No. G049565.

RONALD L. MOORE, Plaintiff and Appellant, v. ROBERT PRESTWOOD, Defendant and Respondent.

Court of Appeals of California, Fourth District, Division Three.

Filed January 28, 2015.

Attorney(s) appearing for the Case

Law Offices of Andrew D. Weiss and Andrew D. Weiss for Plaintiff and Appellant.

Orloff & Associates and Paul Orloff for Defendant and Respondent.


California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.




This appeal presents us with an unusual fact pattern. Neither the plaintiff, Robert Prestwood, nor the defendant, Wells Fargo Bank, is a party. Instead, the contestants are the plaintiff's attorney and a judgment creditor. Both claim the right to receive settlement proceeds Wells Fargo deposited with the trial court. Prestwood's attorney, Paul Orloff of Orloff & Associates, asserts the law firm is entitled to the proceeds pursuant to an attorney lien. Robert Moore maintains he is entitled to the funds because he has a judgment against Prestwood from the bankruptcy court. The trial court determined Orloff had the superior claim.

We need not determine whether the trial court got it right. This case should never have been filed. Prestwood's claim against Wells Fargo predated the filing of his petition in bankruptcy. When he filed for Chapter 7 protection, he lost any individual interest he had in causes of action against Wells Fargo, and from then on he was without standing to pursue these claims. The bankruptcy docket indicates he did not disclose his individual claims against Wells Fargo or seek the permission of the bankruptcy trustee to file suit against the bank. These claims therefore remain part of the bankruptcy estate, even though the case is now closed.

The trial court had no jurisdiction to adjudicate the controversy between Prestwood and Wells Fargo. It therefore had no jurisdiction to adjudicate any matter that developed in the Prestwood action. We return the matter to the trial court to vacate all the orders — including the order requiring Wells Fargo to deposit the settlement proceeds with the court — and to dismiss the case.


Prestwood and his wife filed for Chapter 7 bankruptcy protection on December 10, 2010. At the time, he was a cross-defendant in a lawsuit pending in Orange County Superior Court. His attorney, Paul Orloff of Orloff & Associates, gave notice in January 2011 to the parties in the state court action that Prestwood was in bankruptcy.

In November 2011, Moore obtained a default judgment in the bankruptcy court against Prestwood for $94,665. On December 28, 2011, the Prestwood bankruptcy was closed without discharge.

Prestwood filed his action against Wells Fargo on November 15, 2011, while the bankruptcy was still pending. Orloff was his attorney. Prestwood alleged he was a Wells Fargo employee who had not received commissions on all the loans he processed for the bank. In addition, Wells Fargo had understated the hours he worked when it calculated his paycheck. He alleged he had worked for Wells Fargo between February 10 and November 12, 2010.

Prestwood did not list his individual claim against Wells Fargo on his bankruptcy schedule B, although he listed other pre-petition claims. He disclosed a class action against Wells Fargo of which he was a potential class member, but stated he elected to opt out.1 The bankruptcy docket does not reflect disclosure of a claim against Wells Fargo corresponding to this lawsuit or any request from Prestwood for permission from the trustee to pursue such a claim in state court.

Moore filed notice of his default judgment lien in the state court action on July 11, 2012. In March 2013, Prestwood and Wells Fargo settled. As it turned out, the settlement mainly benefited Orloff. Of the $17,000 settlement amount, $15,500 was designated to go to Orloff, while Prestwood got $2,000 minus some deductions.

Because of Moore's judgment lien, Wells Fargo was reluctant to pay the settlement proceeds directly to Prestwood or to Orloff. The court therefore ordered Wells Fargo to deposit the settlement proceeds with the court; once that was accomplished, Wells Fargo would be dismissed. On August 8, 2013, Wells Fargo deposited $17,058 with the court, and Wells Fargo was duly dismissed without prejudice.

The trial court then held a hearing on the disposition of the deposited funds. The court ruled that Orloff's attorney lien took precedence over Moore's judgment lien and ordered the deposited funds released to Orloff. With regard to the bankruptcy issue, the court stated, "[Prestwood] should have permitted the [bankruptcy] Trustee to pursue this case. But this lapse would not eliminate the need to incur attorney fees. If the trustee sued Wells Fargo, the trustee's attorney would incur attorney fees as well."


Although the parties did not follow the procedures outlined in Code of Civil Procedure sections 386 et seq., in essence Wells Fargo interpleaded the settlement funds and was dismissed. (See, e.g., Code Civ. Proc., § 386.5)2 The court then held a hearing on Moore's judgment lien under Code of Civil Procedure section 708.470, though without the formality of a noticed motion. (See Code Civ. Proc., § 708.470, subd. (a).) By statute, Moore was deemed a party to this proceeding. (Id., § 708.430, subd. (b).)

