JAMES KAY JR v. ANNEDORE PICK (2011)

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

INTRODUCTION

Judgment debtor Annedore Charlet Pick appeals from the order of the trial court directing the sale of her residence to satisfy a judgment lien in favor of judgment creditor James A. Kay, Jr. Pick contends that the trial court erred in ordering the sale of 100 percent of the residence because, after the abstract of judgment was recorded, she deeded one-half of the property to a joint tenant and Kay failed to serve notice of the execution sale on the grantee.   We disagree and affirm the order.

FACTUAL AND PROCEDURAL BACKGROUND

As Pick acknowledges, after Kay recorded his judgment and a few months before the order for sale that is the subject of this appeal, Pick transferred one-half of her residence, the real property located at 350 Mesa Road, Santa Monica (the property or dwelling), to a joint tenant, Jens Paul Koehmke (also referred to as Koemke).

Kay obtained a new writ of execution and in September 2008 delivered it to the Sheriff's Court Services Division along with a Real Estate Levy Instruction form showing both Pick and Koehmke as owners.   These documents instructed the Sheriff to levy on the property.   The Sheriff mailed Kay a “notice to creditor of levy on dwelling” on October 3, 2008, indicating that the requested levy had been made.

On October 15, 2008, Kay moved for an order to show cause why the property should not be sold, as is required for the sale of a dwelling (Code Civ. Proc., § 704.740, subd. (a)).²  Pick opposed the order to show cause.

At the hearing, Pick argued, although the entire property was worth the stipulated $1.05 million, that she owned only a one-half interest in the dwelling, worth only $525,000.   Pick argued that all liens and encumbrances senior to Kay's judgment, plus her $125,000 homestead exceeded the value of her one-half joint tenancy interest and so nothing would be left to pay any part of Kay's judgment.   Pursuant to section 704.780, subdivision (b),³ she argued, the court was without authority to order a sale.   Additionally, Pick argued, even if a sale of 100 percent of the dwelling would satisfy Kay's judgment, where Koehmke had not been summoned and joined in the case and served with notice of the sale, the court could not order a sale of the entire property.

The trial court issued an order for sale of the entire property on January 20, 2009.   Pick filed her timely notice of appeal and then filed for Chapter 13 bankruptcy protection.   The bankruptcy stay was lifted on June 24, 2010 and so the appeal has proceeded.

CONTENTIONS

Pick contends that the trial court erred in ordering a sale of the entire dwelling without first joining Koehmke in the lawsuit as a current owner of one-half interest in the property.   She also contends that as a result of the failure to join Koehmke, the sale of her one-half interest is insufficient to satisfy all other liens and the homestead exemption.

DISCUSSION

“Subject to specified exceptions, an abstract of judgment attaches to all interests (whether present or future, vested or contingent, legal or equitable) owned by the judgment debtor in real property in the county in which the abstract is recorded and creates a judgment lien on that property which continues until it expires 10 years later or is satisfied or released [,or renewed].  [Citations.]”  (Federal Deposit Ins. Corp. v. Charlton (1993) 17 Cal.App.4th 1066, 1069.)

Under section 697.390, subdivision (a),⁴ “a subsequent conveyance or encumbrance of an interest in real property subject to a judgment lien does not affect the lien.”  (Dieden v. Schmidt (2002) 104 Cal.App.4th 645, 651;  see also § 697.720.⁵ ) “Property subject to a real property judgment lien that is transferred or encumbered without satisfaction of the lien remains subject to the lien – just as if no transfer or encumbrance had occurred.   [Citations.]”  (Ahart, Cal. Practice Guide:  Enforcing Judgments and Debts (The Rutter Group 2010) ¶ 6:209, p. 6B–24, italics added, citing § 697.390, subd. (a).)

Thus, when Pick transferred a joint tenancy interest in the property to Koehmke in 2008, Koehmke took his interest subject to Kay's prior judgment lien.  (Dieden v. Schmidt, supra, 104 Cal.App.4th at pp. 651–652.)

