued that his motion to vacate/set aside the
garnishment order was procedurally proper because it was a motion for reconsideration
under Code of Civil Procedure section 1008, subdivision (b), and because “the Court of

6 Section 760 provides: “Except as otherwise provided by statute, all property, real or
personal, wherever situated, acquired by a married person during the marriage while
domiciled in this state is community property.” Section 771 provides, in relevant part:
“The earnings and accumulations of a spouse . . . after the date of separation of the
spouses, are the separate property of the spouse.” (§ 771, subd. (a).)
7   The appellate record does not contain a reporter’s transcript for this hearing.

                                               6
Appeals decision in this case . . . provided authority to [him] to file a motion to set aside
or vacate the garnishment order.” As for the merits, Grant argued that a non-debtor
spouse’s wages are separate property after the date of separation of the spouses and
therefore cannot be garnished to satisfy the debtor spouse’s debts. In support of his
position, Grant relied on Fallay, which concluded that, because the spouses in that case
had separated, the non-debtor spouse’s wages were not subject to a withholding order to
satisfy a judgment against the debtor spouse. (Fallay, supra, 2017 U.S. Dist. Lexis
183673 at p. *7.) In reaching this conclusion, the district court stated, “California law
provides that the wages of a spouse during marriage are generally community property,
and a judgment creditor may move for a court to issue a withholding order against a
judgment debtor’s spouse. See Cal. Fam. Code § 760; Cal. Civ. Proc. Code
§§ 695.020(a), 706.109. Earnings after spouses have separated, however, are separate
property and therefore cannot be reached to satisfy the other spouse’s debts. Cal. Fam.
Code §§ 771(a), 913(b)(1).” (Fallay, at p. *7.) Notably, there was no discussion in
Fallay as to how the debt was incurred, when the judgment was entered against the
debtor spouse, or when the spouses separated. The order issued by the district court
“assumes the parties’ familiarity with the long history of th[e] case and [the creditor’s]
attempts to collect its judgment against [the debtor spouse].” (Id. at p. *2.)
       DCC filed an opposition to Grant’s supplemental brief, arguing that Grant had
failed to show his motion to vacate/set aside the garnishment order should be granted.
DCC maintained that Grant’s motion should be denied because it did not satisfy the
procedural requirements for a motion for reconsideration under Code of Civil Procedure
section 1008. According to DCC, Grant failed to set forth new or different facts,
circumstances or law showing that he was entitled to relief under the reconsideration
statute. In making this argument, DCC correctly noted that the unpublished district court
case relied on by Grant can only be cited as persuasive but not precedential authority.
(Balsam v. Trancos, Inc. (2012) 203 Cal.App.4th 1083, 1100.)

                                              7
       On June 13, 2018, the trial court issued a minute order stating that the matter was
stayed based on Grant’s filing of a bankruptcy petition, and that Grant could renotice his
motion to vacate/set aside the garnishment order after the bankruptcy stay was lifted or
set aside.
       On July 24, 2018, the bankruptcy court issued an order lifting the automatic stay
as to this case. The order stated: “Relief from stay is limited to allowing the parties to go
to judgment, but no enforcement of any judgment or award is permitted without further
order of this court.”
       On August 17, 2018, Grant filed a request for a judicial decision on submitted
motion. The trial court construed Grant’s request as an effort to renotice the hearing on
his motion to vacate/set aside the garnishment order and set the matter for hearing.
       After a hearing, the trial court issued a written order on November 26, 2018,
denying Grant’s motion to vacate/set aside the garnishment order. In denying the motion,
the court found Grant had failed to show that his motion was properly before the court.
The court rejected Grant’s contention that he could seek to vacate or set aside the
garnishment order pursuant to a motion for reconsideration under Code of Civil
Procedure section 1008. The court found that the provision of the statute Grant relied on,
subdivision (b), did not apply because “there was never a ruling on the Motion to
Vacate,” and that his motion was untimely to the extent he was seeking relief under
subdivision (a) of the statute. The court also found that Fallay did “not represent a
change in law that would compel th[e] Court to vacate or set aside the [garnishment
order].” The court went on to discuss Fallay and explain why it was unpersuasive
authority. In doing so, the court noted that Fallay did not discuss whether the judgment
in that case was entered before or after the spouses separated or whether the judgment
debt was incurred for the “necessaries of life” or for “common necessaries of life” within
the meaning of section 914, subdivision (a). Because the court found Grant’s motion
procedurally defective, it did not reach the merits of whether section 916, subdivision

