Court Opinion

ID: 9375117
Source: CourtListenerOpinion
Date Created: 2023-02-24 21:03:03.404535+00
Date Added: 2024-06-11T17:16:56.090966
License: Public Domain

Filed 2/24/23
                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                SECOND APPELLATE DISTRICT

                         DIVISION TWO

MAIRA E. DUARTE JUAREZ,            B313272

       Plaintiff and Appellant,    (Los Angeles County
                                   Super. Ct. No.
       v.                          20STCP02070)

DAVID S. WARD,

       Defendant;

THE ACADEMY OF MOTION
PICTURE ARTS AND
SCIENCES,

       Intervener and
       Respondent.

      APPEAL from a postjudgment order of the Superior Court
of Los Angeles County, Holly J. Fujie, Judge. Affirmed.
      Law Office of Benjamin G. Ramm and Benjamin G. Ramm
for Plaintiff and Appellant.
      Quinn Emanuel Urquhart & Sullivan, Christopher
Tayback, Michael L. Fazio, Daniel C. Posner and Sage R. Vanden
Heuvel for Intervener and Respondent.
       A judgment creditor seeks delivery of her debtor’s Academy
Award statuette, commonly known as the Oscar, under the
Enforcement of Judgments Law (EJL). (Code Civ. Proc.,
§ 680.010 et seq.)1 Respondent Academy of Motion Picture Arts
and Sciences (AMPAS) intervened in the litigation. The EJL
allowed the trial court to determine if AMPAS has a right to
property (the Oscar) that came to light in a debtor’s examination.
(§§ 708.110, 708.180, 708.190.)
       The court did not abuse its discretion by denying the
creditor’s request for delivery of the Oscar. It correctly found
that AMPAS has the right to purchase the Oscar for $10
pursuant to a written agreement with the Oscar winner and
AMPAS’s bylaws. No trial was required. We affirm.
             FACTS AND PROCEDURAL HISTORY
       In 1974, defendant David S. Ward was awarded the Oscar
for his work on the film The Sting. He signed a “winner’s
agreement” (Agreement), as required by AMPAS’s bylaws. As an
AMPAS member, Ward is bound by its bylaws.
       The Agreement reads: “I hereby acknowledge receipt from
you of replica No. 1659 of your copyrighted statuette, commonly
known as ‘Oscar’, as an Award for Best Story and Screenplay -
The Sting’. I acknowledge that my receipt of said replica does not
entitle me to any right whatever in your copyright of said
statuette and that only the physical replica itself shall belong to
me. In consideration of your delivering said replica to me, I agree
to comply with your rules and regulations respecting its use and
not to sell or otherwise dispose of it, nor permit it to be sold or

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

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disposed of by operation of law, without first offering to sell it to
you for the sum of $10.00. You shall have thirty days after any
such offer is made to you within which to accept it. This
agreement shall be binding not only on me, but also on my heirs,
legatees, executors, administrators, Estate, successors and
assigns. My legatees and heirs shall have the right to acquire
said replica if it becomes part of my Estate, subject to this
agreement.”
       In 2020, appellant Maira Duarte Juarez obtained a
judgment against Ward for unpaid wages and penalties. She
served a demand for a debtor’s examination. (§ 708.110.) At the
examination, Ward disclosed that he has an Oscar but few other
assets. After the examination, Juarez obtained a court order for
delivery of movie memorabilia—a baseball bat signed by the cast
of the film Major League. (§ 708.205.)
       Juarez also applied for an order to deliver Ward’s Oscar for
public sale. (§ 708.205.) The court asked the parties to brief
whether the Oscar can be sold. Juarez argued that the Oscar is
Ward’s personal property and primary asset, and any restriction
on its sale does not bind her, as a judgment creditor.
       AMPAS sought to intervene in this case when it learned of
Juarez’s efforts to seize the Oscar. AMPAS’s Chief Financial
Officer Andy Horn declared that the Oscar is a copyrighted work
of art; it represents the pinnacle of professional recognition in the
film industry and is unavailable to the public. Since 1951,
AMPAS’s bylaws mandate that a member who receives an Oscar
must afford AMPAS a right of first refusal to purchase it if it is to
be sold or disposed of. Receipt of an Oscar is conditioned on
execution of the Agreement, which Ward signed in 1974. AMPAS

