Court Opinion

ID: 3215413
Source: CourtListenerOpinion
Date Created: 2016-06-21 19:08:05.154256+00
Date Added: 2024-06-11T14:04:17.804410
License: Public Domain

Filed 6/21/16 Continental East Fund v. Crockett CA4/1
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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or ordered published for purposes of rule 8.1115.

                    COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                  DIVISION ONE

                                           STATE OF CALIFORNIA

 CONTINENTAL EAST FUND IV, LLC,                                    D069652

           Plaintiff and Respondent,

           v.                                                      (Super. Ct. No. RIC527384)

 DONALD RAY CROCKETT,

       Defendant and Respondent,
 ___________________________________

 BANK OF AMERICA, N.A. et al.,

           Interveners and Appellants.

         APPEAL from an order of the Superior Court of Riverside County, Sunshine S.

Sykes, Judge. Reversed and vacated with directions.

         McGuire Woods, Leslie M. Werlin, and Blake S. Olson for Interveners and

Appellants.

         Floratos, Loll & Devine, William A. Floratos, and John M. Devine for Plaintiff

and Respondent.

         No appearance for Defendant and Respondent.
       Plaintiff Continental East Fund IV, LLC (Continental) obtained a judgment

against defendant Donald Ray Crockett and a codefendant in the amount of

$4,157,480.90. In proceedings to enforce the judgment, the trial court issued a "turnover

order" requiring Merrill Lynch, Pierce, Fenner, and Smith, Inc. (Merrill Lynch) to

transfer to Continental's counsel all of the funds (approximately $3,900,000) held in a

Merrill Lynch account that the court found Crockett owned. Bank of America, N.A.

(Bank of America) claims it holds a perfected first priority security interest in

approximately $3,087,000 of the funds in the account under a loan agreement.

       Bank of America and Merrill Lynch (collectively appellants) appeal the turnover

order, contending (1) the turnover order is appealable; (2) they both have standing to

appeal the turnover order; (3) Bank of America was not provided adequate due process

before it was deprived of its security interest in the subject account; (4) the trial court

exceeded its jurisdiction under California's Enforcement of Judgments Law (Code Civ.

Proc., § 680.010 et seq.1) (EJL) by issuing the turnover order without determining

Crockett's interest in or ownership of the funds in the account; (5) the court exceeded its

jurisdiction by issuing the turnover order without complying with Corporations Code

section 15907.03, which governs transfer of a judgment debtor's interest in partnership

property to a judgment creditor. We agree that Bank of America was not provided

adequate due process and, accordingly, reverse and vacate the turnover order.

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

                                               2
                   FACTUAL AND PROCEDURAL BACKGROUND

       In June 2012 Continental obtained a superior court judgment against Crockett and

David Wakefield awarding Continental $4,157,480.90. In April 2015, Continental

obtained an order requiring Merrill Lynch to appear for a third person examination under

section 708.120 regarding property of the judgment debtor in Merrill Lynch's possession

or control. On May 7, 2015, the court granted Continental's ex parte application for a

temporary restraining order (TRO) preventing Crockett and Merrill Lynch from

transferring or encumbering assets held in Merrill Lynch accounts ending in 2446 and

73592 under the name of Crockett 39 Family Partners, Ltd.

       On May 8, 2015, after Merrill Lynch underwent the third person examination, the

court issued an order stating: "It is requested that MERRILL LYNCH . . . immediately

deliver to the Judgment Creditor cash assets held in #[] . . . 7359 . . . , which will be

applied toward satisfaction of the Judgment . . . entered on June 14, 2012 along with all

interest accrued therein." The court set a hearing on "the matter of turnover" for May 14,

2015 and set a deadline for any party opposed to the turnover to file opposition and for

Continental to file "responsive pleadings." The order further provided the restraining

order issued on May 7 would remain in effect until the conclusion of the hearing.

       Crockett filed opposition to the turnover order and the court ultimately held the

hearing on the turnover matter on May 29, 2015. On June 4, 2015, the court filed an

2       Because there were no funds in the account ending in 2446, the only account at
issue in this appeal is the one ending in 7359. Subsequent references to "the account" or
the "Merrill Lynch account" are to the account ending in 7359.

