Case Number: BC045545 Hearing Date: May 08, 2014 Dept: 34

Moving Party: Defendant Ronald Taxe (“Taxe”)

Resp. Party: Third-party Astoria Federal Savings and Loan Association (“Astoria”); third-party Carolyn A. Dye, Chapter 7 Trustee for the Bankruptcy Estate of Kathleen Kellogg-Tax (“Dye”)

Taxe’s motion to set aside the judgment in this matter is DENIED.

The Court GRANTS Dye’s Request for Judicial Notice. (See Evid. Code, § 452(c), (d), (h).)

The Court DENIES Taxe’s Request for Judicial Notice that was part of the Declaration of Grantham attached to Taxe’s Reply. (CRC Rule 3.1113(l).)

BACKGROUND:

Plaintiff Ralph Fernandez commenced this action on 1/2/92 for quiet title. (See Taxe Exh. 3.) Plaintiff filed a supplemental complaint on 11/3/92 adding a claim for rescission of fraudulent transfer. (Id., Exh. 4.) On 5/4/94, the Court entered judgment for plaintiff against defendant Taxe and several other defendants. (Id., Exh. 5.) Among other things, the judgment extinguished a judgment obtained by defendant The Omni Group Inc. (“Omni”) in another action. (Ibid.) Defendants Taxe and G.J. Siegel & Associates appealed, and on 11/16/94 the appellate court affirmed the judgment, with directions that the trial court set aside the assignment of the Omni judgment to Taxe and his wife and to set aside the Omni judgment. (Id., Exh. 6.)

Taxe’s parents filed an action against plaintiff to set aside a Marshal’s Deed in the subject property. Taxe’s parents prevailed and a judgment setting aside the deed was entered on 6/28/94. (Taxe Exh. 7.) Plaintiff and the Taxes thereafter entered into a settlement agreement in February 1996. (See id., Exh. 1.)

On 5/15/00 plaintiff filed a motion to set aside the judgment. (Dye Decl., Exh. 20.) The motion was heard and denied on 6/15/00. (Id., Exh. 22.) The Court rejected the theory that the judgment should be set aside because plaintiff lost standing because Taxe’s parents had set aside the Marshal’s Deed. (Id., Exh. 22, p. 1.) The Court also noted that plaintiff cited no authority for the Court to vacate the judgment entered six years prior without filing a separate action. (Id., Exh. 22, p. 2.)

On 12/11/13, the Court granted Taxe’s ex parte application, vacated the 5/5/94 judgment, and dismissed the action. On 4/3/14, the Court vacated its 12/11/13 minute order.

ANALYSIS:

The Court finds this motion to be close to frivolous, and questions whether Taxe’s counsel has intentionally mislead the court in this motion and his previous motion to vacate that was heard by the court on Dec. 11, 2013.

As an initial matter, the Court notes that the judgment was entered over 20 years ago and the purported settlement agreement between plaintiff and Taxe was executed over 18 years ago. Taxe provides absolutely no explanation as to why he waited so long to seek this relief. Taxe also provides no authority which would allow him to seek such relief approximately 20 years after the judgment was entered without filing a separate action.

The Court is more concerned that Taxe appears to make misrepresentations about the procedural posture of this action. On May 15, 2000, Taxe filed an almost identical motion to the one before the court today. That motion was entitled, “Notice of Motion and Motion to Set Aside, Vacate, Expunge, or Otherwise Eliminate the Judgment Entered in Favor Plaintiff Ralph Fernandez on the Grounds of Equitable Relief for Entry of Avoid Judgment.” (Dye Exh. 20)

Taxe strongly implies that plaintiff’s May 15, 2000 motion to set aside the judgment was never ruled on and is therefore still pending. According to Taxe:

“Plaintiff, Ralph Fernandez’s attorney, Herbert Papenfuss, Esq., initially brought an ex parte application to set aside the judgment and enter a dismissal. The Court (Department 57, the Hon. Ronald [sic, Ralph] Dau), requested Mr. Papenfuss to file the application as a noticed motion. Mr. Papenfuss thereafter filed and served the motion. The docket (Exhibit “2″) reflects that no order or ruling was entered. The motion is still “pending” and by this motion, defendant, Ronald Taxe, requests entry of an order granting it.” (Motion, p. 3:10-15.)

This paragraph is interesting for what it does not say. Although the obvious implication of counsel’s statement is that Judge Dau did not rule on Taxe’s May 15, 2000 motion, counsel is careful to stop just short of saying this. Instead, counsel says only that “the docket . . . reflects that no order or ruling was entered.” This is literally true – the docket attached as Exh. 2 to Taxe’s Motion does not reflect a ruling on this motion.

But the critical fact is that Judge Dau DID rule on the motion. In its June 14, 2000 Minute Order, the Court clearly denied this motion. (See Dye, Exh. 22.)

The Court notes that this is not the first time that Taxe’s counsel has apparently mislead the court. In his ex parte motion filed on Dec. 6, 2013, attorney Grantham makes the same misrepresentation: “A true and correct copy of the court’s docket in this case is attached as Exh. ‘3’. The docket does not reflect that the motion was granted (or denied.)” (Grantham Declaration, attached to ex parte motion, ¶ 5.)

Grantham further affirmatively declared that “the setting aside of the judgment will not affect the interests of third parties . . . .” (Grantham Declaration, attached to ex parte motion, ¶ 6.) It has become clear that this statement was false; if setting aside the judgment wouldn’t affect third parties, this motion would not be so heatedly opposed by various third parties. It is for that very reason that later this court vacated its Dec. 11, 2013 granted Taxe’s ex parte to vacate the previous judgment.

The Court finds counsel’s lack of forthrightness to be troubling and potentially sanctionable.

