Search

Attributes

This case was last updated from Los Angeles County Superior Courts on 01/26/2020 at 19:51:11 (UTC).

TIMOTHY O'BRIEN VS. AMBS DIAGNOSTICS, LLC,

Case Summary

On 10/28/2011 TIMOTHY O'BRIEN filed a Contract - Business Governance lawsuit against AMBS DIAGNOSTICS, LLC. This case was filed in Los Angeles County Superior Courts, Pasadena Courthouse located in Los Angeles, California. The Judges overseeing this case are C. EDWARD SIMPSON, MARY THORNTON HOUSE, SAMANTHA JESSNER and CURTIS A. KIN. The case status is Disposed - Judgment Entered.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****8333

  • Filing Date:

    10/28/2011

  • Case Status:

    Disposed - Judgment Entered

  • Case Type:

    Contract - Business Governance

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Pasadena Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

C. EDWARD SIMPSON

MARY THORNTON HOUSE

SAMANTHA JESSNER

CURTIS A. KIN

 

Party Details

Plaintiffs, Cross Plaintiffs and Not Classified By Court

O'BRIEN TIMOTHY

ORR ARIAN

PANCONI EDWARD

TIMOTHY O'BRIEN

KORSH ERIC

LIBERTY DIAGNOSTICS LLC

ACCATUR DIANOSITCS I LLC

ACCATUR DIAGNOSITCS II LLC

COMPREHENSIVE INTRAOPERATIVE SERVICES

KEHR SCHIFF & CRANE LLP

DAVID FENTON-WITNESS

CROWELL & MORING LLP

FENTON-WITNESS DAVID

TEST PARTY FOR TRUST CONVERSION

Plaintiffs, Defendants and Cross Defendants

PANCONI EDWARD

AMBS DIAGNOSTICS LLC

DOES 1 - 10 INCLUSIVE

KORSH ERIC

MILLER MONSON PESHEL POLACEK & HOSHAW

PANCONI EDWARD DOE 1

Plaintiffs, Cross Defendants and Not Classified By Court

ORR ARIAN

PANCONI EDWARD

AMERICAN MEDICAL BILLING SOLUTIONS LLC

KORSH ERIC

LIBERTY DIAGNOSTICS LLC

ROES 1-100

12 More Parties Available

Attorney/Law Firm Details

Plaintiff and Cross Defendant Attorneys

CYPRESS LLP

THOITS LOVE HERSHBERGER & MCLEAN

WOOLF GAFNI & FOWLER LLP

PUMILIA PATEL & ADAMEC LLP

NACHIMSON BENJAMIN SETH

GORHAM GARY J.

MILLER MONSON PESHEL POLACEK & HOSHAW

Cross Defendant and Defendant Attorneys

GORHAM GARY J.

MILLER MONSON PESHEL POLACEK & HOSHAW

RICHARDSON & PATEL LLP

BUTTERFIELD SCHECHTER & VAN CLIEF LLP

MILLER EWALD MONSON HOSHAW & SCHECHTER

BUTTERFIELD SCHECHTER LLP

SCHECHTER MARC STUART

BERGEN ANN PENNERS

Other Attorneys

CROWELL & MORING LLP

7 More Attorneys Available

 

Court Documents

Writ of Execution

6/14/2017: Writ of Execution

Motion for Sanctions

10/20/2017: Motion for Sanctions

Opposition - OPPOSITION BY DEFENDANT AND CROSS-COMPLAINANT TO MOTION FOR SANCTIONS

11/1/2017: Opposition - OPPOSITION BY DEFENDANT AND CROSS-COMPLAINANT TO MOTION FOR SANCTIONS

Reply - REPLY TO OPPOSITION TO MOTION FOR SANCTIONS

11/8/2017: Reply - REPLY TO OPPOSITION TO MOTION FOR SANCTIONS

Request for Judicial Notice

1/17/2020: Request for Judicial Notice

Legacy Document - LEGACY DOCUMENT TYPE: NOTICE OF ENTRY OF DISMISSAL & P&S

4/11/2012: Legacy Document - LEGACY DOCUMENT TYPE: NOTICE OF ENTRY OF DISMISSAL & P&S

