McCoy Electric Corporation vs Annette Rubin et al

Case Number

16CV03591

Case Type

Hearing Date / Time

Mon, 08/19/2024 - 10:00

Nature of Proceedings

(3) Motions; (6) Debtor's Examinations

Tentative Ruling

McCoy Electric v. Anette Rubin and Stuart Rubin  

Case No. 16CV03591        

Hearing Date: August 19, 2024                                              

HEARING:              1. Cross-Defendant The Las Canoas Co. dba Construction Plumbing’s Two Motions for Orders to Charge Judgment Debtors’ Interests in Partnerships and Limited Liability Companies

                                    2. Cross-Defendant The Las Canoas Co. dba Construction Plumbing’s Motion for Post-Judgment Attorneys’ Fees

                                     

ATTORNEYS:        For Plaintiff McCoy Electric.: Daniel E. Engel

                                    For Defendants Annette Rubin and A. Stuart Rubin: Patrick C. McGarrigle, Bernie Kornberg

                                    For Cross Defendant/Cross Complainant The Los Canoas Co.      dba Construction Plumbing: Daniel E. Engel

                                    For Intervening Party U.S. Real Estate Credit Holdings III-A,                                                LP: Marsha A. Houston, Christopher O. Rivas

                                    [For additional appearances see list.]

                                   

TENTATIVE RULING:

1. Cross-Defendant The Las Canoas Co. dba Construction Plumbing’s two motions for order to charge judgment debtors’ interests in partnerships and limited liability companies is granted.
   1. The Las Canoas Co. dba Construction Plumbing shall prepare formal Orders containing the language set forth in the below analysis.
2. Cross-Defendant The Las Canoas Co. dba Construction Plumbing’s Motion for post-judgment attorneys’ fees is granted in the amount of $68,935.00, in favor of The Los Canoas Co. dba Construction Plumbing and against Annette Rubin and A. Stuart Rubin, jointly and severally.

Background:

This action arises out of a remodeling project at residential property located at 4347 Marina Drive, Santa Barbara, California 93110. The Property was owned by defendants and cross-complainants Annette Rubin and A. Stuart Rubin (“Rubins”).

Plaintiff and cross-defendant McCoy Electric Corporation, an electrical contractor, commenced the action on August 15, 2016, claiming that it was still owed sums for labor and materials furnished at the Property. In response, the Rubins cross-complained against McCoy Electric and its principal, Richard McCoy, for breach of contract, negligent construction, overcharging, conversion of materials, and accounting. The Rubins cross-complained against The Las Canoas Co. dba Construction Plumbing (“CP”), as well as several other parties, on September 19, 2019, asserting causes of action for negligence, products liability, and breach of contract.

CP filed an answer to the Rubin’s cross-complaint on October 25, 2019, asserting a general denial and several affirmative defenses. On October 25, 2019, CP also cross-complained against the Rubins, alleging a claim for breach of written settlement agreement.

The Rubins dismissed their cross-complaint against CP on March 11, 2022.

CP moved for contractual attorneys’ fees for defending the tort cause of action that was brought by the Rubins. On November 14, 2022, the motion was granted in the amount of $574,799.75.

In its efforts to collect on the judgment, on May 20, 2024, CP filed a motion to charge the Rubins interests in 18 partnerships and limited liability companies, and for post-judgment attorney fees. On July 8, 2024, CP filed a second motion to charge the Rubins’ interests in partnerships and limited liability companies, adding 51 additional entities.

The Rubins did not file an opposition to the first motions, but they filed an opposition to the second.

Analysis:

            Motions for Order to Charge Judgment Debtors’ Interests in Partnerships and Limited Liability Companies:

“If a money judgment is rendered against a partner or member but not against the partnership or limited liability company, the judgment debtor’s interest in the partnership or limited liability company may be applied toward the satisfaction of the judgment by an order charging the judgment debtor’s interest pursuant to Section 15907.03, 16504, or 17705.03 of the Corporations Code.” (Code Civ. Proc., § 708.310.)

