Legal News and Appellate Tips

Each week, TVA appellate attorney Tim Kowal reviews several recent decisions out of the appellate courts in California, and elsewhere, and reports about the ones that might help you get an edge in your cases and appeals.

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Tag: Judgment Enforcement

Personal Jurisdiction Unnecessary to Issue Judgment on an Out-of-State Judgment, New Published CA Case Holds

CEB has published my article, “Personal Jurisdiction Unnecessary to Issue Judgment on an Out-of-State Judgment, New Published CA Case Holds.”

The article is about a surprising recent appellate opinion, WV 23 Jumpstart, LLC v. Mynarcik (D3 Nov. 21, 2022) No. C095046, that allowed a Nevada judgment debtor to domesticate a judgment in California—even though the debtor had no contacts with California. And even more surprising, after the Nevada judgment expired, the court allowed the creditor to re-domesticate the judgment back to Nevada.

There are two reasons you should take strong notice of this case, particularly if other states follow this approach:

(1) Judgments accrue interest at different rates depending on state law, so consider domesticating all your judgments in a high-yield jurisdiction—the highest yields are in Massachusetts, Rhode Island, Vermont, and Washington, at 12%.

(2) Judgments lapse after a certain time depending on state law, so consider domesticating all your judgments in a “stay-fresh” jurisdiction—judgments in Delaware, for instance, never expire.

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Personal Jurisdiction Unnecessary to Issue Judgment on an Out-of-State Judgment, New Published Case Holds

The new postjudgment opportunities suggested in the published case of WV 23 Jumpstart, LLC v. Mynarcik (D3 Nov. 21, 2022) No. C095046. The court holds that an out-of-state money judgment may be domesticated in California, even though California lacks personal jurisdiction over the defendant. There are two reasons you should take strong notice of this if other states follow this approach:

(1) Judgments accrue interest at different rates depending on state law, so you should domesticate all your judgments in a high-yield jurisdiction—the highest yields are in Massachusetts, Rhode Island, Vermont, and Washington, at 12%.

(2) Judgments lapse after a certain time depending on state law, so you should domesticate all your judgments in a “stay-fresh” jurisdiction (e.g., judgments never expire in Delaware).

Here is what happened in Jumpstart:

Nevada issued a $1.5 million judgment against loan guarantors. Lenders then got the judgment domesticated in California. The Nevada judgment expired in 2016. But the California judgment remained.

Nevada-based defendant Mynarcik had no contacts or assets in California. Jumpstart, the new assignee of the judgment, wanted to enforce the judgment against Mynarcik in Nevada, but the Nevada judgment had been expired for several years already. So Jumpstart decided to take the domesticated California judgment and domesticate it right back to Nevada. A little like standing in a bucket and pulling yourself up by the handle, but worth a shot.

Mynarcik raised a personal jurisdiction challenge to the California judgment. The Sacramento Superior Court agreed, but the Court of Appeal reversed, finding a court does not need personal jurisdiction to domesticate a sister-state judgment.

I am curious to know what the #AppellateLinkedIn community thinks about this one. Will other state courts follow this reasoning?

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Attachment Not Available for Punitive Damages in Elder Abuse Claims

When a nonagenarian’s new 35-years-junior wife started liquidated his assets, his daughter, Lisa Royals, intervened. In her resulting lawsuit of Royals v. Lu (D1d4 Jul. 18, 2022) 81 Cal.App.5th 328., not only did Royals allege almost $1.1 million in financial elder abuse, she also sought a writ of attachment for three times that amount—apparently based on statutory penalties and attorney fees. And despite the requirement that attachments be based on retrospective rather than prospective debts, the trial court issued a $3.4 million attachment order.

The First District Court of Appeal reversed. Royals’s pleadings and affidavit were “unclear what justified an attachment amount of more than three times the actual damages that Royals pleaded on information and belief.” And even after the appellate court’s request for supplemental briefing on that point, the court found “Royals’s elusiveness” to be “troubling.”

The court held that seeking damages based on penalties and punitive damages, or in “an open-ended way” to justify an inflated damages award, cannot satisfy the attachment statutes.

There was also an interesting procedural quirk when the trial court ordered the attachment vacated, purportedly rendering the appeal moot. That didn’t work: a trial court cannot vacate an order once it’s on appeal.