Legacy Document - LEGACY DOCUMENT TYPE: ORDER

7/25/2012: Legacy Document - LEGACY DOCUMENT TYPE: ORDER

Undertaking

8/23/2012: Undertaking

Notice Re: Continuance of Hearing and Order

11/6/2012: Notice Re: Continuance of Hearing and Order

Legacy Document - LEGACY DOCUMENT TYPE: MISCELLANEOUS-OTHER

1/17/2013: Legacy Document - LEGACY DOCUMENT TYPE: MISCELLANEOUS-OTHER

Legacy Document - LEGACY DOCUMENT TYPE: DECLARATION

6/5/2013: Legacy Document - LEGACY DOCUMENT TYPE: DECLARATION

Legacy Document - LEGACY DOCUMENT TYPE: MOTION-IN LIMINE

10/24/2013: Legacy Document - LEGACY DOCUMENT TYPE: MOTION-IN LIMINE

Legacy Document - LEGACY DOCUMENT TYPE: REPLY

11/8/2013: Legacy Document - LEGACY DOCUMENT TYPE: REPLY

Minute Order - MINUTE ORDER ENTERED: 2014-03-06 00:00:00

3/6/2014: Minute Order - MINUTE ORDER ENTERED: 2014-03-06 00:00:00

Legacy Document - LEGACY DOCUMENT TYPE: MISCELLANEOUS-OTHER

3/17/2014: Legacy Document - LEGACY DOCUMENT TYPE: MISCELLANEOUS-OTHER

Legacy Document - LEGACY DOCUMENT TYPE: OPPOSITION

10/6/2014: Legacy Document - LEGACY DOCUMENT TYPE: OPPOSITION

Legacy Document - LEGACY DOCUMENT TYPE: MEMORANDUM OF COSTS

6/6/2016: Legacy Document - LEGACY DOCUMENT TYPE: MEMORANDUM OF COSTS

Memorandum of Points & Authorities

7/1/2016: Memorandum of Points & Authorities

608 More Documents Available

 

Docket Entries

  • 01/31/2020
  • Hearing01/31/2020 at 08:30 AM in Department E at 600 East Broadway, Glendale, CA 91206; Hearing on Motion to Compel Further Discovery Responses

    Read MoreRead Less
  • 01/31/2020
  • Hearing01/31/2020 at 08:30 AM in Department E at 600 East Broadway, Glendale, CA 91206; Hearing on Motion to Compel Further Discovery Responses

    Read MoreRead Less
  • 01/31/2020
  • Hearing01/31/2020 at 08:30 AM in Department E at 600 East Broadway, Glendale, CA 91206; Status Conference

    Read MoreRead Less
  • 01/24/2020
  • Docketat 08:30 AM in Department E, Curtis A. Kin, Presiding; Status Conference (ReRemittutur) - Not Held - Advanced and Continued - by Court

    Read MoreRead Less
  • 01/24/2020
  • Docketat 08:30 AM in Department E, Curtis A. Kin, Presiding; Hearing on Motion to Compel Further Discovery Responses - Not Held - Advanced and Continued - by Court

    Read MoreRead Less
  • 01/24/2020
  • DocketReply (Reply to Judgment Debtor Timothy Obriens Opposition to Motion Compel Requests for Production of Documents); Filed by AMBS DIAGNOSTICS, LLC (Defendant)

    Read MoreRead Less
  • 01/24/2020
  • DocketReply (Reply to Judgment Debtor Timothy OBriens Opposition to Motions to Compel Special Interrogatories and Responses to Requests for Production of Documents and For Attorneys Fees and Costs); Filed by AMBS DIAGNOSTICS, LLC (Defendant)

    Read MoreRead Less
  • 01/21/2020
  • Docketat 1:30 PM in Department E, Curtis A. Kin, Presiding; Non-Appearance Case Review

    Read MoreRead Less
  • 01/21/2020
  • DocketMinute Order ( (Non-Appearance Case Review)); Filed by Clerk

    Read MoreRead Less
  • 01/21/2020
  • DocketCertificate of Mailing for ((Non-Appearance Case Review) of 01/21/2020); Filed by Clerk

    Read MoreRead Less
1,198 More Docket Entries
  • 12/05/2011
  • DocketAnswer; Filed by AMBS DIAGNOSTICS, LLC, (Defendant); ERIC KORSH (Defendant); BUTTERFIELD SCHECHTER & VAN CLIEF LLP (Legacy Party)

    Read MoreRead Less
  • 12/05/2011
  • DocketCross-Compl fld - Summons Issued; Filed by ERIC KORSH (Defendant); BUTTERFIELD SCHECHTER & VAN CLIEF LLP (Legacy Party)

    Read MoreRead Less
  • 11/08/2011
  • DocketProof-Service/Summons; Filed by Attorney for Plaintiff

    Read MoreRead Less
  • 11/08/2011
  • DocketProof-Service/Summons; Filed by O'BRIEN TIMOTHY (Plaintiff)

    Read MoreRead Less
  • 11/08/2011
  • DocketProof-Service/Summons; Filed by O'BRIEN TIMOTHY (Plaintiff)

    Read MoreRead Less
  • 10/28/2011
  • DocketComplaint Filed

    Read MoreRead Less
  • 10/28/2011
  • DocketComplaint; Filed by O'BRIEN TIMOTHY (Plaintiff); EDWARD PANCONI (Plaintiff); ARIAN ORR (Plaintiff)

    Read MoreRead Less
  • 10/28/2011
  • DocketNotice of Case Management Conference

    Read MoreRead Less
  • 10/28/2011
  • DocketSummons (on Complaint)

    Read MoreRead Less
  • 10/28/2011
  • DocketCivil Case Cover Sheet

    Read MoreRead Less

Tentative Rulings

Case Number: GC048333    Hearing Date: January 15, 2021    Dept: E

MOTION FOR RECONSIDERATION

[CCP § 1008]

Date: 1/15/21 (2:00 PM)

Case: AMBS Diagnostics, LLC v. Timothy O’Brien (GC048333)

TENTATIVE RULING:

Judgment debtor Timothy O’Brien’s Motion for Reconsideration is DENIED.