Moreover, “[w]hen real property encumbered by a duly recorded abstract of judgment is transferred, the transferees are charged with constructive knowledge of the encumbrance and they take title to the property subject to the lien created by the abstract, not as bona fide purchasers.  [Citations.]”  (Federal Deposit Ins. Corp. v. Charlton, supra, 17 Cal.App.4th at p. 1069;  § 697.390, subd. (a).)  Under section 697.390, Kay may enforce his judgment in the same manner and to the same extent as if the property had never been transferred.  (Dieden v. Schmidt, supra, 104 Cal.App.4th at p. 652.)   Therefore, the trial court did not err in ordering the sale of the entire property to satisfy Kay's preexisting judgment lien.

Citing In re Reed (9th Cir.1991) 940 F.2d 1317, Pick argues that only her one-half joint tenancy interest can be sold to satisfy a money judgment.   Pick also relies on Schoenfeld v. Norberg (1970) 11 Cal.App.3d 755.   Pick's reliance on Reed and Schoenfeld is misplaced because there, unlike here, the joint tenancies preceded the debt liens and the effort to sell the properties to satisfy those liens.

In contrast to Reed and Schoenfeld, Koehmke's joint tenancy interest did not arise here until after Kay's abstract of judgment was recorded and renewed.   Thus, Koehmke's interest had no effect on the judgment lien (Dieden v. Schmidt, supra, 104 Cal.App.4th at p. 652), and so the entire dwelling in this case, including Koehmke's interest, remained subject to Kay's judgment lien “just as if no transfer or encumbrance [to Koehmke] had occurred.”  (Ahart, Cal. Practice Guide:  Enforcing Judgments and Debts, supra, ¶ 6:209, p. 6B–24.)

Pick concedes this point.   She states late in her opening brief on appeal that “It is established in California ․ that the judgment lien follows the property and is enforceable against all future interests, as here.”   Nor does Pick “dispute[ ] respondent's judgment lien or his right to enforce it against all owners of the property.”

With this admission, Pick appears to contend that the trial court had no authority to order the sale of Koehmke's one-half interest without first joining him in the lawsuit.   Pick argues because Kay failed to join Koehmke in the case, Kay was limited to the value of Pick's interest alone to satisfy any portion of the judgment, and a sale of her 50–percent interest only would be insufficient to satisfy all other liens and the homestead exemption.   She states:  “Although the judgment could have been enforced against all owners and all interests in the property had Koemke been joined and summonsed to the action, the court neglected to order the joinder, despite appellant's repeated requests.”  (Italics added.)   Pick is wrong.   Service of summons and joinder of a party in the lawsuit has no application post judgment.   At this point, the issue is only whether Kay may execute on his judgment lien.

Even assuming Pick is arguing that Koehmke is entitled to notice of the sale and that she has standing to raise this issue, she is wrong.   The statutes require that the sheriff provide notice of the sale of a dwelling by serving the judgment debtor (§ 701.540, subd. (c)), posting notice in a public place (§ 701.540, subd. (d)(1)) and on the real property (§ 701.540, subd. (d)(2)), serving one of the property's occupants (§ 701.540, subd. (e)), (5) publishing (§ 701.540, subd. (g)), and mailing notice to lienholders (§ 701.540, subd. (h)).  Most important, the sheriff must mail notice of the sale to all persons who request such notice pursuant to section 701.550.⁶  Where Koehmke took title as a joint tenant a decade after Kay's abstract of judgment was recorded against the property giving rise to Kay's lien, Koehmke had constructive knowledge of the lien.   Knowing his interest in the property was subject to Kay's lien and could be sold to satisfy that lien, Koehmke could have complied with the procedures of section 701.550 to receive notice of the sale.   His failure to request notice is not a deprivation of his right to due process on the part of Kay, the trial court, or the sheriff, Pick's contention to the contrary notwithstanding.

DISPOSITION

The order is affirmed.   Respondent to recover costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

We concur:

FOOTNOTES

FN1. This is the second appeal in this case.   In the first, we reversed certain trial court orders granting Pick a credit against one of Kay's judgments against her.   The remititur in that appeal was issued in April 2008 (Kay v. Pick (Jan. 4, 2008, B193325) [nonpub. opn.].).  FN1. This is the second appeal in this case.   In the first, we reversed certain trial court orders granting Pick a credit against one of Kay's judgments against her.   The remititur in that appeal was issued in April 2008 (Kay v. Pick (Jan. 4, 2008, B193325) [nonpub. opn.].)

