Opinion
D068760 D069619
01-23-2017
BRADY COMPANY/SAN DIEGO, INC., et al., Plaintiffs and Respondents, v. NATIONAL FINANCIAL LENDING, LLC, et al., Defendants and Appellants, RICHARD M. KIPPERMAN, Claimant and Respondent. BRADY COMPANY/SAN DIEGO, INC., Plaintiff and Respondent, v. NATIONAL FINANCIAL LENDING, LLC, Defendant and Appellant.
Danning, Gill, Diamond & Kollitz and George E. Schulman for Defendant and Appellant. Niddrie, Addams, Fuller and David A. Niddrie for Plaintiffs and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. Nos. 37-2007-00074230-CU-BC-CTL, 37-2008-00075254-CU-BC-CTL, 37-2008-00081098-CU-BC-CTL, 37-2008-00081480-CU-BC-CTL) CONSOLIDATED APPEALS from orders of the Superior Court of San Diego County, William R. Nevitt, Jr., Judge. Affirmed. Danning, Gill, Diamond & Kollitz and George E. Schulman for Defendant and Appellant. Niddrie, Addams, Fuller and David A. Niddrie for Plaintiffs and Respondents.
Brady Company/San Diego, Inc. (Brady), Dynalectric Company (Dynalectric), Brewer Corporation, and Division 8, Inc. (collectively, Judgment Creditors) brought suit against Point Center Financial, Inc. (PCF), a construction lender that failed to meet its commitment on a condominium project in San Diego. The Judgment Creditors obtained a $2.8 million judgment against PCF. In an attempt to enforce the judgment, Brady and Dynalectric (collectively, Respondents) served a notice of levy on National Financial Lending, LLC (NFL), a third-party controlled by PFC. After NFL transferred funds to PCF in violation of the levy, the Respondents brought a motion under Code of Civil Procedure section 701.020 to impose liability on NFL. The trial court issued an order granting the Respondents' motion and an order awarding Respondents attorneys' fees and costs, which NFL appealed.
Undesignated statutory references are to the Code of Civil Procedure.
After NFL filed its notices of appeal, Richard K. Diamond was appointed as receiver for NFL in a separate civil action in Orange County Superior Court titled Jeffrey Gomberg, et al. v. National Financial Lending, LLC, et al., case No. 30-2015-00796029. On behalf of NFL, for the first time on appeal Diamond asserts that interests of fairness should preclude NFL's investors from bearing the liability ordered by the trial court. Diamond also restates arguments made by NFL in opposition to Brady and Dynalectric's motion, that NFL was not properly served with the notice of levy and that NFL had good cause under section 701.010 for its failure to comply with the levy. We reject these arguments and affirm the trial court's orders.
Respondent's request for judicial notice of the order appointing Diamond is granted.
FACTUAL AND PROCEDURAL BACKGROUND
Some relevant background is taken from this court's earlier opinion in this case disposing of a petition for writ of mandate filed by NFL challenging the trial judge's denial of its peremptory challenge under section 170.6: National Financial Lending, LLC v. Superior Court (2013) 222 Cal.App.4th 262 (National Financial).
This case arises from the development of a condominium project, Mi Arbolito, near the north end of Balboa Park in San Diego, California. (National Financial Lending, LLC v. Superior Court, supra, 222 Cal.App.4th at p. 268.) The Judgment Creditors are contractors who provided material and work on the project but were not paid in full. (Ibid.) As a result, the Judgment Creditors sued both the developer, Mi Arbolito, LLC, and the construction lender, PCF. Mi Arbolito, LLC filed for bankruptcy, but the contractors pursued their claims against PCF and obtained a nearly $2.8 million judgment. (Ibid.) At the time of the judgment, PCF was wholly owned and controlled by Dan J. Harkey.