On October 30, 2020, the Court exempted $200,000 out of the total $710,253 in Debtor’s 401(k) account from levy as the amount reasonably necessary to cover the retirement expenses of Debtor and his spouse. Pursuant to CCP § 704.115(e), the Court exempted an additional $117,664.34 to cover the tax and penalties for the $510,253 to be levied. Accordingly, the Court found that $317,664.34 was exempt from levy. Accordingly, judgment creditor AMBS Diagnostics, LLC (“AMBS”) can levy $392,588.66 from the 401(k) account ($710,253-$317,664.34).

Debtor now maintains that the 10.56% effective tax rate used to calculate the tax liabilities from the levied amount was incorrect. Debtor also requests reconsideration of the $200,000 exempted from levy, which the Court found sufficient for retirement expenses based on its finding that Debtor and his spouse can save $30,000 per year to cover any shortfall. (10/30/20 Minute Order at 5-6.)

The Court finds that Debtor does not present any new facts warranting reconsideration of the Court’s determination of the amount in Debtor’s 401(k) that is exempt from levy. (CCP § 1008(a).)

With respect to the Court’s use of the effective tax rate, Debtor argues that he could not have known the appropriate tax bracket and the tax consequences without the Court’s ruling on the amount in the 401(k) account that was available for levy. (O’Brien Decl. ¶ 8.) However, Debtor did not provide an explanation on how the Court should calculate the tax rate. Debtor only provided the declaration of Ken Waltzer, who averred that depending on the amount of the 401(k) withdrawal, the tax rate would be anywhere from 45.8% to 53.8%. (10/30/20 Minute Order at 7.) The Court noted that Debtor did not refute Creditor’s assertion that the federal and state taxes should be calculated using Debtor’s effective tax rate. In the reply, Debtor now contends that the effective tax rate is not reliable because Debtor’s income changes from year to year. (Fenton Supp. Decl. ¶ 4.) This argument should have been raised in the papers for Debtor’s claim of exemption. It was not. Accordingly, the fact that the withdrawal from Debtor’s 401(k) account would place Debtor in a higher tax bracket is not a new fact warranting reconsideration of the Court’s determination of the amount exempt from levy.

With respect to Debtor’s assertion that he and his spouse cannot save $30,000 per year, Debtor argues that the new fact supporting this request is the finalization of his 2019 tax return on October 15, 2020 showing an adjusted gross income of $177,345, after the Court’s deadline of October 2, 2020 to submit proof of income. (O’Brien Decl. ¶¶ 20, 21.) Debtor maintains with the COVID-19 pandemic, the volatility in his income from 2017 through 2020, and his and his spouse’s support of a family of five, he cannot save $30,00 per year. (O’Brien Decl. ¶¶ 22-24.) However, Debtor either could have submitted a draft of his and his spouse’s 2019 tax return by October 2, 2020, or debtor could have finalized his taxes before October 2, 2020 to be able to submit evidence of his gross income.

In the October 30, 2020 minute order, the Court noted that Debtor and his spouse did not provide tax returns to dispute Creditor’s assertion that Debtor and spouse’s incomes were purportedly $229,577 in 2018. (10/30/20 Minute Order at 5.) To the extent that Debtor contends that the incomes were lower (O’Brien Decl. ¶ 22 [stating 2018 adjusted gross income was $166,958]), the 2018 tax returns were also available for submission to the Court. Nevertheless, none of Debtor’s arguments affects the Court’s finding that as economic circumstances improve, Debtor will be able to save an average of $30,000 per year. Further, Debtor still does not make any averments regarding his ability to reduce expenses to increase his savings. (Woodard Decl. ¶ 6 & Ex. B [$35,340 auto and truck expense; $34,741 computer and internet expense; $104,562 marketing and promotions; $23,965 office expenses].)

The motion is DENIED.

Case Number: GC048333    Hearing Date: January 08, 2021    Dept: E

CLAIM OF EXEMPTION FROM ENFORCEMENT OF JUDGMENT

[CCP §704.080]

Date: 1/8/21 (8:30 AM)

Case: North American Collectors, Inc. v. Tahanian (GC048333)

TENTATIVE RULING:

Judgment debtor George Tahanian and non-party Azatouhi Tahanian’s Claims of Exemption are GRANTED.

