Tashjian v. Invictus Residential Pooler - 2A

Background

The consolidated action involved two lawsuits brought by Vahe Tashjian in 2019 and 2020 against mortgage lenders, loan servicers, and credit-reporting agencies. Several defendants were in default, and others had been dismissed.

Tashjian’s counsel of record was the Shapero Law Firm. As of October 18, 2023, Tashjian owed the firm $23,555.07 in attorney fees. Bell Investment Partners, LLC, and Charles Mousseau had separately filed notices of judgment liens based on judgments entered in California state court.

In approximately late August 2023, Tashjian and New Penn Financial LLC doing business as Shellpoint Mortgage Servicing, Invictus Residential Pooler - 2A, and Specialized Loan Servicing LLC entered into a settlement agreement. The agreement required the settling defendants to pay Tashjian $20,000 in cash, payable to the Shapero Law Firm Client Trust Account.

Tashjian previously sought approval of the settlement, but the court denied that request because he had not filed proof that the judgment creditors had been served and because the required hearing had not occurred. That denial was without prejudice to refiling. Tashjian then filed the motion addressed in this order. The motion was unopposed.

Legal standard

Federal Rule of Civil Procedure 69 requires federal courts to follow the execution procedures of the state where the court is located unless federal law provides otherwise. Under California Code of Civil Procedure § 708.440, a judgment debtor generally cannot enter a settlement without the written consent of a judgment creditor or a court order. The court may authorize the settlement after a hearing, but the motion must be served personally or by mail on the judgment creditor.

Under California law, competing liens generally have priority according to when they were created. An attorney’s contractual lien is created when the fee agreement is executed and does not require notice before it becomes effective against a judgment creditor who levies on the judgment.

Court’s analysis

The court found that Tashjian’s counsel appeared in the action in March 2021, before either judgment creditor filed a lien or obtained the judgment underlying that lien. The court therefore concluded that Tashjian’s counsel had priority over both judgment creditors’ liens. After oral argument, the court was also satisfied that the settlement was not a collusive attempt to avoid a judgment lien.

Ruling

The court found that Tashjian satisfied the requirements of California Code of Civil Procedure § 708.440 and granted his request to approve the settlement agreement with the settling defendants. It ordered that the $20,000 payment be disbursed to the Shapero Law Firm Client Trust Account for payment of Tashjian’s outstanding fees. The court further ordered Tashjian, within 30 days after entry of the order, to file either a notice dismissing each settling defendant or a report on the status of those dismissals.