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Time to Collect: Joseph Chora on Collecting Judgments

So you won a huge court case? Big deal — can you collect? Judgment enforcement, and defense against judgment enforcement, are critically important to litigants. But enforcement sits in that twilight region in between the trial and the appeal, so most trial and appellate attorneys do not know a lot about it. But Joseph Chora, Esq. Chora does. Judgment enforcement is all he does.

We ask Joseph to share some of his best enforcement tips (a teaser: don’t file fraudulent-transfer actions; file a lien instead—it’s faster, cheaper, and it flips the burden of proof). And some of the biggest pitfalls (e.g., failing to make an enforcement plan early).

We also discuss:

• How to cut off the plaintiff’s right to judgment-enforcement fees — and if you’re the plaintiff, how to avoid this
• Increasing an appellate bond
• Enforce judgments against a trustee
• Pursuing alter egos
• Using evasions of judgment enforcement to get an appeal dismissed under the disentitlement doctrine
• How plaintiffs should safeguard against restitution awards if a satisfied judgment is reversed on appeal

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Defense verdict reversed due to improper exclusion of evidence

After an ear doctor was sued for pushing a charity on one of his patients, the jury returned a defense verdict. But the Court of Appeal reversed in Silvester v. Niparko (D2d7 Jun. 20, 2022 no. B301926) 2022 WL 2197100 (nonpub. opn.), holding that the trial court abused its discretion when it refused to allow Silvester to offer evidence of his impaired and vulnerable state when Dr. Niparko pushed his charity on him.

Seldom do judgments get reversed based on evidentiary rulings. But the judge here steadfastly kept out all Silvester’s evidence on an element of his claims, even rebuttal evidence.

There was one more curious detail in the opinion. The opinion notes that, during the trial, “Respondent agreed to a general verdict form in exchange for Silvester's written agreement that he would not seek to execute on any estate assets other than insurance and indemnity protection.”

Typically, defendants prefer to have special verdict forms, because it is easier to challenge them in posttrial motions and appeal. Silvester, to get his way on a general verdict form, agreed to limit his rights to enforce the judgment against the estate beyond the insurance and indemnity coverage.

This is an interesting strategy that may be worth exploring in your next trial.

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Managing Power Dynamics in Settling Appeals

When trying to settle or mediate a case on appeal, how important is it to stay enforcement of judgment? Appellate mediator John Derrick talks with Tim Kowal and Jeff Lewis about whether posting a bond make a judgment-creditor more or less likely to come to the table. And what about the strange and rare personal-surety bonds?

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Outside Reverse Veil Piercing May Be Permissible Even Against an LLC with an Innocent Third-Party Member, Published Appellate Decision Holds

When you have a judgment against a shell entity, you can amend the judgment to name the sole shareholder or member. That is called piercing the corporate veil. Until a few years ago, it didn’t work in reverse: if you have a judgment against a judgment-proof business owner, you can’t add the entity as a judgment-debtor. (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1513, 77 Cal.Rptr.3d 96 (Postal Instant Press).) Except in 2017 in Curci Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 214, 221 (Curci), the same appellate court said you could do that — that is, at least if you were dealing with an LLC. (Curci did not apply to corporations.)

But what if the LLC has innocent members? It wouldn’t be fair to innocent LLC members to add the LLC to a judgment because of whatever some other member did. That is the issue that came up in Blizzard Energy, Inc. v. Schaefers (D2d6 Nov. 18, 2021 no. B305774) 71 Cal.App.5th 823. And the court answered the question by holding: Yes, the LLC may be liable for the judgment, but no, we can’t offer any suggestions how it could be done consistent with an innocent member’s rights. The court remanded for the trial court to think about that.

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Denial of Motion to Enforce a Settlement Held Appealable Because it “Functionally Terminated” the Litigation

Can you appeal an order on a motion to enforce a settlement agreement? And if so, why aren’t these orders listed in the appealable orders statute of [Code of Civil Procedure section 904.1](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=904.1&lawCode=CCP)?