                                               3
order for delivery of property. The court ordered that all the assets in the Merrill Lynch

account "shall be forthwith liquidated and all net proceeds therefrom shall be

immediately turned over to [Continental's] counsel by wire transfer, as per instructions

supplied by [Continental]." The court further ordered that Merrill Lynch provide an

accounting to the parties and that its "previous order freezing these assets shall remain in

full force and effect until the turn over is complete." The court gave notice "that failure

to comply with this order may subject Merrill Lynch to arrest and punishment for

Contempt of Court."

       By letter dated June 17, 2015, Merrill Lynch's counsel, who also represents Bank

of America in this case, provided Crockett's counsel and Continental's counsel the court-

ordered accounting. The letter stated the Merrill Lynch account was "pledged in its

entirety as collateral to [Bank of America] on a loan made by [Bank of America] to

another entity that is not subject to the [court's June 4] Order. . . . [Bank of America],

through a security instrument, holds a first priority lien on the assets, perfected by

control, in account ending in *7359 to secure the loan." The loan amount secured by the

account was $3,086,560.46, excluding accruing interest. The letter stated Merrill Lynch

was in the process of liquidating the assets in the account, which were "comprised of

municipal bonds, mutual funds, cash equivalents, and an alternative investment. The

market value [of the account] as of the close of business on June 16, 2015 was

$3,967,156.19. The net equity amount after the loan is paid off [would] be approximately

$880,595.00 as of the close of business on June 16, 2015." The letter stated that the

process of liquidating the assets in the account pursuant to the court's order would

                                              4
involve Bank of America's giving the loan parties a notice of demand and instructing

Merrill Lynch to apply the proceeds of the account to repay the loan. Upon liquidation of

the account and repayment in full to Bank of America of the loan amount, Merrill Lynch

would "wire transfer the net proceeds to counsel for Continental . . . ."

       The day after receiving the June 17, 2015 letter from Merrill Lynch's counsel,

Continental filed an ex parte application for a TRO preventing Merrill Lynch from

disbursing any of the assets in the account "to any person or entity except as specifically

provided in the Court's Order . . . filed on June 4, 2015." Specifically, Continental sought

to restrain Merrill Lynch from disbursing any money or assets from the account to Bank

of America for repayment of its loan. Continental's ex parte application included a copy

of the June 17, 2015 letter from Merrill Lynch's counsel.

       The court held a hearing on Continental's ex parte application on June 19, 2015.

Merrill Lynch appeared at the hearing through counsel. The court directed Continental's

counsel to prepare an order requiring Merrill Lynch to turn over the money in the account

after liquidation with "no payouts to any lien holders from the account prior to the

turnover." The court informed Merrill Lynch's counsel that "if Merrill Lynch were to pay

off Bank of America in the interim, there would be a basis [upon] which this Court can

find Merrill Lynch to be in contempt of court." Merrill Lynch's counsel requested

permission to be heard. The court denied counsel's request on the ground Merrill Lynch

was not a party and did not have standing.

       The June 19 ex parte hearing resulted in the June 24, 2015 turnover order that

Bank of America and Merrill Lynch have appealed. The turnover order restated the

                                              5
provisions of the court's June 4, 2015 order requiring Merrill Lynch to liquidate all of the

assets in the account, immediately turn over the net proceeds from the account to

Continental's counsel, and provide an accounting to the parties. The order also reiterated

that the court's "previous order freezing these assets shall remain in effect until the turn

over is complete." The June 24 order added the directive that "Merrill Lynch shall pay all

said proceeds as directed without payment to any other alleged creditor, alleged secured

party, or any other claimant." The order gave notice "that failure to comply with this

order may subject Merrill Lynch to punishment for Contempt of Court."

       On June 24, 2015, the same day the court entered the turnover order, Bank of

America filed an ex parte application for leave to file a complaint in intervention and to

stay the June 4, 2015 turnover order pending resolution of its complaint or, alternatively,

to stay the turnover order until it could have its application to intervene heard on regular

notice. Bank of America contended that if the court did not grant its application, it would

suffer irreparable harm or be placed in immediate danger of losing its security, and would

be deprived of its constitutional due process rights.

       The court held a hearing on Bank of America's ex parte application on June 30,

2015. The court denied Bank of America's request to stay the turnover order, but ordered

all funds turned over under the order be held in Continental counsel's interest bearing

trust account until further order of the court. The court set a hearing on Bank of

America's motion to intervene for August 21, 2015 and set a briefing schedule for the

motion. In August 2015, the court granted the motion to intervene and ordered that

"[Bank of America's] intervention is limited to the purpose of determining whether [it]

                                              6
has a senior security interest in the funds that are subject to the turnover order." Bank of

America filed its complaint in intervention and Continental filed an answer to the

complaint.

