Continental East Fund v. Crockett CA4/1 (2016) · DecisionDepot
Continental East Fund v. Crockett CA4/1
California Court of Appeal Jun 21, 2016 No. D069652Unpublished
Filed 6/21/16 Continental East Fund v. Crockett CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
CONTINENTAL EAST FUND IV, LLC, D069652
Plaintiff and Respondent,
v. (Super. Ct. No. RIC527384)
DONALD RAY CROCKETT,
Defendant and Respondent, ___________________________________
BANK OF AMERICA, N.A. et al.,
Interveners and Appellants.
APPEAL from an order of the Superior Court of Riverside County, Sunshine S.
Sykes, Judge. Reversed and vacated with directions.
McGuire Woods, Leslie M. Werlin, and Blake S. Olson for Interveners and
Appellants.
Floratos, Loll & Devine, William A. Floratos, and John M. Devine for Plaintiff
and Respondent.
No appearance for Defendant and Respondent.
Plaintiff Continental East Fund IV, LLC (Continental) obtained a judgment
against defendant Donald Ray Crockett and a codefendant in the amount of
$4,157,480.90. In proceedings to enforce the judgment, the trial court issued a "turnover
order" requiring Merrill Lynch, Pierce, Fenner, and Smith, Inc. (Merrill Lynch) to
transfer to Continental's counsel all of the funds (approximately $3,900,000) held in a
Merrill Lynch account that the court found Crockett owned. Bank of America, N.A.
(Bank of America) claims it holds a perfected first priority security interest in
approximately $3,087,000 of the funds in the account under a loan agreement.
Bank of America and Merrill Lynch (collectively appellants) appeal the turnover
order, contending (1) the turnover order is appealable; (2) they both have standing to
appeal the turnover order; (3) Bank of America was not provided adequate due process
before it was deprived of its security interest in the subject account; (4) the trial court
exceeded its jurisdiction under California's Enforcement of Judgments Law (Code Civ.
Proc., § 680.010 et seq.1) (EJL) by issuing the turnover order without determining
Crockett's interest in or ownership of the funds in the account; (5) the court exceeded its
jurisdiction by issuing the turnover order without complying with Corporations Code
section 15907.03, which governs transfer of a judgment debtor's interest in partnership
property to a judgment creditor. We agree that Bank of America was not provided
adequate due process and, accordingly, reverse and vacate the turnover order.
1 All further statutory references are to the Code of Civil Procedure unless otherwise specified.
2
FACTUAL AND PROCEDURAL BACKGROUND
In June 2012 Continental obtained a superior court judgment against Crockett and
David Wakefield awarding Continental $4,157,480.90. In April 2015, Continental
obtained an order requiring Merrill Lynch to appear for a third person examination under
section 708.120 regarding property of the judgment debtor in Merrill Lynch's possession
or control. On May 7, 2015, the court granted Continental's ex parte application for a
temporary restraining order (TRO) preventing Crockett and Merrill Lynch from
transferring or encumbering assets held in Merrill Lynch accounts ending in 2446 and
73592 under the name of Crockett 39 Family Partners, Ltd.
On May 8, 2015, after Merrill Lynch underwent the third person examination, the
court issued an order stating: "It is requested that MERRILL LYNCH . . . immediately
deliver to the Judgment Creditor cash assets held in #[] . . . 7359 . . . , which will be
applied toward satisfaction of the Judgment . . . entered on June 14, 2012 along with all
interest accrued therein." The court set a hearing on "the matter of turnover" for May 14,
2015 and set a deadline for any party opposed to the turnover to file opposition and for
Continental to file "responsive pleadings." The order further provided the restraining
order issued on May 7 would remain in effect until the conclusion of the hearing.
Crockett filed opposition to the turnover order and the court ultimately held the
hearing on the turnover matter on May 29, 2015. On June 4, 2015, the court filed an
2 Because there were no funds in the account ending in 2446, the only account at issue in this appeal is the one ending in 7359. Subsequent references to "the account" or the "Merrill Lynch account" are to the account ending in 7359.
