Court Opinion

ID: 4165841
Source: CourtListenerOpinion
Date Created: 2017-05-03 18:06:17.806134+00
Date Added: 2024-06-11T14:38:13.670128
License: Public Domain

Filed 5/3/17

                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                           DIVISION SIX

YOLANDA’S, INC.,                        2d Civil No.B271408
                                      (Super. Ct. No. 56-2012-
     Plaintiff and Respondent,        00413479-CU-CO-VTA)
                                         (Ventura County)
v.

KAHL & GOVEIA
COMMERCIAL REAL ESTATE,

     Defendant and Appellant.

            Here we conclude, among other things, that the scope
of questions asked by a judgment creditor in a third party
judgment debtor examination may include the location of assets
no longer in the possession of the third party. (Code Civ. Proc.
§§ 708.120, 708.130, 187.)1 Appellant wishes to appeal from a
post-judgment discovery order arising from such a third party
judgment debtor examination.

      All statutory references are to the Code of Civil
        1

Procedure.
             Appellant acknowledges that the order may not be
appealable. It is not. We accommodate the request to treat the
matter as a petition for writ of mandate. We deny the petition.
                               FACTS
             Yolanda’s, Inc. obtained a $1,892,835 judgment
against Kahl & Goveia Commercial Real Estate (KGCRE);
Rocklin Covenant Group, LP (Rocklin); and K&G / Seabridge II,
LLC (K&G) in an action involving a breach of lease. We reversed
the judgment against KGCRE and affirmed in all other respects.
(Gietzen v. Goveia (Mar. 30, 2016, B255925) [nonpub. opn.].)
             KGCRE managed shopping centers owned, in part,
by Joseph Goveia and Bruce Kahl. Goveia and Kahl were
principals in KGCRE. In spite of earning $774,000 per year in
fees, KGCRE claimed it was insolvent and shut down operations
in August 2013.
             Goveia created a new property management
company, Seabridge Property Services (SPS). KGCRE’s assets
were transferred to SPS along with its key employees.
             One of those employees who transferred from
KGCRE to SPS is Joseph Goveia’s brother, James Goveia. James
was an accountant for KGCRE and serves SPS in that same
capacity.
             In January 2016, Yolanda’s obtained an order
requiring the person most knowledgeable for KGCRE to appear
as a third party witness for a judgment debtor’s examination.
James Goveia was designated as the person most knowledgeable
(PMK).
             Yolanda’s also issued a subpoena to produce
documents in the debtor’s examination. James Goveia produced
a document showing a transfer of a Mercedes Benz owned by

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KGCRE to Kahl and his wife for the forgiveness of an alleged
debt. James also produced two bills of sale transferring four
vehicles and other items including three leases and all goods,
furniture and equipment from KGCRE to Joseph Goveia.
              During the examination, James Goveia acknowledged
the assets listed in the documents were transferred to Kahl and
Joseph Goveia. But James’s counsel instructed him not to
answer questions about where those assets are located. He
claimed such questions are beyond the scope of a third party
judgment debtor’s examination.
              Yolanda’s referred the matter to the trial court. After
briefing and a hearing, the court found that the subpoena issued
in the debtor’s examination was not limited in scope to section
708.120. The court concluded it has inherent authority to create
a proper procedure under section 187. The court granted
Yolanda’s permission to ask questions of KGCRE concerning:
“(i) the ultimate disposition of assets transferred by KGCRE to
Joseph Goveia and Bruce Kahl; (ii) the interrelationship between
KGCRE and other judgment debtors and related parties for
purposes of establishing possible alter ego liability; and (iii) any
other questions that may assist Judgment Creditors in
determining the judgment debtors’ true financial condition and
the nature and location of judgment debtors’ assets and sources
of income.”
                            DISCUSSION
                                   I
                            Appealability
              Is a post-judgment discovery order appealable? Our
colleagues in the Fourth District, Division One, considered the
question twice within six days, but they reached opposite results.

                                 3
              In Macaluso v. Superior Court (2013) 219
Cal.App.4th 1042 (Macaluso), a third party appealed an order
compelling further responses and documents at a judgment
debtor’s examination. The appellate court concluded the order
was appealable as an order after judgment pursuant to section
904.1, subdivision (a)(2). (Macaluso, at p. 1049.)
              Six days later in Fox Johns Lazar Pekin & Wexler,
APC v. Superior Court (2013) 219 Cal.App.4th 1210, 1215 (Fox
Johns), the same appellate court concluded a post-judgment
discovery order made in the course of a proceeding to obtain
information pertaining to a judgment debtor’s assets is not
appealable. The Fox Johns court had second thoughts about
Macaluso. In a footnote it stated: “We are aware of the recent
opinion from this court issued after oral argument here, wherein
the court held that a third party may appeal an order overruling
all of the third party’s objections to the subpoena and granting a
motion to compel compliance with the subpoena. (See Macaluso
v. Superior Court (2013) 219 Cal.App.4th 1042.) We think the
better approach here, on the unique facts before us where it is not
clear if the superior court will be issuing further orders regarding
the very discovery at issue, is to treat the appeal like a petition
for writ of mandate.” (Fox Johns, at p. 1218, fn. 4.) The
distinction escapes us.
              Because it is rarely certain whether the trial court
will be issuing further discovery orders, the better approach in
general is to treat such orders as not appealable. Allowing an
appeal of each discovery order will invite unnecessary delay and
facilitate the concealment of assets. So we join our colleagues in
Fox Johns and part company with them in Macaluso. We treat
this appeal as a petition for writ of mandate.

