Court Opinion

ID: 6118264
Source: CourtListenerOpinion
Date Created: 2022-02-03 20:02:05.274936+00
Date Added: 2024-06-11T08:22:27.084278
License: Public Domain

Filed 2/3/22
               CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                SECOND APPELLATE DISTRICT

                         DIVISION TWO

WILLIAM MEYER,                       B307734

       Plaintiff and Appellant,      (Los Angeles County
                                     Super. Ct. No.
       v.                            BC673404)

WILLIAM SHEH,

     Defendant and
Respondent.

     APPEAL from an order of the Superior Court of Los
Angeles County, Malcolm H. Mackey, Judge. Affirmed.

     Salisian Lee, Neal S. Salisian, and H. Han Pai for Plaintiff
and Appellant.

     Kendall Law, Eileen Kendall; Jeff Lewis Law, Jeffrey
Lewis, and Sean C. Rotstan for Defendant and Respondent.
                               ******
       Before a creditor with a money judgment may force the sale
of a debtor’s dwelling to satisfy that judgment, the creditor must,
in addition to other procedures, obtain a court order authorizing
the sale. (Code Civ. Proc., § 704.750, subd. (a).)1 To obtain that
court order, the creditor must file an application that includes,
among other things, “[a] statement of the amount of any liens or
encumbrances on the dwelling.” (§ 704.760, subd. (c).) Does this
require the creditor to list liens on the property for unpaid real
property taxes, even though those liens need not be recorded
because they come into being by operation of law? We hold that
the answer is “yes.” Because the creditor’s application in this
case did not list the delinquent property taxes against the
debtor’s dwelling and went so far as to represent, under oath,
that “there are no actual or purported liens or encumbrances” on
the property, the trial court properly denied the creditor’s
application as deficient. We accordingly affirm.
         FACTS AND PROCEDURAL BACKGROUND
I.     Facts
       William Sheh (William) owns a four-bedroom, single-family
home on Villa Rosa Drive in Rancho Palos Verdes, California (the
property), along with his wife Lily and another couple, George
and Regina Sheh.2 William, Lily, George, and Regina hold title to
the property as joint tenants.

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

2     Because these individuals all share the same last name, we
will use first names for the sake of clarity. We mean no
disrespect.

                                2
      By early 2020, the property had two relevant
encumbrances. First, the property owners did not pay property
taxes to Los Angeles County from fiscal year 2014-2015; the
amount of those delinquent taxes, along with applicable penalties
and interest, came to $54,788.15 in January 2020, and $55,523.29
in February 2020. Second, the California Franchise Tax Board
had recorded four liens against the property in March 2011,
February 2013, January 2014, and February 2016 for a total
amount of $50,895.58 for taxes owed by Regina.
II.   Procedural Background
      A.     Lawsuit and judgment
      In August 2017, William Meyer (plaintiff) sued William and
his business Tectoweld, Inc. (Tectoweld) for (1) various Labor
Code violations, such as the nonpayment of wages, the failure to
provide itemized statements, and waiting time penalties, (2)
breach of contract, and (3) conversion. After William and
Tectoweld defaulted, the trial court in May 2019 entered a
default judgment against William and Tectoweld in the total
amount of $156,906.04, comprised of $79,438.62 in damages plus
prejudgment interest, costs, attorney fees, and Labor Code
penalties.
      B.     Plaintiff’s collection efforts
      On June 4, 2019, plaintiff recorded an abstract of judgment
with the Los Angeles County Recorder’s Office.
      On November 11, 2019, plaintiff filed a request for the trial
court to issue a writ of execution on the judgment, which by that
time had grown to $173,342.88. On December 3, 2019, the clerk
of court issued the writ.

