Vartelas v. Universal Enterprises Internat. CA4/1 (2014) · DecisionDepot
Vartelas v. Universal Enterprises Internat. CA4/1
California Court of Appeal Nov 13, 2014 No. D063246Unpublished
Filed 11/13/14 Vartelas v. Universal Enterprises Internat. CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
TAKIS VARTELAS, D063246
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2009-00089472- CU-EN-CTL) UNIVERSAL ENTERPRISES INTERNATIONAL, INC., et al.,
Defendants and Respondents,
SAMME LADCKIE,
Defendant and Appellant.
APPEALS from judgments of the Superior Court of San Diego County, Lisa
Foster, Gonzalo P. Curiel, and Timothy B. Taylor, Judges. Affirmed.
Del Mar Law Group and David P. Hall for Plaintiff and Appellant.
The Cabrera Firm and Guillermo Cabrera for Defendants and Respondents.
Allen Matkins Leck Gamble Mallory & Natsis and Charles Lewis Pernicka for
Defendant and Appellant.
Plaintiff Takis Vartelas appeals judgments in favor of defendants Universal
relief generally operates prospectively to declare future rights, rather than to redress past
wrongs. [Citations.] It serves to set controversies to rest before they lead to repudiation
of obligations, invasion of rights or commission of wrongs. In short, the remedy is to be
used in the interests of preventative justice, to declare rights rather than execute them."
(Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)
"[A] complaint for declaratory relief is sufficient if it alleges facts demonstrating
the existence of an actual controversy between the parties about their legal rights and
duties and requests adjudication of the controversy." (Longshore v. County of Ventura
(1979) 25 Cal.3d 14, 29; see Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th
594, 615.) "Whether a claim presents an 'actual controversy' within the meaning of [the
statute] is a question of law that we review de novo." (Environmental Defense Project of
Sierra County v. County of Sierra (2008) 158 Cal.App.4th 877, 885.)
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Vartelas alleges that "[a] dispute has arisen between Vartelas, on one hand, and
Dublin [Square], Universal and Ladckie, on the other hand, concerning the ownership of
the Dublin [Square] and Universal. Vartelas seeks a declaration of rights that Ladckie is
a member of Dublin [Square] and shareholder of Universal." Vartelas argues that these
allegations establish an actual controversy because Vartelas has the ability to execute his
judgment against any ownership interests that Ladckie may have in Dublin Square and
Universal. We disagree. As discussed in part I.B. ante, Vartelas may not hold Dublin
Square and Universal directly liable for his judgment against Ladckie. As such,
Vartelas's allegations show only a factual dispute about Ladckie's alleged assets, which is
not the type of controversy that may be resolved through a declaratory relief action.
In order to state a claim for declaratory relief, Vartelas's allegations must establish
a dispute as to the "legal rights and duties" of the opposing parties in the lawsuit. (See
Longshore v. County of Ventura, supra, 25 Cal.3d at p. 29; see also Code Civ. Proc.,
§ 1060.) "Before a controversy is ripe for adjudication it ' "must be definite and concrete,
touching the legal relations of the parties having adverse legal interests." ' " (Alameda
County Land Use Association v. City of Hayward (1995) 38 Cal.App.4th 1716, 1722.)
The declaration sought by Vartelas would not establish Vartelas's legal rights or relations
with respect to Ladckie, Universal, or Dublin Square. Vartelas's ability to legally execute
on any assets owned by Ladckie, for example, would be unaffected by the requested
declaration. The declaration sought by Vartelas would address merely the existence of
any such assets.
16
Unlike the authorities cited by Vartelas, his allegations do not establish a dispute
over the respective legal rights and obligations of parties to a contract or insurance policy
(see Osseous Technologies of America, Inc. v. Discovery Ortho Partners LLC (2010) 191
Cal.App.4th 357, 365; Ludgate Insurance Co. v. Lockheed Martin Corp. (2000) 82
Cal.App.4th 592, 603; but see Meyer v. Sprint Spectrum L.P., supra, 45 Cal.4th at p. 646)
or a dispute over the validity of a city ordinance or administrative agency policy (see
Qualified Patients Association v. City of Anaheim (2010) 187 Cal.App.4th 734, 753;
Californians for Native Salmon & Steelhead Association v. Department of Forestry
(1990) 221 Cal.App.3d 1419, 1429). At most, as we have explained, Vartelas's
allegations establish a factual dispute regarding the extent of Ladckie's assets. The trial
court thus properly sustained defendants' demurrer to this cause of action as well. And,
in the absence of any argument that Vartelas could cure the deficiencies in this cause of
action by amendment, leave to amend was properly denied.