On December 8, 2020, the Court issued a tentative ruling finding that $24,391.00 of the $38,685.75 held by Wells Fargo was exempt from levy pursuant to CCP § 704.080(c). The Court based this tentative ruling on bank statements attached to judgment debtor’s claim of exemption. However, debtor appeared by way of counsel and informed the Court that the bank statements were incomplete. The Court continued the hearing to allow debtor to file complete bank statements.

On December 22, 2020, debtor filed a declaration with bank statements from 2019 and 2020. Judgment creditor North American Collectors, Inc.’s has objected such evidence as lacking foundation. The Court OVERRULES the objection. The bank statements attached to the declaration indicate a total of $59,825.00 in Social Security direct deposits as follows:

Date

Name

Amount

1/6/2019

AT

$ 1,318

1/9/2019

GT

1,488

2/13/2019

GT

1,488

2/20/2019

AT

1,318

3/13/2019

GT

1,488

3/20/2019

AT

1,318

4/10/2019

GT

1,488

4/17/2019

AT

1,318

5/8/2019

GT

1,488

5/15/2019

AT

1,318

6/12/2019

GT

1,488

6/19/2019

AT

1,318

7/10/2019

GT

1,488

7/17/2019

AT

1,318

8/14/2019

GT

1,488

8/21/2019

AT

1,318

9/11/2019

GT

1,488

9/18/2019

AT

1,318

10/4/2019

AT

198

10/9/2019

GT

1,488

10/16/2019

AT

1,318

11/13/2019

GT

1,488

11/18/2019

AT

1,340

12/11/2019

GT

1,488

12/18/2019

AT

1,340

1/8/2020

GT

1,505

1/15/2020

AT

1,355

2/12/2020

GT

1,505

2/19/2020

AT

1,355

3/11/2020

GT

1,505

3/18/2020

AT

1,355

4/8/2020

GT

1,505

4/15/2020

AT

1,355

5/13/2020

GT

1,505

5/20/2020

AT

1,355

6/10/2020

GT

1,505

6/17/2020

AT

1,355

7/8/2020

GT

1,505

7/15/2020

AT

1,355

8/12/2020

GT

1,505

8/19/2020

AT

1,355

9/9/2020

GT

1,505

9/16/2020

AT

1,355

10/6/2020

AT

171

TOTAL:

$ 59,825

Judgment debtor continues to contend that $3,752.10 held in retirement accounts designated as “USPBGC” and “WFC” are also exempt from levy. Judgment debtor does not provide any evidence that USPBGC and WFC are private retirement plans, which would render disbursements from those plans exempt from levy under CCP § 704.115(d). Debtor thus does not meet the burden of claiming that the excess amount from these retirement accounts is exempt from levy. (CCP § 704.080(e)(4).)

Regardless, the $59,825 judgment debtor and his wife received in Social Security benefit payments are exempt from levy under CCP §704.080(c). Because the Social Security payments exceeds the $38,685.75 held by Wells Fargo as the excess amount over the automatic exemption set forth in CCP §704.080(b), the entirety of these funds are exempt from levy. Accordingly, the claim of exemption is GRANTED. Wells Fargo shall not release any funds to the Los Angeles County Sheriff’s Department.

Case Number: GC048333    Hearing Date: October 30, 2020    Dept: E

CLAIM OF EXEMPTION FROM

EXECUTION OF JUDGMENT

(CCP §704.115)

Date: 10/30/20 (2:00 PM)

Case: AMBS Diagnostics, LLC v. Timothy O’Brien (GC048333)

TENTATIVE RULING:

Under CCP § 706.105, a claimant after service of a withholding order may make a claim of exemption. Under CCP § 703.580(b), at a hearing on a claim of exemption, “the exemption claimant has the burden of proof.”

Debtor Timothy O’Brien seeks a determination that his current 401(k) retirement savings of approximately $710,253 is fully exempt from levy to satisfy the judgment entered against him on September 4, 2014.

As an initial matter, the Court notes that judgment Debtor and spouse are required to execute a financial statement setting forth the income, assets, and outstanding obligations under oath unless the spouses are living separate and apart. (CCP § 703.530(b), (c).) Judgment Debtor’s supporting declarations do not comply with CCP § 2015.5. The July declarations were not executed under penalty of perjury under the laws of the State of California. Rather, such declarations invoke the laws of the United States, not the laws of the State of California, as is required under CCP § 2015.5. Further, the October 2, 2020 declarations of Debtor Timothy O’Brien and his spouse Milagros “Patricia” O’Brien are not executed under penalty of perjury at all. Given these shortcomings, these declarations should not be considered by this Court as competent evidence in support of the judgment’s Debtor’s claim of exemption.