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order for delivery of property. The court ordered that all the assets in the Merrill Lynch
account "shall be forthwith liquidated and all net proceeds therefrom shall be
immediately turned over to [Continental's] counsel by wire transfer, as per instructions
supplied by [Continental]." The court further ordered that Merrill Lynch provide an
accounting to the parties and that its "previous order freezing these assets shall remain in
full force and effect until the turn over is complete." The court gave notice "that failure
to comply with this order may subject Merrill Lynch to arrest and punishment for
Contempt of Court."
By letter dated June 17, 2015, Merrill Lynch's counsel, who also represents Bank
of America in this case, provided Crockett's counsel and Continental's counsel the court-
ordered accounting. The letter stated the Merrill Lynch account was "pledged in its
entirety as collateral to [Bank of America] on a loan made by [Bank of America] to
another entity that is not subject to the [court's June 4] Order. . . . [Bank of America],
through a security instrument, holds a first priority lien on the assets, perfected by
control, in account ending in [7359] to secure the loan." The loan amount secured by the
account was $3,086,560.46, excluding accruing interest. The letter stated Merrill Lynch
was in the process of liquidating the assets in the account, which were "comprised of
municipal bonds, mutual funds, cash equivalents, and an alternative investment. The
market value [of the account] as of the close of business on June 16, 2015 was
$3,967,156.19. The net equity amount after the loan is paid off [would] be approximately
$880,595.00 as of the close of business on June 16, 2015." The letter stated that the
process of liquidating the assets in the account pursuant to the court's order would
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involve Bank of America's giving the loan parties a notice of demand and instructing
Merrill Lynch to apply the proceeds of the account to repay the loan. Upon liquidation of
the account and repayment in full to Bank of America of the loan amount, Merrill Lynch
would "wire transfer the net proceeds to counsel for Continental . . . ."
The day after receiving the June 17, 2015 letter from Merrill Lynch's counsel,
Continental filed an ex parte application for a TRO preventing Merrill Lynch from
disbursing any of the assets in the account "to any person or entity except as specifically
provided in the Court's Order . . . filed on June 4, 2015." Specifically, Continental sought
to restrain Merrill Lynch from disbursing any money or assets from the account to Bank
of America for repayment of its loan. Continental's ex parte application included a copy
of the June 17, 2015 letter from Merrill Lynch's counsel.
The court held a hearing on Continental's ex parte application on June 19, 2015.
Merrill Lynch appeared at the hearing through counsel. The court directed Continental's
counsel to prepare an order requiring Merrill Lynch to turn over the money in the account
after liquidation with "no payouts to any lien holders from the account prior to the
turnover." The court informed Merrill Lynch's counsel that "if Merrill Lynch were to pay
off Bank of America in the interim, there would be a basis [upon] which this Court can
find Merrill Lynch to be in contempt of court." Merrill Lynch's counsel requested
permission to be heard. The court denied counsel's request on the ground Merrill Lynch
was not a party and did not have standing.
The June 19 ex parte hearing resulted in the June 24, 2015 turnover order that
Bank of America and Merrill Lynch have appealed. The turnover order restated the
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provisions of the court's June 4, 2015 order requiring Merrill Lynch to liquidate all of the
assets in the account, immediately turn over the net proceeds from the account to
Continental's counsel, and provide an accounting to the parties. The order also reiterated
that the court's "previous order freezing these assets shall remain in effect until the turn
over is complete." The June 24 order added the directive that "Merrill Lynch shall pay all
said proceeds as directed without payment to any other alleged creditor, alleged secured
party, or any other claimant." The order gave notice "that failure to comply with this
order may subject Merrill Lynch to punishment for Contempt of Court."
