BANC OF AMERICA LEASING & CAPITAL, LLC, Plaintiff and Respondent, v. SFERAS INCORPORATED et al., Defendants; PERRY F. CARAVELLO, Third Party Claimant and Appellant

7/30/2019 BANC OF AMERICA LEASING & CAPITAL, LLC, Plaintiff and Respondent, v. SFERAS INCORPORATED et al., Defendan

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2/28/12AL LLC v. SFERAS INCORPORATED PERRY CARAVELLO, B22478

selaw.findlaw.com/ca-court-of-appeal/1566795.html

Court of Appeal, Second District, California.

BANC OF AMERICA LEASING

CAPITAL LLC v. SFERAS

INCORPORATED PERRY CARAVELLO

BANC OF AMERICA LEASING & CAPITAL, LLC, Plaintiff and Respondent, v.

SFERAS INCORPORATED et al., Defendants; PERRY F. CARAVELLO, Third Party

Claimant and Appellant.

B224787

-- May 09, 2011

Perry F. Caravello, in pro. per. for Third Party Claimant and Appellant. Serlin & WhitefordMark A. Serlin, Kevin P. Whiteford for Plaintiff and Respondent.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

Appellant Perry F. Caravello appeals from the trial court's denial of his third party claim,brought pursuant to Code of Civil Procedure section 720.110, by which Caravello sought thereturn of funds he held in joint bank accounts that were levied upon by a judgment creditor of

his cousin. The trial court found that Caravello contributed all monies to the accounts, butheld that Caravello exposed all funds to levy by the cousin's judgment creditor through addinghis cousin's name to the accounts. Based on this holding, the trial court denied Caravello'sthird party claim.

We reverse. The trial court's emphasis on whether the levy was proper was misplaced. Caravello's third party claim was a proper method of seeking return of the levied funds, andthe trial court's finding that Caravello contributed all funds to the subject accountsnecessitated a finding that the accounts belonged to him. The judgment creditor could obtain


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no greater right in the bank accounts than that of its judgment debtor, the cousin, and

Caravello's interest as the owner of the accounts was clearly superior to that of his nonownercousin. Caravello's third party claim therefore should have been granted.

FACTUAL AND PROCEDURAL BACKGROUND

In February 2010, Banc of America Leasing & Capital, LLC, was granted judgment against

Sferas Incorporated, previously doing business as Master Graphics Printing, and its principalMark F. Sferas, in the amount of $80,707. Banc of America thereafter obtained a writ ofexecution and levied upon all deposit accounts in the name of Sferas at Comerica Bank inWoodland Hills, California. Three accounts, including one time deposit, were levied onMarch 25, 2010.

Shortly afterward, Caravello, acting in propria persona, filed a verified third party claim, inwhich he stated that the levied bank accounts were in his name and he was the complete andunequivocal owner of the levied funds. Caravello claimed that Sferas, his cousin, was not

owner of any levied funds, that Sferas had never made deposits into or withdrawals from thebank accounts, and that Sferas had never transferred or acquired any funds from theaccounts. The claim stated that Sferas had been jointly named on Caravello's accountssolely because Caravello planned that, in the event of death, Sferas would transfer theaccount funds to Caravello's daughter, a resident of Texas. Caravello filed a petition forhearing on his third party claim pursuant to Code of Civil Procedure sections 720.110,720.210, and 720.310, seeking a determination of the validity of his claim and the properdisposition of the account funds.

Apparently unable to obtain a regular hearing date for his third party claim prior to August2010, Caravello filed an ex parte application on April 14, 2010, for an order shortening time,with a declaration made under penalty of perjury that substantially repeated the informationcontained in his verified third party claim. Banc of America opposed. The court's April14, 2010 minute order stated that the application was granted, and that the petition forhearing on third-party claim was set for April 29, 2010. Confusion arose, as Banc ofAmerica thought that the ex parte hearing on the order shortening time was merely continueduntil April 29, 2010, not that the third party claim would be heard on that date.