Nevertheless, even if Debtor’s supporting declarations complied with CCP § 2015.5, for the reasons stated below, the Court finds that judgment Creditor AMBS Diagnostics, LLC’s evidence is more reliable and credible than judgment debtor’s evidence. Accordingly, the Court finds as follows with respect to Debtor Timothy O’Brien’s claim of exemption.

In determining the amount necessary to provide for a debtor, spouse, and dependents upon the debtor’s retirement, the factors considered include: (1) the debtor’s present and anticipated living expenses and income; (2) the age and health of the debtor and his or her dependents; (3) the debtor’s ability to work and earn a living; (4) the debtor’s training, job skills and education; (5) the debtor’s other assets and their liquidity; (6) the debtor’s ability to save for retirement; and (7) any special needs of the debtor and his or her dependents. (O’Brien v. AMBS Diagnostics, LLC , 246 Cal.App.4th at 951.)

Debtor is currently 56 years old, in good health, and employed as a business coach. (O’Brien Motion Decl. ¶ 4.) Debtor’s spouse is currently 46 years old. (O’Brien Motion Decl. ¶ 4.) Debtor’s spouse works with debtor at their business. (O’Brien Motion Decl. ¶ 4.)

Debtor’s three children are currently 15, 13, and 9 years old. (O’Brien Motion Decl. ¶ 4.) The parties assume that Debtor plans to retire at 67 years old, 11 years from now, at the earliest. Debtor’s three children would be adults by then.

Debtor maintains that he and his spouse do not have any other assets beside $1,500 in business savings. (T. O’Brien 10/2/20 Decl. ¶ 6; M. O’Brien Decl. 10/2/20 Decl. ¶ 6.) In response, Creditor points to assets identified in Debtor’s financial statement on August 31, 2017, including Buchanan Street Partners, LLC IV, Buchanan Street Partners, LLC V, Buchanan Street Partners, LLC V, and Baymar Fabyan Randall LLC have any value. (Woodard 10/16/20 Decl. ¶ 5 & Ex. A.) Debtor admitted they had a value of $261,283.28 on August 31, 2017, but Debtor’s expert retirement analyst, Ken Waltzer, contends that they no longer have value. (Supp. Waltzer Decl. Ex. A.) The unexplained evaporation of over a quarter of a million dollars in valuation of such assets is doubtful, and it also renders suspicious the claims of Debtor’s expert more generally. Nevertheless, Creditor does not assume that these entities have any value for the purpose of proposing the amount that could remain in the 401(k) plan and still cover Debtor and his spouse’s necessary retirement expenses. (Opp. at 18:16-18.) Accordingly, the Court does not consider these other entities in determining Debtor’s claim of exemption.

Debtor maintains that his household’s yearly expenses, excluding taxes, will be $323,370, which includes $246,349 in living expenses, $8,496 in liability payments, $55,534 in other expenses, and $13,171 in insurance premiums. (Waltzer Decl. ¶ 9.) Based on a life expectancy of 95 years for Debtor and his spouse, Debtor maintains that Debtor will require $5,609,706 at retirement. (Waltzer Decl. ¶ 9.) Based on the approximate current balance of just over $700,000 in the 401(k) plan and a rate of return of 6.38%, Debtor maintains that the amount that will be available in the plan for retirement needs will be $1,226,694. (Waltzer Decl. ¶ 9.) The difference between the purported amount the O’Briens will need in retirement and the amount that will be available absent any additional contributions to the plan is $4,383,012. (Waltzer Decl. ¶ 9.) Debtor accordingly claims that the total amount in the 401(k) plan must be exempted for Debtor to even have any opportunity to build up what his household supposedly needs in retirement.

Debtor’s expert Waltzer avers that Debtor requires an annual savings of $263,815 to close the shortfall. (Waltzer Decl. ¶ 9.) Waltzer bases this conclusion on the assumption that the annual living expenses for judgment Debtor and his spouse during retirement are $185,746 in today’s dollars. (Waltzer Decl. Ex. B at p. 10.) The $185,746 is comprised of the following: $61,200 ($5,100 per month) for rent, $2,527 ($210.58 per month) for DirecTV, $3,027 ($252.25 per month) for gas, $12,000 ($1,000 per month) for DWP, $720 ($60 per month) for renter’s insurance, $3,000 ($250 per month) for Spartan’s Elite gym membership, and $103,272 ($8,606 per month) for unidentified “All Household Expenses.” (Waltzer Decl. Ex. B at p. 10.)

