What Assets Can Be Reached to Collect Judgments in California? – Part 1

Before developing a judgment enforcement plan, creditors should understand what assets of the debtor can, and cannot, be reached to collect the judgment.  The answer is that, in general, all property of a judgment debtor is subject to enforcement of a money judgment, unless an exception is provided by law.  See CCP § 695.010(a).

“Exemptions” are the most important exception to the general rule.  Certain property of a judgment debtor is automatically exempt without requiring the debtor to assert an exemption claim.  See CCP § 703.030(b).  Unless the debtor receives an “automatic” exemption, all other property for which the Enforcement of Judgments Law provides an exemption from enforcement is exempt only if the judgment debtor files a timely exemption claim.  See CCP § 703.030(a).

Community Property:  A common question is whether community property and income can be reached to collect a judgment.  The answer is that a judgment against either spouse is enforceable against the community property assets of both spouses to the extent provided in Family Code § 900 et seq.  See CCP § 695.020. 

Retirement Funds:  Except as allowed in CCP § 704.110, retirement funds generally cannot be reached to collect judgments in California.

Social Security Benefits:  Social security payments and benefits cannot be reached to enforce a judgment.  See 42 USC §§ 407(a), 1383(d).

Non-Transferrable Interests:  Property that is not transferable by the judgment debtor is usually not subject to enforcement of a money judgment.  See CCP § 695.030.  For example, personal injury claims and legal malpractice claims (if a lawsuit has not yet been filed) cannot be transferred or assigned.  Therefore, these claims cannot be reached to collect a judgment.  However, these claims can be reached if the judgment has filed a lawsuit for the personal injury or legal malpractice claim.

Licenses:  Licenses issued by the government to engage in any business or profession cannot be reached to enforce a money judgment.  See CCP § 695.060.

Patents:  Under federal law, non-exclusive patent licenses are not assignable (and, therefore, cannot be reached to collect a judgment).  However, California law is different in this regard.  In California, non-exclusive patent licenses may be reached to enforce a judgment.  However, it is unclear if California law is preempted by federal law on this issue.

The above applies to patent licenses.  The result is different for actual patents.  Patents are generally assignable without the patent owner’s consent and, therefore, patents can usually be reached to enforce a judgment in California.  See Superbrace, Inc. v. Tidwell (2004) 124 Cal.App. 4th 388, 404-405.

Unfortunately, California’s Enforcement of Judgments Law does not provide a specific procedure for reaching patents (other than possibly serving an examination order to examine the judgment debtor, pursuant to CCP § 708.110, which creates a lien on all of the debtor’s nonexempt personal property for one year).  To reach patents, creditors should consider filing a motion seeking that the patent be sold by the levying officer (i.e., the Sheriff).  As an alternative, creditor may seek the appointment of a receiver to sell the patent.

Trust Interests:   Despite the general rule that non-transferrable interests cannot be reached, a beneficiary’s interest in a trust, even if non-assignable, can be subject to enforcement of a judgment “to the extent provided by law.”  See CCP § 695.030(b)(1).