Nevertheless, Banc of America filed an opposition to Caravello's claim, arguing that Caravellohad failed to submit competent, admissible evidence supporting his claim, particularly because

he had attached no documentary evidence. Banc of America also argued that becauseSferas was named on the accounts, he had dominion and control over them, and Banc ofAmerica's rights with respect to the accounts funds were superior to those of Caravello. Caravello filed a reply to Banc of America's opposition, expanding on the points he made inhis initial third party claim.

At the April 29, 2010 hearing, the trial court stated that its minute order had been in error, andthat only the ex parte application would be heard that day. The parties wished to have thethird party claim heard immediately, however, and stipulated to a waiver of procedural


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irregularities. The court further requested that the parties stipulate that any appeal be takendirectly from the statement of decision that would be issued after the hearing. The partiesagreed, and tried the third party claim that day.

Caravello attempted to present evidence at the hearing by examining Sferas as well as himself Objections to much of Caravello's direct examination were sustained. Caravello didmanage to present some evidence that Sferas never made any deposits or withdrawals from

the subject bank accounts, and that Sferas's name was placed on the accounts for the purposeof transmitting the funds to Caravello's daughter in the event of Caravello's death. Therewas also evidence presented that the subject bank accounts were under both Caravello's andSferas's names, that Sferas's name was placed on the accounts in approximately July 2009,and that when the accounts were levied in March 2010, both Caravello's and Sferas's nameswere still on the accounts. The parties further stipulated that a total of $27,436.23 was inthe three levied accounts.

The trial court issued a lengthy statement of decision on May 14, 2010, which, after

recounting the procedural history, stated: Indeed, Mr. Caravello was a credible witness. He testified directly and with conviction. The testimony received at trial establishes that themonies held in all three subject bank accounts were deposited by Mr. Caravello without anycontribution thereto by Mr. Sferas. Nevertheless, the court found that the ultimate issue to

be decided was whether applicable California law allowed [Banc of America] to levy againstthe subject bank account regardless of notice of Caravello's claim The court found thatonce Mr. Caravello added the name of Mr. Sferas to the subject bank account, Mr.Caravello exposed all of the funds contained therein to any judgment creditor of Mr. Sferas. The court held that Banc of America's judgment was superior to Mr. Caravello's claim to

the account funds, and concluded by finding that the levy was valid under applicableCalifornia law and therefore that Caravello's claim could only be denied. Thereafter, thecourt entered judgment in favor of Banc of America denying Caravello's third party claim.

DISCUSSION

On appeal, Caravello argues that he proved the funds in the levied bank accounts wereentirely his and that the trial court thus erred by denying his third party claim. Banc ofAmerica contends that the levy on the accounts was proper, that Caravello failed to meet hisevidentiary burden of proof in making his third party claim, and that the trial court's ultimate

decision should not be disturbed. We find that the trial court's holding that the accountfunds were contributed only by Caravello was supported by substantial evidence, but the trialcourt then erred by denying Caravello's third party claim. Accordingly, we reverse.

I.The Trial Court's Determination that the Account Funds Came Solely from CaravelloWas Supported by Substantial Evidence.

Although much of the evidence that Caravello attempted to present in support of his thirdparty claim was excluded, some admissible evidence was presented and considered by the tria


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court. In its statement of decision, the trial court held that the monies in all three subjectbank accounts were deposited by Caravello without any contribution by Sferas.