Despite the Rubins’ declarations and argument to the contrary, CP has established, by admissible evidence, that the Rubins hold interests, either directly or indirectly, in all of the limited liability companies and limited partnerships listed in the two motions. Charging orders are appropriate in order for CP to attempt collection on its judgment against the Rubins.

Intervening party, U.S. Real Estate Credit Holdings III-A, L.P. (“USRECH”), filed limited objections to CP’s motions. With respect to the objections to the first motion, USRECH argues that CP’s motion should be denied to the extent that it impairs USRECH’s collections on a prior lien. In the second objection, USRECH appears to abandon that position and, instead, takes issue with CP’s arguments regarding the validity, extent, and enforceability of USRECH’s liens associated with a Riverside County case. The court also notes that USRECH filed a complaint in intervention on July 18, 2024, against CP and McCoy Electric Corporation, seeking declaratory relief regarding this court not adjudicating the extent, validity, or priority of USRECH’s liens. In response, on August 8, 2024, CP and McCoy Electric Corporation filed a cross-complaint against USRECH challenging the validity and priority of any claimed lien of USRECH to the Rubins’ property or interests. There has been no ruling relative to the complaint in intervention or the cross-complaint.

“ ‘Other things being equal, different liens upon the same property have priority according to the time of their creation . . ..’ ” (Civ. Code, § 2897.) Numerous statutes apply this general first-in-time principle to specific types of liens or security interests. For example, California Uniform Commercial Code section 9322 governs priorities between competing security interests, ranking them “ ‘according to priority in time of filing or perfection.’ ” (Cal. U. Com. Code, § 9322, subd. (a)(1).) Similarly, Code of Civil Procedure section 697.590 governs priorities between judgment liens on personal property and security interests in the same property, ranking those interests “ ‘according to priority in time of filing or perfection.’ ” (§ 697.590, subd. (b).)” (Rice v. Downs (2021) 73 Cal.App.5th 213, 230.)

“We have not found, nor have the parties identified, a statute specifically addressing the priority of charging orders in relation to other liens and security interests.” (Ibid.)

“In the absence of a statute specifically addressing the priority of charging orders, we rely on the general first-in-time rule stated in Civil Code section 2897. (See Bluxome Street Associates v. Fireman’s Fund Ins. Co. (1988) 206 Cal.App.3d 1149, 1158; cf. Ahart, Cal. Practice Guide: Enforcing Judgments and Debts (The Rutter Group 2021) ¶ 6:1472.1 [citing Civ. Code, § 2897 in support of proposition that “ ‘Where judgment creditors have obtained charging order liens on the same interests, priority should be given to the first creditor that obtained a lien’ ”].)” (Ibid.)

By way of evidence submitted in support of its objections, USRECH obtained and perfected its liens approximately two years ago. Without making a formal finding of such, USRECH appears to have priority as to the entities they have served liens upon. As noted above USRECH has filed a complaint in intervention regarding their claim of priority. However, that dispute has not yet been decided, and the court cannot rely on speculative outcomes of future litigation in ruling on the present motions.

As such, the motions will be granted, but CP will be instructed to prepare orders, for each of the entities identified in its motions, that utilizes the following language:

“The motion of The Las Canoas Co. dba Construction Plumbing came regularly for hearing on August 19, 2024, before Hon. Colleen K. Sterne, in Department 5 of the above-entitled court, with appearances by counsel as follows: [list the names of the persons who appeared at the hearing and, as applicable, who they represented]. The court having considered the documents filed in connection with the motion and heard the argument of counsel, and good cause appearing:

IT IS ORDERED:

1. That the interest of Annette Rubin or A. Stuart Rubin in the [partnership or LLC] known as [Name of partnership or LLC], whose address is [address of partnership or LLC] [is/are] hereby charged with the unpaid balance of the judgment entered in favor of The Las Canoas Co. dba Construction Plumbing and against Annette Rubin and A. Stuart Rubin, jointly and severally, on November 28, 2022, in the sum of $577,424.75 plus interest thereon at the rate of 10 percent per annum from November 28, 2022.