       Appellants filed a notice of appeal in Riverside County Superior Court that

identified the June 4 turnover order, the June 19 oral order denying Merrill Lynch the

right to be heard, the June 24 turnover order, and the June 30 order. Division Two of the

Fourth District Court of Appeal, before transferring the appeal to this Division, ordered

appellants to file a letter brief addressing the issue of whether they have standing to

appeal the June 4 and June 24 orders. After considering appellants' letter brief, the court

issued an order allowing the appeal to proceed but directing the parties to address the

issue of appellants' standing in their briefs. The court dismissed the appeal from the

June 19, 2015 oral order and the June 30 order.

                                       DISCUSSION

                                      I. Appealability

       The parties dispute whether the June 24, 2015 turnover order is an appealable

order. Continental contends the turnover order is not appealable because it is not a final

judgment. Essentially, Continental argues that because the issue of whether Bank of

America has a priority security interest in the Merrill Lynch account will be determined

in the adjudication of Bank of America's complaint in intervention, the appeal from the

turnover order is premature. Appellants contend the turnover order is appealable under

section 904.1, subdivision (a)(2) as an order after judgment and under subdivision (a)(6)

                                              7
as a mandatory injunction. We agree with appellants and note that Continental did not

address appellants' specific appealability arguments.

       An order entered after an appealable judgment is itself appealable under section

904.1, subdivision (a)(2). However, not every postjudgment order is appealable. (Lakin

v. Watkins Associated Industries (1993) 6 Cal.4th 644, 651 (Lakin).) "To be appealable,

a postjudgment order must satisfy two additional requirements. . . . [¶] The first

requirement . . . is that the issues raised by the appeal from the order must be different

from those arising from an appeal from the judgment. [Citation.] 'The reason for this

general rule is that to allow the appeal from [an order raising the same issues as those

raised by the judgment] would have the effect of allowing two appeals from the same

ruling and might in some cases permit circumvention of the time limitations for appealing

from the judgment.' [Citation.] . . . [¶] The second requirement . . . is that 'the order must

either affect the judgment or relate to it by enforcing it or staying its execution.'

[Citation.] Under this rule, a postjudgment order that does 'not affect the judgment or

relate to its enforcement [is] not appealable . . . .' " (Id. at pp. 651-652.) In addition, the

postjudgment order must not be preliminary to further proceedings and become subject to

appeal after a future judgment. (Id. at p. 654.)

       The turnover order satisfies these requirements for an appealable postjudgment

order. The instant appeal from the order raises issues that are different from and

unrelated to any issues that could arise from an appeal from the judgment, and the order

clearly relates to the judgment because Continental sought the order as a means of

enforcing its judgment under the EJL. Further, the order does not on its face contemplate

                                               8
further proceedings and is not subject to an appeal after a judgment is entered on Bank of

America's complaint in intervention.3

       The turnover order is also appealable as a mandatory injunction. Section 904.1,

subdivision (a)(6) makes appealable "an order granting . . . an injunction . . . ." An

injunction is "a writ or order commanding a person either to perform or to refrain from

performing a particular act." (McDowell v. Watson (1997) 59 Cal.App.4th 1155, 1160;

Luckett v. Panos (2008) 161 Cal.App.4th 77, 84.) An order compelling a person to

perform a particular act constitutes a mandatory injunction and, as such, is an appealable

order under section 904.1, subdivision (a)(6). (Canaan Taiwanese Christian Church v.

All World Mission Ministries (2012) 211 Cal.App.4th 1115, 1118, fn. 1.) The June 24,

2015 turnover order compelled Merrill Lynch to perform the particular acts of liquidating

the assets in the Merrill Lynch account and turning over the proceeds from the liquidation

to Continental's counsel. Thus, the order is appealable as a mandatory injunction.

3      The appeal does not raise the same issue raised in Bank of America's complaint in
intervention–i.e., whether Bank of America's security interest in the Merrill Lynch
account is superior to Continental's; it raises the issue of where the turned over funds
from the Merrill Lynch account should be held until the complaint in intervention is
adjudicated. The relief it seeks is reversal of the turnover order, which would simply
require those funds to be returned to the Merrill Lynch account rather than being held in
Continental's attorney's trust account.

                                              9
                                   II. Standing to Appeal

       As noted, the parties were directed to address the issue of appellants' standing in

their briefs. We conclude both Bank of America and Merrill Lynch have standing to

appeal.