                                             8
(a)(2) and/or CMRE supported vacating or setting aside the garnishment order, as claimed
by Grant.
       On December 5, 2018, Grant filed a motion for reconsideration. Among other
things, he pointed out that, because the divorce judgment was entered while his appeal of
the garnishment order was pending, he could not have sought reconsideration of that
order based on changed circumstances and new facts until after the remittitur was filed in
the trial court on November 3, 2017. Grant insisted that his motion to vacate/set aside the
garnishment order was a proper motion for reconsideration under Code of Civil
Procedure section 1008, subdivision (b), and that the relief he requested was appropriate
under section 916, subdivision (a)(2) and CMRE. DCC filed an opposition, arguing that
Grant’s motion was procedurally defective. DCC did not address the merits of the
motion.
       After a hearing, the trial court issued an order denying Grant’s motion for
reconsideration on June 11, 2019. The court found that Grant had failed to identify any
changed circumstances or new or different facts within the meaning of Code of Civil
Procedure section 1008. This timely appeal followed.
                                       DISCUSSION
       Grant contends the trial court erred in denying his motion to vacate/set aside the
garnishment order. He argues that his motion was not procedurally defective and that the
trial court should have granted the motion based on the authority he cited. According to
Grant, because Mary was assigned the debt owing to DCC as part of the stipulated
judgment that was incorporated into the divorce judgment, his wages are no longer
subject to garnishment.
       After appellate briefing was complete, we requested and received supplemental
letter briefs from the parties “analyzing the propriety of the trial court’s denial of
appellant’s motion to vacate/set aside the garnishment order pursuant to Family Code
section 916, subdivision (a)(1), as interpreted by In re Carrion (2019) 601 B.R. 523.”

                                               9
Grant argues that In re Carrion does not support affirmance of the trial court’s order
while DCC argues that the case supports the opposite conclusion. As we next explain,
we conclude that Grant’s motion fails on the merits because it is predicated on an
erroneous interpretation of section 916, wherein Grant relies exclusively on subsection
(a)(2) of the statute without consideration of subsection (a)(1).8
       We begin by observing that we review the legal correctness of the trial court’s
ruling, not its reasoning, and may affirm a ruling on any ground supported in the record.
(D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 19; Lunada Biomedical v.
Nunez (2014) 230 Cal.App.4th 459, 479.)

8  Citing Global Protein Products, Inc. v. Le (2019) 42 CalApp.5th 352, DCC initially
argues that we should dismiss this appeal because an order denying a renewed motion
under Code of Civil Procedure section 1008, subdivision (b) is not appealable. We
disagree. Grant’s motion to vacate/set aside the garnishment order does not fall within
the ambit of Code of Civil Procedure section 1008, subdivision (b), which governs a
second motion or application for “the same order” the court has already declined to make.
Here, Grant filed a motion to dismiss for lack of jurisdiction in response to DCC’s motion
for a garnishment order. Grant claimed that the trial court had no “jurisdiction” to
garnish his wages because he had recently filed for divorce. (Direct Capital, supra, 14
Cal.App.5th at p. 1171.) Grant also opposed DCC’s motion by arguing that “because
computers were not necessaries of life as used in section 914, his separate property wages
were not subject to garnishment therefor.” (Direct Capital, at p. 1171.) After we upheld
the trial court’s order garnishing Grant’s wages (id. at pp. 1170, 1177), Grant filed a
motion to vacate/set aside the garnishment order based on changed circumstances (i.e.,
the terms of the divorce judgment). On this record, Grant’s motion cannot be considered
a renewal of a previously denied motion within the meaning of the reconsideration
statute. Therefore, we will not dismiss the appeal. The trial court’s order denying
Grant’s motion qualifies as an appealable postjudgment order, since it relates to the
enforcement of the judgment and raises issues different from those arising from an appeal
from the judgment. (Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 651-
652, 654.)