2. That [Name of partnership or LLC and its members or general partners] shall pay any money or property due or to become due to Annette Rubin or A. Stuart Rubin directly to The Las Canoas Co. dba Construction Plumbing until the amount remaining due on the judgment, plus all accrued interest, is paid in full.

3. Absent further Order of this court or another court of competent jurisdiction: That should U.S. Real Estate Credit Holdings III-A, LP hold a senior-priority lien, pursuant to writs of attachment or other lien, [Name of partnership or LLC] shall honor and fully satisfy the lien of U.S. Real Estate Credit Holdings III-A, LP prior to paying any money or property due, pursuant to this order, to The Las Canoas Co. dba Construction Plumbing.”

      Post-Judgment Attorney Fees:

CP seeks post-judgment attorney fees in the amount of $68,935.00. The motion is supported by the declaration of Daniel E. Engel and unredacted billing statements.

Code of Civil Procedure section 685.040 provides: “The judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment. Attorney’s fees incurred in enforcing a judgment are not included in costs collectible under this title unless otherwise provided by law. Attorney’s fees incurred in enforcing a judgment are included as costs collectible under this title if the underlying judgment includes an award of attorney’s fees to the judgment creditor pursuant to subparagraph (A) of paragraph (10) of subdivision (a) of Section 1033.5.”

“[Code of Civil Procedure section 685.040] imposes just “ ‘two requirements before a motion for an award of post judgment attorney fees may be awarded as costs: (1) the fees must have been incurred to ‘enforce’ a judgment; and (2) the underlying judgment had to include an award for attorney fees pursuant to Code of Civil Procedure section 1033.5, subdivision (a)(10)(A)....’ ” [Citation.]” (Cardinale v. Miller (2014) 222 Cal.App.4th 1020, 1025 (Cardinale).) “While in the usual scheme of things the target of a fee motion under section 685.040 is presumably the original judgment debtor, the Legislature did not so restrict the provision’s scope. Rather, the statute by its terms is broad enough to encompass fees expended to enforce a judgment against third parties who conspired with the judgment debtor to evade its enforcement.” (Ibid.)

“[T]he fee setting inquiry in California ordinarily begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. ‘California courts have consistently held that a computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award.’ [Citation.] The reasonable hourly rate is that prevailing in the community for similar work. [Citation.] The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided. [Citation.] Such an approach anchors the trial court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary. [Citation.].” (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.)

“[T]he verified time statements of the attorneys, as officers of the court, are entitled to credence in the absence of a clear indication the records are erroneous.” (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 396.)

“[T]rial courts must carefully review attorney documentation of hours expended” in assessing reasonable and necessary attorney fees. (Ketchum v. Moses (2001) 24 Cal.4h 1122, 1132.) “The ‘ “experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong.” ’ ” (Ibid.)

“ ‘[A] reasonable hourly rate is the product of a multiplicity of factors .... the level of skill necessary, time limitations, the amount to be obtained in the litigation, the attorney’s reputation, and the undesirability of the case.’ ” (Margolin v. Regional Planning Com. (1982) 134 Cal.App.3d 999, 1003–1004.)

“[T]he [party] ... seeking fees and costs ‘ “bear[s] the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates.” [Citation.]’” (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1320.) “‘To that end, the court may require [a] defendant[ ] to produce records sufficient to provide “‘a proper basis for determining how much time was spent on particular claims.’” [Citation.]’” (Ibid.) “The evidence should allow the court to consider whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended. [Citation.]” (Ibid.)

The court has reviewed the billing statements and finds the time expended to be reasonable in CP’s efforts to enforce their judgment. Likewise, the hourly rate is reasonable.

Post-judgment attorneys’ fees will be allowed in the amount requested.