                                 4
                                    II
               KGCRE contends the scope of a section 708.120 third
party examination is expressly limited by the statute and case
law.
               Section 708.120, subdivision (a) provides: “Upon ex
parte application by a judgment creditor who has a money
judgment and proof by the judgment creditor by affidavit or
otherwise to the satisfaction of the proper court that a third
person has possession or control of property in which the
judgment debtor has an interest or is indebted to the judgment
debtor in an amount exceeding two hundred fifty dollars ($250),
the court shall make an order directing the third person to
appear before the court, or before a referee appointed by the
court, at a time and place specified in the order, to answer
concerning such property or debt. The affidavit in support of the
judgment creditor’s application may be based on the affiant’s
information and belief.”
               KGCRE argues the statute concerns only property of
which a third party has “possession or control” or where the third
party is “indebted to the judgment debtor.” The statute provides
that the third party must “answer concerning such property or
debt . . . .” (§ 708.120, subd. (a).) KGCRE concludes that because
it no longer has possession or control over the property in
question, it need not answer questions concerning the location of
the property.
               KGCRE relies on Fox Johns, supra, 219 Cal.App.4th
1210. There, a law firm client was a judgment debtor. The
judgment creditor proceeded with post-judgment third party
discovery against the law firm under section 708.120. The law
firm refused to allow the judgment creditor to discover the

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identity of the law firm’s clients, the billings of other clients or
obtain other information about the identity of entities that could
be the judgment debtor’s alter ego. The trial court issued an
order compelling the law firm to disclose some of the information
requested. The Court of Appeal issued a writ of mandate
compelling the trial court to vacate its order.
             The appellate court stated: “Simply put, the purpose
of section 708.120 is to provide a tool that allows a judgment
creditor to find property or money that is owed to the judgment
debtor. To this end, it allows the judgment creditor to obtain an
order to examine a third party who it believes possesses the
judgment debtor’s property or owes the judgment debtor a debt
over $250. The judgment creditor must prove to the court’s
satisfaction that either one of these circumstances exists before
the court will issue an order requiring the party to appear for an
examination. Further, the statute clearly provides that the third
party is to answer questions regarding the subject property or
debt. Section 708.120 does not allow for a more expansive
examination.” (Fox Johns, supra, 219 Cal.App.4th at p. 1221.)
             Whatever the limitations of section 708.120, section
708.130, subdivision (a) has a broader reach. It provides:
“Witnesses may be required to appear and testify before the court
or referee in an examination proceeding under this article in the
same manner as upon the trial of an issue.”
             This subdivision allows any person with information
leading to the enforcement of the judgment, to be subpoenaed to
testify in an examination proceeding in the same manner as a
trial witness. (Ahart, Cal. Practice Guide: Enforcing Judgments
and Debts (The Rutter Group 2016) ¶ 6:1280, pp. 6G-2 - 6G-3.)

                                 6
              The trial court also relied on section 187. That
section provides: “When jurisdiction is, by the Constitution or
this Code, or by any other statute, conferred on a Court or
judicial officer, all the means necessary to carry it into effect are
also given; and in the exercise of this jurisdiction, if the course of
proceeding be not specifically pointed out by this Code or the
statute, any suitable process or mode of proceeding may be
adopted which may appear most conformable to the spirit of this
Code.”
              Section 187 codifies the trial court’s inherent power
to adopt any suitable method of practice if the procedure is not
specified by statute or the Rules of Court. (Citizens Utilities Co.
v. Superior Court (1963) 59 Cal.2d 805, 812-813.)
              KGCRE argues section 187 does not apply because
section 708.120 expressly limits the examination of a third party
to property of the judgment debtor held by a third party and
debts owed by a third party to a judgment debtor. But nothing in
section 708.120 states that it is the only procedure available for
examining a third party. In fact, section 708.130 expressly
provides otherwise. To the extent section 708.130 may not apply,
there is no reason why the court cannot use its power under
section 187 to fashion an appropriate procedure. The policy of
the law favors the enforcement of judgments. (See Troy v.
Superior Court (1986) 186 Cal.App.3d 1006, 1014 [“the purpose of
a judgment debtor examination is to leave no stone unturned in
the search for assets which might be used to satisfy the
judgment”].) There is no policy favoring the concealment of the
judgment debtor’s assets from the judgment creditor.
              KGCRE complains that the order of examination in
this case is expressly limited to section 708.120. But the issue is

                                  7
moot. Whatever the scope of the original order for examination,
KGCRE and James Goveia now have more than adequate notice
of the trial court’s subsequent discovery order. KGCRE and
James Goveia are required to comply fully and completely with
that order.
                            DISPOSITION
              The petition for writ of mandate is denied. Costs are
awarded to respondent.
              CERTIFIED FOR PUBLICATION.

                                     GILBERT, P. J.

We concur:

             YEGAN, J.

             PERREN, J.

                                 8
                   Kent M. Kellegrew, Judge

               Superior Court County of Ventura

                ______________________________

              Voss, Cook & Thel and Francis T. Donohue III for
Defendant and Appellant.
              Lurie & Seltzer, Barak Lurie and Michael J. Conway
for Plaintiff and Respondent.

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