Sbam Partners, LLC v. Wang

• Decision Date: 09 July 2008
• Docket Number: No. B204191.,B204191.
• Citation: 79 Cal. Rptr. 3d 752,164 Cal.App.4th 903
• Court: California Court of Appeals Court of Appeals
• Parties: SBAM PARTNERS, LLC, Plaintiff and Respondent, v. CHENG MIIN WANG, Defendant and Appellant.

164 Cal.App.4th 903

79 Cal. Rptr. 3d 752

SBAM PARTNERS, LLC, Plaintiff and Respondent, v. CHENG MIIN WANG, Defendant and Appellant.

No. B204191.

Court of Appeals of California, Second District, Division Three.

July 9, 2008.

Pick & Boydston and James C. Sun for Defendant and Appellant.

Law Offices of John Z. Shafai and John Z. Shafai for Plaintiff and Respondent.

OPINION

CROSKEY, J.

Plaintiff and respondent SBAM Partners, LLC (SBAM) applied for an order for the sale of defendant and appellant Cheng Miin Wang's condominium located in Los Angeles County in order to satisfy a judgment recorded in the same county. An order to show cause why the order for sale should not issue was entered, and a hearing was held. The issue presented was whether a debtor could create a homestead exemption on property acquired after a judgment had been recorded. Wang claims he was entitled to a homestead exemption on the property pursuant to Code of Civil Procedure section 704.710.¹ The trial court denied the exemption because Wang's property was purchased after SBAM recorded the abstract of judgment. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

On January 13, 1995, a judgment was entered against Wang in the principal sum of $128,957.07. The judgment was assigned to Bank of Seoul on or about March 24, 1995, and was then assigned to SBAM on or about November 19, 2002. An abstract of the judgment had been recorded in Los Angeles County on March 30, 1995. On November 17, 1997, Wang purchased the condominium in question, located in Los Angeles County; he has resided there continuously since the date of purchase. The parties do not suggest that the condominium was purchased with the proceeds from the sale of a prior homestead, and there is no evidence in the record to that effect. SBAM renewed the judgment² on January 6, 2005, in the amount of $257,788.09, and recorded the renewal in Los Angeles County on January 13, 2005.³

On February 6, 2006, SBAM applied for an order for the sale of Wang's condominium to enforce the judgment. On February 7, 2006, the court entered an order to show cause why an order for sale of dwelling should not issue. On July 17, 2007, there was a hearing pursuant to this order. Wang argued that the condominium was entitled to a homestead exemption because attachment of the lien did not occur until the date of purchase, at which time the condominium was already a homestead. SBAM responded that a homestead exemption cannot be created for property acquired after creation of the lien. The trial court denied the homestead exemption, and an order for the sale of the condominium was entered on September 19, 2007. Wang has filed a timely notice of appeal.

ISSUE ON APPEAL

The issue on appeal is whether Wang is entitled to a homestead exemption for his condominium which was acquired after SBAM's judgment lien was recorded, pursuant to section 704.710, subdivision (c).

DISCUSSION

1. Standard of Review

Whether Wang is entitled to a homestead exemption for property acquired after SBAM's judgment lien had been recorded depends on the interpretation of section 704.710, subdivision (c). "`The construction and interpretation of a statute are ... question[s] of law, which the Court of Appeal considers de novo. [Citation.]' [Citation.]" (Treweek v. City of Napa (2000) 85 Cal.App.4th 221, 223 .)

2. Homestead Exemption

(1) Section 697.310, subdivision (a) allows a creditor to obtain a judgment lien on real property owned by the debtor in the county where the abstract of judgment is recorded. The lien attaches to such property at the time the lien is created. (§ 697.340, subd. (a).) "If any interest in real property in the county on which a judgment lien could be created under subdivision (a) is acquired after the judgment lien was created, the judgment lien attaches to such interest at the time it is acquired." (Id., subd. (b), italics added.) (2) If the debtor's home is sold in order to satisfy the judgment, the debtor may be eligible for a homestead exemption of up to $150,000 on the proceeds from the sale.⁴ (§ 704.730.)

