Domestication of Judgments
The firm is regularly retained to assist in the extraterritorial recognition and enforcement of judgments ‑ i.e. full faith and credit ‑ and procedures to enforce out‑of‑state (sister state) and foreign country judgments in California, as well as California judgments in other jurisdictions and/or against property in other jurisdictions. In general, this involves one of four types of litigation:
- The domestication of sister state judgments.
- The registration of federal judgments.
- The domestication of foreign judgments.
- The confirmation of foreign arbitration awards.
We accept these types of cases on either a contingency or hourly basis.
DOMESTICATION OF SISTER STATE MONETARY JUDGMENTS:
The federal Constitution provides that a judgment from a sister state (of the United States) is entitled to the same "full faith and credit" in every court within the United States as it has by law or usage in the court of the sister state. Thus, a sister state judgment rendered by a court with jurisdiction over the subject matter and the parties is given collateral estoppel (issue preclusion) and res judicata (claim preclusion) effect nationwide. However, procedurally, a sister state judgment is enforced in California pursuant to California law. A sister state judgment cannot be enforced in California until it is "domesticated" (or registered) in California as a California judgment in accordance with the Sister State Money‑Judgments Act (the "SSMJA") or by bringing an action to establish the judgment per Code of Civil Procedure 1913.
Under the SSMJA (beginning at Code of Civil Procedure 1710.10), a money judgment obtained in another state may be filed with a California court and a California judgment is entered immediately. Once served on the judgment debtor, it becomes enforceable, and a writ of execution is generally issued.
After service of the judgment, the judgment debtor has 30 days to file and serve a motion to vacate the judgment. But the judgment may only be vacated upon certain specified and proven grounds: (1) the most common: the sister state court (that entered the judgment) lacked either subject matter or personal jurisdiction over the defendant; (2) there is an appeal of the judgment pending in the sister state; (3) the sister state court has granted a stay of enforcement, or (4) there is a motion to vacate the judgment pending in the sister state.
In this firm's practice, debtors are never successful in their attempts to prevent the sister state judgment from being domesticated. In fact, in Mr. Guerrini's career, he has been successful at defeating each and every debtor's attempt to challenge domestication of a sister state judgment.
DOMESTICATION OF SISTER STATE NON‑MONETARY JUDGMENTS:
The SSMJA is clearly more efficient to enforce sister state money judgments. But an independent civil action (i.e. a new civil filing) is the only way that a sister state non‑monetary judgment may be enforced (with the exception of child custody and visitation orders, which are enforced generally under the Uniform Child Custody Jurisdiction and Enforcement Act).
Thus, separate and new lawsuits in California are required to enforce sister state non‑monetary judgments. As with sister state monetary judgments, the action may only be legitimately defended upon certain specified and proven grounds: (1) the most common: the sister state court (that entered the judgment) lacked either subject matter or personal jurisdiction over the defendant; (2) there is an appeal of the judgment pending in the sister state; (3) the sister state court has granted a stay of enforcement, (4) the judgment was obtained by fraud; (5) the judgment has been satisfied; or (6) there is a motion to vacate the judgment pending in the sister state.
As with sister state monetary judgments, in this firm's practice, debtors have never been successful in their attempts to prevent the sister state judgment from being domesticated.
DOMESTICATION OF FOREIGN COUNTRY MONEY JUDGMENTS:
Unfortunately, the United States has no reciprocal treaty with any country requiring that it recognize judgments rendered abroad. Foreign country money judgments may be enforceable in California if they meet the requirements of the requirements of the UFMJRA ‑‑ the "Uniform Foreign Money Judgments Recognition Act", codified in California, beginning at Civil Code section 1713. To do this, the creditor brings an action in California to establish a domestic judgment. But keep in mind that California courts have broad discretion to deny enforcement of foreign money judgments.
A foreign country money judgment may be recognized in California only if the judgment is final, conclusive and enforceable where rendered (even if an appeal if pending). Such a judgment is not “conclusive” if it was rendered under a system which does not provide impartial tribunals or afford due process of law. In such a case, the California court would not permit enforcement of the judgment locally.