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informed Ward and Juarez that it is asserting its right to
purchase Ward’s Oscar for $10.
       The court gave AMPAS leave to intervene, allowed Juarez
to propound discovery on AMPAS, and ordered the parties to
brief their claims. Before the court could rule on the claims,
Ward returned the Oscar to AMPAS and was paid $10. Juarez
argued that AMPAS “should be able to keep its statuette. It also
must pay the judgment . . . because property subject to a lien
‘may be proceeded against and either sold or sequestered, and its
proceeds paid to a person in whose favor the lien exists.’ ”
                     THE COURT’S RULING
       The court found that Ward’s Oscar is subject to an
equitable servitude, under the Agreement and AMPAS’s bylaws.
The servitude requires Ward to offer AMPAS the Oscar for $10
before selling or disposing of it by operation of law. Conveying
the Oscar for Juarez’s benefit is “disposing” of it by operation of
law. Ward offered the Oscar to AMPAS to comply with his
Agreement and membership obligations; AMPAS purchased it for
$10 and now owns and possesses it. The court wrote, “[A]t this
time, Plaintiff has neither sought delivery of the Oscar from the
Academy nor has [she] argued that [she] has the right to do so.”
       A judgment creditor can demand the proceeds from the sale
of a debtor’s personal property. Juarez holds a lien on the $10 in
proceeds from Ward’s transfer of the Oscar to AMPAS. AMPAS
acquired it through a valid contract and paid the amount it was
contractually required to pay. Even if Juarez acquired the Oscar,
it cannot be sold because of the equitable servitude. The court

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ordered Ward to surrender the $10 in proceeds to Juarez. Juarez
appealed the order.2
                            DISCUSSION
       1. Appeal and Review
       The order arises after judgment in Juarez’s labor law case
against Ward. (§ 904.1, subd. (a)(2); Imperial Bank v. Pim
Electric, Inc. (1995) 33 Cal.App.4th 540, 544, fn. 1 (Pim) [an order
to enforce a judgment after a debtor’s exam is appealable].)
When the court resolves competing interests in property, its
“determination is conclusive as to the parties to the proceeding
and the third person [claiming an interest], but an appeal may be
taken from the determination.” (§ 708.180, subd. (a).)
       On appeal, Juarez addresses whether (1) the trial court was
allowed to use a summary procedure; (2) the equitable servitude
doctrine applies to chattels; and (3) the Agreement creates an
equitable servitude on Ward’s Oscar. “The trial court’s findings
of fact are reviewed for substantial evidence, its conclusions of
law are reviewed de novo, and its application of the law to the
facts is reversible only if arbitrary and capricious.” (Haraguchi v.
Superior Court (2008) 43 Cal.4th 706, 711–712, fns. omitted.)
       2. The Court Properly Proceeded Under the EJL
       The EJL “is a comprehensive scheme governing the
enforcement of all civil judgments in California.” (Pim, supra, 33
Cal.App.4th at p. 546.) Under this scheme, a lien is created on all
nonexempt personal property when the debtor is served with
notice to appear for examination. (Id. at pp. 552–553; § 708.110,
subd. (d).) “Except as otherwise provided by law, all property of
the judgment debtor is subject to enforcement of a money