On June 24, 2015, the same day the court entered the turnover order, Bank of
America filed an ex parte application for leave to file a complaint in intervention and to
stay the June 4, 2015 turnover order pending resolution of its complaint or, alternatively,
to stay the turnover order until it could have its application to intervene heard on regular
notice. Bank of America contended that if the court did not grant its application, it would
suffer irreparable harm or be placed in immediate danger of losing its security, and would
be deprived of its constitutional due process rights.
The court held a hearing on Bank of America's ex parte application on June 30,
2015. The court denied Bank of America's request to stay the turnover order, but ordered
all funds turned over under the order be held in Continental counsel's interest bearing
trust account until further order of the court. The court set a hearing on Bank of
America's motion to intervene for August 21, 2015 and set a briefing schedule for the
motion. In August 2015, the court granted the motion to intervene and ordered that
"[Bank of America's] intervention is limited to the purpose of determining whether [it]
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has a senior security interest in the funds that are subject to the turnover order." Bank of
America filed its complaint in intervention and Continental filed an answer to the
complaint.
Appellants filed a notice of appeal in Riverside County Superior Court that
identified the June 4 turnover order, the June 19 oral order denying Merrill Lynch the
right to be heard, the June 24 turnover order, and the June 30 order. Division Two of the
Fourth District Court of Appeal, before transferring the appeal to this Division, ordered
appellants to file a letter brief addressing the issue of whether they have standing to
appeal the June 4 and June 24 orders. After considering appellants' letter brief, the court
issued an order allowing the appeal to proceed but directing the parties to address the
issue of appellants' standing in their briefs. The court dismissed the appeal from the
June 19, 2015 oral order and the June 30 order.
DISCUSSION
I. Appealability
The parties dispute whether the June 24, 2015 turnover order is an appealable
order. Continental contends the turnover order is not appealable because it is not a final
judgment. Essentially, Continental argues that because the issue of whether Bank of
America has a priority security interest in the Merrill Lynch account will be determined
in the adjudication of Bank of America's complaint in intervention, the appeal from the
turnover order is premature. Appellants contend the turnover order is appealable under
section 904.1, subdivision (a)(2) as an order after judgment and under subdivision (a)(6)
7
as a mandatory injunction. We agree with appellants and note that Continental did not
address appellants' specific appealability arguments.
An order entered after an appealable judgment is itself appealable under section
904.1, subdivision (a)(2). However, not every postjudgment order is appealable. (Lakin
v. Watkins Associated Industries (1993) 6 Cal.4th 644, 651 (Lakin).) "To be appealable,
a postjudgment order must satisfy two additional requirements. . . . [¶] The first
requirement . . . is that the issues raised by the appeal from the order must be different
from those arising from an appeal from the judgment. [Citation.] 'The reason for this
general rule is that to allow the appeal from [an order raising the same issues as those
raised by the judgment] would have the effect of allowing two appeals from the same
ruling and might in some cases permit circumvention of the time limitations for appealing
from the judgment.' [Citation.] . . . [¶] The second requirement . . . is that 'the order must
either affect the judgment or relate to it by enforcing it or staying its execution.'
[Citation.] Under this rule, a postjudgment order that does 'not affect the judgment or
relate to its enforcement [is] not appealable . . . .' " (Id. at pp. 651-652.) In addition, the
postjudgment order must not be preliminary to further proceedings and become subject to
appeal after a future judgment. (Id. at p. 654.)
The turnover order satisfies these requirements for an appealable postjudgment
order. The instant appeal from the order raises issues that are different from and
unrelated to any issues that could arise from an appeal from the judgment, and the order
clearly relates to the judgment because Continental sought the order as a means of
enforcing its judgment under the EJL. Further, the order does not on its face contemplate
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further proceedings and is not subject to an appeal after a judgment is entered on Bank of
America's complaint in intervention.3
The turnover order is also appealable as a mandatory injunction. Section 904.1,
subdivision (a)(6) makes appealable "an order granting . . . an injunction . . . ." An
injunction is "a writ or order commanding a person either to perform or to refrain from
performing a particular act." (McDowell v. Watson (1997) 59 Cal.App.4th 1155, 1160;
Luckett v. Panos (2008) 161 Cal.App.4th 77, 84.) An order compelling a person to
perform a particular act constitutes a mandatory injunction and, as such, is an appealable
order under section 904.1, subdivision (a)(6). (Canaan Taiwanese Christian Church v.
