Sourcecorp, Inc. v. Shill
206 Cal. App. 4th 1054
| Cal. Ct. App. | 2012Background
- Sourcecorp, Inc. registered an Arizona fraud judgment in California in September 2004; the total judgment exceeded $3 million.
- A September 2010 turnover order (Code Civ. Proc., § 699.040) directed Shill to transfer $125,000 in cash from his residence to the El Dorado County Sheriff after Sourcecorp learned of the cash during a deposition.
- Garnishment had been in effect since June 2005, yet the outstanding judgment amount (with interest) exceeded $4 million.
- Shill sought to vacate the turnover order contending the cash was earnings exempt from levy under § 704.070, as it represented post-garnishment earned income.
- The trial court denied the motion; on appeal, Shill argued the cash remained exempt and also challenged tracing of the funds to exempt earnings.
- The appellate court affirmed the trial court, holding the earnings exemption under § 704.070 is time-limited and not extended indefinitely; tracing does not defeat the 30-day limit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 704.070 exemptions extend beyond 30 days for earnings traced to cash | Shill argues exempt earnings remain exempt if traceable to earnings, regardless of time. | Sourcecorp contends the exemption is time-limited to 30 days and cannot extend to longer-held cash. | Exemption is time-limited; cash must be within 30 days or traced to 30-day earnings to remain exempt. |
| Whether the debtor bears the burden to prove tracing of exempt funds to paid earnings | Sourcecorp contends funds traced from exempt earnings remain exempt if properly traced. | Shill contends tracing supports exempt status for cash on hand. | Debtor bears burden to prove tracing; funds traced to exempt earnings maintain exemption only within the 30-day window. |
Key Cases Cited
- Kono v. Meeker, 196 Cal.App.4th 81 (Cal.App.4th Dist. 2011) (sets framework for enforcement and exemptions in judgment enforcement)
- Meyer, 186 Cal.App.4th 1279 (Cal.App.4th Dist. 2010) (statutory interpretation of exemptions)
- In re Eddie L., 175 Cal.App.4th 809 (Cal.App.4th Dist. 2009) (interpretation of exemptions and tracing concepts)
- Imagistics Internat., Inc. v. Department of General Services, 150 Cal.App.4th 581 (Cal.App.4th Dist. 2007) (forfeiture and procedural issues in exemptions)
- Le Font v. Rankin, 167 Cal.App.2d 433 (Cal.App.2d Dist. 1959) (exemption of wages prior to levy; historical context)
- Carter v. Carter, 55 Cal.App.2d 13 (Cal.App.2d Dist. 1942) (wages exemption within a fixed prior period)
- Randone v. Appellate Department, 5 Cal.3d 536 (Cal.1989) (case cited regarding exemptions and limitations)
- People v. Watson, 42 Cal.4th 822 (Cal.2007) (statutory interpretation and lenity considerations)
- United States v. Bajakajian, 524 U.S. 321 (U.S. 1998) (excessive fines doctrine in constitutional context)
- Long Island Trust Co. v. United States Postal Service, 647 F.2d 336 (2d Cir. 1981) (federal garnishment law limits on earnings exemptions)