      2   Ward did not file a responsive brief in this appeal.

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judgment.” (§ 695.010, subd. (a).) However, “property of the
judgment debtor that is not assignable or transferable is not
subject to enforcement of a money judgment.” (§ 695.030, subd.
(a).)
       Juarez demanded that Ward respond to requests for
information about his assets. After a debtor’s examination (§
708.110), she requested an order to have Ward’s property applied
to satisfy her judgment. Under section 708.205, subdivision (a),
the court may order the judgment debtor’s interest in property to
be applied toward the satisfaction of the judgment. Juarez
secured a signed order for movie memorabilia, but the court
refused her request for the Oscar.
       The court allowed AMPAS to intervene to claim a right to
the Oscar. Section 708.190 reads: “The court may permit a
person claiming an interest in the property or debt sought to be
applied in an examination proceeding to intervene in the
proceeding and may determine the person’s rights in the property
or debt pursuant to Section 708.180.” The purpose of this statute
is to allow “the early resolution of a third-party claim to property
that is the subject of an examination proceeding.” (Cal. Law
Revision Com. com., Deering’s Ann. Code Civ. Proc. (2022) foll.
§ 708.190.)3
       These procedures are a “ ‘less expensive and less
cumbersome’ ” way of enforcing a debt. (Evans v. Paye (1995) 32
Cal.App.4th 265, 276.) When a third party claims an interest in

      3 Juarez believes the trial court could not apply section
708.190 because AMPAS did not cite it in its request to intervene.
That is not the rule. “ ‘The general rule is that a trial court is
presumed to have been aware of and followed the applicable
law.’ ” (People v. Shiga (2016) 6 Cal.App.5th 22, 40.)

                                 6
property adverse to the debtor or creditor, the court’s resolution
of the competing interests is conclusive. (Id. at pp. 277–280.)
The EJL envisions that the court will make factual findings,
without the need for a separate lawsuit. (Id. at pp. 278–282.)
       A creditor’s suit may be required if the court finds that the
third party’s claim is made in good faith and at least one of three
conditions exists: (1) the court is not a proper forum for
adjudicating the claim; (2) another action is pending regarding
the third party claim; or (3) the court believes the claim should be
tried as an independent suit. (§ 708.180, subd. (b).) The court
did not find that any of these conditions exist.
       When Juarez asked “to use post-judgment discovery
procedures to investigate the Academy’s claims,” the court
allowed her to conduct discovery; the parties briefed their
competing claims to Ward’s Oscar. (§ 708.180, subd. (a) [court
may allow a continuance for discovery, production of evidence, or
other preparation for the hearing].) Juarez asked the court to bar
AMPAS from “purchasing the Oscar statuette out from under Ms.
Juarez,” citing section 708.110, subdivision (d). Juarez now
argues that the court should not have followed streamlined
procedures.
       The EJL summary procedures were not “foisted” on Juarez,
as she now argues; she acknowledges that she could have brought
an independent civil action. (Ilshin Investment Co., Ltd. v. Buena
Vista Home Entertainment, Inc. (2011) 195 Cal.App.4th 612, 626–
627.) Juarez’s regret that she pursued her remedies under
section 708.110 et seq., instead of a civil suit, is not trial court
error. Nor would an independent action necessarily have
produced a different result.

                                 7
       Juarez argued below (a) there is no evidence that Ward is a
member of AMPAS subject to its bylaws; (b) the bylaws do not
bind third party creditors; and (c) even if the bylaws could
restrict the rights of judgment creditors, she should not lose her
right to collect on her judgment “simply because [AMPAS] might
decide to offer a low price for an asset that can be used to satisfy
a judgment. The Academy should be forced to buy the Award
from the Plaintiff for $1.00 [sic] or allow the levying officer to sell
it. At the very least, the Plaintiff is entitled to the $1.00 [sic].”
       None of these issues required a trial. AMPAS’s Horn
declared that Ward is an AMPAS member since 1974, which
Juarez does not dispute. Nor does Juarez dispute that AMPAS
offered to purchase the Oscar under the Agreement. The legal
issue of whether AMPAS’s bylaws apply to a creditor’s claim does
not require a trial.
       Later, Juarez argued that a trial was needed to determine
if the Agreement and AMPAS’s right of first refusal is a
“reasonable” restraint on alienation. The court found the
restraint reasonable when it wrote that AMPAS “acquired the
Oscar based upon a valid contractual transaction” and if Juarez
were to acquire it, she “would be unable to sell it, either herself or
through a third party, because of the existence of the equitable
servitude on it.” Whether an equitable servitude may exist in
personal property is a legal question that we discuss below.
       3. Equitable Servitudes in Chattels
       In the trial court, Juarez initially wrote that AMPAS’s
bylaw “appears to create a so-called ‘equitable servitude’ in
personal property against an Oscar that was at any time awarded
to an existing member that currently subscribes to the bylaws.”
She argued that the bylaw unreasonably destroys or impairs an