                                3
      On February 21, 2020, the Los Angeles County Sheriff’s
Department served plaintiff with a notice that a levy was made
on the property pursuant to the writ of execution.
      On April 27, 2020,3 plaintiff filed an application for the
court to order the sale of William’s one-fourth interest in the
property to satisfy the outstanding judgment. In an application
signed under penalty of perjury, plaintiff’s attorney (1) attached
an appraisal valuing the property at $1,350,000, and William’s
one-fourth interest at $337,500, (2) estimated a homestead
exemption of $100,000, and (3) represented that “[o]ther than
[plaintiff’s] judgment lien and execution lien . . ., there are no
actual or purported liens or encumbrances on [William’s] interest
in the Property.”
      The trial court issued an order to show cause on plaintiff’s
application and set a hearing date. Following further briefing
and a hearing, the trial court denied plaintiff’s application
because the application did “not contain” the “lien information”
“required” by section 704.760—namely, (1) it did not list the

3     Although a creditor has only 20 days from the date of being
served with notice of the levy on the debtor’s dwelling to file an
application for an order for sale of the dwelling (plus five days for
service by mail) (§§ 704.750, subd. (a), 684.120, subd. (b)(1)),
plaintiff’s application—which was filed 66 days after service of
the notice—is ostensibly timely due to the COVID-19-related
extensions of time for filing. No party has argued to the contrary,
and the record does not indicate that the property was released
from the levy. (See § 704.750, subd. (a) [if creditor does not
timely file application, levying officer shall release dwelling].)

                                 4
property tax liens on the property, and (2) it mischaracterized the
effect of the recorded tax liens entered against Regina.4
       C.     Appeal
       Plaintiff filed this timely appeal.
                             DISCUSSION
       Plaintiff argues that the trial court erred in denying his
application to sell the property because (1) he was not required to
list the property tax lien because section 704.760, subdivision (c),
only obligates creditors to list recorded liens, (2) the trial court
should not have considered Regina’s encumbrances on the
property in its decision to deny the application, and (3) our
Legislature’s recent amendment to raise the minimum
homestead exemption to $300,000 does not apply “retroactively”
to his preamendment application (see § 704.730, as amended by
Stats 2020, ch. 94, § 1). As discussed below, our resolution of
plaintiff’s first argument obviates the need to reach his
remaining arguments. Our review of plaintiff’s first argument is
de novo because it calls upon us to interpret statutes and to apply
the law to undisputed facts. (Smith v. LoanMe, Inc. (2021) 11
Cal.5th 183, 190 [statutory interpretation]; Boling v. Public
Employment Relations Bd. (2018) 5 Cal.5th 898, 912 [application
of law to undisputed facts].)
I.     Pertinent Law
       A.     Regarding the enforcement of money judgments
       California’s Enforcement of Judgments Law (the Law) (§
680.010 et seq.) is a “‘comprehensive and precisely detailed
scheme’ governing enforcement of money judgments” in

4     William also had filed a motion to set aside the default
entered against him. The court denied that motion in the same
order, and William has not cross-appealed that ruling.

                                 5
California. (Kono v. Meeker (2011) 196 Cal.App.4th 81, 86.) “As a
general rule, the Law authorizes a creditor holding a ‘money
judgment’ to ‘enforce’ that judgment against ‘all property of the
judgment debtor . . . .’” (O’Brien v. AMBS Diagnostics, LLC
(2016) 246 Cal.App.4th 942, 947, quoting §§ 695.010, subd. (a),
669.710.)
      When it comes to enforcing a money judgment against the
real property that a debtor uses as his “dwelling” (that is, the
“place where [he] resides” (§ 704.710, subd. (a))), the Law
requires that the creditor adhere to the following procedure.
      First, the judgment creditor must record an abstract of
judgment with the county recorder’s office; doing so creates a
judgment lien that attaches to all of the judgment debtor’s real
property in that county “in excess of the statutory homestead
exemption and all liens and encumbrances in existence when the
abstract of judgment is recorded.” (§§ 697.310, subd. (a), 697.340,
subd. (a), 697.060, subd. (a), 704.950, subd. (c); Stoffel v. Dutton
(1985) 175 Cal.App.3d 1185, 1188; Wells Fargo Financial
Leasing, Inc. v. D & M Cabinets (2009) 177 Cal.App.4th 59, 69.)
      Second, the creditor must apply for and obtain a writ of
execution from the clerk of the trial court; the writ of execution
directs the sheriff or other levying officer to enforce the judgment.
(§§ 699.510, subd. (a), 699.520; Kahn v. Berman (1988) 198
Cal.App.3d 1499, 1508 (Kahn).)
      Third, the creditor provides instructions and a notice of
levy to the sheriff or other levying officer to execute the writ by
levying upon the judgment debtor’s interest in his dwelling.
(§§ 699.530, subd. (a), 699.540, 700.010.) The sheriff or other
levying officer achieves this by recording the writ of execution
and notice of levy with the county recorder’s office (§ 700.015,

