45 Cal.App.5th 466
Cal. Ct. App.2020Background
- Wanke obtained a 2013 money judgment against Scott Keck and his company WP Solutions for $1,190,929; Keck later declared bankruptcy and WP Solutions was suspended/dissolved.
- AV Builder Corp. (AVB) had engaged WP Solutions as waterproofing subcontractor on five projects; examination revealed AVB owed WP Solutions $109,327.
- Wanke served a writ of execution and notice of levy in June 2014, conducted examinations, and filed a creditor's suit under Code Civ. Proc. § 708.210 in July 2016 to collect the $109,327.
- Bench trial (June 2018) focused on (1) whether WP Solutions’ suspension (and assignment principles) barred Wanke from suing and (2) AVB’s asserted § 431.70 warranty setoffs and statute-of-limitations defenses.
- Trial court allowed a limited $25,908 offset for Point Loma repairs but otherwise rejected AVB’s setoff claims; judgment entered for Wanke for $83,418.94.
Issues
| Issue | Wanke's Argument | AVB's Argument | Held |
|---|---|---|---|
| Whether a creditor's suit under § 708.210 is barred because the judgment debtor (WP Solutions) was a suspended corporation | Wanke: § 708.210 gives judgment creditors an independent right to sue third parties regardless of debtor’s suspension | AVB: Wanke stands in WP Solutions’ shoes; assignment principles and cases disallow assignees of suspended corporations from suing | Court: § 708.210 is not an assignment; suspended-corporation incapacity is not a jurisdictional bar to a creditor’s suit by the judgment creditor |
| Whether Wanke’s creditor’s suit was time-barred under § 708.230 (the period when the judgment debtor "may bring an action") | Wanke: the relevant accrual uses ordinary limitations (four years for contract-based claims); suit filed within the accrual window | AVB: WP Solutions lost capacity (contractor license suspension) in July 2014 so the ‘‘may bring an action’’ period ended, making Wanke’s 2016 suit untimely | Court: "may bring an action" refers to when the debtor’s claim accrued (not present capacity); AVB failed to prove as a matter of law any portion was time-barred |
| Whether AVB is entitled to § 431.70 setoffs for lost warranty obligations and related repairs (valuation & mutuality) | Wanke: AVB failed to prove a non-speculative value for warranty setoffs; benchmarks were unreliable | AVB: entitled to offsets based on per-square-foot benchmarks and years remaining on warranties | Court: denied warranty setoff—AVB failed to carry its burden to prove nonspeculative valuation; credibility findings supported rejection |
Key Cases Cited
- Imperial Bank v. Pim Electric, Inc., 33 Cal.App.4th 540 (1995) (Enforcement of Judgments Law governs judgment enforcement).
- Ilshin Investment Co., Ltd. v. Buena Vista Home Entertainment, Inc., 195 Cal.App.4th 612 (2011) (distinguishes creditor's suit from motion procedure under EJL).
- Cal-Western Business Services, Inc. v. Corning Capital Group, 221 Cal.App.4th 304 (2013) (assignee of suspended corporation lacks capacity to sue on assignor's claim).
- Casiopea Bovet, LLC v. Chiang, 12 Cal.App.5th 656 (2017) (judicial assignment under EJL subject to assignment rules; assignee of suspended corporation barred).
- Jess v. Herrmann, 26 Cal.3d 131 (1979) (historic equitable basis for setoff; avoids superfluous payments).
- Construction Protective Services, Inc. v. TIG Specialty Ins. Co., 29 Cal.4th 189 (2002) (§ 431.70 permits only defensive setoff, not affirmative recovery).
- Harrison v. Adams, 20 Cal.2d 646 (1942) (mutuality requirement for setoff).