Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. CH 2040428
Haerle, J.
I. INTRODUCTION
This appeal is yet another chapter in the epic battle between Mervin Mark Sarchet (Mark) and his former spouse, Wensen Tang Sarchet (Wensen), whose union ended more than ten years ago.
Pursuant to a prior appeal by Wensen, this court affirmed a superior court order that required Wensen to pay Mark damages for breaching her fiduciary duty to the community by unreasonably delaying the sale of the former family home, located on Cloverleaf Court in Fremont (the Cloverleaf Court residence). (In re the Marriage of Wensen and Mervin Mark Sarchet (Aug. 9, 2007, A114901) [nonpub. opn.] (Sarchet I).)
Now, Mark appeals an order denying his application for an order directing the sale of Wensen’s current residence, located on Sawleaf Street in Fremont (the Sawleaf Street residence) so that he can collect his damages award. The superior court denied Mark’s application on the ground that it did not have personal jurisdiction over Wensen’s brother, Chien-Hsiung Tang (Tang), who holds legal title to the Sawleaf Street residence. We affirm.
II. STATEMENT OF FACTS
A. Background
Mark and Wensen married on September 14, 1991, had four children together and separated on October 4, 1998. A judgment of dissolution was entered on December 14, 1999, but the superior court reserved jurisdiction to resolve all other issues between these parties. The string of litigation that followed is detailed in our decision in Sarchet I. An abridged version of that summary provides the necessary background for the present appeal.
In August 2000, the parties’ former family home, the Cloverleaf Court residence, was listed for sale for $2,700,000, but the house was not sold until 2005. In the meantime, Mark, who had primary physical custody of the children, lived in the residence until he experienced employment and financial problems and, at some point, failed to pay the mortgage. In September 2002, Wensen cured the default and took possession of the Cloverleaf Court residence. In December 2002, Mark filed a chapter 7 bankruptcy petition.
In March 2003, Wensen obtained limited relief from the automatic bankruptcy stay so that the state family law court could resolve various matters pertaining to the dissolution of the marriage. Wensen, whose family has significant assets abroad, maintained that she had been the primary financial provider during the marriage and, therefore, claimed separate property interests and/or reimbursement rights with respect assets acquired during the marriage. On September 8, 2004, the Honorable Harry R. Sheppard filed a judgment resolving these property issues (the September 2004 family court judgment).
In January 2005, the bankruptcy court approved the sale of the Cloverleaf Court residence for $1,803,000 and authorized the trustee to pay Wensen $745,000, as her separate property share of proceeds of the sale.
It is not clear whether Wensen was paid this full amount. On February 18, 2005, the trustee sent Wensen a check for $644,931. The trustee withheld $80,069 pending resolution of his motion to surcharge Wensen for damages resulting from (1) her refusal to timely vacate the residence; (2) the wrongful removal of property from the residence; and (3) damage she caused to the property. In March 2005, Wensen and the bankruptcy trustee entered into an agreement resolving the surcharge claim.
On June 28 2005, the bankruptcy court conducted a trial on Wensen’s petition to except her claims from Mark’s chapter 7 discharge. In a memorandum of decision issued after trial and filed July 1, 2005 (the July 2005 order), the court found that the September 2004 family court judgment established that Wensen had proven six of her claims against Mark and ordered those six claims excepted from the automatic stay. The bankruptcy court also determined that the bankruptcy estate had an offset claim against Wensen for damages she caused by delaying the sale of the Cloverleaf Court residence. The court was persuaded that “but for Wensen’s improper conduct, motivated by anger at Mark, the [Cloverleaf Court residence] would have sold for $2.7 million, approximately $900,000 more than the [2005] sale price,” and that Mark likely would not have had to file for bankruptcy at all.
After the July 2005 order was issued, the bankruptcy trustee took the position that, to the extent that Wensen’s claims had not been satisfied by the $745,000 payment from the proceeds of the sale of the Cloverleaf Court residence, they were offset by the $900,000 credit established by the July 2005 order. In September 2005, the bankruptcy court affirmed that Wensen’s claims were satisfied and, on December 9, 2005, the court ordered the trustee to abandon any remaining claims the estate had against Wensen to Mark.
