G.F. Galaxy Corp. v. Johnson

CourtCalifornia Court of Appeal
DecidedMarch 8, 2024
DocketD081492
StatusPublished

This text of G.F. Galaxy Corp. v. Johnson (G.F. Galaxy Corp. v. Johnson) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
G.F. Galaxy Corp. v. Johnson, (Cal. Ct. App. 2024).

Opinion

Filed 2/26/24; certified for publication 3/8/24 (order attached)

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

G.F. GALAXY CORPORATION, D081492

Plaintiff and Appellant,

v. (Super. Ct. No. 37-2019- 00009803-CU-CO-CTL) PHUOC LEE JOHNSON,

Defendant and Respondent.

APPEAL from an order of the Superior Court of San Diego County, Ronald F. Frazier, Judge. Reversed and remanded. Kitagawa & Ebert, James R. Ebert and Steven L. Krongold for Plaintiff and Appellant. Phuoc Lee Johnson, in pro. per.; Jabro Law Group and Dimetri Reyzin for Defendant and Respondent. INTRODUCTION Appellant G.F. Galaxy Corporation (Galaxy) appeals from an order granting with prejudice Phuoc Lee Johnson’s motion to tax postjudgment

costs under Code of Civil Procedure section 685.070, subdivision (c). 1 Galaxy had secured a default judgment against Johnson in the instant action and sought by way of a second action to prevent Johnson from transferring assets that might otherwise be available to satisfy the judgment. While the second action remained pending, Galaxy filed a cost memorandum in this case pursuant to section 685.040. Therein, it requested the attorney fees and costs it incurred during the first two years of its efforts to enforce the judgment. The costs derived primarily from the second action. In response, Johnson filed a motion to tax costs seeking to strike the attorney fees and most of the postjudgment costs Galaxy sought. The trial court concluded that a judgment creditor may not claim attorney fees and costs incurred in a separate action before it has prevailed in that action. Because Galaxy’s second action remained ongoing, the trial court granted the motion to tax costs with prejudice, noting that Galaxy could “seek any potential fees or costs it may be entitled to in the Second Action.” Galaxy appealed, arguing that section 685.040 does not contain a “prevailing party” requirement. We agree and conclude the trial court abused its discretion in granting the motion to tax costs on this basis. We therefore reverse and remand the case for further proceedings consistent with this opinion.

1 Statutory references are to the Code of Civil Procedure unless otherwise indicated. 2 FACTUAL AND PROCEDURAL BACKGROUND In August 2018, Galaxy sued Johnson and others for breach of contract and fraud. On October 29, 2019, the trial court entered a default judgment against Johnson and another party in the amount of $477,075.71, which included an award of attorney fees pursuant to contract. Thereafter, Galaxy recorded an abstract of judgment reflecting the default judgment amount with the San Diego County Recorder. Johnson did not pay the amount due under the judgment. In February 2020, Galaxy filed a second action against Johnson and others, alleging that Johnson quitclaimed his interest in real property to his spouse and recorded sham deeds of trust in an effort to avoid the lien in favor of Galaxy imposed by the abstract of judgment. Galaxy sought to cancel deeds of trust to two properties, quiet title to the same, and set aside the allegedly fraudulent transfer. In its second amended complaint, Galaxy clarified that it sought relief pursuant to the Uniform Voidable Transfer Act (Civ. Code, § 3439 et seq.) (UVTA). Meanwhile, another creditor, Franklin De Marco, Jr., recorded another abstract of judgment against Johnson with the San Diego County Recorder on September 27, 2021 (the De Marco Abstract). The De Marco Abstract created a judgment lien in the sum of $348,870.86. In April 2022, while the second action remained pending, Galaxy filed a memorandum of costs after judgment in the first action. Therein, Galaxy sought $257,910.50 for attorney fees incurred between May 1, 2020, and March 31, 2022, in prosecuting the second action. It also requested $18,733.22 in costs. In response, Johnson filed a motion to tax postjudgment costs and attorney fees. He argued Galaxy was required to have filed a noticed motion setting forth its entitlement to reasonable attorney fees, not

3 simply a memorandum of costs. Additionally, in requesting that the attorney fees and costs be stricken, he noted that “[t]here has been no judgment, no determination of prevailing party, and no award of attorney’s fees or costs

[in] the Pending Case.” 2 Galaxy disputed that a motion was required and that section 685.040 contained a “prevailing party” requirement. On December 16, 2022, the trial court held a hearing and then adopted its tentative ruling granting the motion to tax costs. The court rejected Johnson’s argument that Galaxy was required to claim attorney fees by way of a noticed motion, explaining that “the Code clearly allows [Galaxy] to claim attorney fees either by way of a costs memorandum or by noticed motion. (Code Civ. Proc., §§ 685.070(a)(6) & 685.080.)” However, the court concluded that “[n]one of the cases cited by [Galaxy] allowed the judgment creditor to claim attorney fees and costs incurred in a separate action before the separate action had been resolved in some way.” It further determined that, “even assuming the Second Action is an action to enforce the judgment rendered in this case (which the court does not determine at this time), [Galaxy] has not yet prevailed in the Second Action. As such, [Galaxy] is not entitled to claim those costs.” The court, therefore, struck the attorney fees and costs from Galaxy’s cost memorandum and made its order with prejudice, noting that Galaxy could “seek any potential fees or costs it may be entitled to in the Second Action.” DISCUSSION I. Johnson’s Motions on Appeal After Galaxy filed its opening appellate brief and Johnson responded, Johnson filed a motion requesting that we take judicial notice of subsequent

2 In this instance, the term “Pending Case” referred to the second action. 4 filings in the case. He also moved to augment the record and dismiss the appeal. Galaxy opposed the motion to dismiss and request for judicial notice but did not object to Johnson’s request to augment the appellate record. Even if we were to take judicial notice of the requested documents and augment the record, Johnson’s motion does not persuade us that dismissal is warranted. Johnson asks us to consider evidence that, on June 28, 2023, he tendered a cashier’s check for $641,571.43 to Galaxy, which he contends fully satisfied the judgment in the first action. He represents that the check included postjudgment interest calculated through July 5, 2023, and was delivered with a letter demanding that Galaxy immediately file a full satisfaction of judgment. Galaxy accepted the check but did not provide an acknowledgement of full satisfaction of judgment or release its judgment lien. Instead, on June 30, 2023, it filed a partial satisfaction of judgment wherein it acknowledged receiving $641,571.43 but stated: “G.F. Galaxy Corporation filed a Memorandum of Costs After Judgment on April 27, 2022. Phuoc Lee Johnson filed a Motion to Tax Costs, which was granted by the court. G.F. Galaxy Corporation has appealed the Court’s ruling to seek $276,643.72 in additional Attorney’s fees and costs, and the Appeal has not been decided.” In response, Johnson filed a motion to compel Galaxy to execute a full satisfaction of judgment. The trial court set a hearing on the motion for December 22, 2023. The thrust of Johnson’s argument is that because Galaxy accepted the payment, it is foreclosed from continuing to seek the attorney fees and costs it incurred in attempting to enforce the judgment. Additionally, Johnson contends that when Galaxy accepted the check, it also was required to accept the condition that the payment constituted full satisfaction of the judgment.

5 Johnson relies primarily on Gray1 CPB, LLC v. SCC Acquisitions, Inc. (2015) 233 Cal.App.4th 882 (Gray1). In Gray1, the plaintiff obtained a large judgment against the defendants. (Id. at pp.

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Bluebook (online)
G.F. Galaxy Corp. v. Johnson, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gf-galaxy-corp-v-johnson-calctapp-2024.