After the entry of judgment, PCF appealed but did not stay the execution of judgment by posting an undertaking. After attempting to negotiate an informal resolution of the judgment with PCF, the Judgment Creditors commenced collection proceedings. They obtained numerous orders for and conducted debtors' examinations on various PCF representatives, including Harkey. In addition, the Judgment Creditors levied on various third-party entities controlled by PCF, including NFL. The notice of levy on NFL was served on April 26, 2012. Under the relevant Code of Civil Procedure provisions, NFL was required to respond to those levies by (1) turning over the monies owed to PCF to the Orange County Sheriff or (2) submitting a memorandum of garnishee within 10 days. (§§ 701.010, 701.030.) NFL, however, failed to respond.
The notice was personally served on a person identified by the process server as "Jane Doe/Person in Charge" at the offices shared by PCF and NFL. The proof of service stated that "Jane Doe" also "refused to give [her] name."
After the notice of levy was served on NFL, the Judgment Creditors discovered NFL transferred $2.8 million to PCF in the form of management fees in violation of the levy. (National Financial, supra, 22 Cal.App.4th at p. 268.) As a result, the Judgment Creditors sought and obtained an order appointing a postjudgment limited receiver for PCF. (Id. at pp. 268-269.) The receiver, however, "had difficulty obtaining PCF records he believed he needed in order to fulfill his receivership obligations" and brought a "motion to clarify his duties and authority." (Id. at p. 269.) While that motion was pending, PCF filed a petition for bankruptcy in the United States Bankruptcy Court, Central District of California. The Judgment Creditors obtained relief from the automatic bankruptcy stay to pursue litigation against third-party entities controlled by PCF, including NFL, for levy violations. (Ibid.)
Thereafter, on June 17, 2013, the Judgment Creditors brought a motion under section 701.020 to impose liability on NFL for violation of the notice of levy served on April 26, 2012. NFL responded by moving to quash the notices of levy, asserting the service was not valid. (National Financial, supra, 222 Cal.App.4th at p. 269.) NFL also filed a peremptory challenge to the trial judge under section 170.6. (Ibid.) The trial judge denied the challenge and NFL sought review of that order in this court by petition for writ of mandate, which was denied. (Id. at p. 262.) After this court issued its opinion in December 2013 denying NFL's petition, the trial court denied NFL's motion to quash.
NFL then filed an opposition to the Judgment Creditors' motion to impose liability under section 701.020, again asserting that it had not been properly served with the notice of levy as required by section 684.110, subdivision (a)(1) and that, even if service was effective, it had good cause under section 701.020, subdivision (a) to avoid compliance with the levy. On May 30, 2014, the trial court granted the motion to impose liability on NFL with respect to Brady. The court concluded that service was effective, that NFL had not shown good cause to avoid the levy, and ordered a further hearing to establish the amount due, including attorneys' fees, under section 701.020. Before that hearing, the order was amended to add Dynalectric as an additional prevailing party.
The hearing to establish the amount of NFL's levy liability occurred over a year later, on July 17, 2015. The court issued an order "find[ing] that NFL transferred in excess of $4,000,000.00 in violation of the [c]reditors' levies" and ordered "judgment against NFL for its knowing and willful refusal to comply with a levy without good cause" in favor of Brady in the amount of $1,343,239.82 and in favor of Dynalectric in the amount of $1,094,504.86. The final levy order set forth specific liability amounts for "judgment," interest, attorneys' fees, and costs. The order also stated the court retained jurisdiction to award additional attorneys' fees and costs. On August 14, 2015, NFL filed a notice of appeal from the July 17, 2015 order.
After the July 17, 2015 order was issued, the trial court issued additional orders from which NFL filed subsequent notices of appeal. NFL, however, did not include all of these orders in its appendix and does not address any of them it its briefing. On August 14, 2015, the trial court amended its earlier order appointing a receiver for PCF by expanding the receiver's authority and ordering NFL and other related entities controlled by Harkey to cooperate with the receiver. NFL filed a notice of appeal in case number D068760 identifying that August 14, 2015 order. On October 2, 2015, the trial court granted the Brady and Dynalectric creditors' motion for costs and attorneys' fees incurred by the receiver. NFL filed a notice of appeal of that order, also in case number D068760, on October 19, 2015.