B. Sarchet I
In 2004 and 2005 (prior to the bankruptcy trial), Mark filed motions against Wensen in the superior court pursuant to which he sought (1) damages for breach of fiduciary duty to the community; (2) an upward modification of Wensen’s child support obligation; and (3) an order requiring Wensen to pay Mark’s attorney’s fees as a sanction for her wrongful litigation conduct pursuant to Family Code section 271 (section 271). These motions were consolidated for trial before the Honorable Jacob Blea (the 2005 state court action).
The 2005 state court trial commenced on June 21, with the court taking evidence relating to the attorney fees issue. The trial was continued to September 2, 2005. By that time, the bankruptcy trial was over but Mark’s bankruptcy case was not yet closed. Therefore, the state court proceeded only with respect to the child support claim and postponed resolution of the other claims until after the bankruptcy case was closed.
On September 29, 2005, Mark filed a motion to join Tang (Wensen’s brother) in the state court proceeding. Mark alleged that Tang was a necessary party because he was listed as the legal owner of Wensen’s current home, the Sawleaf Street residence. In the pending trial, Mark sought to prove that Wensen was the equitable owner of that residence and that it was available to satisfy Wensen’s obligations. A hearing on Mark’s joinder motion was held on December 14, 2005. Neither Wensen nor Tang appeared. That same day, the court filed an order joining Tang as a party to the proceedings.
The state court trial continued on January 12, 2006 and, on April 25, 2006, Judge Blea filed an 28-page order entitled “Findings and Order after Hearing” (the April 2006 order). The court held, among other things, that Wensen breached her fiduciary duty to the community by intentionally and maliciously delaying the sale of the Cloverleaf Court residence, that Wensen was the equitable owner of the Sawleaf Street residence, and that Tang held the property in trust for Wensen. Wensen was ordered to pay Mark $536,452.28 as damages resulting from her breach of duty, additional child support, retroactive to January 2005, and $100,000 of Mark’s attorney’s fees.
Wensen appealed the April 2006 order, alleging that (1) she did not breach her fiduciary duty; (2) Tang was not properly joined in the 2005 state court action, and all orders within the April 2006 order that depended on the joinder were invalid; (3) the modification of her child support obligation was improper; and (4) Mark was not entitled to attorney fees.
On August 9, 2007, this court filed its decision in Sarchet I. We reversed the order modifying Wensen’s child support obligation, affirmed the remainder of the April 2006 order and remanded the case for a recalculation of Wensen’s support obligation. With regard to Wensen’s claim that Tang was not properly joined in the action, we stated: “Even if Wensen could show the joinder was ineffectual, she does not have standing to assert Tang’s rights as a basis for obtaining a reversal of the April 2006 order.” (Sarchet I, supra, at p. 17.) We also observed that “Wensen has not shown that she is an aggrieved party with respect to the joinder order. Tang, who may be an aggrieved party, has not appeared to complain.” (Ibid.)
C. Mark’s Attempts to Force the Sale of the Sawleaf Street Residence
Mark’s efforts to collect his damages award from Wensen by forcing the sale of the Sawleaf Street residence commenced shortly after the April 2006 order was entered, continued after we filed our decision in Sarchet I and have now been stalled by the order at issue in this appeal.
On July 18, 2006, Mark filed a Writ of Execution of the April 2006 order. The appellate record contains two Notices of Levy under Writ of Execution, one which was allegedly served by mail on Wensen and the second which was allegedly served by mail on Tang. Both notices were recorded with the Alameda County Recorder on July 19, 2006.
On August 14, 2006, Mark filed an application for an order to show cause for sale of dwelling pursuant to section 704.750, et seq. of the Code of Civil Procedure. Mark sought orders (1) for the sale of the Wensen’s interest in the Sawleaf Street residence and (2) directing Tang to execute and record a grant deed in favor of Wensen transferring title to the Sawleaf Street residence within 30 days. Judge Blea issued an order to show cause on August 14. A hearing on Mark’s application for an order for sale of dwelling was scheduled for October 20, 2006, but was continued several times.
