Federated Financial v. Michael Lamm, CV13-0134

Hearing: Claim of Exemption

Date: March 28, 2018

In March 2013, Federated Financial Corporation of America (“Plaintiff”) obtained a judgment of $52,374.49, against Michael Lamm (“Defendant”). In December 2017, Plaintiff assigned the judgment to NDS, LLC (“NDS”). NDS then executed a bank levy on Defendant’s account at Rabobank on January 10, 2018. (Code Civ. Proc., § 700.040) As of February 1, 2018, the Santa Barbara County Sheriff’s Office reports it is not holding any funds.

Defendant filed a Claim of Exemption. Defendant’s financial statement reports no funds are currently held in the account. “If funds in a natural person’s deposit account are traceable ‘paid earnings’ or other exempt proceeds, they may be exempt; and a claim of exemption can be filed by the debtor to release such funds from the execution levy.” (Ahart, Cal. Practice Guide: Enforcing Judgments and Debts (The Rutter Group 2017) ¶ 6:559, citing Code Civ. Proc., § 704.070(a); see also ¶ 6:951 [earnings paid within 30 days before writ is levied, which may be traced to deposit accounts, may be wholly or partially exempt].)

However, to the extent the exempt earnings remain on hand at the end of the 30-day period, the debtor’s basic necessities are deemed to have been satisfied without them; those earnings lose their exempt character and may be reached to satisfy an outstanding obligation to the judgment creditor. (Ahart, supra, at ¶ 6:951, citing Sourcecorp, Inc. v. Shill (2012) 206 Cal.App.4th 1054, 1059-1061; italics in the original.)
When the judgment creditor chooses to levy on a bank account, the levy reaches only those amounts in the deposit account at the time of service on the financial institution. (Code Civ. Proc., § 700.140(b).) In this case, the date of service was January 10, 2018.

Here, Defendant’s financial statement declares that there are no funds in the Rabobank account and the Sheriff’s Office reports it is not holding any funds. Unless it is shown that there is some amount that is being levied that the Court can determine to be exempt or non-exempt, the Court finds that the Claim of Exemption is moot.