II
A
Vartelas further contends that the trial court erred in granting defendants' summary
judgment motion on his remaining cause of action, a creditor's suit against Dublin
Square. "A defendant's motion for summary judgment should be granted if no triable
issue exists as to any material fact and the defendant is entitled to a judgment as a matter
of law. [Citation.] The burden of persuasion remains with the party moving for
summary judgment. [Citation.] When the defendant moves for summary judgment, in
those circumstances in which the plaintiff would have the burden of proof by a
17
preponderance of the evidence, the defendant must present evidence that would preclude
a reasonable trier of fact from finding that it was more likely than not that the material
fact was true [citation], or the defendant must establish that an element of the claim
cannot be established, by presenting evidence that the plaintiff 'does not possess and
cannot reasonably obtain, needed evidence.' " (Kahn v. East Side Union High School
Dist. (2003) 31 Cal.4th 990, 1002-1003 (Kahn).)
" 'Once the defendant . . . has met that burden, the burden shifts to the
plaintiff . . . to show that a triable issue of one or more material facts exists as to that
cause of action or a defense thereto. The plaintiff . . . may not rely upon the mere
allegations or denials' of his 'pleadings to show that a triable issue of material fact exists
but, instead,' must 'set forth the specific facts showing that a triable issue of material fact
exists as to that cause of action or a defense thereto.' " (Aguilar v. Atlantic Richfield Co.
(2001) 25 Cal.4th 826, 849 (Aguilar).)
"We review the record and the determination of the trial court de novo." (Kahn,
supra, 31 Cal.4th at p. 1003.) "In performing our de novo review, we must view the
evidence in a light favorable to plaintiff as the losing party [citation], liberally construing
[the plaintiff's] evidentiary submission while strictly scrutinizing defendants' own
showing, and resolving any evidentiary doubts or ambiguities in plaintiff's favor."
(Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768.) "Although our review of a
summary judgment is de novo, it is limited to issues which have been adequately raised
and supported in plaintiff['s] brief. [Citations.] Issues not raised in an appellant's brief
18
are deemed waived or abandoned." (Reyes v. Kosha (1998) 65 Cal.App.4th 451, 466,
fn. 6.)
Code of Civil Procedure section 708.210 establishes the basis for Vartelas's
creditor's suit: "If a third person has possession or control of property in which the
judgment debtor has an interest or is indebted to the judgment debtor, the judgment
creditor may bring an action against the third person to have the interest or debt applied
to the satisfaction of the money judgment." Here, Vartelas alleged in his TAC that
Dublin Square "has possession and/or control of property in which Ladckie has some
interest, including but not limited to earned but unpaid salary, vacation time and
bonuses." As we will explain, we conclude that the court did not err in granting summary
judgment on this cause of action.
B
Vartelas first contends that the trial court erred in finding that the statute of
limitations barred recovery of benefits due to Ladckie under his employment agreement
prior to 2005. The statute of limitations for Vartelas's creditor's suit is governed by Code
of Civil Procedure section 708.230. That statute establishes that a creditor's suit "shall be
commenced . . . before the expiration of the later of the following times: [¶] (1) The time
when the judgment debtor may bring an action against the third person concerning the
property or debt. [¶] (2) One year after creation of a lien on the property or debt
pursuant to this title if the lien is created at the time when the judgment debtor may bring
an action against the third person concerning the property or debt." (Code Civ. Proc.,
§ 708.230, subd. (a).) Vartelas does not contend that he obtained a lien on any property
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or debt, so subdivision (a)(2) of the statute is inapplicable. Subdivision (a)(1) therefore
governs this issue.
Code of Civil Procedure section 708.230, subdivision (a)(1), provides that a
creditor's suit must be commenced within the statute of limitations governing the
judgment debtor's action against the third person. In effect, this provision borrows the
statute of limitations that governs the underlying claim the judgment debtor would have
against the third person. (See Ahart, Cal. Practice Guide: Enforcing Judgments and
Debts (The Rutter Group 2014) ¶¶ 6:1398-6:1399.) Because the statute of limitations for
breach of Ladckie's written employment agreement is four years (see Code Civ. Proc.,
§ 337), Vartelas is barred from recovering any amounts due under Ladckie's agreement
more than four years prior to the date Vartelas filed suit.
