Opinion
B199991
9-8-2008
MELVIN GREEN, Plaintiff and Appellant, v. STEVEN G. LAMB, Defendant and Respondent.
James M. Tillipman for Plaintiff and Appellant. Jeffrey A. Kopczynski for Defendant and Respondent.
Not to be Published
STATEMENT OF THE CASE
On March 15, 1996, Melvin Green (dba Melvin Green Rentals) filed a complaint against Steven G. Lamb. K. J. Lamb is Stevens wife. The complaint alleged conversion, imposition of constructive trust and violation of trust. In the complaint, Green alleged that he employed Steven Lamb as bookkeeper for his rental business, as well as bookkeeper for Greens tax consultation business. The factual allegations underlying the counts were that Steven Lamb engaged in fraudulent and deceptive entries, causing damages to Green.
On February 21, 1997, Green obtained a default judgment for damages of $55,039.14, costs in the amount of $ 202.00, and $999.65 as interest.
On September 2, 2005, Green filed a motion seeking to add K. J. Lamb, as an individual party, to the default judgment. The motion also sought further relief as follows: 1) an order enjoining K. J. Lamb from selling, concealing, encumbering or otherwise transferring any community property assets of her marriage to Lamb; 2) imposition of a constructive trust on all of K. J. Lambs interest in community property assets of said marriage; 3) authorization to levy on K. J. Lambs community property assets, and: 4) attorneys fees and collection costs according to proof.
A hearing on the motion was conducted on October 7, 2005. At the conclusion of that hearing, the trial court denied the motion. The minute order reflecting the order of the court provides:
"Motion to amend judgment is denied, as plaintiff has failed to show that relief is available under CCP section 187 as interpreted by case law, as there is no showing that the debtor sought to be added to the judgment was the alter ego of the named debtor, or that this party had actual control over the underlying litigation. McClellen v. Northridge Park Townhome Owners Association (2nd Dist. 2001) 89 Cal.App.4th 746; Triplett v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 1415, 1421. In addition, there are serious questions concerning whether this court may exercise any equitable jurisdiction in this matter when plaintiff has delayed eight years in seeking this relief with no explanation whatsoever offered in the moving papers for the delay. Alexander v. Abbey of the Chimes (1980) 104 Cal.App.3d 39."
On February 17, 2007, the judgment was renewed.
On October 27, 2006, Green conducted a judgment debtor hearing of K. J. Lamb. On March 8, 2007, Green filed a motion virtually identical to the 2005 motion, seeking to add K. J. Lamb as an individual party to the judgment. Again, the motion sought further relief as follows: 1) an order enjoining K. J. Lamb from selling, concealing, encumbering or otherwise transferring any community property assets of her marriage to Steven Lamb; 2) imposition of a constructive trust on all of K. J. Lambs interest in community property assets of said marriage; 3) authorization to levy on K. J. Lambs community property assets, and 4) attorneys fees and collection costs according to proof.
On April 13, 2007, the second motion to add K. J. as a party to the judgment was denied on the same basis as the first motion. At the hearing on the motion, the trial court stated "I remember the case. This is the case two years ago, I denied the same motion. And there is nothing different than it was two years ago . . . and its ancient." After some further discussion, the trial court added: "Im finding a finding of laches here. The motion is, basically, the same motion previously denied. Nine years is too long. Motion is denied."
The court did not address or rule upon the other relief requested in the motion.
Appellant filed a timely notice of appeal.
CONTENTIONS ON APPEAL
Appellants effort to add K. J. Lamb to the judgment is based on the following contentions: 1) "K. J.s interest in the community estate is liable for her husbands debt; and 2) the court has authority to add a new judgment debtor upon a post-trial motion. Appellant argues that "the matter does not concern alter ego liability." Rather, "as a matter of law the community property interests of each of them are liable for the debts of the other spouse regardless whether the debts are based on contract, tort or otherwise. California Family code Sections 902, 910; Feldner v. Feldner (1995) 40 Cal.App.4th 617." Appellant summarizes his position as follows: "It is not disputed that Mr. Lambs obligation was incurred while married to K. J. As a matter of law K. J.s interest in the community property . . . estate of the Lamb marriage is liable for the debt owed to appellant."
Respondents contentions address only the correctness of the trial courts decision to deny the motion to add K. J. to the judgment. Respondent correctly contends that K. J. Lamb should not be added as a new judgment debtor. However, Respondent incorrectly contends that K. J. Lamb is not responsible for the criminal or tortuous acts of Steven Lamb; at least to the extent of her interest in the community estate.
DISCUSSION
Appellant obtained a default judgment against Mr. Steven Lamb in 1996. He sought for the second time in the trial court to amend the judgment to add Mr. Lambs wife, K. J. Lamb to the final judgment and for other equitable relief including: enjoining K. J. Lamb from transferring, encumbering, etc. any community property assets of her marriage to Steven Lamb; imposition of a constructive trust on all of K. J. Lambs interest in community property assets; authorization to levy on K. J. Lambs assets; and, costs and fees. The trial court denied the motion to amend the judgment, but did not specifically address other requested relief.
