Creditor’s Action Was Not Truly Independent Suit, But Continuation Of Postjudgment Enforcement Efforts Obstructed By Third Party Holding Judgment Debtor Funds.
Inequitable circumstances often dictate results in appellate cases, although the decision in ABC Money Transactions, Inc., Case No. G048363 (4th Dist., Div. 3 April 10, 2015) (unpublished) was hardly a stretch under the governing law.
There, attorney third party held some settlement proceeds of a judgment debtor in his trust account. After judgment creditor was allowed to levy on that account, attorney appealed the postjudgment levy order, which was eventually affirmed in an earlier appeal. However, before the prior affirmance came down, judgment creditor filed a creditor’s suit against attorney to obtain payment of the trust-held funds to judgment creditor. Following a bench trial, the lower court ordered the requested relief and also awarded attorney’s fees pursuant to Code of Civil Procedure section 701.020(c).
The appellate court affirmed in a 3-0 decision authored by Justice Fybel.
Under section 701.020(c), a third party in a trial judge’s discretion can be ordered to pay costs and reasonable attorney’s fees to a judgment creditor in establishing liability for failure to deliver property to a levying officer. In this case, attorney filed a notice of appeal from the prior levy order such that judgment creditor was faced with a difficult decision to wait until the appeal was resolved or file a creditor’s suit to preserve the trust funds before they were dissipated. The legal issue coalesced into a consideration of whether this was a true independent creditor’s suit (no fees allowed, per Ilshin Investment Co., Ltd. v. Buena Vista Home Entertainment, Inc., 195 Cal.App.4th 612, 629 (2011)) or a mere continuation of the earlier action in which a levy order was being pursued (fees allowed, per section 701.020(c)). In this one, fees were allowable, especially where the third party’s conduct along the way showed evinced a inferable strategy to prevent the release of funds to judgment creditor. Affirmed.