                                 6
subd. (a)) and serving copies of these documents on the debtor
(§ 700.010).
       Fourth, the creditor must apply for a court order
specifically authorizing the sheriff or other levying officer to sell
the dwelling. (§§ 704.750, subd. (a), 704.760; Amin v. Khazindar
(2003) 112 Cal.App.4th 582, 589 (Amin).) The application must
be “made under oath,” and in addition to “describ[ing] the
dwelling,” must specify: (1) “whether or not the records of the
county tax assessor indicate that there is a current homeowner’s
exemption or disabled veteran’s exemption for the dwelling,” (2)
“whether the dwelling is a homestead and the amount of the
homestead exemption [which reserves a statutorily specified
amount of equity in a dwelling to the debtor],” and (3) whether
the judgment “is based on a consumer debt.” (§ 704.760, subds.
(a), (b), (d).) Most pertinent here, the application must also
specify:
       “the amount of any liens or encumbrances on the
       dwelling, the name of each person having a lien or
       encumbrance on the dwelling, and the address of
       such person used by the county recorder for the
       return of the instrument creating such person’s lien
       or encumbrance after recording.”
(Id., subd. (c).)
       Fifth, the trial court reviewing the application must
determine whether the fair market value of the judgment
debtor’s interest in the dwelling is “likely to produce a bid [at the
sale] sufficient to satisfy” (1) the amount of the homestead
exemption, which was $100,000 at the time plaintiff filed his
application in this case and is now a minimum of $300,000
(§ 704.730, subd. (a)), and (2) the amount of “all liens and

                                  7
encumbrances” “senior to the [judgment] lien being executed.”
(§ 704.780, subd. (b); Rourke v. Troy (1993) 17 Cal.App.4th 880,
883-884 (Rourke); Amin, supra, 112 Cal.App.4th at p. 589.) If the
proposed sale is unlikely to yield a bid high enough to cover the
homestead exemption plus any preexisting liens and
encumbrances, leaving no money left over for paying off even a
part of the judgment creditor’s lien, the application should be
denied. (Kahn, supra, 198 Cal.App.3d at p. 1508.) But if the
court determines that a bid for the judgment debtor’s interest
will likely exceed the homestead exemption plus all pre-existing
liens and encumbrances, such that there is some amount
available to satisfy even a “part” of the judgment creditor’s lien,
then the court must grant the application for sale. (§ 740.780,
subd. (b); Rourke, at pp. 884-885.)
       Sixth, the court monitors the bidding. If there is no bid
that “exceeds the amount of the homestead exemption plus any
additional amount necessary to satisfy all liens and
encumbrances on the property,” the sale will not go forward.
(§ 704.800, subd. (a).) And even if the bid does exceed that
threshold amount, if the bid is less than 90 percent of the fair
market value of the judgment debtor’s interest as determined at
the time the application was signed, the judgment creditor must
get the court’s permission to either accept that bid or hold a new
sale. (Id., subd. (b).)
       Seventh and finally, if the sales goes through, the proceeds
from the sale of the dwelling are distributed in the following
order: (1) to the holders of all preexisting liens and
encumbrances, (2) to the judgment debtor in the amount of the
homestead exemption, (3) to the levying officer for any unpaid