Both Wensen and Tang filed pleadings opposing Mark’s application. Tang’s pleading was captioned as a “Notice of Special Appearance and Opposition to Application for Order for Sale of Dwelling On Grounds of Lack of Jurisdiction.” Tang took the position that he was the record title holder of the Sawleaf Street residence and that the court could not issue an order for sale without first obtaining personal jurisdiction over him. In this regard, Tang maintained that he had not been properly joined in the 2005 state court action and emphasized that the court had not even issued a summons for his joinder. Tang further alleged that he had not made a general appearance in this action and was now specially appearing “for the sole purpose of contesting the jurisdiction of this court.”
Meanwhile, on March 22, 2007, Mark initiated a separate proceeding by filing a “Joinder Complaint to Set Aside Fraudulent Transfer, for Imposition of Constructive Trust, for Order for Reconveyance, for Appointment of a Receiver, and for Damages” (the 2007 state court action). In the caption of this pleading, Mark identified himself as the respondent, Wensen as the petitioner and Tang as the claimant. A “Summons (Joinder)” was issued by the clerk of the superior court on March 22, 2007. Mark filed a proof of personal service of the summons and complaint on Wensen.
On May 25, 2007, Mark filed a proof of service of the summons and joinder complaint on Tang. According to that document, a process server made several attempts to personally deliver the summons and complaint to Tang at an address in Taiwan that was believed to be Tang’s place of employment. Finally, the documents were left with an “Asian female at the address [who] refused to give name or relationship.”
On June 27, 2007, Tang filed a motion to quash summons and service of Mark’s joinder complaint. He argued (1) the summons was not properly issued and was invalid, (2) he was not served with the summons and complaint, (3) Mark failed to serve required documents with the joinder complaint. Tang supported his motion with a declaration in which he stated, among other things, that he is the owner of the Sawleaf Street residence, his sister Wensen told him that Mark claimed to have served him as a party in the 2007 state court action, and he never received any papers relating to this case.
On September 7, 2007, the Honorable Alice Vilardi filed an order granting Tang’s motion to quash summons and service of the joinder complaint. The court found that Mark had failed to serve the necessary documents in compliance with section 413.10 of the Code of Civil Procedure and that “the court has not acquired jurisdiction over the claimant [Tang].”
The long-delayed hearing on Mark’s application for an order to sell the Sawleaf Street residence was finally conducted on September 17, 2007, before Judge Vilardi. In an order dated January 10, 2008, the court denied Mark’s request for an order to sell the Sawleaf Street residence. The court found, among other things, that the interests of the record property holder, Tang, had not been adjudicated because the court had “not yet acquired personal jurisdiction over him.” The court specifically found that Tang has not made a general appearance in this case. The court also found that its September 7, 2007, order granting Tang’s motion to quash “voids the court’s April 25, 2006, order that [Wensen] is the 100% equitable owner of the [Sawleaf Street] property.” The court reasoned that “[a]bsent personal jurisdiction over the title owner of the property, the court was without jurisdiction to make an order regarding petitioner’s ownership interest.” The court also found that it was without jurisdiction to issue an order directing Tang to transfer the property to Wensen.
On March 7, 2008, Mark filed a notice of appeal of the January 10, 2008, order denying his application for an order for the sale of the Sawleaf Street residence (the January 2008 order).
The January 2008 order is an appealable order. (Code Civ. Proc., §§ 704.830 and 703.600; see also, Kahn v. Berman (1988) 198 Cal.App.3d 1499, 1503.)
III. DISCUSSION
A. Mark’s Statutory Rights Were Not Violated
Mark contends that, under the circumstances of this case, the trial court had a mandatory statutory obligation to issue an order for the sale of the Sawleaf Street residence. He construes the applicable statutes as limiting the relevant inquiry at a hearing on an application for an order for sale of a dwelling to the issue of whether the subject property is an exempt homestead. Mark then concludes that, because the Sawleaf Street residence is not exempt, the trial court was required to grant his application.
1. The Statutory Framework
Mark’s application for an order to sell the Sawleaf Street residence was made pursuant to Code of Civil Procedure section 704.740, et seq. Section 704.740, subdivision (a) states that, with exceptions not applicable here, “the interest of a natural person in a dwelling may not be sold under this division to enforce a money judgment except pursuant to a court order for sale obtained under this article and the dwelling exemption shall be determined under this article.”