The Court finds that the $185,746 purportedly required for living expenses is excessive. Creditor argues that Debtor and his spouse will not incur Spartan’s Elite gym costs for their life span. However, this cost is relatively de minimis, and Debtor and his spouse have a legitimate interest in using a gym to maintain their health. By contrast, the Court finds the $5,100 rent per month is excessive, particularly considering that Debtor’s children will be adults and presumably no longer living with their parents during their retirement years. It is reasonable that Debtor and his spouse should downsize to a smaller property for $3,000 per month in today’s dollars. Based on the expected downsizing of Debtor’s residence and reduced household size, the gas and DWP bill are also excessive. Moreover, Creditor provides undisputed evidence that Debtor’s current DWP bill averages $751.51 per month and current gas bill averages $112.51 per month, which is materially lower than the amounts used by Debtor’s expert in his calculations. (Woodard 8/12/20 Decl. ¶¶ 11, 17 & Exs. G, K.)

Further, Debtor does not set forth the entirety of particular expenses comprising the stated amount of $103,273 in “All Household Expenses.” The only other household expenses Debtor’s expert identifies are the following: $1,700 ($141.67 per month) in additional rent, $4,633 ($386.08 per month) in auto insurance, $923 ($76.92 per month) for Debtor’s car registration, $512 ($42.67 per month) for spouse of Debtor’s car registration, $3,857 ($321.42 per month) for cell phone, $7,140 ($595 per month) for Jonathan Club dues, $14,332 ($1,194.33 per month) for spouse of Debtor’s auto payment, and $1,080 ($90 per month) for Debtor’s auto payment. (Waltzer Decl. Ex. B at 11-13.) This breakdown is incomplete because these expenses only account for up to $41,737 of Debtor’s claimed expenses. Moreover, the car registration and auto payment amounts ($1,943.92 combined) are excessive. The allowable expense for two cars set by the IRS is $508 (Woodard 8/12/20 Decl. ¶ 19 & Ex. M), meaning that Debtor has overstated such expenses by $1,435.92. The over $7,000 in Jonathan Club dues, which are not a retirement necessity, are excessive in their entirety. Thus, as a whole, the Court finds Debtor’s claim of $185,746 in annual expenses to be unsupported and excessive.

The Court notes that Debtor’s spouse currently cares for her 75-year-old mother recovering from cancer and for her sister who has special needs. (O’Brien Motion Decl. ¶ 4.) The Court thus recognizes that Debtor’s household expenses might include amounts necessary to support the spouse’s mother and sister. However, it does not appear from this record that Debtor treats the mother and sister as legal dependents. Indeed, Debtor provides no explanation or evidence concerning any financial support he or his spouse actually provide to the mother and sister. Further, even if including expenses for the care of the spouse’s mother and sister might partially explain how Debtor could claim $185,746 in annual expenses, Debtor provides no explanation concerning the life expectancy of the mother and sister such that the Court could determine how long Debtor and his spouse would support the relatives (if at all) during retirement. Debtor thus does not meet his burden to establish the necessity of any support provided to his mother-in-law and sister-in-law.

Because the $185,746 Debtor claims for annual expenses during retirement is not fully supported, the assertion that Debtor and his spouse will need for $5,609,706 in retirement is not credible and cannot be relied upon this Court to determine to what extent, if any, Debtor is entitled to a claim of exemption.

The Court thus looks to Creditor’s argument and analysis to determine what the proper amount of expenses are in resolving Debtor’s claim of exemption. In so doing, the Court finds that Jeremy Runnells and Sam Marshall are qualified to opine on the amount necessary for judgment debtor and his spouse to meet their expenses upon retirement. (Woodard 10/2/20 Decl. ¶¶ 8, 9 & Exs. D, E.)

According to the IRS Standards for allowable living expenses, $6,417 is a reasonable amount for allowable monthly living expenses, which is $77,004 annually. (Woodard Decl. ¶ 19 & Ex. M.) Creditor’s retirement analysts, nonetheless, use a more generous amount for living expenses beginning in 2031 when Debtor retires, namely, $126,698, which is $106,284 in today’s dollars. (Woodard Decl. ¶ 20 & Ex. N at p. 3.) Runnells and Marshall do not explain how $126,698 or $106,284 is calculated. However, given that the IRS standard for living expenses is $77,004, the Court finds that $106,284 in today’s dollars is a reasonable figure to use here. In finding the $106,284 figure used by Creditor’s experts reasonable, the Court notes the contrast with Debtor’s expert, who prepared his report based on the current (and relatively lavish) lifestyle of Debtor and his spouse. (Supp. Waltzer Decl. Ex. A [“The Runnels report makes an assumption that reducing the O’Brien’s expenses to $8,857.15/month ($106,285.80/year) is reasonable. We believe that his number is arbitrary and not based on their actual lifestyle, whereas our spending estimates are based on spending adjusted for changes expected during retirement”].) Simply put, Debtor is not entitled to maintain his current lifestyle, and it is unreasonable to calculate retirement living expenses that fully permit it. The Court finds it reasonable to rely on the Creditor’s figure of $106,284, which is substantially higher than the IRS allowable standard and thus appropriately accounts for the lifestyle to which Debtor has become accustomed. (See In re Patrick (Bankr. C.D. Cal. 2008) 411 B.R. 659, 669–670 [It is difficult to ascertain what standard should be used to determine reasonable expenses. Although [Creditor] alludes to the poverty level, that is not a proper guide. But neither is it appropriate to merely rubberstamp the lifestyle that the Debtor has been used to. The IRS Standards have become the darlings of Congress in recent years, so that might be a good place to start . . . ”].)

