Mariano v. Villa
- Edward Davila
- 5:16-cv-03467
- U.S. District Court · Northern District of California
- 5
In Mariano v. Villa, Judge Davila granted in part and denied in part requests to change a charging order and narrow a subpoena.
The order affected the plaintiffs seeking to collect the judgment, Enrique V. Villa as the judgment debtor, the nonparty partners Enrique P. Villa, Javier Villa, and Rigoberto Villa, and the partnership operating El Rancho Liquors. It limited the charging order to money actually owed to Enrique V. Villa and narrowed the partnership-records subpoena.
What happened
In Mariano v. Villa, the plaintiffs were trying to collect nearly $3 million from a prior judgment against Enrique V. Villa. They obtained an order directing El Rancho Liquors to pay them money that would otherwise go to Villa based on his claimed partnership interest.
Nonparties Enrique P. Villa, Javier Villa, and Rigoberto Villa argued that Enrique V. Villa had transferred his partnership interest and no longer owned any part of it. They also argued that the plaintiffs’ subpoena for partnership records was too broad, private, and irrelevant.
Judge Edward J. Davila granted in part and denied in part the motion. He changed the charging order to cover only money that would otherwise be owed to Enrique V. Villa, and narrowed the subpoena to records relevant to determining whether he had an ownership interest; the plaintiffs could seek broader financial records if such an interest was found.
The detailed version
- Mariano v. Villa · No. 5:16-cv-03467
- Edward Davila
- July 2, 2020
Background
The plaintiffs obtained a default judgment against Enrique V. Villa for nearly $3 million on July 27, 2017. The opinion states that the plaintiffs had not collected any of the judgment.
To help collect the judgment, the plaintiffs sought an order charging Villa’s interest in El Rancho Liquors, a general partnership. On April 14, 2020, the court issued a charging order stating that Villa had a one-third partnership interest and requiring the partnership to pay the plaintiffs at least one-third of distributions, profits, or income otherwise due to him.
The plaintiffs later served the partnership with a subpoena seeking documents and information concerning Villa’s alleged partnership interest, including tax returns, bank statements, financial records, and communications or agreements involving Villa.
The Motion
Nonparties Enrique P. Villa, Javier Villa, and Rigoberto Villa moved for relief from the charging order and sought to quash, or cancel, the subpoena. They argued that Enrique V. Villa had transferred his interest to his son, Enrique P., in 2016 and had no partnership interest afterward. They also argued that they were the partnership’s sole partners and that the partnership should not be required to pay the judgment debtor’s debts.
The nonparties further argued that the subpoena was too broad and sought private information that was irrelevant to enforcing the judgment. The plaintiffs disputed the authenticity of the transfer agreement and the credibility of the declarations supporting the motion. They also argued that the evidence did not establish that Villa lacked an interest in the partnership’s remaining 77 percent.
Court’s Analysis
The court explained that reconsideration of an order may be appropriate based on newly discovered evidence, clear error or manifest injustice, or an intervening change in controlling law. The nonparties presented new evidence indicating that Villa’s interest may have been 23 percent rather than one-third and may have later been reduced to zero. That evidence included a purported transfer agreement, Enrique P.’s 2016–2019 tax forms showing a 23 percent interest, Villa’s 2016 tax form showing a reduction from 23 percent to zero, and declarations from the partners.
The court did not decide the credibility of that evidence at this stage. Instead, it amended the charging order to clarify that the plaintiffs were entitled only to money that otherwise would have been due to Villa based on whatever partnership interest he actually had—one-third, 23 percent, or none. If further investigation showed that Villa had no partnership interest, the partnership would not have to pay the plaintiffs any money on that basis.
The court also ruled that the plaintiffs were entitled to post-judgment discovery from the partners and the partnership to determine whether Villa had an interest and, if so, its extent. But because the existence of an interest was uncertain, the court limited the subpoena to documents relevant and material to determining partnership ownership. The court stated that the plaintiffs could seek further discovery about the partnership’s finances if Villa was found to have an interest.
Order
The court granted in part and denied in part the motion for relief from the charging order and to quash the subpoena. The modified charging order charged any partnership interest Villa had with the unpaid judgment, required the partnership to pay the plaintiffs money otherwise due to Villa until the judgment and related accrued interest and costs were paid, and barred Villa from taking that money during that period. The order also made the charging order a lien on any partnership interest Villa had.
The subpoena was limited to: (1) Schedule K-1 forms filed by the partnership’s general partners from June 1, 2016, onward; (2) agreements between the partnership or its general partners and Villa during that period; (3) payments made to Villa during that period; and (4) communications concerning the partnership between Villa and the partnership or its general partners during that period. The order did not decide whether Villa actually owned a partnership interest.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.