Unless otherwise stated, all statutory references in this section of our opinion are to the Code of Civil Procedure.
To obtain a court order for sale, the judgment creditor must levy upon the subject property, serve notice of the levy on the judgment debtor and file an application for an order for sale within a specific time frame. (§ 704.750.) The application must comply with the requirements of section 704.760, which include that the creditor must provide specific information regarding whether the property is a homestead as well as a statement of the amount of liens or encumbrances on the property and the names and addresses of lien holders. Upon the filing of an application for an order for sale, the court will set a hearing and “order the judgment debtor to show cause why an order for sale should not be made in accordance with the application.” (§ 704.770, subd. (a).)
At the order to show cause hearing, the court must determine whether the property that the judgment creditor seeks to sell is subject to a homestead exemption. (§ 704.780.) Section 704.780, subdivision (b) states: “The court shall determine whether the dwelling is exempt. If the court determines that the dwelling is exempt, the court shall determine the amount of the homestead exemption and the fair market value of the dwelling. The court shall make an order for sale of the dwelling subject to the homestead exemption, unless the court determines that the sale of the dwelling would not be likely to produce a bid sufficient to satisfy any part of the amount due on the judgment pursuant to Section 704.800. The order for sale of the dwelling subject to the homestead exemption shall specify the amount of the proceeds of the sale that is to be distributed to each person having a lien or encumbrance on the dwelling and shall include the name and address of each such person. . . . If the court determines that the dwelling is not exempt, the court shall make an order for sale of the property in the manner provided in Article 6 (commencing with Section 701.510) of Chapter 3.”
2. Analysis
Mark focuses almost entirely on selected phrases in section 704.780, subdivision (b), which is quoted above. He argues that, by using the term “shall” to describe the court’s obligation to consider whether the dwelling is an exempt homestead, the Legislature imposed a mandatory legal obligation on lower courts to issue an order for sale in all cases in which it determines that the property is not an exempt dwelling.
We are not persuaded by this argument. To be sure, section 704.780 requires the court to determine whether the subject property is a homestead. However, when read in its proper context, the mandatory language in section 704.780 requires the court to make an order for sale upon finding the property is not exempt only in those cases in which the debtor has used the exemption to attempt to block the sale. Nothing in the language of this or any other provision supports Mark’s view that the relevant inquiry at an order to show cause hearing is solely whether the subject property is exempt.
Section 704.770, subdivision (a), requires that a court schedule a hearing on an application for an order to sell a dwelling so that the debtor can “show cause why [the] order for sale should not be made in accordance with the application.” In this case, both the judgment debtor and the legal title holder of the property opposed Mark’s application on the ground that the judgment debtor (Wensen) has no interest in the levied property and the holder of legal title to the property (Tang) was not before the court. Mark does not identify any provision in the relevant statutes which precluded the court from entertaining these arguments.
Mark contends that “an Application for Sale of Dwelling pursuant to a levy cannot be denied on the ground that the Judgment debtor has no interest in the property levied on or on the ground that legal title is held in the name of another.” Again, we disagree. As noted above, section 704.740 states that, with exceptions not applicable here, “the interest of a natural person in a dwelling may not be sold under this division to enforce a money judgment except pursuant to a court order for sale obtained under this article . . . .” (§704.740, subd. (a), emphasis added.) Implicit in this statutory language is the requirement that the debtor have an interest in the property that is sought to be sold.
Mark directs us to Vest v. Superior Court (1956) 140 Cal.App.2d 91 (Vest). ~(AOB 17)~ In Vest, the petitioner obtained a writ of execution against real property held in the name of his judgment debtor’s ex-wife. During divorce proceedings that overlapped the execution proceedings, the debtor’s wife obtained a judgment that the subject property, though community in nature, was awarded entirely to her. Thereafter, the trial court granted the wife’s motion to quash and set aside the writ of execution on the ground that the judgment debtor did not have any interest in the subject property. The Vest court reversed on several grounds. First, the court held that a writ cannot be recalled unless the judgment upon which it is based or the writ itself is void on its face. In this regard, the court noted among other things, that a levy cannot “be quashed on the ground that the judgment debtor has no interest in the property levied upon, as strangers to the action have means provided by law for protecting their rights . . . .” (Id. at p. 93.) Second, the court found that the subject property was a community asset at the time the judgment was entered and that community property was liable for the tort of the husband. Finally, the court found that the petitioner was not required to move to set aside the decree awarding the real property to the wife before he could execute against the property but could instead, challenge the fraudulent conveyance by a direct levy against the property. (Id. p. at p. 95.)