       Whether an appellant has standing to appeal is a question of law and is

jurisdictional. (People v. Hernandez (2009) 172 Cal.App.4th 715, 719-720 (Hernandez).)

"We liberally construe the issue of standing and resolve doubts in favor of the right to

appeal." (Apple, Inc. v. Franchise Tax Bd. (2011) 199 Cal.App.4th 1, 13.) Section 902

governs standing to appeal and provides that "[a]ny party aggrieved may appeal in the

cases prescribed in this title." A party "is considered 'aggrieved' [if the party's] rights or

interests are injuriously affected by the judgment. [Citations.] Appellant's interest 'must

be immediate, pecuniary, and substantial and not nominal or a remote consequence of the

judgment.' " (County of Alameda v. Carleson (1971) 5 Cal.3d 730, 737 (County of

Alameda).)

       As a general rule, only parties of record have standing to appeal. (County of

Alameda, supra, 5 Cal.3d at p. 736; Hernandez v. Restoration Hardware, Inc. (2016) 245

Cal.App.4th 651, 657.) However, the rule is not ironclad. Under the heading, "Who May

Appeal," the Code Commissioners' Notes to section 902 state that "[o]ne not a party to

the record may appeal, if aggrieved by the judgment." (Code commrs., notes foll. 17B

West's Ann. Code Civ. Proc., § 902 (2009 ed.) p. 10.) The Commissioners' Notes cite

Adams v. Woods (1857) 8 Cal. 306 (Adams), in which the California Supreme Court held

that a party aggrieved by a judgment has the right to appeal the judgment even though the

                                              10
appellant is not a party of record. (Id. at pp. 314-315.) As the Court of Appeal noted in

In re FairWageLaw (2009) 176 Cal.App.4th 279 (FairWageLaw): "Nonparties who are

aggrieved by a judgment may appeal from it. '[A]ny entity that has an interest in the

subject matter of a judgment and whose interest is adversely affected by the judgment is

an aggrieved party and is entitled to be heard on appeal.' " (Id. at p. 285.)

       In Hernandez, nonparty pawnbrokers appealed an order that required them to

return stolen property in their possession to its purported owners. (Hernandez, supra,

172 Cal.App.4th at p. 719.) The trial court issued the order without providing notice to

the pawnbrokers. (Ibid.) A panel of this court in Hernandez noted that "[a]ny party

legally aggrieved by a challenged ruling has standing to appeal it [citation] and a

nonparty that is aggrieved by a judgment or order may become a party of record and

obtain a right to appeal by moving to vacate the judgment. [Citation.] Additionally, a

nonparty may appeal if a judgment or order has a res judicata effect on the nonparty.

[Citation.] Such an effect on the nonparty must, however, be 'immediate, pecuniary, and

substantial and not nominal or a remote consequence of the judgment [or order]' in order

to confer standing." The Hernandez panel concluded the nonparty pawnbrokers had

standing to appeal because "the challenged order [was] binding and the injurious effect of

the order on the pawnbrokers was immediate, pecuniary and substantial." (Id. at p. 720.)

       Bank of America was similarly aggrieved by the turnover order because the order

at least temporarily deprived it of its claimed security interest in the Merrill Lynch

account, and threatened to permanently deprive it of that interest without due process.

Bank of America was further aggrieved by the order because it forced Merrill Lynch to

                                             11
liquidate the assets in the account, thereby limiting the growth potential of the account.

(See Blumenthal v. Di Giorgio Fruit Corp. (1938) 30 Cal.App.2d 11, 19 [injunction to

restrain payment of stock dividends under recapitalization plan could result in a forced

liquidation of stock that would seriously injure stockholders who accept the benefit of the

plan].) The order on its face is binding and the injurious effect of the order on the Bank

of America was immediate, pecuniary and substantial.

       The turnover order is injurious to Bank of America regardless of the court's

ultimate determination of the priority of Bank of America's claimed security interest in

the Merrill Lynch account because, as we discuss infra, the order deprived it of its

security interest without notice and an opportunity to be heard on the issue of whether its

interest was superior to Continental's claimed interest in the account as a judgment

creditor. "The right to be heard does not depend upon an advance showing that one will

surely prevail at the hearing." (Fuentes v. Shevin (1972) 407 U.S. 67, 87 (Fuentes).) "If

the right to notice and a hearing is to serve its full purpose, then, it is clear that it must be

granted at a time when the deprivation can still be prevented. At a later hearing, an

individual's possessions can be returned to him if they were unfairly or mistakenly taken

in the first place. Damages may even be awarded to him for the wrongful deprivation.