All World Mission Ministries (2012) 211 Cal.App.4th 1115, 1118, fn. 1.) The June 24,
2015 turnover order compelled Merrill Lynch to perform the particular acts of liquidating
the assets in the Merrill Lynch account and turning over the proceeds from the liquidation
to Continental's counsel. Thus, the order is appealable as a mandatory injunction.
3 The appeal does not raise the same issue raised in Bank of America's complaint in intervention–i.e., whether Bank of America's security interest in the Merrill Lynch account is superior to Continental's; it raises the issue of where the turned over funds from the Merrill Lynch account should be held until the complaint in intervention is adjudicated. The relief it seeks is reversal of the turnover order, which would simply require those funds to be returned to the Merrill Lynch account rather than being held in Continental's attorney's trust account.
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II. Standing to Appeal
As noted, the parties were directed to address the issue of appellants' standing in
their briefs. We conclude both Bank of America and Merrill Lynch have standing to
appeal.
Whether an appellant has standing to appeal is a question of law and is
jurisdictional. (People v. Hernandez (2009) 172 Cal.App.4th 715, 719-720 (Hernandez).)
"We liberally construe the issue of standing and resolve doubts in favor of the right to
appeal." (Apple, Inc. v. Franchise Tax Bd. (2011) 199 Cal.App.4th 1, 13.) Section 902
governs standing to appeal and provides that "[a]ny party aggrieved may appeal in the
cases prescribed in this title." A party "is considered 'aggrieved' [if the party's] rights or
interests are injuriously affected by the judgment. [Citations.] Appellant's interest 'must
be immediate, pecuniary, and substantial and not nominal or a remote consequence of the
judgment.' " (County of Alameda v. Carleson (1971) 5 Cal.3d 730, 737 (County of
Alameda).)
As a general rule, only parties of record have standing to appeal. (County of
Alameda, supra, 5 Cal.3d at p. 736; Hernandez v. Restoration Hardware, Inc. (2016) 245
Cal.App.4th 651, 657.) However, the rule is not ironclad. Under the heading, "Who May
Appeal," the Code Commissioners' Notes to section 902 state that "[o]ne not a party to
the record may appeal, if aggrieved by the judgment." (Code commrs., notes foll. 17B
West's Ann. Code Civ. Proc., § 902 (2009 ed.) p. 10.) The Commissioners' Notes cite
Adams v. Woods (1857) 8 Cal. 306 (Adams), in which the California Supreme Court held
that a party aggrieved by a judgment has the right to appeal the judgment even though the
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appellant is not a party of record. (Id. at pp. 314-315.) As the Court of Appeal noted in
In re FairWageLaw (2009) 176 Cal.App.4th 279 (FairWageLaw): "Nonparties who are
aggrieved by a judgment may appeal from it. '[A]ny entity that has an interest in the
subject matter of a judgment and whose interest is adversely affected by the judgment is
an aggrieved party and is entitled to be heard on appeal.' " (Id. at p. 285.)
In Hernandez, nonparty pawnbrokers appealed an order that required them to
return stolen property in their possession to its purported owners. (Hernandez, supra,
172 Cal.App.4th at p. 719.) The trial court issued the order without providing notice to
the pawnbrokers. (Ibid.) A panel of this court in Hernandez noted that "[a]ny party
legally aggrieved by a challenged ruling has standing to appeal it [citation] and a
nonparty that is aggrieved by a judgment or order may become a party of record and
obtain a right to appeal by moving to vacate the judgment. [Citation.] Additionally, a
nonparty may appeal if a judgment or order has a res judicata effect on the nonparty.
