Sunday, February 06, 2005

James F. O'Toole Co. v. Los Angeles Kingsbury Ct. Ass'n (Cal. Ct. App - February 3, 2005)

Here's my bet. I wager that you can correctly guess the result that is (correctly) reached by Justice Vogel in this case through mere intuition -- without any reference whatsoever to the underlying statutes.

Here's all I'll tell you. A condominium complex is damaged by the Northridge earthquake. The condominium association hires a public adjuster (O'Toole) to deal with the insurance company, and agrees to pay him 10% of any money he obtains from the insurer on the association's behalf. As a result of O'Toole's efforts, the condo association gets $1.4 million, but refuses to pay O'Toole. O'Toole then sues the Association, and successfully obtains a judgment of $140,000 plus an extra $60,000 in prejudgment interest.

But the Association still refuses to pay, and also (not surprisingly) refuses to order a special assessment on the condo owners in order to obtain the money to pay the judgment. So O'Toole obtains an order that appoints a receiver for the Association and compels the Association to levy a special assessment on the owners to pay the judgment.

The Association appeals, contending that the court is powerless to enforce the judgment against it because there's a California statute that says that any regular assessment is exempt from execution if that money is necessary to pay for essential services (e.g., utilities, insurance, etc.). The Association contends that since all of the income from regular assessments goes towards essential services, as long as the Association refuses to impose a special assessment to pay him, O'Toole can never enforce his judgment.

John Kunath, a graduate of Loyola Law School, represents O'Toole. Michael Rapkin, a graduate of the University of LaVerne College of Law, represents the Association.

Who -- entirely rightly -- wins in the Court of Appeals: the Association or O'Toole?