The trial court also issued an order on July 24, 2015, which is the subject of a third notice of appeal filed by NFL in case number D068760, stating that other, specified limited liability companies "shall pay any and all monies or property now due, or to become due in the future, to [NFL] directly to the . . . Judgment Creditors . . . until the amount remaining due to Judgment Creditors, plus all accrued interest and allowable costs thereon, is paid in full." NFL does not address this order in its briefing and it was not included in NFL's appendix. Similarly, NFL also filed two subsequent notices of appeal in case number D068760 identifying the trial court's September 18, 2015 order "charging the member interests of [NFL]" in specified limited liability companies with liability and interest, but did not include that order in its appendix or address the order in its briefing.
On September 4, 2015, the trial court entered a separate order imposing liability on NFL in favor of Division 8, Inc. and Brewer Corporation. NFL filed a notice of appeal identifying this order on November 19, 2015, which this court dismissed as untimely. On October 16, 2015, the trial court entered an order again expanding PCF's receiver's authority to allow him to seize deposit and investment accounts in NFL's name, to obtain statements from the limited liability companies identified in its earlier orders, to hold and retain funds obtained by virtue of the order, and to report to the Judgment Creditors. NFL filed its eighth notice of appeal in case number D068670 from the October 16, 2015 order, but did not include the order in its appendix or address that order it in its briefing.
After the Judgment Creditors discovered a clerical error in the amount presented to the court, on December 1, 2015, the July 17, 2015 order was amended to state that the judgment balance due to Brady was $1,703,274.02. On December 24, 2015, NFL filed its notice of appeal from that amended order.
DISCUSSION
I
As an initial matter, Respondents assert this court should dismiss NFL's appeals from orders that were entered before the December 1, 2015 order. They contend that because these orders did not resolve issues raised by the postjudgment proceedings, the orders were not final and, therefore, not appealable. Respondents also assert that NFL's failure to address the appealability of the orders is itself grounds for dismissal of the appeals from those nonfinal orders.
NFL does not address the majority of the trial court's orders that the Respondents contend should be dismissed. Instead, it focuses only on the trial court's May 30, 2014 order granting the Brady creditors motion to impose liability on NFL, the subsequent order entered on July 17, 2015 establishing the amount of levy liability due to Brady and Dynalectric, and the December 1, 2015 order amending the amount of liability imposed on NFL in favor of Brady. We disagree with the Respondents' assertion that the July 17, 2015 order was not a final, postjudgment order. That order does not contemplate further proceedings and fixes the amount of liability. As such, it is an appealable final order, and the May 30, 2014 order imposing liability on NFL is reviewable on appeal from that order. (§ 904.1, subd. (a)(2); see Housing Group v. United Nat. Ins. Co. (2001) 90 Cal.App.4th 1106, 1110, fn. 3 ["An order regarding enforcement of a judgment is immediately appealable."].) In addition, because the December 1, 2015 order amended the order establishing the amount of NFL's levy liability to Brady to correct a clerical error, NFL's appeal was properly taken from the July 17, 2015 order. (See Stone v. Regents of University of California (1999) 77 Cal.App.4th 736, 743-744 ["Changes which correct errors, mistakes and omissions made through inadvertence, but do not involve the exercise of the judicial function, are considered corrections of clerical errors that leave the original judgment intact."].)
As set forth in the background section, NFL filed a total of nine notices of appeal. The first eight notices were assigned to case number D068760. The ninth notice of appeal, which identified the December 1, 2015 amended order, was assigned case number D069619. Because of the timing of briefing, we rejected the parties' stipulation to consolidate the two cases and instead ordered the cases considered together. Thereafter, on our own motion, we consolidated the cases for purposes of opinion.
With respect to the additional orders that NFL appealed, because those orders are not the subject of NFL's appellate contentions, we need not reach them. (See Behr v. Redmond (2011) 193 Cal.App.4th 517, 538 [failure to brief "issue constitutes a waiver or abandonment of the issue on appeal."].) Any appellate contentions related to those orders not raised by NFL are deemed abandoned.
