Tentative from Judge Kaufman re exemption for Covid-19 stimulus checks

June 25, 2020  2:00 PM
1:11-11603  Chapter 7
#3.00 Judgment Creditors Motion Assignment Order and Restraining Order

Docket 735
At the last hearing, the Court requested that Tammy Phillips and Tammy Phillips, a Prof. Law Corp. (“Creditors”), file a supplemental brief regarding whether Kevan Harry Gilman (“Debtor”) waived his right to claim an exemption in any “Covid-19 economic stimulus checks/payments from the federal government to Debtor,”including the stimulus check that Debtor may qualify for under the Coronavirus Aid, Relief, and Economic Security Act (the “Stimulus Check”) .

On May 28, 2020, Creditors filed a supplemental brief (the “Brief”) [doc. 746].  In the Brief, Creditors assert that Debtor waived his right to an exemption by failing to claim one within three days of the hearing on their motion pursuant to California Code of Civil Procedure (“CCP”) § 708.550.  Creditors also argue that Debtor has waived his right to claim an exemption in any future Covid-19 related federal stimulus payments.  Finally, if Debtor is provided with a Stimulus Check, Creditors expressed opposition to the Court’s proposed procedure for Creditors to receive the Stimulus Check. [FN1].  Debtor did not file a response to the Brief.


Pursuant to CCP § 708.550—

(a) The judgment debtor may claim that all or a portion of the right to payment is exempt from enforcement of a money judgment by application to the court on noticed motion filed not later than three days before the date set for the hearing on the judgment creditor’s application for an assignment order. The judgment debtor shall execute an affidavit in support of the application that includes all of the matters set forth in subdivision (b) of Section 703.520. Failure of the judgment debtor to make a claim of exemption is a waiver of the exemption.
(b) The notice of the motion shall be personally served on the judgment creditor not later than three days before the date set for the hearing.
(c) The court shall determine any claim of exemption made pursuant to this section at the hearing on issuance of the assignment order.

Creditors did not reference CCP § 708.550 anywhere in the original motion or their reply to Debtor’s declaration. Nevertheless, because Debtor did not claim an exemption in his original declaration or in response to the Brief, the Court will allow Creditors to attach the Stimulus Check without providing additional time for Debtor to claim an exemption. Under CCP § 708.550(a), Debtor has waived any claim of an exemption in the Stimulus Check.

The Court will not rule on whether Creditors have a right to attach any future Covid-19 related federal stimulus payments issued to Debtor. “The exercise of judicial power under Art. III of the Constitution depends on the existence of a case or controversy and a federal court lacks the power to render advisory opinions.” U.S. Nat. Bank of Oregon v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439, 446, 113 S.Ct. 2173, 2178, 124 L.Ed.2d 402 (1993) (internal quotations omitted). “A court’s role is ‘neither to issue advisory opinions nor to declare rights in hypothetical cases, but to adjudicate live cases or controversies consistent with the powers granted [by the] Constitution.’” Potrero Hills Landfill, Inc. v. Cty. of Solano, 868 F.Supp.2d 1007, 1013 (E.D. Cal. 2012) (quoting Stormans, Inc. v. Selecky, 586 F.3d 1109, 1123 (9th Cir. 2009)); see also Thomas v. Union Carbide Agric. Prod., Co., 473 U.S. 568, 580–81, 105 S.Ct. 3325, 87 L.Ed.2d 409 (1985) (courts should refrain from deciding cases that “involve contingent future events that may not occur as anticipated, or indeed may not occur at all”). “For example, a claim is not ripe for adjudication if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all.” Bova v. City of Medford, 564 F.3d 1093, 1096 (9th Cir. 2009) (internal quotations omitted).

Congress has yet to pass any legislation providing for additional Covid-19 related stimulus payments to individual taxpayers. Before the issue of Creditors’ right to attach future, hypothetical Covid-19 related federal stimulus payments is ripe, the Court will not issue an advisory opinion. Without knowing the contours of any such future legislation, the Court is unable to rule on either Creditors’ or Debtor’s rights vis-à-vis a future stimulus payment which may be issued to Debtor.

Finally, Creditors challenge the Court’s proposed procedure for collection of the Stimulus Check, i.e., to obtain the Stimulus Check directly from the United States government. [FN2].  This alternative was suggested to address Creditors’ concern that Debtor will dissipate the Stimulus Check, instead of providing it to Creditors.  If Creditors prefer to wait until Debtor receives a Stimulus Check, and then have Debtor forward the Stimulus Check to them (despite their concerns about Debtor’s compliance), the Court will instead order Debtor to indorse the Stimulus Check to Creditors and/or their assignees, as requested by Creditors.

The Court will order that, if Debtor receives a Stimulus Check, Debtor must indorse the Stimulus Check to “Charles Jakob, Attorney, for the benefit of Tammy Phillips and Tammy R. Phillips, a Professional Corporation or their assignees of record.”
Creditors must submit an order within seven (7) days.

1. Creditors also argue that the Court should have set their original motion for hearing on an earlier date, noting that “[b]y delaying its ruling, the Court is almost certainly rendering the motion worthless.” Brief, p. 5. However, a “trial court possesses the inherent power to control its own docket and calendar,” and Creditors did not set forth a reasonable basis to have a hearing set on shortened notice, in connection with pending legislation. Subsequently, the Court continued the hearing on this matter because, at the initial hearing on this motion, for the first time, Creditors referenced CCP § 708.550; the Court required sufficient time to assess the application of that statute to this matter.

2. Creditors state that the Court did not advise Creditors which agency to serve with the Court’s order granting their motion. The Court cannot provide legal advice to Creditors regarding proper service. Creditors are represented by counsel whose role it is to research such issues.

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