Vartelas contends that the statute's use of the term "judgment debtor" means that
the underlying statute of limitations cannot begin to run until judgment is entered. (See
Code Civ. Proc., § 708.230, subd. (a)(1).) In Vartelas's view, Ladckie could not have
become a "judgment debtor" until judgment is entered, so the statute could not have
begun to run until Vartelas obtained his California judgment against Ladckie. We
disagree. The statute uses the phrase "judgment debtor" descriptively. The statute of
limitations on Ladckie's underlying claim began to run when it accrues as to him, whether
or not he had attained the status of a "judgment debtor" at that time. A creditor like
Vartelas is bound by the same time limitation. (Ibid.) This principle flows logically from
the nature of the creditor's suit itself, in which the creditor stands in the shoes of the
judgment debtor in his claim against the third person. (See Ilshin Investment Co., Ltd. v.
20
Buena Vista Home Entertainment, Inc. (2011) 195 Cal.App.4th 612, 627.) The
legislative history cited by Vartelas does not support a contrary interpretation.
Unlike the wrongful death cause of action at issue in Kincaid v. Kincaid (2011)
197 Cal.App.4th 75, 80, cited by Vartelas, a creditor's suit is not a fully independent
cause of action with its own statute of limitations. Instead, a creditor's suit is expressly
limited to the statute applicable to the judgment debtor's underlying claim against the
third person. (Code Civ. Proc., § 708.230, subd. (a)(1).) Contrary to Vartelas's
contention, such a result is not inequitable. Vartelas, as Ladckie's creditor, is able to
recover any amounts that Ladckie himself would be able to recover at the time Vartelas
filed his creditor's suit. To hold otherwise would subject third persons to an extended
period of suit through no fault of their own. Vartelas's analogy to the Uniform
Fraudulent Transfer Act is unpersuasive given its differing statutory language, context,
and history. (Cf. Cortez v. Vogt (1997) 52 Cal.App.4th 917, 929.)
We therefore conclude that the trial court properly interpreted the statute of
limitations applicable to Vartelas's creditor's suit. Any amounts due to Ladckie under his
employment agreement with Dublin Square prior to May 11, 2005, i.e., four years before
Vartelas brought his creditor's suit, are not recoverable by Vartelas in this action. (See
Code Civ. Proc., §§ 337, 708.230, subd. (a)(1).)
C
Because we have determined that the statute of limitations bars Vartelas's recovery
of any pre-May 2005 wages, we need not further consider Vartelas's contentions
regarding such wages. However, even if his suit is limited by the statute of limitations,
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Vartelas argues that the court erred in determining that no triable issues of fact exist on
Ladckie's entitlement to certain post-May 2005 wages. He raises the following issues:
(1) whether Dublin Square paid Ladckie his wages for the remainder of 2005 and (2)
whether Vartelas may recover amounts that Ladckie directed Dublin Square to withhold
or garnish from his wages as spousal support for Ladckie's ex-wife (but which Dublin
Square did not pay to her).
1
Dublin Square offered a sworn declaration from Ladckie that "[t]here is no unpaid
portion" of Ladckie's salary currently due to him. This evidence was sufficient to shift
the burden of production to Vartelas to produce admissible evidence creating a triable
issue of fact. (See Aguilar, supra, 25 Cal.4th at p. 849.) In response, Vartelas submitted
a 2005 form W-2 showing that Ladckie had been fully paid for that year. This evidence
corroborated Ladckie's declaration and did not create a triable issue of fact. Vartelas also
submitted Dublin Square's 2005 tax return. This return listed no compensation under the
line item "Compensation of officers" but showed approximately $515,000 in "Salaries
and wages." Vartelas claims that Dublin Square's return shows that it did not pay
Ladckie any salary because later Dublin Square tax returns listed Ladckie's salary under
the "Compensation of officers" line item. Dublin Square counters that Ladckie's wages
were included in the "Salaries and wages" line item for that year
Even viewing Vartelas's evidence liberally, as we must, we cannot conclude that
Vartelas has adequately raised a triable issue of fact as to Ladckie's 2005 wages. "A
party cannot avoid summary judgment based on mere speculation and conjecture
22
[citation], but instead must produce admissible evidence raising a triable issue of fact.
[Citation.]" (Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509,
1524.) The technical inconsistencies noted by Vartelas in Dublin Square's tax returns
show no more than the possibility, based on speculation, that Ladckie was not paid in
2005. Such evidence is insufficient to carry Vartelas's burden of production to show a
triable issue of material fact on this issue. (See ibid.; see also Yuzon v. Collins (2004)
116 Cal.App.4th 149, 166 [triable issue of fact cannot be created by speculation,
conjecture, conclusory assertions or mere possibilities].)