Further, Debtor has time to replenish his retirement account. The Runnells report assumes that, beginning in 2021, debtor will add $30,000 to the 401(k) plan each year until retirement. (Woodard Decl. ¶ 20 & Ex. N at p. 4.) Debtor and spouse’s incomes were purportedly $344,733 in 2017 and $229,577 in 2018. (Opp. at p. 14, n. 2.) The tax returns evidencing this income were not provided, but debtor did not dispute these figures in the reply. Assuming living expenses of approximately $106,000 for each year on average until Debtor retires, Debtor and his spouse can reasonably contribute $30,000 per year to their 401(k) plan, as proposed by Creditor. (Woodard Decl. ¶ 20 & Ex. N at p. 1.) Debtor contends that, due to the current pandemic, he is losing clients and is suffering a shortfall of $13,000 to $15,000 per month. (T. O’Brien 7/31/30 Decl. ¶ 6.) In supplemental briefing, Debtor claims that his year-to-date income in 2020 is $2,042.46. (T. O’Brien Supp. Decl. ¶ 3.) Debtor’s spouse claims that her year-to-date income in 2020 is $141,095.85. (M. O’Brien Supp. Decl. ¶ 3.) However, Debtor does not provide any explanation as to how he and his spouse are cutting back on business and living expenses to adjust for the decline in income. (T. O’Brien 7/31/30 Decl. ¶ 6.) Moreover, even if Debtor is currently experiencing a temporary shortfall in income, Debtor and his spouse are not precluded from contributing increasing amounts to their 401(k) plan as the pandemic subsides and the economy improves. Given Debtor and his spouse’s demonstrated historic ability to generate income under normal economic circumstances, the assumption that they can contribute, on average, $30,000 annually to their 401(k) plan is reasonable.

The Court also finds well taken the inclusion of cash flow from Social Security in the retirement plan. (Woodard Decl. ¶ 20 & Ex. N at p. 8.) The Court also finds it reasonable to assume the spouse’s ability to work for 9 more years after Debtor retires, as well as Debtor’s life expectancy of 82 (as opposed to 95) and the spouse’s life expectancy of 85 (as opposed to 95). (Woodard Decl. ¶ 6 & Ex. B [social security life expectancy calculator].)

Because the Court credits Runnells and Marshall’s analysis and assumptions, the Court looks to the Runnels report to determine what amount can be levied from the 401(k) plan, which would still allow Debtor to replenish the plan to an amount sufficient to cover his and his spouse’s retirement. Creditor proffers a “Sensitivity Analysis” table on page 6 of the Runnells report to argue that, for example, if Creditor levies approximately $300,000 from the current balance of slightly over $700,000, the reduced balance of $400,000 would still leave Debtor’s spouse with $845,652 when the spouse reaches 86 years old. (Woodard Decl. ¶ 20 & Ex. N at p. 6; Runnels Decl. ¶¶ 8-9.) In other words, leaving $400,000 in the 401(k) account would be sufficient to cover Debtor and his spouse’s expenses during their retirement and leave a surplus of $845,652 for the spouse at age 86. The table also presents various scenarios based on differing amounts left in the plan after levy and on whether debtor and his spouse work past 67 years old.

The “Sensitivity Analysis” table is based on an inflation rate of 1.61% and a projected growth rate of 6.30%--both of which the Court finds to be reasonable assumptions. (Woodard Decl. ¶ 20 & Ex. N at pp. 3-4.) Debtor disputes Creditor’s inflation rate of 1.61%. (Supp. Waltzer Decl. Ex. A.) Debtor instead contends that a rate of 2.60% is reasonable because the average inflation rate according to www.inflationdata.com is 3.09%. (Waltzer Decl. Ex. C, pp. 11-13.) Debtor did not actually provide any copy from this website upon which he relies. But, even if he had provided a copy, its reliability is debatable. Creditor maintains that the inflation rate should be “the difference in yields between a 10-year Treasury Bond and 10-year TIPS (Treasury Inflation Protected Securities).” (Woodward Decl. ¶ 20 & Ex. N, p. 8.) Creditor characterizes this difference as a “great barometer” of inflation in the papers filed on August 21, 2020. (Runnells Decl. ¶ 8(f)(1).)