Denial of Motion to Amend Judgment
Code of Civil Procedure section 187 allows the amendment of a judgment to add judgment debtors provided two requirements are met: 1) The new party must be the alter ego of the old party; and 2) The new party had control over the litigation, thereby having had the opportunity to litigate in order to satisfy due process concerns. (Triplett v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 1415. 1422.) In certain circumstances, an amendment to add a third party judgment debtor may be allowed where necessary to prevent "injustice" even though "alter ego" liability is not involved. (Carr v. Barnabeys Hotel Corp. (1994) 23 Cal.App.4th 14, 20-21.)
However, absent notice and a property opportunity to respond, an amendment to a judgment imposing direct liability on a third party, not an alter ego, may violate that partys due process rights. (Nelson v. Adams USA, Inc. (2000) 529 U.S. 460, 466-468.)
Appellant argues that he is not seeking to add K. J. Lamb to the judgment under an "alter ego" theory, but rather under general principles related to community property. Although, community property is liable for debts incurred by either spouse during marriage, it does not follow that a wife can be added to a judgment rendered against her husband in an action in which she was not named as a party and had no opportunity to defend. (Oyakawa v. Gillett (1992) 8 Cal.App.4th 628.) The "alter ego" theory does not fit the factual circumstances in this appeal and does not authorize adding K. J. Lamb to the judgment against her husband.
As stated above, a party can be added to a judgment to prevent an "injustice." Appellant does not offer any argument that an injustice will result if K. J. Lamb is not added to the judgment. However, respondent does make two substantial equitable arguments in opposition to the motion to amend. One of the equitable arguments expressed was that K. J. Lamb was never a named party to the original complaint and never appeared in the case. Respondent also argues that appellant was not diligent in pursuing his effort to add her to the judgment; his first motion being filed eight years after the default judgment and the current motion coming ten years after the default. There does not appear to be an equitable argument to support adding K. J. Lamb to the complaint.
We agreed that the motion to amend the judgment was correctly denied. There is no appropriate reason to add K. J. Lamb to the complaint; respondents equitable arguments are well taken. Additionally, the doctrine of res judicata would preclude the relitigation of this issue as appellant raised the identical motion to amend in 2005 and it was denied.
Other Relief Sought by Appellant
During the hearing on appellants motion, the trial judge discussed only the request to add K. J. Lamb to the judgment. In this appeal, appellant raises the fact that he sought other relief from the trial court and that those requests were not addressed. He asserts that he is able to execute against K. J. Lambs interest in the community estate not based on alter ego, but rather on the basis of pure community property law. He does not claim to have rights against K. J. Lambs separate property. As a matter of law, appellants position has merit. Although appellant is unable to add K. J. Lamb to the judgment as a judgment creditor, he may seek enforcement of his judgment against Steven Lamb from the community estate. Respondent cites several cases in support of its opposition to appellants efforts to add K. J. Lang to the judgment. While these cases affirm respondents notion that K. J. Lamb may not have been a proper party to the original litigation against Steven Lamb, they also reaffirm the general rule that it is not necessary to name both spouses in an action in order to bind the community estate. Liability of community property is not limited to debts incurred for benefit of community, but extends to debts incurred by one spouse alone exclusively for his or her own personal benefit. (Lezine v. Security Pacific Fin. Services, Inc., supra, 14 Cal.4th 56). Appellant may pursue other lawful means to execute his judgment against the community estate of K. J. and Steven Lamb.
California law provides that community property is liable for a money judgment against one spouse whether or not the other spouse is a named defendant in the underlying action. (Family Code §§ 902, 910; Code of Civil Procedure §§ 695.020, 1000; Lezine v. Security Pacific Fin. Services, Inc. (1996) 14 Cal. 4th 56, 64.)
(In re Marriage of Stitt (1983) 147 Cal.App.3d 579, 588;11601 Wilshire Associates v. Grebow (1998) 64 Cal.App.4th 453; Reynolds and Reynolds v. Universal Forms, Labels (Reynolds)(C.D. Cal. 1997) 965 F. Supp. 1392.)
The same would not be true if appellant were seeking to reach K. J. Lambs separate property. In California, where a creditor seeks to reach the separate property of the non-debtor spouse, the non-debtor spouse is a necessary party. (Reynolds, supra, 965 F. Supp at p. 1397; See also Credit Bureau of Santa Monica Bay Dist. Inc. v. Terranova (1971) 15 Cal.App.3d 854, 857-858.)
RUBIN — Concurring.
I concur in the judgment and in the opinion except for that portion under the heading "Other Relief Sought by the Appellant." A review of the record reveals that appellant has significantly confused when a person may be named as an additional judgment debtor or be jurisdictionally subject to injunctive relief, with the type of property that is subject to execution.
What is clear is that there is no basis to add Ms. Lamb as a judgment debtor and the trial court presently appears to have no jurisdiction over Ms. Lamb to enjoin her from doing anything. What is not so clear is what property in which Ms. Lamb may have an interest is subject to execution. This is a subject that may be complex factually, legally (see, e.g., Family Law, §§ 913, 914; 11 Witkin, Summary of Cal. Law (10th ed. 2005) Community Property, § 172 et seq.), or both.
Because that issue is neither procedurally nor substantively properly before us, I see no reason to add our thoughts on what might happen in the future.
Appellant argues that the trial court did not address other relief sought. We are unable to entertain arguments on appeal that were not raised before the trial court. It was the responsibility of appellant to make an effort to have the court actually rule on his other requested relief. The absence of an adverse ruling precludes any appellate challenge. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.)
DISPOSITION
The denial of the motion to amend the judgment is affirmed.
I concur:
FLIER, J.