2
In response to Dublin Square's evidence that Ladckie had been fully paid, Vartelas
raises another issue: whether Ladckie (and thus Vartelas) can recover wages withheld by
Dublin Square for spousal support but not paid to Ladckie's ex-wife. Vartelas
acknowledges that he has no claim to wages garnished after Ladckie served Dublin
Square with a valid spousal support earnings assignment order. (See Fam. Code,
§§ 5241-5243.) However, Vartelas argues that any wages voluntarily garnished or
withheld before service of that order, and not paid to Ladckie's ex-wife, are "property in
which [Ladckie] has an interest" pursuant to Code of Civil Procedure section 708.210.
Vartelas relies on the general proposition that " '[e]arned but unpaid salary or
wages are vested property rights.' " (Reyes v. Van Elk, Ltd. (2007) 148 Cal.App.4th 604,
612; see Pineda v. Bank of America, N.A. (2010) 50 Cal.4th 1389, 1401.) However, the
wages here are not "unpaid" in the typical sense. Ladckie's W-2 forms and check stubs
from the period show that he was fully paid. Dublin Square did not refuse to pay
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Ladckie's wages. Instead, Ladckie gave back some of those wages (in the form of
voluntary garnishment or withholding) and directed Dublin Square to pay those wages to
his ex-wife. Ladckie thus relinquished his interest in the garnished wages. In his
declaration, Ladckie confirms that he is not owed any salary from Dublin Square.
Although Dublin Square was not obligated to garnish any amounts pursuant to the
Family Code because it had not been served with a valid assignment order, Dublin
Square made the garnishments and agreed to pay them to Ladckie's ex-wife. Dublin
Square's subsequent failure to make payments may give rise to a cause of action, but
Vartelas has not shown that Ladckie retains a property interest in the garnished wages
that can be recovered through Vartelas's creditor's suit. (See Code Civ. Proc., § 708.210.)
Dublin Square holds the garnished wages for payment to Ladckie's ex-wife. Ladckie
(and his creditors) no longer have an interest in them. The voluntary withholding or
garnishment alleged by Vartelas is thus insufficient to create a triable issue of fact on
Vartelas's creditor's suit.
Because Vartelas has not created a triable issue of fact as to his ability to recover
property from Dublin Square in which Ladckie allegedly has an interest, we need not
consider the parties' additional arguments regarding (1) the scope of Vartelas's allegations
in the TAC and (2) any potential offsets resulting from Ladckie's alleged indebtedness to
Dublin Square.
III
In his cross-appeal, Ladckie contends that the court erred in denying his motion to
vacate the underlying California judgment and for judgment on the pleadings. Vartelas
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filed a motion to dismiss Ladckie's cross-appeal as untimely. Because we have
concluded that the trial court did not err in granting defendants' demurrer or their motion
for summary judgment, we affirm the judgment in Ladckie's favor. As such, we will
dismiss Ladckie's cross-appeal as moot. (See Hewlett v. Squaw Valley Ski Corp. (1997)
54 Cal.App.4th 499, 510, 546 [dismissing protective cross-appeal as moot upon
affirmance of opposing party's appeal].) Vartelas's motion to dismiss Ladckie's cross-
appeal is therefore moot as well, and we deny it on that basis.
DISPOSITION
The judgments are affirmed. Ladckie's cross-appeal is dismissed as moot.
Vartelas's motion to dismiss Ladckie's cross-appeal is denied as moot. Universal, Dublin
Square, and Ladckie are entitled to costs on appeal.
McINTYRE, J.
WE CONCUR:
HUFFMAN, Acting P. J.
NARES, J.
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AI Brief
AI-generated · verify before citing
Holding. The court affirmed the trial court's dismissal of the plaintiff's claims, holding that California law does not permit "reverse" alter ego liability to hold corporations liable for the debts of their shareholders and that the plaintiff failed to sufficiently allege a "single enterprise" theory of liability. Furthermore, the court found no triable issue of fact regarding the creditor's suit for unpaid wages, as the evidence indicated the debtor owed money to the corporation rather than the reverse.
Issues
Whether the trial court erred in sustaining a demurrer without leave to amend regarding alter ego, fraudulent transfer, and declaratory relief claims.
Whether the trial court erred in granting summary judgment on a creditor's suit for unpaid wages and benefits.
Whether the plaintiff sufficiently alleged a 'single enterprise' theory of liability to hold affiliated entities liable for a judgment debtor's debts.
Disposition. Affirmed
Quotations verified verbatim against the opinion
“California courts have therefore rejected such "reverse" piercing and prevented creditors from holding corporations liable for the debts of shareholders and owners.”
“The trial court thus properly sustained defendants' demurrer to this cause of action as well.”