FN2. All further statutory references are to the Code of Civil Procedure, unless otherwise noted..  FN2. All further statutory references are to the Code of Civil Procedure, unless otherwise noted.

FN3. Section 704.780 requires the trial court to determine whether the dwelling is exempt as a homestead.  (Id., subd. (b).)  It then determines the amount of the homestead exemption and the fair market value of the dwelling and must make an order for sale of the dwelling subject to the homestead exemption, unless it determines that the sale would not likely produce a bid sufficient to satisfy any part of the amount due on the judgment.  (Ibid.).  FN3. Section 704.780 requires the trial court to determine whether the dwelling is exempt as a homestead.  (Id., subd. (b).)  It then determines the amount of the homestead exemption and the fair market value of the dwelling and must make an order for sale of the dwelling subject to the homestead exemption, unless it determines that the sale would not likely produce a bid sufficient to satisfy any part of the amount due on the judgment.  (Ibid.)

FN4. Section 697.390 reads in pertinent part, “If an interest in real property that is subject to a judgment lien is transferred or encumbered without satisfying or extinguishing the judgment lien:  [¶] (a) The interest transferred or encumbered remains subject to a judgment lien created pursuant to Section 697.310 in the same amount as if the interest had not been transferred or encumbered.”.  FN4. Section 697.390 reads in pertinent part, “If an interest in real property that is subject to a judgment lien is transferred or encumbered without satisfying or extinguishing the judgment lien:  [¶] (a) The interest transferred or encumbered remains subject to a judgment lien created pursuant to Section 697.310 in the same amount as if the interest had not been transferred or encumbered.”

FN5. Section 697.720 reads, “Subject to Section 701.630 [sale extinguishes the lien under which property is sold], if an interest in real property subject to an execution lien is transferred or encumbered, the interest transferred or encumbered remains subject to the lien after the transfer or encumbrance.”.  FN5. Section 697.720 reads, “Subject to Section 701.630 [sale extinguishes the lien under which property is sold], if an interest in real property subject to an execution lien is transferred or encumbered, the interest transferred or encumbered remains subject to the lien after the transfer or encumbrance.”

FN6. Section 701.550 reads:  “(a) In addition to the notice of sale required by this article, the levying officer shall, at the time notice of sale is posted pursuant to Section 701.530 or 701.540, mail notice of sale to any person who has requested notice of the sale pursuant to this section. [¶] (b) A request for notice of sale under this section made prior to the issuance of the writ shall be in writing and shall be filed with the clerk of the court where the judgment is entered.   The request shall specify the title of the court, the cause and number of the action in which the judgment was entered, and the date of entry thereof, and shall state the address to which the notice of sale is to be mailed.   The name and address of the person requesting notice of sale under this subdivision shall be noted on the writ. [¶] (c) A person who desires notice of sale of particular property that has been levied upon may file a request for notice of sale with the levying officer who will conduct the sale.   The request shall contain the information specified by the levying officer as needed in order to comply with the request.”.  FN6. Section 701.550 reads:  “(a) In addition to the notice of sale required by this article, the levying officer shall, at the time notice of sale is posted pursuant to Section 701.530 or 701.540, mail notice of sale to any person who has requested notice of the sale pursuant to this section. [¶] (b) A request for notice of sale under this section made prior to the issuance of the writ shall be in writing and shall be filed with the clerk of the court where the judgment is entered.   The request shall specify the title of the court, the cause and number of the action in which the judgment was entered, and the date of entry thereof, and shall state the address to which the notice of sale is to be mailed.   The name and address of the person requesting notice of sale under this subdivision shall be noted on the writ. [¶] (c) A person who desires notice of sale of particular property that has been levied upon may file a request for notice of sale with the levying officer who will conduct the sale.   The request shall contain the information specified by the levying officer as needed in order to comply with the request.”

KLEIN, P. J. CROSKEY, J.