II
In its opening briefs, NFL first summarizes the arguments it asserted in the trial court in opposition to the Respondents' motion to impose liability under section 701.020. NFL states that it argued to the trial court that it should not face lability because "(1) service of the levy was not proper; (2) it had 'good cause' to fail to respond; and (3) NFL, LLC's transfer of funds did not involve property of PCF." NFL, however, does not state that the trial court erred in rejecting these arguments or that reversal on any of these grounds is appropriate. Rather, NFL contends only that it should not be held liable because "equity cannot permit NFL, LLC to be held liable for the improper acts of its former manager Dan Harkey."
Brady and Dynalectric respond that this court need not address the arguments made by NFL in the trial court. They assert that because NFL has not affirmatively advanced those arguments on appeal, the arguments are forfeited. We agree. " 'Appellate briefs must provide argument and legal authority for the positions taken. "When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived." ' [Citation.] 'We are not bound to develop appellants' argument for them. [Citation.] The absence of cogent legal argument or citation to authority allows this court to treat the contention as waived.' [Citations.]" (Cahill v. San Diego Gas & Elec. Co. (2011) 194 Cal.App.4th 939, 956.)
In its reply briefs, NFL does not refute the Respondents' assertion it has waived the arguments it made below. Instead, NFL states only that its opening briefs "set[] forth the actual arguments raised by NFL, LLC, prior to [Diamond's] appointment [as receiver]" and that "[t]hey are not simply 'procedural history' as the Respondents assert, but are the arguments of NFL, LLC." NFL, however, does not explain why the trial court's rejection of those arguments was error or ask this court to reverse the trial court's orders on the basis of those arguments. Because NFL has not explained what error the trial court made by granting the Brady creditors' motion to impose liability under section 710.020, we decline to reach the arguments asserted by NFL below.
Shortly after the reply brief in this case was filed, we issued an opinion in an appeal by another third-party entity controlled by PCF, Point Center Mortgage Fund I, LLC (PCMFI), that was also levied by the Judgment Creditors. In that case, PCMFI argued the trial court erred by finding the levy was properly served and that it had good cause under section 701.020 to avoid the levy. (Brewer Corporation v. Point Center Mortgage Fund I, LLC (Sept. 21, 2016, No. D068863) 2016 WL 5112056, at *1.) We rejected those arguments and affirmed the trial court's order. (Ibid.)
On our own motion, this court requested supplemental briefing from the parties on the effect of that opinion on this appeal. In their response, Brady and Dynalectric argue that under the doctrines of res judicata and collateral estoppel, the opinion precludes NFL from relitigating the issues decided therein. In its response, NFL asserts it was not a party to that appeal and, therefore, cannot be bound by the decision. Because we do not reach the legal issues decided in that related matter, we do not address the application of the doctrines of res judicata and collateral estoppel.
III
With respect to NFL's argument that its investors should be spared from the improper acts of Harkey, we agree with Brady and Dynalectric that NFL cannot advance this new legal theory on appeal. As discussed, Diamond, on behalf of NFL, asks this court to "consider the unusual circumstances that occurred, the conflict of interest of Dan Harkey and [PCF], and the impact of that conflict on NFL, LLC and its individual investors." Diamond posits that Harkey's failure "to respond to the notice of levy served on NFL, LLC, appears to have been done with the intent to saddle all of the investors of NFL, LLC with the Respondent's judgment against PCF" and that "[i]nnocent members of NFL, LLC will be harmed if the [o]rder is affirmed." NFL asks this court to remand the case to the trial court to consider this argument.
In support of this request, NFL cites to section 909 and Conservatorship of Hart (1991) 228 Cal.App.3d 1244, 1259. Section 909 provides, "In all cases where trial by jury is not a matter of right or where trial by jury has been waived, the reviewing court may make factual determinations contrary to or in addition to those made by the trial court. The factual determinations may be based on the evidence adduced before the trial court either with or without the taking of evidence by the reviewing court. The reviewing court may for the purpose of making the factual determinations or for any other purpose in the interests of justice, take additional evidence of or concerning facts occurring at any time prior to the decision of the appeal, and may give or direct the entry of any judgment or order and may make any further or other order as the case may require. This section shall be liberally construed to the end among others that, where feasible, causes may be finally disposed of by a single appeal and without further proceedings in the trial court except where in the interests of justice a new trial is required on some or all of the issues."