Mark contends that if, as the Vest court held, a levy cannot be quashed on the ground that the debtor has no interest in the property levied, “it naturally follows” that an application for sale of a dwelling cannot be denied on the ground that the debtor has no interest in the property or is not the record title holder. We are not persuaded that a levy and a sale are interchangeable occurrences, at least in this context. If they were, the statutory provisions requiring an order for sale would be superfluous. Therefore, even if we presume, for purposes of argument, that the Vest court was correct that a levy cannot be quashed on the ground that the debtor had no interest in the property, that is not what happened here. Tang, a stranger to the underlying action, did not move to quash the levy but, instead, protected his rights by specially appearing at an order to show cause hearing in order to oppose the sale of real property held solely in his name on the ground that the court did not have jurisdiction over him.
Vest is distinguishable from the present case in another important way. The Vest court’s statement that a writ of execution cannot be quashed on the ground that the debtor has no interest in the property was dicta in light of the fact that the court expressly found that the judgment debtor in that case did have an ownership interest in the subject property. (Vest, supra, 140 Cal.App.2d at p. 93.) In the present case, by contrast, the lower court was presented with evidence and circumstances which precluded it from making any determination as to the ownership of the subject property. Mark overlooks relevant authority which establishes that an order for sale should not be issued when the court is presented with evidence that the judgment debtor may not have an interest in the subject property. (See Schoenfeld v. Norberg (1970) 11 Cal.App.3d 755 (Schoenfeld); Lauer v. Rose (1976) 60 Cal.App.3d 493 (Lauer).)
In Shoenfeld, supra, 11 Cal.App.3d 755, the trial court issued an order for the sale of a judgment debtor’s residence notwithstanding the fact that it had yet to determine (1) whether the property was a community asset or held in joint tenancy or (2) what portion or interest in the property could be sold. The Court of Appeal reversed the “self-contradictory” order (id. at p. 760) holding that the trial court “erred in not determining whether the property was community or joint tenancy before ordering a sale . . . .” (Id. at p. 761.)
In Lauer, supra, 60 Cal.App.3d 493, the superior court granted a motion by a judgment debtor to quash a notice of levy and execution against real property that the debtor had previously quitclaimed to his ex-wife during their marriage as her sole separate property. The Court of Appeal affirmed, reasoning, among other things, that it appeared from the evidence that it was “extremely unlikely” that the judgment debtor had any right, title or interest in the property and that “serious problems would result” from permitting a sale without first determining what interest could be sold. (Id. at p. 498.) The Lauer court also observed that due process required judicial interference with the sale under writ of execution because the judgment debtor’s ex-wife was not a party to the underlying action and had not had the opportunity to establish that the property was her sole and separate property. (Id. at p. 499.)
Schoenfeld and Lauer support our conclusion that the trial court had the authority to deny Mark’s application for an order for sale on the ground that the judgment debtor’s interest in the subject property had not yet been established. Indeed, Lauer suggests that due process required the court to deny Mark’s application since Tang was not a party to the 2005 state court action and had not had the opportunity to establish that the Sawleaf Street residence is his sole property.
B. Law of The Case
Mark contends that Wensen’s status as the 100 percent equitable owner of the Sawleaf Street residence has already been conclusively established by this court’s decision in Sarchet I and that the trial court violated the doctrine of law of the case by refusing to make its ruling in conformity with this established fact. Again, we disagree.
In Sarchet I, Wensen appealed the April 2006 order on several grounds including that Tang was not properly joined in the 2005 state court action. However, our decision in Sarchet I expressly stated that Wensen did not challenge the lower court’s finding that she was “the true owner of [the Sawleaf Street] residence.” (Sarchet I, supra, at p. 18.) Therefore, contrary to Mark’s contentions in this appeal, this court has not previously affirmed--nor even reviewed--the specific finding that Wensen was the equitable owner of the Sawleaf Street residence.