                                 8
costs, (4) to the judgment creditor, and (5) to the judgment debtor
if there is any money left over. (§ 704.850.)
       This very detailed procedure was designed to give judgment
creditors a viable mechanism to collect on an unpaid judgment
lien while also ensuring that “senior liens and encumbrances
would be paid”; that “the homeowners,” by virtue of the
homestead exemption, “will not suffer from additional
consequences of their economic misfortune”; and that the
purchasers at the sale “will own the property free and clear of all
liens and encumbrances.” (Rourke, supra, 17 Cal.App.4th at p.
885; Little v. Community Bank (1991) 234 Cal.App.3d 355, 360
(Little).)
       B.     Regarding real property taxes
       When the county assesses a tax against a property, the
imposition of the tax “is a lien against the property assessed.”
(Rev. & Tax. Code, § 2187.) The lien attaches by operation of law.
(Long Beach v. Aistrup (1958) 164 Cal.App.2d 41, 51 (Aistrup);
Garcia v. County of Santa Clara (1978) 87 Cal.App.3d 319, 324
[“A tax on real property becomes a lien against that property”])
What is more, that “lien constitutes an encumbrance on the title
to the land” (Aistrup, at p. 52; Civ. Code, § 1114), and does so
without any prior recording in the county recorder’s office.
Although the tax collector must wait at least five years before
selling a residential property to collect on a tax lien (Rev. & Tax.
Code, § 3691, subd. (a)(1)(A)), this “later fixation of the amount of
taxes by levy and assessment is but a step in the enforcement of
an already established lien.” (Aistrup, at p. 51, italics added.)
II.    Analysis
       This case presents the question: Does an unrecorded
property tax lien fall within the definition of “any lien[] or

                                 9
encumbrance[] on [a] dwelling” that must be set forth in a
judgment creditor’s application to sell the dwelling under section
704.760? We conclude that the answer is “yes,” and do so for two
reasons.
       First and foremost, the plain text of section 704.760
dictates this result. That statute requires the judgment creditor
to set forth “the amount of any liens or encumbrances on the
dwelling.” (§ 704.760, subd (c), italics added.) As our Supreme
Court has noted time and again, “‘any’ means ‘any.’” (People v.
Turner (1990) 50 Cal.3d 668, 704, quoting People v. Castro (1985)
38 Cal.3d 301, 310; People v. Prather (1990) 50 Cal.3d 428, 434.)
Because it is undisputed that a property tax lien is both a lien
and an encumbrance by operation of law and without the
requirement of recording that lien or encumbrance in the county
recorder’s office, an unrecorded property tax lien is a “lien or
encumbrance on the dwelling” that must be disclosed in the
creditor’s application. The plain text of the statute is
unambiguous and therefore “controls.” (Poole v. Orange County
Fire Authority (2015) 61 Cal.4th 1378, 1384-1385 (Poole).)
       Second, reading section 704.760 to require that unrecorded
real property liens be disclosed in an application to sell a
dwelling is also consistent with the purpose of that statute.
(Poole, supra, 61 Cal.4th at pp. 1384-1385 [“‘[O]ur task is to select
the construction that comports most closely with the
Legislature’s apparent intent, with a view to promoting rather
than defeating the statutes’ general purpose . . .’”].) As noted
above, a key purpose of the judgment enforcement procedures
section 704.760 operates within is to ensure that “senior liens
and encumbrances would be paid” and that the purchasers at the
sale “will own the property free and clear of all liens and