                                             10
       Section 916 provides:
       “(a) Notwithstanding any other provision of this chapter, after division of
community and quasi-community property pursuant to Division 7 (commencing with
Section 2500):
       “(1) The separate property owned by a married person at the time of the division
and the property received by the person in the division is liable for a debt incurred by the
person before or during marriage and the person is personally liable for the debt, whether
or not the debt was assigned for payment by the person’s spouse in the division.
       “(2) The separate property owned by a married person at the time of the division
and the property received by the person in the division is not liable for a debt incurred by
the person’s spouse before or during marriage, and the person is not personally liable for
the debt, unless the debt was assigned for payment by the person in the division of the
property. Nothing in this paragraph affects the liability of property for the satisfaction of
a lien on the property.
       “(3) The separate property owned by a married person at the time of the division
and the property received by the person in the division is liable for a debt incurred by the
person’s spouse before or during marriage, and the person is personally liable for the
debt, if the debt was assigned for payment by the person in the division of the property.
If a money judgment for the debt is entered after the division, the property is not subject
to enforcement of the judgment and the judgment may not be enforced against the
married person, unless the person is made a party to the judgment for the purpose of this
paragraph.
       “(b) If property of a married person is applied to the satisfaction of a money
judgment pursuant to subdivision (a) for a debt incurred by the person that is assigned for
payment by the person’s spouse, the person has a right of reimbursement from the
person’s spouse to the extent of the property applied, with interest at the legal rate, and

                                             11
may recover reasonable attorney’s fees incurred in enforcing the right of reimbursement.”
(§ 916, subds. (a), (b).)
       As recently explained by a Bankruptcy Appellate Panel of the Ninth Circuit, the
meaning of section 916, in plain English, is as follows: “if Spouse A and Spouse B
divorce:
       “(1) Spouse A remains liable for Spouse A’s own debts, even if an MSA [marital
settlement agreement] requires Spouse B to pay some or all of those debts;
       “(2) Spouse A is not liable for any of Spouse B’s debts, except for any of Spouse
B’s debts that the MSA requires Spouse A to pay;
       “(3) Spouse A is liable for any of Spouse B’s debts that the MSA requires Spouse
A to pay;
       “(4) If Spouse A pays any debts that the MSA requires Spouse B to pay, Spouse B
must reimburse Spouse A; and
       “(5) Vice versa. (In re Carrion, supra, 601 B.R. at p. 527; see Law Revision
Commission Comments to § 916 [“Section 916 prescribes rules of liability of former
community, quasi-community, or community estate property and former separate
property following a division of the property pursuant to a court judgment of separation,
dissolution, or later division. [¶] Subdivision (a)(1) states the rule that the rights of a
creditor against the property of a debtor are not affected by assignment of the debt to the
other spouse for payment pursuant to a property division. A creditor who is not paid may
seek to satisfy the debt out of property of the debtor. The debtor in such a case will have
a right of reimbursement against the former spouse pursuant to subdivision (b)”].)
       We agree with In re Carrion’s interpretation of section 916 and conclude that
Grant’s motion to vacate/set aside the garnishment order is foreclosed by the plain text of
the statute, specifically subdivision (a)(1). In our prior opinion disposing of Grant’s first
appeal, we upheld the trial court’s determination that Grant was liable for the debt
incurred by Grant’s then attorney-spouse for office computer equipment. In doing so, we

                                              12
noted that it was undisputed that “the debt was incurred while Mary and Grant were
married and before they separated, therefore section 914, subdivision (a)(1) provides that
Grant is liable for the debt if it was for necessaries of life, as the trial court found it was,”
and as we affirmed. (Direct Capital, supra, 14 Cal.App.5th at p. 1172.) It is settled that
to “incur” an obligation is to become liable for it. (See, e.g., Board of Education v.
Commission on Professional Competence (1980) 102 Cal.App.3d 555, 563-564.) Thus,
Grant incurred the debt by operation of section 914, subdivision (a)(1) during the
marriage and remains personally liable under section 916, subdivision (a)(1), regardless
of the terms of the stipulated judgment that were incorporated into the divorce judgment.
Contrary to Grant’s contention, the assignment of the debt to Mary under the terms of the
stipulated divorce judgment does not relieve him of liability for the debt. (In re Carrion,
supra, 601 B.R. at pp. 527-528.) Under the circumstances, Grant must pay the debt but is
entitled to seek reimbursement from Mary. (Id. at p. 528.)
        We are unpersuaded by Grant’s contention that CMRE and/or Fallay compel a
contrary result. These cases are factually distinguishable and do not address the specific
issue presented here.

                                               13
                                     DISPOSITION
       The trial court’s order denying Grant’s motion to vacate/set aside the garnishment
order is affirmed. Grant shall pay DCC’s costs of this appeal. (Cal. Rules of Court, rule
8.278(a).)

                                                       /s/
                                                 Duarte, Acting P. J.

We concur:

     /s/
Hoch, J.

     /s/
Renner, J.

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