[Citation.] Such an effect on the nonparty must, however, be 'immediate, pecuniary, and
substantial and not nominal or a remote consequence of the judgment [or order]' in order
to confer standing." The Hernandez panel concluded the nonparty pawnbrokers had
standing to appeal because "the challenged order [was] binding and the injurious effect of
the order on the pawnbrokers was immediate, pecuniary and substantial." (Id. at p. 720.)
Bank of America was similarly aggrieved by the turnover order because the order
at least temporarily deprived it of its claimed security interest in the Merrill Lynch
account, and threatened to permanently deprive it of that interest without due process.
Bank of America was further aggrieved by the order because it forced Merrill Lynch to
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liquidate the assets in the account, thereby limiting the growth potential of the account.
(See Blumenthal v. Di Giorgio Fruit Corp. (1938) 30 Cal.App.2d 11, 19 [injunction to
restrain payment of stock dividends under recapitalization plan could result in a forced
liquidation of stock that would seriously injure stockholders who accept the benefit of the
plan].) The order on its face is binding and the injurious effect of the order on the Bank
of America was immediate, pecuniary and substantial.
The turnover order is injurious to Bank of America regardless of the court's
ultimate determination of the priority of Bank of America's claimed security interest in
the Merrill Lynch account because, as we discuss infra, the order deprived it of its
security interest without notice and an opportunity to be heard on the issue of whether its
interest was superior to Continental's claimed interest in the account as a judgment
creditor. "The right to be heard does not depend upon an advance showing that one will
surely prevail at the hearing." (Fuentes v. Shevin (1972) 407 U.S. 67, 87 (Fuentes).) "If
the right to notice and a hearing is to serve its full purpose, then, it is clear that it must be
granted at a time when the deprivation can still be prevented. At a later hearing, an
individual's possessions can be returned to him if they were unfairly or mistakenly taken
in the first place. Damages may even be awarded to him for the wrongful deprivation.
But no later hearing and no damage award can undo the fact that the arbitrary taking
that was subject to the right of procedural due process has already occurred." (Fuentes,
supra, at pp. 81-82, italics added.) Thus, whether or not the trial court ultimately
determines Bank of America's security interest in the account is superior to Continental's
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interest, Bank of America is aggrieved by the turnover order because the order deprived it
of its alleged interest in the account without the opportunity to be heard.
Merrill Lynch is also aggrieved by the turnover order, which, as we discussed
above, is a mandatory injunction that compelled Merrill Lynch to liquidate the assets in
the account and the turn over the proceeds from the liquidation to Continental's counsel
under the threat of contempt. Merrill Lynch became a party of record when it appeared
under a court order for a third person examination under section 708.120. On that point,
Pacific States Savings & Loan Co. v. Mortimer (1945) 70 Cal.App.2d 811 (Pacific
States) is instructive.
In Pacific States, the appellant corporation appealed an order authorizing the
"commissioner in liquidation" to sell certain parcels of real property owned by the
corporation. (Pacific States, supra, 70 Cal.App.2d at pp. 812-813.) The corporation
appeared in the proceedings and contested the proposed sales in response to an order to
show cause why the sales should not be approved. (Id. at pp. 813-814.) The respondent
commissioner contended the corporation lacked standing to appeal. The Court of Appeal
disagreed, noting that "[o]ne may become a 'party to the record' by an order to show
cause which brings him into the proceeding and enables the court to make an order
adverse to him." (Id. at p. 814.) The court concluded that because the corporation was
brought into the proceeding by an order to show cause and appeared to contest the order
for sale, it became a party entitled to appeal from that order. (Ibid.) Similarly, in the
present case, Merrill Lynch was ordered to appear in the proceeding by Continental's
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third person examination subpoena, and it was ordered to turn over the account under
threat of contempt. It thereby became a party entitled to appeal from the turnover order.