                                 10
encumbrances.” (Rourke, supra, 17 Cal.App.4th at p. 885; Little,
supra, 234 Cal.App.3d at p. 360.) Allowing a judgment creditor to
omit property tax liens from the application would cause trial
courts, by virtue of a lack of information, to authorize sales of
dwellings where there is insufficient equity to cover those liens—
leading to one of two possible outcomes: (1) the sale would
extinguish the real property lien without payment to the taxing
authority (thereby leaving that senior lien unpaid), or (2) the sale
would not extinguish the real property lien and the purchaser
would be saddled with that lien (thereby leaving the purchaser
with title that is not free and clear of all encumbrances). Either
result is at odds with the legislative purpose of section 704.760.
Plaintiff urges that the priority of tax liens would ensure that
such liens would not go unpaid, but this would still saddle the
purchaser with those liens; what is more, a rule allowing
creditors to ignore tax liens in applying to enforce a judgment
against a dwelling would permit a trial court to authorize a sale
of a dwelling even when, had the liens been accounted for, there
may be no leftover equity for the judgment creditor to acquire
after the sale.
       Plaintiff responds with two further arguments—one legal,
and one factual.
       In his legal argument, plaintiff asserts that the plain
language of section 704.760, subdivision (c) requires a judgment
creditor’s disclosure of only those liens and encumbrances that
must be recorded. Pointing to the second and third clauses of
that subdivision, which requires the judgment creditor to disclose
“the name” and “the address of such person used by the country
recorder for the return of the instrument creating such person’s
lien or encumbrance after recording,” plaintiff urges that the

                                11
entire subdivision only applies to recorded liens and
encumbrances. We disagree. The first clause of the subdivision
is crystal clear in its requirement that the judgment creditor
disclose “any liens or encumbrances on the dwelling.” Critically,
it does not limit itself to “any recorded liens or encumbrances on
the dwelling,” and we decline to read the second or third clauses
as implicitly doing so. Instead, those clauses merely require that
name and address information be disclosed as to those liens and
encumbrances that happen to be recorded, information that
would seem to be wholly unnecessary when the lien is imposed by
a public entity with an easily ascertainable name and address, as
in the case of a property tax lien. And even if there were some
textual ambiguity in the statute, because plaintiff’s
interpretation would undermine the purpose of the procedures of
which section 704.760 is a part, “[a]s between the construction of
[a statute] that furthers its purpose and . . . one that undermines
it, we must go with the former.” (Rutgard v. City of Los Angeles
(2020) 52 Cal.App.5th 815, 827; Pineda v. Bank of America, N.A.
(2010) 50 Cal.4th 1389, 1397.) Plaintiff notes that the full
amount of the property tax lien (due to ever-accruing interest and
penalties) may not be known until that lien is recorded in
anticipation of sale, but the same is true of all judgment liens (at
least as to the accrual of interest) and this assertion is in any
event contradicted by the preliminary title report plaintiff filed
with his application which disclosed the current amount of the
unpaid tax balance, indicating that this amount is knowable.
       In his factual argument, plaintiff contends that his
application did disclose the tax lien because it was mentioned in
the preliminary title report accompanying plaintiff’s application
for an order to sell the property. This is insufficient. Section

                                12
704.760 requires the judgment creditor to state, “under oath,” the
“liens or encumbrances on the dwelling” (§ 704.760, subd. (c)), not
merely to include the liens or encumbrances somewhere in its
application packet for the court to find on its own. Accepting
plaintiff’s contention would also lead to mischief, if not outright
deception. In this very case, plaintiff’s counsel—despite the title
report disclosing the existence of the lien, as well as the appraisal
report—mispresented, under oath, that there were “no actual or
purported liens or encumbrances” on William’s “interest in the
property.” Is a trial court to ignore counsel’s sworn
representations and hunt through the application for
contradictory information? The answer has to be “no.”
                          DISPOSITION
       The order denying the application for sale is affirmed.
William is entitled to his costs on appeal.
       CERTIFIED FOR PUBLICATION.

                                      ______________________, J.
                                      HOFFSTADT

We concur:

_________________________, P. J.
LUI

_________________________, J.
CHAVEZ

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