The circumstances in which this provision is used to allow "an appellate court [to] receive new evidence after judgment, or order the trial court to do so, are very rare. For this court to take new evidence pursuant to statute (Code Civ. Proc., § 909) . . . the evidence normally must enable the Court of Appeal to affirm the judgment, not lead to a reversal. (See 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, §§ 653-654 at pp. 633-635 and cases there cited; Estate of Schluttig (1950) 36 Cal.2d 416, 422; Kabisius v. Board of Playground, etc. (1935) 4 Cal.2d 488, 494; Tupman v. Haberkern (1929) 208 Cal. 256, 269.)" (Philippine Export & Foreign Loan Guarantee Corp. v. Chuidian (1990) 218 Cal.App.3d 1058, 1090; Bombardier Recreational Products, Inc. v. Dow Chemical Canada ULC (2013) 216 Cal.App.4th 591, 605 [" ' "Although appellate courts are authorized to make findings of fact on appeal . . . , the authority should be exercised sparingly. . . . Absent exceptional circumstances, no such findings should be made." [Citation.]' [Citations.] [Citation.] Even when exceptional circumstances exist, appellate courts still are not to exercise their authority to make factual findings except where to do so will result in the litigation's termination . . . ."].) In Conservatorship of Hart, supra, 228 Cal.App.3d 1244, the Court of Appeal held that an exception to the strict limitations on reviewing courts to consider a new piece of evidence was warranted because the specific piece of evidence in question was not in dispute and the conservatee, whose interest was effected by the new evidence, was disabled and unable to protect her own interest in the trial court. (Id. at p. 1259.)
This authority does not support a reversal of the orders here. Unlike the appellant in Conservatorship of Hart, NFL has not advanced any specific evidence for this court's consideration. Rather, NFL makes only a bare claim that its innocent investors will be harmed if the challenged orders are affirmed. It asks this court "to review these facts" and to remand the case for the trial court "to consider the conflict of interest that Mr. Harkey had and its impact on NFL, LLC and its individual investors." However, NFL does not assert any new fact, and as the Respondents point out, its argument amounts to the assertion of a new legal theory on appeal.
"It is a well-established tenet of appellate jurisprudence that a litigant may not pursue one line of legal argument in the trial court, and having failed in that approach, pursue a different, and indeed, contradictory line of argument on appeal, thus depriving the trial court of the opportunity to consider what the appellant contends on appeal is the real dispute. (See Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2012) ¶ 8:229, p. 8-155 (rev. # 1, 2011) [theories not raised in trial court generally may not be asserted for the first time on appeal].) Such new arguments may be deemed waived, based on common notions of fairness. 'Appellate courts are loath to reverse a judgment on grounds that the opposing party did not have an opportunity to argue and the trial court did not have an opportunity to consider. . . . Bait and switch on appeal not only subjects the parties to avoidable expense, but also wreaks havoc on a judicial system too burdened to retry cases on theories that could have been raised earlier.' " (Brandwein v. Butler (2013) 218 Cal.App.4th 1485, 1519.)
To address NFL's new equitable argument now, which could have been raised in the trial court, is unfair both to the trial court and the Respondents, who have pursued the judgment they obtained against PCF for years. (See Marsango v. Automoble Club of Southern California (1969) 1 Cal.App.3d 688, 695 ["Litigation is an adversary process contemplating an element of risk to all parties. To permit a change of theory on appeal is to allow one party to deal himself a hole card to be disclosed only if he loses. Even if that device does no more than give him a second chance, it has unbalanced the inherent risk of the litigation and put the other party at a disadvantage."].) We decline to consider the equitable argument asserted by NFL for the first time on appeal and conclude the argument is forfeited.
DISPOSITION
The orders are affirmed. Respondents to recover costs of appeal.
BENKE, J. WE CONCUR: McCONNELL, P. J. IRION, J.