                                  8
existing substantive right; it is premature to enforce an equitable
servitude before AMPAS extends an offer to purchase the Oscar;
and the bylaw is an unreasonable restraint on alienation. Later,
Juarez argued that AMPAS’s contractual right of first refusal
does not eliminate her lien under the EJL; no equitable servitude
was established; the restriction on sale is unreasonable; and
AMPAS’s payment of only $10 for the Oscar is a voidable transfer
from an insolvent debtor. Yet she agreed that AMPAS “should be
able to keep its statuette.”
      a. Equitable Servitudes
      The doctrine of equitable servitudes applies in California,
which has “accumulated its own body of rules.” (Citizens for
Covenant Compliance v. Anderson (1995) 12 Cal.4th 345, 353.)
The doctrine makes enforceable, in equity, a covenant relating to
property that might be otherwise unenforceable. (Marra v. Aetna
Construction Co. (1940) 15 Cal.2d 375, 378–379; Southern
California School of Theology v. Claremont Graduate University
(2021) 60 Cal.App.5th 1, 8.)
      b. The Nadell Case
      Most cases applying the doctrine of equitable servitudes
involve real property. One California case, Nadell & Co. v.
Grasso (1959) 175 Cal.App.2d 420 (Nadell), holds that equitable
servitudes may be created in personal property.4 A servitude
may be enforced if personal property is subject to a written

      4  Property is either “[r]eal or immovable,” or “[p]ersonal or
movable.” (Civ. Code, § 657.) “Every kind of property that is not
real is personal.” (Civ. Code, § 663.) Personal property includes
“money, goods, chattels, things in action, and evidences of debt.”
(Civ. Code, § 14, subd. (b)(3).)

                                  9
agreement imposing a reasonable restriction, and a later owner
has notice of the restriction. (Id. at pp. 428–431.)
      In Nadell, the plaintiff contracted to purchase damaged
containers of Kraft fruit salad; as a condition of the sale, the
plaintiff agreed to repackage the fruit salad before selling it to
consumers. The defendant, a subsequent purchaser, refused to
abide by the condition, resulting in the retail sale of physically
damaged products bearing the Kraft name. (Nadell, supra, 175
Cal.App.2d at pp. 423–424.) The court enforced the restriction
against the defendant, whose lack of privity with the parties who
agreed to restrict sale did not make the restriction unenforceable.
Instead, an equitable servitude was sustained on a theory that a
producer of goods has a proprietary interest in the goodwill of its
business. (Id. at p. 431.)
      Nadell cites as precedent California Supreme Court cases
underscoring business interests in protecting public goodwill in a
product. (Nadell, supra, 175 Cal.App.2d at pp. 427–428.) The
opinion cites cases from other jurisdictions that “ ‘enforced rights
resembling an equitable servitude binding on a third party who
has acquired personal property from one who is under a contract
to use it for a particular purpose or in a particular way.’ ” (Id. at
p. 428.)
      The goal in Nadell was to enforce a restriction on sale to
ensure the prestige and good name of the original producer of
property. The goodwill of a business “is property” (Bus. & Prof.
Code, § 14102) and “is not limited to the field of manufacturing.”
(Nadell, supra, 175 Cal.App.2d at p. 431.) “[I]t is sound public
policy to protect” the interests of a manufacturer, producer, or
distributor of a trademarked article “in the goodwill towards his
product which he has created . . . against destruction by others