The court resolved the conflict over the settlement proceeds in Orloff's favor, even though Orloff was "intervening" in Prestwood's case to establish the validity of its lien and to contest the validity of Moore's lien, as it was not entitled to do. (See, e.g., Brown v. Superior Court (2004) 116 Cal.App.4th 320, 323-324, 328.) The validity of an attorney lien can be established only through a separate action. (Id. at p. 324.)

The question then becomes whether the trial court's orders resolving the conflict between Moore and Orloff and ordering the funds disbursed to Orloff are appealable. No final judgment appears in the record — only a series of minute orders — but with Wells Fargo dismissed (without a judgment), there was nothing left for the court to do. Therefore the court's order to disburse the settlement proceeds to Orloff had the legal effect of a final judgment. (See Bank of California v. Thornton-Blue Pacific, Inc. (1997) 53 Cal.App.4th 841, 845-846.) Despite the numerous procedural deficiencies in the conduct of this case — which do not appear to have prejudiced anyone — we conclude the matter is properly before us, though just barely. (See Avery v. Associated Seed Growers, Inc. (1963) 211 Cal.App.2d 613, 630 ["The proper procedure is to reverse the void judgment, rather than to dismiss the appeal[.]"].)

We perceive a far deeper problem with this case than the failure of Orloff to file a separate action to establish the enforceability of the attorney lien. Prestwood lacked standing to bring the action against Wells Fargo from the outset, because the causes of action belonged to his bankruptcy estate, not to him. Lack of standing is a jurisdictional defect that can be raised at any time, even for the first time on appeal. (Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599, 1604; see Parker v. Bowron (1953) 40 Cal.2d 344, 351 [lack of standing goes to existence of cause of action].) Lack of standing is far from a "lapse," as characterized by the trial court; it fatally undercuts the court's ability to take any action at all in the case.3

"[A] [bankruptcy] trustee, as the representative of the bankruptcy estate, is the real party in interest, and is the only party with standing to prosecute causes of action belonging to the estate once the bankruptcy petition has been filed." (Kane v. Nat'l Union Fire Ins. Co., 535 F.3d 380, 385 (5th Cir. 2008) (Kane).)4 The bankruptcy trustee represents the estate, and the trustee alone has the capacity to sue or be sued on the estate's behalf. (11 U.S.C. § 323.) Thus, "a pre-petition cause of action is the property of the Chapter 7 bankruptcy estate, and only the trustee in bankruptcy has standing to pursue it." (Parker v. Wendy's Intern., Inc. (11 Cir. 2004) 365 F.3d 1268, 1272. (Parker).)

Prestwood filed for Chapter 7 protection on December 10, 2010. By that time the causes of action he alleged against Wells Fargo, assuming he had any, had already accrued. (See Miller v. Pacific Shore Funding (D.Md. 2002) 287 B.R. 47, 50; In re Forbes (S.D.Fla. 1986) 58 B.R. 706, 707 [cause of action accrues when plaintiff damaged].)5 These causes of action became property of the bankruptcy estate as soon as Prestwood filed his petition, and his standing to pursue them on his own disappeared.

Prestwood's bankruptcy proceeding closed at the end of December 2011. Orloff now argues that the trustee abandoned the claims against Wells Fargo when the proceeding closed.

Under 11 U.S.C. section 554, subdivision (a), a trustee may "abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate." Scheduled property that is not administered by the time the proceedings close is abandoned to the debtor. (11 U.S.C. § 554, subd. (c).) The debtor's rights to the abandoned property are treated as if no bankruptcy had ever occurred. (Kane, supra, 535 F.3d at p. 385; see Parker, supra, 365 F.3d at p. 1272.) "[W]hen property of the bankrupt is abandoned, the title `reverts to the bankrupt, nunc pro tunc, so that he is treated as having owned it continuously.' [Citations.]" (Morlan v. Universal Guaranty Life Ins. Co. (7th Cir. 2002) 298 F.3d 609, 617.)

Property not formally scheduled in the bankruptcy proceeding, however, is not abandoned at the close of the bankruptcy proceeding, even if the trustee was aware of its existence. (Vreugdenhill v. Navistar Intern. Transp. Corp. (8th Cir. 1991) 950 F.2d 524, 526.) At the close of the bankruptcy case, property of the estate that is neither abandoned nor administered remains in the estate. (11 U.S.C. § 554, subd. (d).) Failing to list property, including causes of action, on a bankruptcy schedule leaves that property in the bankruptcy estate. (Mobility Sys. & Equip. Co. v. United States (Fed.Cl. 2001) 51 Fed.Cl. 233, 236; see Vreugdenhill v. Navistar Intern. Transp. Corp., supra, 950 F.2d at pp. 525-526.)