Anglo-Californian Bank v. Superior Court (1908) 153 Cal. 753 (Anglo-
Californian) is also analogous to the present case. In Anglo-Californian, the plaintiff
bank held funds belonging to an insolvent corporation undergoing involuntary liquidation
in receivership. (Id. at p. 754.) The bank refused to pay the corporation's receiver
portions of the corporation's funds that two third parties claimed were owed to them. The
court issued an order to show cause why the bank should not be ordered to pay the
withheld funds to the receiver and, after a hearing, ordered the bank to pay those funds to
the receiver. (Id. at pp. 754-755.) The bank challenged the order by writ petition, the
California Supreme Court granted a writ of review, and the defendants (the superior court
and a judge) argued that issuance of the writ was improper because the bank had standing
to challenge the order by appeal. (Id. at pp. 755-756.) The Supreme Court agreed and
dismissed the writ proceeding, concluding the order was appealable as a final
adjudication against the bank in a collateral proceeding and the bank had standing to
appeal because it was "a party to the record, so far as such collateral proceeding was
concerned, having been brought in as such a party by the order to show cause . . . ." (Id.
at p. 756.)
Merrill Lynch similarly became a party to the record with standing to appeal the
turnover order because it was brought into the case by an order to appear in the judgment
enforcement proceeding. Merrill Lynch was aggrieved by the turnover order because the
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order compelled it, under the threat of contempt, to liquidate the assets in the account and
then lose the account by turning it over to Continental's counsel.
III. Due Process
Appellants contend the turnover order should be vacated because Bank of America
was not provided adequate due process before it was deprived of its security interest in
the subject account. We agree.
"Both the federal and state Constitutions compel the government to afford persons
due process before depriving them of any property interest. [Citations.] In light of the
virtually identical language of the federal and state guarantees, [California courts] have
looked to the United States Supreme Court's precedents for guidance in interpreting the
contours of our own due process clause and have treated the state clause's prescriptions as
substantially overlapping those of the federal Constitution. [Citation.] [¶] 'The essence
of due process is the requirement that "a person in jeopardy of serious loss [be given]
notice of the case against him and opportunity to meet it." ' [Citations.] The opportunity
to be heard must be afforded 'at a meaningful time and in a meaningful manner.' "
(Today's Fresh Start, Inc. v. Los Angeles County Office of Education (2013) 57 Cal.4th
197, 212 (Today's Fresh Start).) As we noted above, "[i]f the right to notice and a
hearing is to serve its full purpose, then, it is clear that it must be granted at a time when
the deprivation can still be prevented." (Fuentes, supra, 407 U.S. at p. 81.)
" 'The first inquiry in every due process challenge is whether the plaintiff has been
deprived of a protected interest in "property" or "liberty." [Citations.] Only after finding
the deprivation of a protected interest do we look to see if the State's procedures comport
15
with due process.' " (Today's Fresh Start, supra, 57 Cal.4th at p. 214.) A "security
interest" is an interest in personal property or fixtures that secures payment or
performance of an obligation. (Cal. U. Com. Code, § 1201, subd. (b)(35).) Accordingly,
the June 24, 2015 turnover order deprived Bank of America of a protected property
interest.
The court issued the turnover order without first providing Bank of America notice
or an opportunity to be heard. The court was made aware of Bank of America's security
interest, at the latest, through Continental's ex parte application filed on June 18 and
heard on June 19, 2015. Continental's application included the June 17 letter from
Merrill Lynch's counsel informing Continental of Bank of America's security interest and
Merrill Lynch's intent to transfer to Continental the net proceeds of the account after
paying Bank of America the balance owing on its loan secured by the account. The
purpose of Continental's ex parte application was to prevent Merrill Lynch from
transferring any funds from the account to Bank of America, and its application was
successful. As a result of the hearing, the court ordered Merrill Lynch to turn over the
money in the account after liquidation with no payouts to any lien holders from the
account prior to the turnover. The court expressly warned Merrill Lynch's counsel that
there would be a basis to hold Merrill Lynch in contempt of court "if Merrill Lynch were
to pay off Bank of America in the interim[.]"