The functional answer to the question is yes: orders on motions to enforce a settlement probably are appealable. But the court in *[Rezzadeh v. Chiu*](https://casetext.com/case/rezzadeh-v-chiu?tab=keyword&jxs=&sort=relevance&type=case&resultsNav=false) (D5 Dec. 13, 2021) 2021 WL 5873074 (nonpub. opn.) suggests the reason this is not obvious in the statute is that litigants are not supposed to have to take appeals from the orders. Instead, trial courts are supposed to be entering *judgments* on those orders. And then the appeal, naturally, would be taken from the judgment.

Settling a case is not the end. You may need to be prepared to invoke your appellate rights until a settlement is fully executed.

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Judgment Not Satisfied Unless Payment "Conditioned"​ on Satisfaction, Published Appellate Decision Holds

Enforcing a judgment is hard enough before appeals and appeal bonds enter the picture. Unfortunately, the published opinion in Wertheim, LLC v. Currency Corp. (D2d1 Oct. 14, 2021) 2021 WL 4785575 (nos. B304655, B310650) now takes that picture even further out of focus. The upshot is that the defendant fully satisfied a judgment, but that was not enough: the plaintiff intended to seek more costs, and the defendant did not "condition" its payment on its constituting full satisfaction of the judgment.

Held: contrary tot Gray1 CPB, LLC v. SCC Acquisitions, Inc. (2015) 233 Cal.App.4th 882, 891, the plaintiff could continue filing motions for more enforcement costs even after the defendant had paid the entire amount of the judgment, interest, and costs then due.

Takeaways: (1) Don't wait to enforce an appeal bond — you have a year after the appeal, that ought to be plenty. (2) When seeking judgment-enforcement fees, the touchstone is "necessarily incurred," not the more familiar and relaxed standard under Civil Code section 1717. (3) If you are a defendant trying to satisfy a judgment, make it clear that is your intent, because Wertheim throws existing law on this point into doubt.

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Sale of Property Rendered Appeal Moot; Bond and Stay Were Required to Preserve the Appeal

It is not enough to appeal your case. You have to keep your case alive until the Court of Appeal has a chance to get to it.

That is the lesson of Badea-Mic v. Detres (D3 Nov. 23, 2020) **no. C085459 (nonpub. opn.). The appellant appealed an order authorizing the sale of the property, but the property was sold to a third party before the appeal concluded. Thus, the appeal was moot.

In fairness, the appellant did seek a stay in the trial court, which was the right move. But when the trial court denied that stay, the appellant waited too long to seek a writ of supersedeas (the appellate court's fancy word for stay) in the Court of Appeal. In this case, she had only four days to seek supersedeas before escrow closed. A good reason to have appellate counsel at the ready!

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Failure to Exercise Discretion in Issuing a Stay of Enforcement of Judgment Is an Abuse of Discretion

In a recent case involving more than one case number, the defendant got an early victory in one case, and got an award of attorney fees. The trial court, however, did not like the idea of rewarding one party partway through a complex litigation, so it imposed a sua sponte stay of enforcement of that fee award.

That stay was reversed on appeal in Specialty Baking, Inc. v. Kohanbash (LASC App. Div. May 24, 2021) no. BV033347 (nonpub. opn.). While such a stay may be permissible, the court in making the discretionary ruling failed to consider the factors required under the operative statute. Failure to exercise discretion is an abuse of discretion.

Whenever the topic of stays and bonds come up, that is a good time to consult an appellate attorney.

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After Reversal on Appeal, Appellant Claimed It Was Entitled to $5.7MM in Restitution

Here is an under-appreciated consideration in appellate procedure: If you are the party that prevailed at trial, and you collect on your judgment pending appeal, what's the worst that could happen? Would it surprise you to learn that the prevailing plaintiff could be ordered to make restitution "of all property and rights lost by the erroneous judgment or order," and could even have a money judgment imposed against it under Code of Civil Procedure section 908? This includes legal interest. And if enforcing the judgment caused the appellant to lose business profits, the judgment creditor can be liable for those losses, too.

That is very nearly what happened to the respondent in Dr. Leevil, LLC v. Westlake Health Care Ctr. (D2d6 Mar. 17, 2021) no. B304339 (non-pub.). A judgment-creditor absolutely can be liable in restitution to the judgment-debtor. And it would have here, too, had the appellant not stipulated to the remedy – a $5.7 million mistake. Ouch.

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