                                 10
who have no interest in it except to use it in a misleading way.”
(Max Factor & Co. v. Kunsman (1936) 5 Cal.2d 446, 455.)
       Juarez argues that Nadell is wrongly decided—that only
real property can be subject to an equitable servitude. She relies
on Civil Code section 702: “The names and classification of
interests in real property have only such application to interests
in personal property as is in this division of the code expressly
provided.” Equitable servitudes—as the name suggests—are
imposed by courts acting in equity. The doctrine does not arise
from statute. (See Nadell, supra, 175 Cal.App.2d at p. 426
[rejecting a claim “that respondent failed to exhaust his legal
remedies before recourse to equity”].) Civil Code section 702 does
not bar AMPAS from asserting an equitable servitude.
       c. Application of Nadell to Ward’s Oscar
       In consideration of receiving the Oscar, Ward signed the
Agreement promising to offer it to AMPAS before selling or
otherwise disposing of it. As a member of AMPAS, Ward is
bound by its bylaws, which oblige him to offer the Oscar to
AMPAS. AMPAS has a right of first refusal to reclaim an Oscar
before it can be transferred. If AMPAS declined to exercise its
rights, an Oscar could be sold. Juarez had notice of AMPAS’s
right of first refusal, and intent to exercise that right, before she
could take possession of the Oscar. Nadell does not require notice
to the general public, only to the party who comes into possession
of property subject to a constraint.
       Juarez contends that AMPAS’s right of first refusal is a
presumptively void restraint on alienation, and that AMPAS did
not show that the restraint is reasonable. In her view, the
reasonableness issue presented a question of fact that could not
be resolved summarily. Juarez acknowledges that AMPAS’s

                                 11
Horn declared that the restraint on Oscar sales benefits it and its
members; however, he did not account for its effect on creditors
and AMPAS failed to adequately answer discovery questions.5
       The goal identified in Nadell for enforcing a reasonable
restriction on alienation, in an unusual case, exists here. “ ‘[A]
court of equity will enforce a restrictive covenant, if it is
reasonable and made within proper limitations.’ ” (Nadell, supra,
175 Cal.App.2d at p. 429.) “Reasonableness is determined by
comparing the justification for a particular restraint on
alienation with the quantum of restraint actually imposed by it.”
(Kendall v. Ernest Pestana, Inc. (1985) 40 Cal.3d 488, 498.)
       Substantial evidence supports the trial court’s conclusion
that the restraint is reasonable. AMPAS’s Horn declared that
AMPAS “has spent millions of dollars to promote the ‘Oscar’ ” so
that “[t]he prestige associated with receiving an ‘Oscar’ is
unparalleled by any other award of its kind.” Each statuette is
“one of a kind,” not available to the public nor intended “to be
treated as an article of trade.” If Juarez places Ward’s Oscar on
sale, AMPAS and its members will be irreparably harmed by the
diminution in value of all Oscars, the Academy Award ceremony,
“and the prestige of the Oscar in general.” Juarez did not refute
this by presenting a contrary expert opinion.
       An Oscar is conferred on those who earn it by dint of
artistic talent that is rewarded by acclamation of peers in the
film industry. An Oscar that is sold by a creditor, who did not
earn the award, diminishes the honor of the achievement and the
value of AMPAS’s copyrighted statuette.

      5 Juarez did not ask to meet and confer about the responses
or try to compel further discovery, forfeiting her claim of
inadequate discovery.