(3) Section 704.710, subdivision (a) defines "dwelling" as "a place where a person resides." Section 704.710, subdivision (c) provides that "`[h]omestead' means the principal dwelling (1) in which the judgment debtor or the

judgment debtor's spouse resided on the date the judgment creditor's lien attached to the dwelling, and (2) in which the judgment debtor or the judgment debtor's spouse resided continuously thereafter until the date of the court determination that the dwelling is a homestead. Where exempt proceeds from the sale or damage or destruction of a homestead are used toward the acquisition of a dwelling within the six-month period provided by Section 704.720,⁵ `homestead' also means the dwelling so acquired if it is the principal dwelling in which the judgment debtor or the judgment debtor's spouse resided continuously from the date of acquisition until the date of the court determination that the dwelling is a homestead, whether or not an abstract or certified copy of a judgment was recorded to create a judgment lien before the dwelling was acquired."

(4) In sum, the homestead character of the property is determined as of the date of attachment of the judgment lien. For already owned property, attachment occurs at the time the lien is created. For after-acquired property, attachment occurs on the date of purchase. The proceeds from a voluntary sale of an already exempted homestead are exempt for six months. If the exempt proceeds are used to purchase a dwelling within that six-month period, such dwelling may also qualify for a homestead exemption, even if a judgment lien has already been recorded. In this case, Wang's condominium was purchased with nonexempt proceeds after SBAM recorded the judgment. Therefore, attachment of the judgment lien and the (possible) creation of the homestead occurred simultaneously—at the time of purchase. Whether the judgment lien is subject to a homestead exemption in such a case is an issue of first impression in California.

The Legislative Committee comment to section 704.710 states, in part, that "[s]ubdivision (c) is intended to preclude a judgment debtor from moving into a dwelling after creation of a judgment lien or after levy in order to create an exemption." (Legis. Com. com., Deering's Ann. Code Civ. Proc, §704.710 (1998 ed.) p. 451.) The use of the word "creation" instead of "attachment" produces some ambiguity in ascertaining the legislative intent. SBAM argues that the lien was "created" on March 30, 1995, when the judgment was recorded, in which case Wang clearly would not be entitled to a homestead exemption on the condominium subsequently purchased in November 1997. Wang claims that the lien on his condominium was not "created" until it actually attached, which according to section 697.340, subdivision (b), was the date of purchase on November 17, 1997. Since he lived in the condominium on the date of purchase, the homestead and the lien attached at the same time, and Wang argues that the homestead has priority over the lien.⁶

(5) "`Words used in a statute or constitutional provision should be given the meaning they bear in ordinary use. [Citations.] If the language is clear and unambiguous there is no need for construction, nor is it necessary to resort to indicia of the intent of the Legislature (in the case of a statute) or of the voters (in the case of a provision adopted by the voters). [Citations.] [¶] But the "plain meaning" rule does not prohibit a court from determining whether the literal meaning of a statute comports with its purpose or whether such a construction of one provision is consistent with other provisions of the statute. The meaning of a statute may not be determined from a single word or sentence; the words must be construed in context, and provisions relating to the same subject matter must be harmonized to the extent possible. [Citation.] Literal construction should not prevail if it is contrary to the legislative intent apparent in the statute. The intent prevails over the letter, and the letter will, if possible, be so read as to conform to the spirit of the act. [Citations.] An interpretation that renders related provisions nugatory must be avoided [citation]; each sentence must be read not in isolation but in the light of the statutory scheme [citation]; and if a statute is amenable to two alternative interpretations, the one that leads to the more reasonable result will be followed [citation].' [Citation.]" (Gonzalez v. Toews (2003) 111 Cal.App.4th 977, 981 .) (6) "Statements in legislative committee reports which are in accordance with a reasonable interpretation of a statute will be followed by courts to assist in interpretation of legislative intent. [Citation.]" (Wolfe v. Lipsy (1985) 163 Cal.App.3d 633, 642, fn. 2 .)

"In 1982, the Legislature enacted Assembly Bill No. 707, known as the `Enforcement of Judgments Law,' which is a comprehensive statutory scheme for the enforcement of civil judgments in California, including the role of homestead and residential exemptions. [Citation.]" (Wolfe v. Lipsy, supra, 163 Cal.App.3d at p. 641.) As introduced on March 2, 1981, Assembly Bill No. 707 (1981-1982 Reg. Sess.) (Assembly Bill 707) provided that section 704.710, subdivision (c) would read (in pertinent part), "`[h]omestead' means the principal dwelling (1) in which the judgment debtor or the judgment debtor's spouse actually resided on the date the judgment creditor's lien attached to the dwelling or which, after the date a judgment lien was created by the recording of an abstract or certified copy of the judgment, was acquired with the intent that the judgment debtor or the judgment debtor's spouse actually reside therein as his or her principal dwelling, and (2) in which the judgment debtor or the judgment debtor's spouse actually resided continuously thereafter until the date of the court...