Case Number: KC058921    Hearing Date: October 31, 2014    Dept: O

Montelago Two Development Company, LLC v. Lee, et al. (KC058921)

Plaintiff Montelago Two Development Company LLC’s MOTON FOR JUDGMENT ON THE PLEADINGS

Respondent: Plaintiff-in-Intervention Lee

TENTATIVE RULING

Plaintiff Montelago Two Development Company LLC’s moton for judgment on the pleadings is DENIED.

After obtaining a judgment in Nevada for $99,162.62 against James and Connie Lee, Montelago filed a “sister state” judgment against James and Connie in Los Angeles Superior Court for $316,891.79 (the higher amount was due to attorneys fees, costs, and interest). Montelago then discovered a series of fraudulent transfers between and among the Defendants, which prompted the filing of this lawsuit on 6/10/10.

In January 2012, James Lee paid the sister state judgment in full.

On 1/23/12, Lee filed a Complaint-in-Intervention, seeking a declaration that there are no “damages recoverable” in this action against any Defendant.

In April 2012, James Lee was dismissed.

On 10/31/13, Montelago obtained a default judgment against Lee’s wife and children in the sum of $219,613.21, representing attorneys fees and costs incurred up to the time Lee paid the full amount of the amended judgment. In that Order, Judge Hoffstadt acknowledged that Lee paid the full amount of the amended judgment. That order did not address Lee’s present claim that he also paid $348,029.88 comprising of attorney’s fees. (Opposition, 4:12-14.) The court notes that the Complaint-in-Intervention alleges a different amount; that Lee paid $246,679.84 on 12/1/11. (Complaint-in-Intervention, Par. 21.)

Although Lee was dismissed from the present action, he was allowed to participate as a Plaintiff-in-Intervention because of his possible joint and several liability for damages imposed on his wife. Lee was not allowed to present any evidence at the default hearing because he had already been dismissed. The court rendered default judgment against defaulting Defendants, and Lee’s claims in the Complaint-in-Intervention were to proceed to trial.

Montelago now contends that Lee is prohibited from pursuing his claim that no damages are recoverable because Judge Hoffstadt already rendered a default judgment against defaulting Defendants that directly contradicts Lee’s claim. Judge Hoffstadt found that defaulting Defendants owed Montelago $219,613.21 in compensatory damages. (Ex. F.), the amount of attorney’s fees and costs Montelago incurred up to and including January 2012 when Lee paid the balance of the underlying judgment.

“To prevent a double recovery, equity demands credit be given for payments received on the judgment. Such a balance acts as an offset against the judgment. At common law, a setoff is based upon the equitable principle that parties to a transaction involving mutual debts and credits can strike a balance between them. Setoffs routinely are allowed in actions to enforce a money judgment. The right of offset rests upon the inherent power of the court to do justice to parties appearing before it. A motion to compel acknowledgment of satisfaction or partial satisfaction of a judgment, Code Civ. Proc., §§ 724.050, subd. (d), 724.110, subd. (b), is an entirely acceptable procedure for seeking an offset against a judgment.” (Jhaveri v. Teitelbaum (2009) 176 Cal.App.4th 740, 753-754.)

A party permitted to intervene is permitted to do so in order to pursue its own interests. Once permitted to intervene, it is a party to the action not bound by other parties’ procedural defaults. (Western Heritage Ins. Co. v. Sup.Ct. (2011) 199 Cal.App.4th 1196, 1207.)

Judge Hoffstadt’s ruling would not contradict Lee’s claim of offset for payments already made, if properly proven at trial.

Motion is DENIED.