Thursday, May 3, 2018
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Court of Appeal:
Death of Judgment Debtor Doesn’t Effect Viability of Lien
Reverses a Determination That a Lien Evaporated Upon Demise of the Debtor And Could Only Be Brought Into Existence by Filing Claim Within a Year
By a MetNews Staff Writer
A judgment lien did not perish a year after the judgment debtor’s death, Div. Six of this district’s Court of Appeal declared yesterday, reversing a contrary determination by a trial court.
Presiding Justice Arthur Gilbert wrote:
“A cause of action survives one year after the death of a debtor. But not a judgment lien. Judgment liens have longevity.”
They are enforceable for a 10-year period from entry of judgment, he noted.
CCP §366.2(a)
At issue was an interpretation of Code of Civil Procedure §366.2(a) which provides:
“If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply.”
Ventura Superior Court Judge Henry J. Walsh held that defendant Janice M. McClanahan, who in 2008 won a $12 million judgment against Harry Mansdorf, no longer has a judgment lien against an oceanside parcel in Ventura County near Malibu. He found that under §366.2, her lien was extinguished when Mansdorf died Aug. 27, 2012, and could only have been revived if she had filed a claim within one year.
Walsh awarded judgment to plaintiff County Line Holdings, LLC in its action to quiet title to the property. It had purchased a $2 million judgment lien in 2013 at a sheriff’s sale.
Section Doesn’t Apply
Gilbert said in yesterday’s opinion that Walsh erred in applying §366.2, setting forth:
“Section 366.2, subdivision (a), by its terms, limits the time for bringing a ‘cause of action.’ Execution on a judgment lien is not a cause of action….Issues relating to a primary right had long passed away, allowing for the birth of a judgment lien with a long life. Section 366.2 does not apply.”
He added:
“County Line’s argument that section 366.2 applies to execution on a judgment lien leads to an absurd result. A plaintiff who had not brought an action prior to a defendant’s death would have one year to both file an action and execute on the ensuing judgment lien, an impossibility in most cases.”
CCP §686.020
The jurist went on to say that Code of Civil Procedure §686.020 is not of assistance to County Line. That section says that “enforcement of a judgment against property in the judgment debtor’s estate is governed by the Probate Code,” not the CCP’s “Enforcement of Judgments Law.”
He pointed out:
“Section 686.020 refers to enforcement of a judgment against ‘property in the judgment debtor’s estate.’ Here the Malibu Property was subject to Mansdorf’s living trust and thus was not in the judgment debtor’s estate.”
High Court Decision
Gilbert said the California Supreme Court’s 1937 decision in Corporation of America v. Marks “is instructive,” teaching that “[j]udgment liens survive.”
He recited that the high court said in that opinion that when the judgment debtor dies, it is no longer permissible to levy execution on property of the decedent, adding, however:
“But the death of the debtor does not terminate the judgment lien.”
Under that opinion, Gilbert said, even if the judgment creditor does not seek enforcement of the lien prior to distribution, any party receiving property takes it subject to the lien.
Both Country Line and Walsh relied on the Court of Appeal’s 2004 decision in Embree v. Embree. Gilbert said the case dealt with an ex-wide of the decedent whose effort to enforce an oral promise was barred because a claim was not made within one year.
The case did not involve an action on a judgment, and only discussed judgments in dicta, Gilbert said.
Degrees
Differentiating between levels of dicta, he wrote:
“…Embree’s discussion of judgment liens is not only dicta, it is the lowest form of dicta: footnote dicta. The court’s statement that any judgment lien is effectively extinguished once the judgment debtor died is directly contradicted by our Supreme Court in Corporation of America v. Marks….”
Attorneys representing the prevailing party were Thomas P. Cacciatore; Douglas G. Benedon and Gerald M. Serlin of Benedon & Serlin, LLP; and Timothy B. Sottile of Sottile Baltaxe. John Antoni and Kevin Tredway of Antoni Albus, LLP, acted for County Line.
Cacciatore Comments
Cacciatore, a Pasadena attorney, commented:
“We are just gratified that the court recognized the case of Corporation of America v Marks which controls the facts of this case.”
He remarked that “while we appreciated the opportunity to be in judge Walsh’s court in Ventura,” he perceived that “Judge Walsh was sidetracked by the vigorous advocacy of our opposing counsel, John Antoni,” adding:
“They simply had the wrong end of the case, but did the best they could with bad facts. ‘A judgment lien has always been regarded as the highest form of security.’ That is the law and always has been the law. All of the arguments by County Line to the contrary cannot change that fundamental principle.”
Antoni and Tredway were not available for comment.
The case is County Line Holdings, LLC v. McClanahan, B278790.
The lien that County Line purchased at a sheriff’s sale was created in January 2012 in favor of John Torjisen, Mansdorf’s former attorney. In 2016, Div. Four of this district’s Court of Appeal held that the Los Angeles Superior Court erred in invalidating a third party’s claim but that it correctly denied a tardy motion to vacate the order.
Copyright 2018, Metropolitan News Company