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       d. Merger Doctrine
       Juarez contends that the merger doctrine extinguishes any
equitable servitude. She cites Civil Code sections 805 and 811,
which are in division 2, part 2 relating to “Real or Immovable
Property.” (Civ. Code, § 755 et seq.)6 The statutes do not apply
to personal property. Even if they did apply, the doctrine of
merger means that the servitude was extinguished when AMPAS
paid $10 and retook the Oscar. (See, e.g., Rosebrook v. Utz (1941)
45 Cal.App.2d 726, 728–729 [grantee’s easement over a parcel
was extinguished when the grantee became owner of the parcel].)
Once AMPAS became the owner of the Oscar, Ward had no
further interest in it; it cannot be seized, although the $10 Ward
received for it can be.
       4. Juarez Cannot Have Greater Rights than Ward
       Juarez agrees that AMPAS has a right of first refusal but
asserts that it can be enforced only against Ward, not against
her. She does not dispute that Ward signed the Agreement, is
bound by AMPAS’s bylaws, or that he is subject to AMPAS’s right
of first refusal. In effect, she argues that her rights are greater
than Ward’s rights.
       A judgment creditor’s interest is derivative of the judgment
debtor’s interest: The creditor acquires only the interest a
judgment debtor has in personal property at the time of the levy.
(City of Torrance v. Castner (1975) 46 Cal.App.3d 76, 80.) “The

      6 Civil Code section 805 reads, “A servitude thereon cannot
be held by the owner of the servient tenement.” A servitude is
extinguished when the right to the servitude and the right to the
servient tenement merge in the same person; the servient
tenement is destroyed; acts incompatible with the servitude; or
disuse of the servitude. (Civ. Code, § 811.)

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lien attaches to the real and not the apparent interest of the
debtor.” (Henry v. General Forming, Ltd. (1948) 33 Cal.2d 223,
225–226.) Because a judgment is a lien only on the interest of
the judgment debtor, latent equities against the debtor may be
asserted against his judgment creditor, who “is subject to all prior
interests in the property, whether known or unknown, recorded
or unrecorded.” (In re Mellor (9th Cir. 1984) 734 F.2d 1396, 1401,
fn. 4; McGee v. Allen (1936) 7 Cal.2d 468, 473.)
       These legal principles thwart Juarez’s claim to the Oscar.
She is Ward’s creditor, not his legatee or heir, and she plans to
dispose of the Oscar by operation of law, at a public sale. But
Ward is not allowed to dispose of the Oscar without first offering
it to AMPAS, a restriction he agreed to as consideration for
receiving the award. Moreover, bylaws of voluntary associations
are binding contracts. (Berke v. Tri Realtors (1989) 208
Cal.App.3d 463, 469.) As an AMPAS member, Ward is bound by
its bylaw restricting the sale of Oscars.
       As Ward’s creditor, Juarez is subject to the same restriction
imposed by the Agreement and bylaws. Juarez had no greater
rights than Ward. She admitted as much when she told the trial
court that AMPAS “should be able to keep its statuette.” Juarez
writes that the Agreement is “a personal, contractual obligation
between Mr. Ward and the Academy.” It is unclear how Juarez
has standing to assert that the Agreement is “repugnant to the
interest created [and] void” (Civ. Code, § 711), when the person
who signed it willingly complied with its terms.
       Even if Juarez could force delivery of the Oscar, she and
any subsequent purchaser would be subject to AMPAS’s right of
first refusal. The holder of a right of first refusal has the
preference to purchase property that “ ‘is enforceable against

                                14
third persons entering into a contract to buy the property with
notice of the holder’s right.’ ” (Hartzheim v. Valley Land & Cattle
Co. (2007) 153 Cal.App.4th 383, 389.) As previously discussed,
AMPAS’s right to reclaim the Oscar is reasonable to preserve its
significant investment in the goodwill of its business.
                           DISPOSITION
       The order is affirmed. The parties shall bear their own
costs on appeal.
       CERTIFIED FOR PUBLICATION.

                                     LUI, P. J.
We concur:

      ASHMANN-GERST, J.

      HOFFSTADT, J.

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