The Ryan Firm v. Rick Tarnutzer
Case No: 19CV02470
Hearing Date: Tue Jun 18, 2019 9:30

Nature of Proceedings: Hearing Application for Order for Issuance of Sale of Dwelling

Application for Issuance of Order of Sale of Dwelling

Attorneys:

For Plaintiff: Timothy M. Ryan (The Ryan Firm – Irvine)

For Defendant: Richard W. Millar (Friedman Stroffe & Gerard – Irvine)

Ruling: The Court denies judgment creditor The Ryan Firm’s application for issuance of order for sale of dwelling, without prejudice to serving a new notice of levy and thereafter complying with the requirements of CCP §§ 704.740, et seq.

Background

Plaintiff The Ryan Firm obtained a stipulated judgment in the Orange County Superior Court against defendant Rick Tarnutzer, aka Byron Richard Tarnutzer, individually and as trustee of The 1997 Troy Trust. The judgment creditor applies to sell a dwelling to satisfy the judgment. The dwelling is located at 540 Owen Road in Santa Barbara.

A natural person’s interest in a dwelling may only be sold pursuant to a court order under CCP § 704.740-704.850. CCP § 740.740(a). An application for sale must be filed within 30 days after service of a notice of levy. CCP § 704.750(a). The application is timely.

Byron Richard Tarnutzer (“Richard”) contends that he has no interest in the dwelling, other than as a beneficiary of the 1997 Troy Trust (the “Trust”). Title to the property is vested in Nancy Jewell Tarnutzer and Byron Richard Tarnutzer, Co-Trustees of the Trust. Nancy Jewell Tarnutzer is the sole settlor of the Trust. The Trust contains a spendthrift provision, which provides that beneficial interests in the trust, its principal, and its income shall not be subject to the claims of any creditor.

The judgment creditor replies that the judgment is not just against Richard as an individual, but also against him as trustee of the Trust. The judgment creditor maintains that it can satisfy a debt owed by the trust by selling Trust property. (There is no homestead exemption asserted.)

A trust cannot be a judgment debtor; rather the judgment is properly rendered against the trustee of the trust in his representative capacity. Prob. Code § 18004; Portico Mgmt. Grp., LLC v. Harrison, 202 Cal.App.4th 464, 473-474 (2011). The judgment in the Orange Superior Court is against Richard both in his individual capacity and in his capacity as trustee of the Trust. (Neither party addresses the effect of the absence of the other co-trustee from any judgment.)

“Upon the filing of the application by the judgment creditor, the court shall set a time and place for hearing and order the judgment debtor to show cause why an order for sale should not be made in accordance with the application. The time set for hearing shall be not later than 45 days after the application is filed or such later time as the court orders upon a showing of good cause.” CCP § 704.770.

The judgment creditor did not obtain an order to show cause and set the hearing more than 45 days after the application was filed without a showing of good cause. The judgment debtor has opposed the application but not because of the lack of an OSC or the date of the hearing. The judgment debtor has waived any noncompliance with the statute.

However, the other co-trustee of the Trust and property occupant, Nancy Tarnutzer, has not waived these requirements. CCP § 704.770(b)(2) requires the judgment creditor to personally serve the OSC, a copy of the application, and a copy of the notice of hearing on an occupant of the dwelling or, if there is no occupant present at the time service is attempted, post a copy of each document in a conspicuous place at the dwelling. On May 15, the judgment creditor served Nancy Tarnutzer or any other occupant by posting the application and supporting documents at the property. There was no OSC to serve, so the judgment creditor has not complied with CCP § 704.770(b)(2) as to Nancy Tarnutzer.

There is no time to correct the errors in the procedure given the strict timeline for compliance. Therefore, the Court denies judgment creditor The Ryan Firm’s application for issuance of order for sale of dwelling, without prejudice to serving a new notice of levy and thereafter complying with the requirements of CCP §§ 704.740, et seq.