But no later hearing and no damage award can undo the fact that the arbitrary taking

that was subject to the right of procedural due process has already occurred." (Fuentes,

supra, at pp. 81-82, italics added.) Thus, whether or not the trial court ultimately

determines Bank of America's security interest in the account is superior to Continental's

                                               12
interest, Bank of America is aggrieved by the turnover order because the order deprived it

of its alleged interest in the account without the opportunity to be heard.

       Merrill Lynch is also aggrieved by the turnover order, which, as we discussed

above, is a mandatory injunction that compelled Merrill Lynch to liquidate the assets in

the account and the turn over the proceeds from the liquidation to Continental's counsel

under the threat of contempt. Merrill Lynch became a party of record when it appeared

under a court order for a third person examination under section 708.120. On that point,

Pacific States Savings & Loan Co. v. Mortimer (1945) 70 Cal.App.2d 811 (Pacific

States) is instructive.

       In Pacific States, the appellant corporation appealed an order authorizing the

"commissioner in liquidation" to sell certain parcels of real property owned by the

corporation. (Pacific States, supra, 70 Cal.App.2d at pp. 812-813.) The corporation

appeared in the proceedings and contested the proposed sales in response to an order to

show cause why the sales should not be approved. (Id. at pp. 813-814.) The respondent

commissioner contended the corporation lacked standing to appeal. The Court of Appeal

disagreed, noting that "[o]ne may become a 'party to the record' by an order to show

cause which brings him into the proceeding and enables the court to make an order

adverse to him." (Id. at p. 814.) The court concluded that because the corporation was

brought into the proceeding by an order to show cause and appeared to contest the order

for sale, it became a party entitled to appeal from that order. (Ibid.) Similarly, in the

present case, Merrill Lynch was ordered to appear in the proceeding by Continental's

                                             13
third person examination subpoena, and it was ordered to turn over the account under

threat of contempt. It thereby became a party entitled to appeal from the turnover order.

       Anglo-Californian Bank v. Superior Court (1908) 153 Cal. 753 (Anglo-

Californian) is also analogous to the present case. In Anglo-Californian, the plaintiff

bank held funds belonging to an insolvent corporation undergoing involuntary liquidation

in receivership. (Id. at p. 754.) The bank refused to pay the corporation's receiver

portions of the corporation's funds that two third parties claimed were owed to them. The

court issued an order to show cause why the bank should not be ordered to pay the

withheld funds to the receiver and, after a hearing, ordered the bank to pay those funds to

the receiver. (Id. at pp. 754-755.) The bank challenged the order by writ petition, the

California Supreme Court granted a writ of review, and the defendants (the superior court

and a judge) argued that issuance of the writ was improper because the bank had standing

to challenge the order by appeal. (Id. at pp. 755-756.) The Supreme Court agreed and

dismissed the writ proceeding, concluding the order was appealable as a final

adjudication against the bank in a collateral proceeding and the bank had standing to

appeal because it was "a party to the record, so far as such collateral proceeding was

concerned, having been brought in as such a party by the order to show cause . . . ." (Id.

at p. 756.)

       Merrill Lynch similarly became a party to the record with standing to appeal the

turnover order because it was brought into the case by an order to appear in the judgment

enforcement proceeding. Merrill Lynch was aggrieved by the turnover order because the

                                            14
order compelled it, under the threat of contempt, to liquidate the assets in the account and

then lose the account by turning it over to Continental's counsel.

                                      III. Due Process

       Appellants contend the turnover order should be vacated because Bank of America

was not provided adequate due process before it was deprived of its security interest in

the subject account. We agree.

       "Both the federal and state Constitutions compel the government to afford persons

due process before depriving them of any property interest. [Citations.] In light of the

virtually identical language of the federal and state guarantees, [California courts] have

looked to the United States Supreme Court's precedents for guidance in interpreting the

contours of our own due process clause and have treated the state clause's prescriptions as

substantially overlapping those of the federal Constitution. [Citation.] [¶] 'The essence

of due process is the requirement that "a person in jeopardy of serious loss [be given]

notice of the case against him and opportunity to meet it." ' [Citations.] The opportunity

to be heard must be afforded 'at a meaningful time and in a meaningful manner.' "

(Today's Fresh Start, Inc. v. Los Angeles County Office of Education (2013) 57 Cal.4th

197, 212 (Today's Fresh Start).) As we noted above, "[i]f the right to notice and a

hearing is to serve its full purpose, then, it is clear that it must be granted at a time when

the deprivation can still be prevented." (Fuentes, supra, 407 U.S. at p. 81.)