Prestwood did not list the causes of action underlying the present case against Wells Fargo on his bankruptcy schedules. "[T]he bankruptcy code place[s] an affirmative duty on [the debtor] to schedule his assets and liabilities. [Citation.] If he fail[s] properly to schedule an asset, including a cause of action, that asset continues to belong to the bankruptcy estate and [does] not revert to [the debtor]." (Cusano v. Klein (9th Cir. 2001) 264 F.3d 936, 945-946.) The schedules must be "accurate and complete. And they must be corrected if they are incomplete." (In re Mohring (Bankr.E.D.Cal. 1992) 142 B.R. 389, 394.) Although there are "no bright-line rules for how much itemization and specificity is required," the debtor must be as particular as is reasonable under the circumstances. (Id. at p. 395.)

According to the complaint in this action, Prestwood's causes of action against Wells Fargo arose sometime between February and November 2010, or shortly thereafter, when he alleged he was underpaid. He filed for Chapter 7 protection in December 2010. His state court action was filed in November 2011, while the bankruptcy was still open.

Prestwood thus had no standing to file his complaint against Wells Fargo. The causes of action alleged in the complaint belonged to his bankruptcy estate, not to him individually. Likewise, they were not abandoned when the bankruptcy was closed, because they were never listed. They remain still in the bankruptcy estate. The Bankruptcy Code permits interested parties to petition to reopen a closed bankruptcy, to administer late-discovered assets. (11 U.S.C. § 350, subd. (b).) This case, however, should never have been filed, and any orders issued in its course are void, because Prestwood lacked standing to bring it, and the trial court lacked jurisdiction to hear it. (Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 438-439.) If a court is without jurisdiction, any orders it enters are "void and of no force and effect as completely as if never entered." (Ruiz v. Ruiz (1980) 104 Cal.App.3d 374, 379.)


The order of disbursal is reversed. The matter is returned to the trial court with instructions to vacate all of the orders entered since the matter was filed and to dismiss the case without prejudice. The funds deposited by Wells Fargo are to be returned to Wells Fargo. The parties are to bear their own costs on appeal.

MOORE, J. and FYBEL, J., concurs.


1. The schedule does not state the basis for the class action against Wells Fargo, only that there was one. Prestwood also disclosed claims against Moore.
2. Prestwood moved ex parte for an order compelling Wells Fargo to pay over the settlement proceeds to Orloff. He later made a noticed motion for the same relief. Wells Fargo opposed the motion and, in the opposition papers, asked to be allowed simply to deposit the funds with the court. The court denied Prestwood's motion, but suggested that Wells Fargo file an interpleader motion. It does not appear that Wells Fargo did so. Instead, it just deposited the funds with the court and was dismissed. No affidavit from Wells Fargo or formal notice appears in the record. (See Code Civ. Proc., § 386.5.)
3. Whether the bankruptcy trustee would have incurred attorney fees going after Wells Fargo — or, indeed, would have hired Orloff to represent her — is far from a foregone conclusion. The modest settlement amount strongly suggests the trustee may well have decided the matter was not worth pursuing.
4. A bankruptcy estate includes "all legal or equitable interests of the debtor in property." (11 U.S.C. § 541, subd. (a)(1).) The Historical and Statutory Notes for 11 U.S.C. section 541 provide: "This section defines property of the estate, and specifies what property becomes property of the estate. The commencement of a bankruptcy case creates an estate. . . . [T]he estate is comprised of all legal or equitable interest of the debtor in property, wherever located, as of the commencement of the case. The scope of this paragraph is broad. It includes all kinds of property, including tangible or intangible property, [and] causes of action. . . ." (Revision Notes and Legislative Reports, 1978 Acts, 11 U.S.C.A. (2004) foll. § 541, p. 6, italics added.)
5. The Labor Code violations Prestwood alleged in his complaint against Wells Fargo resulted in immediate injury. For example, Labor Code section 226 provides that an employee is deemed to suffer injury if the employer fails to provide accurate and complete information, and the employee cannot determine from the pay stub the amount of gross and net wages. (Lab. Code, § 226, subd. (e)(2)(b).) Under Labor Code section 201, unpaid wages are immediately due and payable upon discharge. (Lab. Code, § 201, subd. (a).)


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