In addition, a foreign money judgment may not be recognized in California if the foreign court did not have personal jurisdiction over the defendants or subject matter jurisdiction over the matter. The facts in the underlying case will dictate whether the California court will exercise its discretion and grant, or deny, enforcement of the judgment.
Even if the judgment meets these requirements, the California court can exercise its discretion to deny enforcement and refuse to recognize the judgment if (1) the defendants did not have adequate notice of the proceeding, (2) the judgment was obtained by fraud, (3) the judgment violates public policy, (4) the judgment conflicts with another conclusive judgment, (5) the judgment was obtained in violation of an agreement between the parties, or (6) the foreign court was such an inconvenient forum that due process is offended.
A foreign money judgment is not enforced the same way that a sister state judgment is enforced. Rather, the creditor must literally file a new lawsuit in California, seeking to obtain a domestic judgment based upon the foreign judgment. There is generally no re‑litigation of any of the underlying issues; the creditor merely asks the court to enter a judgment in California based upon the judgment that was entered in the foreign country. The debtor may not respond at all, or he may challenge the judgment on due process grounds. But either way, the court has broad discretion to grant, or deny, enforcement. In our experience, if the debtor participated in the litigation giving rise to the judgment, due process concerns are generally satisfied.
Note that absent a contrary agreement between the parties, the California court enforcing the foreign country money judgment will generally convert the foreign currency to U.S. dollars using the exchange rate in effect at the time of entry of the foreign judgment.
Also note that the action to obtain the judgment must be commenced within four years from the date that the foreign country judgment is entered.
The judgment, once registered in California, accrues interest at 10% per annum.
REGISTRATION OF FEDERAL JUDGMENTS:
As long as enforcement has not been stayed by a judge, a final judgment for the recovery of money or property entered outside of California in any federal district court, bankruptcy court, circuit court of appeals, or in the Court of International Trade, may be enforced in California by registering it in a federal district in California. (Nonfinal federal judgments cannot be registered unless good cause is shown or upon order of the court that entered the judgment.)
To register a final federal judgment, we file locally, a certified copy of the judgment with the clerk of the court that rendered the judgment. This local clerk then enters the judgment in the local district.
Unlike a state court‑issued judgment, it does not have to be served upon the debtor; and once registered in the local district, the judgment has "the same effect as a judgment of the district court of the district where registered and may be enforced in like manner." (28 USC 1963).
ENFORCEMENT OF FOREIGN ARBITRAL AWARDS:
The United States is a signatory to the Convention on Recognition and Enforcement of Foreign Arbitral Award, which mandates enforcement of arbitration agreements between citizens or entities of different countries, as well as awards in foreign arbitration proceedings, except where the arbitration agreement is “null, void, inoperative or incapable of being performed.”
Under the Convention, subject matter jurisdiction is in the federal courts, and the appropriate district in which to file is the one where the debtor resides (or where an agreement between the parties stipulates).
To enforce a foreign arbitration award, a petition to confirm the award is filed in the appropriate federal district within three years from the date of issuance of the arbitration award. If the award is not in English, a certified translation must accompany the petition. Once confirmed, the award is entered as a federal district court judgment and is enforceable just like a federal judgment.
ENFORCEMENT OF CALIFORNIA JUDGMENTS AGAINST A DEBTOR'S PROPERTY OUTSIDE OF CALIFORNIA:
Often, a debtor may attempt to shield his/her assets by hiding them outside of California. Other than a judgment for child or spousal support, a final money judgment rendered by a California court cannot be enforced against a debtor’s income or assets located in another state without first obtaining a judgment in that jurisdiction. This is done by “domesticating” the California judgment in the sister state jurisdiction (generally in a manner similar to the way in which sister state judgments are domesticated in California). Over the years, we have built up a solid and reliable network of attorneys nationwide that regularly assist us with litigation and domestication in other states.
Even without domesticating the California judgment, the California court can still validly order the debtor to apply his/her out-of-state property or income to satisfy an unpaid judgment. This is done via writ of execution (for example, to reach securities in the possession of a secured party), turnover order (for example, after examination), assignment order (for example, to obtain all or part of a stream of payments due the debtor from a third party), charging order (for example, against the debtor’s interest in a partnership or limited liability company), or a creditor’s suit (for example, against a third party who possesses or controls property in which the debtor has an interest).