Zhu v. Li
- Jeffrey White
- 4:19-cv-02534
- U.S. District Court · Northern District of California
- 4
In Zhu v. Li, Magistrate Judge Hixson exempted $2,080 and ruled $6,492.07 available to satisfy the judgment.
The order affects Defendants’ claims to protect money in their Wells Fargo and Bank of America accounts from enforcement of Plaintiff’s money judgment. It allows $2,080 to remain exempt and permits $6,492.07 to be applied toward the judgment.
What happened
In Zhu v. Li, the court considered Defendants’ request to protect $8,572.07 held in four bank accounts from enforcement of a $1,495,669.38 judgment. The money was held at Wells Fargo and Bank of America.
California law automatically protected $2,080 for each of the two judgment debtors. Defendants also argued that the remaining money was needed for family expenses and credit-card obligations. The court found they had not shown that the additional funds were necessary, given their reported combined annual income of $286,296 and the credit-card debt at issue.
The court determined that $2,080 was exempt and $6,492.07 was not exempt. Magistrate Judge Thomas S. Hixson issued the order on March 14, 2024.
The detailed version
- Zhu v. Li · No. 4:19-cv-02534
- Jeffrey White
- Mar. 14, 2024
Background
A judgment had been entered for Plaintiff and against Defendants in the amount of $1,495,669.38. Plaintiff served writs of execution and notices of levy on Wells Fargo and Bank of America seeking deposits and account amounts held by Defendants.
Defendants filed identical claims seeking to exempt $8,572.07 held in four bank accounts. They said the money was needed to pay $13,490.52 in obligations, including credit-card bills and a San Mateo County property-tax bill. Wells Fargo protected $2,080 and subjected $3,680.66 to garnishment. Bank of America attached $4,891.41.
Legal framework
Federal Rule of Civil Procedure 69(a)(1) generally requires enforcement of a money judgment to follow the procedure of the state where the federal court is located, unless a federal statute applies. The court therefore applied California enforcement law.
Under California Code of Civil Procedure section 704.220, up to $2,080 in a judgment debtor’s deposit account is exempt without a claim. The exemption applies separately to each debtor. Because there were two debtors, the court determined that Defendants were entitled to two $2,080 exemptions, totaling $4,160. One $2,080 exemption had already been recognized, leaving $6,492.07 in dispute.
Section 704.225 can also protect money that is necessary for the support of the judgment debtor, the debtor’s spouse, and dependents. The party claiming the exemption has the burden of proof.
Court’s analysis
The court noted that Defendants had already paid the property-tax bill, so the remaining claimed need concerned approximately $6,002.54 in credit-card debt. Defendants’ financial statements reported combined annual income of $286,296 and monthly take-home pay of $15,909, compared with monthly expenses of $15,727.
The court concluded that Defendants had not met their burden of showing that the disputed funds were necessary to pay the credit-card debt. The court stated that Defendants could not prevent enforcement merely because they spent heavily.
Disposition
The court determined that, of the claimed $8,572.07 exemption, $2,080 was EXEMPT and $6,492.07 was NOT EXEMPT. The order determines whether the levied property may be applied toward satisfaction of the judgment.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.