The Court of Appeal examines a trier of fact's resolution of disputed factual questions under asubstantial evidence standard of review. (Crawford v. Southern Pacific Co. (1935) 3 Cal.2d427, 429.) Substantial refers to the quality, not the quantity, of evidence. (Roddenberryv. Roddenberry (1996) 44 Cal.App.4th 634, 651.) It is not synonymous with any

evidence, but rather must be reasonable in nature, credible, and of solid value. (BeckDevelopment Co. v. Southern Pacific Transportation Co. (1996) 44 Cal.App.4th 1160, 12031204, quoting Estate of Teed (1952) 112 Cal.App.2d 638, 644.) The appellate court doesnot reweigh the evidence. (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 631.) Further, we defer to the trier of fact on judging the credibility of witnesses. (Lenk v. TotalWestern, Inc. (2001) 89 Cal.App.4th 959, 968; Oldham v. Kizer (1991) 235 Cal.App.3d1046, 1065.)

The trial court's determination that all funds in the subject accounts were contributed by

Caravello was supported by substantial evidence.1 The trial court correctly noted that itcould not apply evidentiary and procedural rules to Caravello in a more indulgent mannersimply because he appeared in propria persona (Harding v. Collazo (1986) 177 Cal.App.3d1044, 1056), and correctly excluded much of the evidence that Caravello sought to introduce. Despite this, admissible evidence was presented that supported the conclusion that Caravelloalone contributed the money to the bank accounts, and that Sferas made no withdrawals. The trial court was in an optimal position to judge the credibility of Caravello and Sferas, andSferas testified that he never contributed any amounts to the bank accounts and that his namewas on the accounts solely so he could provide the account funds to Caravello's daughter if

Caravello died. Furthermore, the court record included written statements made underpenalty of perjury by Caravello, which also discussed the funds in the bank accounts, andsupported the conclusion that all funds were deposited by Caravello. No evidence was

presented showing that Sferas or anyone other than Caravello had contributed the funds to theaccounts. We therefore will not overturn the trial court's determination of this factualmatter.

II.Caravello's Third Party Claim Should Have Been Granted.

1.The emphasis on the validity of the levy was misplaced.

The trial court's statement of decision focused on whether Banc of America properly leviedon the subject accounts. The trial court should have concentrated instead on whether,following the levy, Caravello successfully proved ownership of the subject funds and therebymet his burden on his third party claim. The court effectively found that Caravello provedownership, but denied his third party claim anyway. We review this issue of law de novo. (See Pou Chen Corp. v. MTS Products (2010) 183 Cal.App.4th 188, 192.)

Where personal property has been levied upon under a writ of execution, a third party who
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claims ownership of or the right to possess the property may make a third party claim, wherethe interest claimed is superior to the creditor's lien on the property. (Code Civ. Proc., 720.110, subd. (b).) The third party bears the burden of proving the interest by a

preponderance of the evidence. (Code Civ. Proc., 720.360; Whitehouse v. Six Corp.(1995) 40 Cal.App.4th 527, 530 (Whitehouse).) It can meet this burden by introducingevidence showing that it owns the subject property. (Whitehouse, 40 Cal.App.4th at p. 535;ITT Commercial Finance Corp. v. Tech Power, Inc. (1996) 43 Cal.App.4th 1551, 1558

(ITT Commercial Finance).) The burden then shifts to the creditor to establish that thethird party's interest is invalid or inferior to that of the creditor. (Whitehouse, at p. 535; ITT Commercial Finance, at pp. 15581559.)

In the trial court proceedings, Banc of America argued that it had a right to levy on the bankaccounts pursuant to Code of Civil Procedure section 700.160, subdivision (b)(1), whichstates, A court order is not required as a prerequisite to levy on a deposit account or safe-deposit box standing in the name of [t]he judgment debtor, whether alone or together withthird persons. The trial court agreed, and found this issue dispositive.

The third party claim process, however, is separate from the right to levy. (Peck v. Hagen(1989) 215 Cal.App.3d 602, 607.) After a levy occurs, a third party may pursue a claim

pursuant to Code of Civil Procedure section 720.100 et seq. (Peck v. Hagen, at p. 607; Code Civ. Proc., 720.110, subd. (b) [Third party may make a third party claim [w]here

personal property has been levied upon].) Contrary to the trial court's ruling, whether Bancof America properly levied on the bank accounts was not the ultimate issue at all. The levywas merely a fact giving rise to Caravello's third party claim. While the trial court did not errin finding that the levy was procedurally proper under Code of Civil Procedure section

700.160, subdivision (b)(1), this finding was largely irrelevant to the issue of whetherCaravello's claim was meritorious.