Taxe argues that his 2000 motion is still “pending” and asks, by way of this motion, that the Court enter an order granting the previous 2000 motion. However, as indicated above, that 2000 motion was denied. In his reply, Taxe implies that this is really a motion for reconsideration: “With all due respect to Judge Dau, Fernandez and Taxe ‘got it right’ in their Motion to Vacate the Judgment filed in the year 2000.” If this is a motion for reconsideration, it is approximately 13 years and 11 months too late. (See CCP 1008.)

The only authority cited by Taxe in the instant motion is Code of Civil Procedure section 128(a)(8), which provides that a court has the power to “amend and control its process and orders so as to make them conform to law and justice. An appellate court shall not reverse or vacate a duly entered judgment upon an agreement or stipulation of the parties unless the court finds both of the following: [¶] (A) There is no reasonable possibility that the interests of nonparties or the public will be adversely affected by the reversal. [¶] (B) The reasons of the parties for requesting reversal outweigh the erosion of public trust that may result from the nullification of a judgment and the risk that the availability of stipulated reversal will reduce the incentive for pretrial settlement.” Taxe primarily relies on the language pertaining to whether an appellate court may vacate a judgment based on a stipulation. (Motion, pp. 11-14.)

The plain language of this provision suggests that it applies only to appellate court actions. Taxe has not provided any authority which holds that section 128(a)(8) allows a trial court to vacate a judgment approximately two decades after entry of judgment, issuance of an appellate court ruling affirming the judgment, and execution of the purported stipulation. (See Eisenberg, et al., Cal. Prac. Guide: Civ. App. & Writs (The Rutter Group 2013) ¶¶ 6:121.15, 6:121.16 [section 128(a)(8) does not apply to allow dismissal of an appeal after the filing of the appellate court’s decision].)

Even if the Court were to consider the merits of Taxe’s section 128(a)(8) argument, it would be denied. Section 128(a)(8) “creates a presumption against stipulated reversals.” (Eisenberg, ¶ 6.120.2 [italics in original].) A judgment cannot be vacated if there is a “reasonable possibility” that the interests of non-parties will be adversely affected. (Code Civ. Proc., § 128(a)(8). Here, Astoria sufficiently shows that its interests could be adversely affected if the judgment is vacated. It is undisputed that the Omni judgment, which was found to be invalid by this Court and the appellate court, had also attached to another property (“Vestone Property”). (See Motion, p. 5; Astoria Opp., p. 4.) It is also undisputed that this property was in the name of Kathleen Kellogg-Taxe and that she obtained a $1 million loan from Astoria. (Motion, pp. 5-6; Astoria Opp., p. 4; Dye Opp., p. 5.) There is now a dispute as to whether the Omni judgment lien is valid and whether the judgment in the instant case is collateral estoppel as to the assertion of such lien. (See Astoria Opp., pp. 4-5; Dye Opp., pp. 5-6.) Third-party Kellspin Inc., a defendant in Kellogg-Taxe’s bankruptcy proceedings and purported assignee of the Omni judgment, has filed a summary judgment motion in those proceedings wherein it argues that the Omni judgment is valid and enforceable. (See Dye Exh. 25.) The bankruptcy court has granted a motion to sell the Vestone Property, but the proceeds are to be held in escrow pending resolution of the dispute as to the liens. (See Astoria Exh. 10.) Therefore, if the judgment in this matter is vacated, the Omni judgment (and its related liens) could be reinstated, and Kellspin could assert the lien against the proceeds of the sale of the Vestone Property. Thus, there is a reasonable possibility that Astoria’s interest in the Vestone Property will be affected.

The Court rejects Taxe’s attacks on the merits of the underlying judgment. The only authority cited for this motion is Code of Civil Procedure section 128. Taxe has not brought a motion to set aside a void judgment under section 473(d). Taxe’s attempt to rely on 473(d) for the first time in his reply is not well taken. (Campos v. Anderson (1997) 57 Cal.App.4th 784, 794, fn.3 [“Points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before. To withhold a point until the closing brief deprives the respondent of the opportunity to answer it or requires the effort and delay of an additional brief by permission.”].) To the extent that Taxe seeks to set aside the judgment on equitable grounds, such a request is rejected because the motion was not made within a reasonable time. (See Cowan v. Cowan (1946) 72 Cal.App.2d 868, 871-872.)

Moreover, Taxe fails to support his arguments as to the merits of the judgment. Taxe has already appealed the judgment on the merits, and the appellate court affirmed the judgment. (See Taxe Exh. 6.) Taxe does not explain why he did not raise these arguments with the appellate court. Taxe does not provide admissible evidence that Omni was not served in this action. (See Taxe Exh. 13 [the declaration merely states that Lauren Hunt was not advised of the action; this does not establish that Omni was never served].) Indeed, Dye provides a proof of service showing that Omni was served in Washington. (See Dye Exh. 11.) Taxe provides no authority to support his assertion that plaintiff’s purported error in designating Omni as a California corporation renders the judgment void or otherwise supports a motion to vacate the judgment. As for the argument that the Court did not have authority to vacate the Omni judgment, the appellate court expressly rejected Taxe’s argument that the relief granted exceeded that prayed for in the complaint. (Taxe Exh. 6, p. 11.) The appellate court also concluded that this Court correctly found that the Omni judgment was part of a scheme by Taxe to preclude plaintiff from executing on his judgment, and ordered the Court to set aside the Omni judgment. (Id., pp. 14-15.) Taxe also argues that plaintiff lacked standing in the underlying action because the Marshal’s Deed was set aside. As noted above, the Court has already rejected this argument. (See Dye Exh. 22.) Taxe did not file a timely or proper motion for reconsideration of the June 15, 2000 ruling.

Taxe’s motion to set aside the judgment in this matter is DENIED.