In determining what process is due, courts balance three considerations: " 'First,
the private interest that will be affected by the official action; second, the risk of an
erroneous deprivation of such interest through the procedures used, and the probable
16
value, if any, of additional or substitute procedural safeguards; and finally, the
Government's interest, including the function involved and the fiscal and administrative
burdens that the additional or substitute procedural requirement would entail.' " (Today's
Fresh Start, supra, 57 Cal.4th at p. 213.) Bank of America's "private interest" (i.e.,
security interest) in over $3 million of the funds transferred to Continental's counsel
under the turnover order is substantial, as is the risk of erroneous deprivation of that
interest in light of the order's implied finding that Continental's interest in the account as
a judgment creditor is superior to Bank of America's security interest. Providing Bank of
America notice and an opportunity to be heard before ordering Merrill Lynch to turn over
the entire account to Continental's counsel would not have imposed a significant fiscal
and administrative burden on the government (i.e., the court). To the contrary, it would
have obviated the need for further proceedings seeking to stay or undo the turnover order,
including this appeal.
Although Merrill Lynch was not deprived of notice of the June 19, 2015 hearing
resulting in the June 24 turnover order, it was deprived of the opportunity to be heard
regarding Bank of America's security interest. As noted, the court denied Merrill Lynch's
request to be heard at the June 19 hearing because the court concluded Merrill Lynch was
not a party and did not have standing. The court's issuance of the order requiring Merrill
Lynch to turn over the entire account before allowing Bank of America or Merrill Lynch
to be heard on the issue of whether Bank of America's security interest in the account was
superior to Continental's interest in the account deprived Bank of America of its
constitutional right to due process. When "the trial court denies a party his right to a fair
17
hearing, it exceeds its jurisdiction, and the error is reversible per se." (In re Marriage of
Carlsson (2008) 163 Cal.App.4th 281, 292.)4
DISPOSITION
The turnover order entered on June 24, 2015 is reversed and vacated. The court is
directed to enter an order requiring Continental's counsel to return the funds counsel
received from the Merrill Lynch account to Merrill Lynch to be held pending resolution
of Bank of America's complaint in intervention. Appellants are awarded their costs on
appeal.
McCONNELL, P. J.
WE CONCUR:
HUFFMAN, J.
O'ROURKE, J.
4 In light of our decision to vacate the turnover order and direct return of the subject funds to the Merrill Lynch account, we need not address appellants' contentions that the court issued the turnover order without complying with the EJL and Corporations Code section 15907.03. Any defenses to a future turnover order of funds held in the Merrill Lynch account may be asserted by parties with standing to do so in the future proceedings.
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AI Brief
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Holding. The court held that the turnover order violated Bank of America's due process rights because it deprived the bank of its security interest in the account without notice or an opportunity to be heard. Consequently, the court reversed and vacated the turnover order.
Issues
Whether the turnover order is an appealable order.
Whether Bank of America and Merrill Lynch have standing to appeal the turnover order.
Whether the trial court violated Bank of America's due process rights by issuing a turnover order without notice or an opportunity to be heard.
Disposition. Reversed and vacated.
Quotations verified verbatim against the opinion
“We agree that Bank of America was not provided adequate due process and, accordingly, reverse and vacate the turnover order.”
“The turnover order satisfies these requirements for an appealable postjudgment order.”
“Bank of America was similarly aggrieved by the turnover order because the order at least temporarily deprived it of its claimed security interest in the Merrill Lynch account, and threatened to permanently deprive it of that interest without due process.”