2.Caravello met his burden of proof on the third party claim.

Caravello could meet his burden of proof by showing ownership of the funds in the leviedaccount. (Code Civ. Proc., 720.110, subd. (b).) It would then be up to Banc of Americato rebut Caravello's claim of ownership or show that it had a superior interest. (Whitehouse,supra, 40 Cal.App.4th at p. 535; ITT Commercial Finance, supra, 43 Cal.App.4th at pp.15581559.) The trial court found that the funds in the account were contributed solely by

Caravello. Since Banc of America did not rebut this holding, or otherwise show it had asuperior interest, Caravello's third party claim should have been granted.

Parties' interests in multiple party bank accounts generally are governed by the CaliforniaMultipleParty Accounts Law (CAMPAL), Probate Code section 5100 et seq. (Fin.Code, 852; Lee v. Yang (2003) 111 Cal.App.4th 481, 487489; Evangelho v. Presoto (1998) 67Cal.App.4th 615, 622.) Multiple party accounts include joint accounts. (Prob.Code, 5132, subd. (a).) Joint account means an account payable on request to one or more oftwo or more parties whether or not mention is made of any right of survivorship.


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(Prob.Code, 5130.) Checking accounts, savings accounts, and certificates of deposit allcome within the CAMPAL definition of account. (Prob.Code, 5122, subd. (a).) Thetrial court recognized that the subject accounts were joint accounts, but did not analyze theinterests in the accounts under the CAMPAL rules.

By applying the CAMPAL rules, the trial court would have determined that Caravello provedownership of the accounts. Probate Code section 5301, subdivision (a), provides, An

account belongs, during the lifetime of all parties, to the parties in proportion to the netcontributions by each to the sums on deposit, unless there is clear and convincing evidence ofa different intent.2 The Law Revision Commission's comments to section 5301 note howunder former law, if the joint account provided for rights of survivorship, the account was

presumed to be a joint tenancy and each joint tenant was presumed to have an equal interestin the account. Wallace v. Riley, 23 Cal.App.2d 654, 667 (1937). (Cal. Law RevisionCom. com., 53 West's Ann. Prob.Code (2009 ed.) foll. 5301, p. 58.) Section 5301changed that law. (Ibid.) Therefore, by ruling that the monies held in all three subject bankaccounts were deposited by Mr. Caravello without any contribution thereto by Mr. Sferas,

the trial court made the finding necessary for determining the subject accounts belonged toCaravello.3

The third party claim consequently should have been granted. Section 5301' s rules regardingbeneficial ownership are relevant to controversies between parties to an account and theircreditors and other successors. (Prob.Code, 5201, subd. (a).) Furthermore, and criticalhere, a judgment or levy reaches only the interest of the debtor in the property because a

judgment creditor can acquire no greater right in the property levied upon than that of itsjudgment debtor. (Regency Outdoor Advertising, Inc. v. Carolina Lanes, Inc. (1995) 31

Cal.App.4th 1323, 1329.) Thus, Banc of America's levy could provide it with no greaterrights to the funds than the rights held by Sferas. Since Sferas had not contributed to theaccounts, he had no interest in them, and therefore Banc of America, as Sferas's creditor, hadno interest in the levied property.4 Accordingly, Caravello's interest in the account funds wasnecessarily superior to Banc of America's.