       " 'The first inquiry in every due process challenge is whether the plaintiff has been

deprived of a protected interest in "property" or "liberty." [Citations.] Only after finding

the deprivation of a protected interest do we look to see if the State's procedures comport

                                              15
with due process.' " (Today's Fresh Start, supra, 57 Cal.4th at p. 214.) A "security

interest" is an interest in personal property or fixtures that secures payment or

performance of an obligation. (Cal. U. Com. Code, § 1201, subd. (b)(35).) Accordingly,

the June 24, 2015 turnover order deprived Bank of America of a protected property

interest.

       The court issued the turnover order without first providing Bank of America notice

or an opportunity to be heard. The court was made aware of Bank of America's security

interest, at the latest, through Continental's ex parte application filed on June 18 and

heard on June 19, 2015. Continental's application included the June 17 letter from

Merrill Lynch's counsel informing Continental of Bank of America's security interest and

Merrill Lynch's intent to transfer to Continental the net proceeds of the account after

paying Bank of America the balance owing on its loan secured by the account. The

purpose of Continental's ex parte application was to prevent Merrill Lynch from

transferring any funds from the account to Bank of America, and its application was

successful. As a result of the hearing, the court ordered Merrill Lynch to turn over the

money in the account after liquidation with no payouts to any lien holders from the

account prior to the turnover. The court expressly warned Merrill Lynch's counsel that

there would be a basis to hold Merrill Lynch in contempt of court "if Merrill Lynch were

to pay off Bank of America in the interim[.]"

       In determining what process is due, courts balance three considerations: " 'First,

the private interest that will be affected by the official action; second, the risk of an

erroneous deprivation of such interest through the procedures used, and the probable

                                              16
value, if any, of additional or substitute procedural safeguards; and finally, the

Government's interest, including the function involved and the fiscal and administrative

burdens that the additional or substitute procedural requirement would entail.' " (Today's

Fresh Start, supra, 57 Cal.4th at p. 213.) Bank of America's "private interest" (i.e.,

security interest) in over $3 million of the funds transferred to Continental's counsel

under the turnover order is substantial, as is the risk of erroneous deprivation of that

interest in light of the order's implied finding that Continental's interest in the account as

a judgment creditor is superior to Bank of America's security interest. Providing Bank of

America notice and an opportunity to be heard before ordering Merrill Lynch to turn over

the entire account to Continental's counsel would not have imposed a significant fiscal

and administrative burden on the government (i.e., the court). To the contrary, it would

have obviated the need for further proceedings seeking to stay or undo the turnover order,

including this appeal.

       Although Merrill Lynch was not deprived of notice of the June 19, 2015 hearing

resulting in the June 24 turnover order, it was deprived of the opportunity to be heard

regarding Bank of America's security interest. As noted, the court denied Merrill Lynch's

request to be heard at the June 19 hearing because the court concluded Merrill Lynch was

not a party and did not have standing. The court's issuance of the order requiring Merrill

Lynch to turn over the entire account before allowing Bank of America or Merrill Lynch

to be heard on the issue of whether Bank of America's security interest in the account was

superior to Continental's interest in the account deprived Bank of America of its

constitutional right to due process. When "the trial court denies a party his right to a fair

                                              17
hearing, it exceeds its jurisdiction, and the error is reversible per se." (In re Marriage of

Carlsson (2008) 163 Cal.App.4th 281, 292.)4

                                       DISPOSITION

       The turnover order entered on June 24, 2015 is reversed and vacated. The court is

directed to enter an order requiring Continental's counsel to return the funds counsel

received from the Merrill Lynch account to Merrill Lynch to be held pending resolution

of Bank of America's complaint in intervention. Appellants are awarded their costs on

appeal.

                                                                        McCONNELL, P. J.

WE CONCUR:

HUFFMAN, J.

O'ROURKE, J.

4      In light of our decision to vacate the turnover order and direct return of the subject
funds to the Merrill Lynch account, we need not address appellants' contentions that the
court issued the turnover order without complying with the EJL and Corporations Code
section 15907.03. Any defenses to a future turnover order of funds held in the Merrill
Lynch account may be asserted by parties with standing to do so in the future
proceedings.

                                             18