Equally important, in Sarchet I, this court also expressly declined to address whether Tang had been properly joined in the 2005 state court action. Wensen did not have standing to raise that issue and Tang did not appear before us. Therefore, the December 2005 joinder order was not affirmed, nor even subject to review in Sarchet I.
After we issued our decision in Sarchet I, the lower court issued its September 7, 2007, order granting Tang’s motion to quash the summons and joinder complaint. That order established that Tang (1) was not properly joined in the 2005 state court action and (2) was not properly served in the 2007 state court action, and therefore, the court did not have personal jurisdiction over Tang. These express findings did not conflict with anything we said in Sarchet I and became the law of the case.
The January 2008 order which is the subject of this appeal does not violate but follows the law of the case doctrine. In that order, the trial court reaffirmed that it did not have personal jurisdiction over the legal title holder of the Sawleaf Street residence. The court also found that its September 7, 2007, order granting Tang’s motion to quash “void[ed] the court’s April 25, 2006, order that [Wensen] is the 100% equitable owner of the property.” Nothing about this finding was inconsistent with or precluded by our decision in Sarchet I.
Contrary to Mark’s contention here, the superior court did follow the law of the case by holding that it had not yet acquired personal jurisdiction over Tang. Therefore, the nature of Tang’s ownership interest in the Sawleaf Street residence has not yet been determined.
C. Tang Has Not Made a General Appearance
Finally, Mark contends that the trial court erroneously found that Tang has not made a general appearance in this case.
“[A] party waives any objection to the court’s exercise of personal jurisdiction when the party makes a general appearance in the action. [Citation.]” (Roy v. Superior Court (2005) 127 Cal.App.4th 337, 341 (Roy).) “A general appearance is one in which the defendant participates in the action in a manner which recognizes the court’s jurisdiction. [Citation.] If the defendant raises an issue for resolution or seeks relief available only if the court has jurisdiction over the defendant, then the appearance is a general one. [Citation.]” (Factor Health Management v. Superior Court (2005) 132 Cal.App.4th 246, 250; see also, Roy, supra, 127 Cal.App.4th at p. 341.)
Mark does not dispute that the September 7, 2007, order quashing summons and service of the joinder complaint on Tang establishes that Tang’s conduct prior to that date did not constitute a general appearance in this action. Instead, Mark contends that, after the court quashed the summons and service of the joinder complaint, Tang no longer had any legitimate reason to participate in these proceedings and that Tang’s continued participation after that event constitutes a general appearance in this action. We disagree. Notwithstanding the court’s express order that it did not have personal jurisdiction over Tang, Mark persisted in his efforts to force the sale of the Sawleaf Street residence. As part of those efforts, Mark expressly sought an order directing Tang to transfer legal title to the property to Wensen. Therefore, Tang had sound reasons to continue to specially appear in order to object that the court did not have jurisdiction over him.
Mark complains that Tang’s attorney appeared at a September 13, 2007, settlement conference and at the September 17, 2007, order to show cause hearing, and then filed written opposition to Mark’s application for the order to sell the Sawleaf Street residence. However, Mark does not articulate any specific conduct by Tang or his attorney which was inconsistent with a special appearance to continue to dispute personal jurisdiction over Tang.
Mark contends that Tang’s appearance shifted from a special appearance to a general appearance when Tang “chose to argue” that Mark’s application should be denied because Tang was the legal owner of the Sawleaf Street residence. We are perplexed by this argument. There has never been any dispute that Tang holds legal title to the property, which is why Mark’s application sought to compel Tang to transfer the property into Wensen’s name. Since Mark continued to seek this relief, Tang continued to specially appear in order to contest the court’s jurisdiction over him.
Mark has failed to establish that Tang took any action which either sought affirmative relief from the lower court or somehow acknowledged jurisdiction over him. Therefore, we affirm the trial court’s finding that Tang has not made a general appearance in this case.
IV. DISPOSITION
The January 10, 2008, order is affirmed.
We concur: Kline, P.J., Lambden, J.