Banc of America argues that, as a judgment lien creditor, it had priority over any possiblerights of Caravello pursuant to Orix Financial Services, Inc. v. Kovacs (2008) 167Cal.App.4th 242, 250251 (Orix). The Orix court found that an unsecured judgmentcreditor, who levied on funds in the debtor's bank account (which was not a joint account),had rights superior to those of a third party secured creditor. (Ibid.) This decision was basedon California Uniform Commercial Code section 9332, subdivision (b), which states, Atransferee of funds from a deposit account takes the funds free of a security interest in thedeposit account unless the transferee acts in collusion with the debtor in violating the rights ofthe secured party.

This rule is not controlling here, however. Orix did not involve a joint account to which thejudgment debtor had not contributed any funds.5 Orix also differed in that the plaintiff,which brought claims against the judgment creditor for unjust enrichment and imposition of
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constructive trust, was a third party secured creditor, not an owner of the account. (167Cal.App.4th at p. 245246.) We find that CAMPAL is more specifically applicable to theunusual facts present in this case. (See Zengen, Inc. v. Comerica Bank (2007) 41 Cal.4th239, 251; Steinman v. Malamed (2010) 185 Cal.App.4th 1550, 1561 [noting that theCalifornia Uniform Commercial Code does not automatically displace other legal principlesand code sections, and that other principles of law will apply unless displaced].) Asexplained, Banc of America's levy could reach only Sferas's interest in the bank accounts, and

Sferas did not have ownership of the accounts. Caravello showed the accounts belongedsolely to him. Caravello's interest as the owner of the accounts was clearly superior to thatof a nonowner, Sferas, and Sferas's judgment creditor, regardless of the levy. The fact thatthe accounts were levied did not eliminate Caravello's ownership.

For these reasons, we conclude that the trial court's denial of Caravello's third party claim wasin error and must be reversed.

DISPOSITION

The superior court's May 28, 2010 judgment on third party claim is reversed. The superiorcourt is directed to enter a new and different judgment granting the third party claim pursuantto Code of Civil Procedure section 720.390. Appellant shall recover his costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

We concur:

FOOTNOTES

1. FN1.Banc of America filed with this court a request for judicial notice attaching abankruptcy summary and schedule pertaining to Sferas, who apparently filed for bankruptcy. We deny Banc of America's request for judicial notice, which does not comply withCalifornia Rules of Court, rule 8.252, including because it does not contain any of theinformation required by subdivision (a)(2) of that rule. In any event, the Sferas bankruptcyschedule summary and schedule attached to Banc of America's faulty request for judicialnotice are not contrary to the trial court's holding that the funds in the subject bank accountswere wholly deposited by Caravello.

2. FN2.Pursuant to Government Code section 68081, the parties were invited to submitletter briefs addressing the applicability of CAMPAL, particularly section 5301. Banc ofAmerica submitted a letter brief, while Caravello did not.

3. FN3.There was no showing that Caravello and Sferas intended that the accounts wouldbelong to Sferas in any manner prior to Caravello's death.

4. FN4.Unlike in Lee v. Yang,supra, 111 Cal.App.4th at page 490, in which a jointaccount holder withdrew money she did not contribute, the evidence here showed that Sferas
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did not withdraw any funds from the accounts. If he had withdrawn funds, Caravello likelywould not have a valid claim to those withdrawn funds. But, since this did not occur, weneed not analyze this hypothetical situation any further.

5. FN5.Banc of America also contends that Sferas had complete dominion and controlover the deposit accounts, which rendered Caravello's third party claim unsustainable. Thecited authority for this assertion, Wheelon v. Patco, Inc. (1968) 258 Cal.App.2d 71, 74, does

not support the argument. Rather, the only question presented in Wheelon was whether athird party claimant established that certain funds had been held in escrow for or assigned toher (ibid.), and, again, the law on joint accounts was not at issue.

BOREN, P.J.

DOI TODD, J.ASHMANNGERST, J.

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Documents

BANC OF AMERICA LEASING & CAPITAL, LLC, Plaintiff and Respondent, v. SFERAS INCORPORATED et al., Defendants; PERRY F. CARAVELLO, Third Party Claimant and Appellant