In the August 28, 2020 minute order, the Court asked creditor to justify why the difference between the yields between a 10-year treasury bond and 10-year TIPS should be used as the appropriate figure for inflation. In supplemental briefing, Creditor argues that the yield spread between these two figures provides the investors’ expectation for future inflation. (Woodard Decl. 10/2/20 Decl. ¶ 5 & Ex. B.) Debtor did not respond to this argument in his response to creditor’s supplemental briefing. Accordingly, Debtor does not meet his burden to establish the proper rate of inflation. On this record, the Court finds the 1.61% inflation rate asserted by Creditor to be appropriate.

The Court additionally finds that, given their good health, it would be reasonable for Debtor and his spouse to retire at age 69, as opposed to age 67 (as Debtor assumes in his proposal). Assuming a retirement age of 69 years for Debtor and his spouse and a beginning 401(k) balance of $200,000, according to the Creditor’s Sensitivity Analysis, Debtor’s spouse would still have $114,563 available when she turns 86 years old. (Woodard Decl. ¶ 20 & Ex. N at p. 6.) Based on a life expectancy of 82 for debtor and 85 for debtor’s spouse and reasonable annual expenses of $106,284, the Court finds that a 401(k) balance of $114,563 when debtor’s spouse is 86 years old is sufficient to cover retirement expenses for the remainder of the spouse’s life. Without any further adjustments, using an exemption of $200,000, approximately $510,253 (i.e., the difference between the current 401(k) balance of $710,253 and $200,000) would be subject to levy.

In the August 28, 2020 minute order, however, the Court also asked Creditor to account for federal and state taxes, for which an additional amount would need to be exempted to cover taxes on the 401(k) withdrawals. (See CCP § 704.115(e).) Debtor’s expert Waltzer opines that, depending on the amount of the 401(k) withdrawal, the tax rate would be anywhere from 45.8% to 53.8%. (Waltzer Decl. ¶ 15.) Creditor disagrees, stating that the Court should base its assumption on Debtor’s effective tax rate. (Creditor Supp. Brief at 3:23-25.) Debtor does not address this argument in his response to creditor’s supplemental briefing. The Court finds the use of the effective tax rate reasonable and appropriate. The Court will thus increase the amount of the exemption by 10.56%, which is Debtor’s effective tax rate, calculated by dividing the total tax owed by debtor in 2018 ($22,279) by the total income of debtor in 2018 ($210,958). (Woodard 10/2/20 Decl. ¶ 7 & Ex. C.)

Although Creditor acknowledges CCP § 704.115(e) requires the Court to exempt the amount necessary to cover federal and state income taxes, Creditor argues there is no requirement for the Court to account for the 10% federal early withdrawal penalty and 2.5% state early withdrawal penalty that Waltzer claims Debtor will incur. (Creditor Supp. Brief at 4:3-10.) While CCP § 704.115(e) does not explicitly account for early withdrawal penalties, the Court finds it is reasonable to exempt the amount required to pay such penalties so that the full $200,000 the Court found above to be appropriate to meet Debtor and his spouse’s needs at retirement is actually left in the account. The Court will thus increase the amount of the exemption by 23.06%, which is the sum of Debtor’s 10.56% effective tax rate, the 10% federal early withdrawal penalty, and 2.5% state early withdrawal penalty. Based on the approximate $510,253 levy amount calculated above, the Court will add $117,664.34 (i.e., 23.06% of $510,253) to the $200,000 exemption.

For the foregoing reasons, the claim of exemption is GRANTED in accordance with the calculations herein. Pursuant to CCP § 706.105, the Court finds that $317,664.34 is exempt from levy. The remainder may be levied by Creditor AMBS Diagnostics, LLC to satisfy its September 4, 2014 judgment against debtor Timothy O’Brien.

Case Number: GC048333    Hearing Date: February 28, 2020    Dept: E

MOTION TO BE RELIEVED AS COUNSEL

[CCP §284, CRC 3.1362]

Date: 2/28/20

Case: Timothy O’Brien v. AMBS Diagnostics, LLC (GC048333)

TENTATIVE RULING:

The UNOPPOSED Motion to be Relieved as Counsel by Benjamin Nachimson, Esquire, counsel for Judgment Debtor Timothy O’Brien, is GRANTED.

The Court shall amend items 7 through 9 of the proposed order to reflect the upcoming Status Conference set for March 25, 2020 and the absence of a trial date.

Counsel will be relieved effective upon the filing of the proof of service of the signed order upon the client.

related-case-search

Dig Deeper

Get Deeper Insights on Court Cases


Latest cases where AMBS Diagnostics, LLC is a litigant

Latest cases where COMPREHENSIVE INTRA-OPERATIVE SERVICE INC is a litigant

Latest cases where KEHR SCHIFF & CRANE LLP is a litigant

Latest cases where CROWELL & MORING LLP is a litigant