GRAY1 CPB, LLC, Plaintiff and Appellant, v. SCC ACQUISITIONS, INC., et al., Defendants and Appellants.
No. G047429
Fourth Dist., Div. Three.
Jan. 27, 2015.
233 Cal.App.4th 882
A petition for a rehearing was denied February 20, 2015, and the petition of appellant Gray1 CPB, LLC, for review by the Supreme Court was denied April 15, 2015, S224914.
Shumener, Odson & Oh, Robert J. Odson and Edward O. Morales for Plaintiff and Appellant.
White & Case, Aalok Sharma and Mark E. Gustafson for Defendants and Appellants.
MOORE, J.—You cross continents and spend years trying to collect a judgment for your client. Late one Friday afternoon, the debtor‘s lawyer walks into your office and hands you a cashier‘s check for almost $13 million, covering the entire judgment and all accumulated interest. Do you accept the check or say, “No thank you, I need to make a motion for attorney fees first?” Put another way, is a bird in the hand worth two in the bush?
Gray1 CPB, LLC (Gray1), obtained a judgment against SCC Acquisitions, Inc., and Bruce Elieff (collectively defendants). Almost two years later, defendants paid the amount of the outstanding judgment and accrued interest with a cashier‘s check. In the interim, Gray1 allegedly incurred more than $3 million in attorney fees in an effort to enforce its judgment. The fees were largely incurred in litigating a separate action against Elieff in an effort to untangle what Gray1 asserted were a number of fraudulent transactions resulting in the placement of fraudulent liens on Elieff‘s real property as part of a scheme to insulate Elieff‘s properties from the judgment.
According to Gray1, it was only when it appeared the separate action was imminently headed toward resolution in Gray1‘s favor that defendants gave Gray1 the cashier‘s check to pay the judgment. Gray1 did not immediately cash the check. It held onto the check long enough for its attorneys to file a motion for postjudgment costs, including attorney fees. Once deposited, the issuing bank honored the check.
Judgment creditors who have prevailed on a contract authorizing the award of attorney fees are entitled to postjudgment attorney fees. (
In addition to opposing Gray1‘s motion, defendants filed a motion of their own. They sought a determination that Gray1 unjustly failed to file a timely acknowledgment of full satisfaction of judgment. (
We previously issued a published opinion in this matter, holding Gray1‘s motion for attorney fees was untimely because it was made after defendants
In Conservatorship of McQueen, supra, 59 Cal.4th 602, the plaintiff won a judgment in a financial abuse of an elder case. The judgment was appealed and the plaintiff prevailed.
I
FACTS
In August 2010, Gray1 obtained a judgment in excess of $9.1 million, plus interest, against defendants as a result of defendants’ failure to make good on their guaranties of a loan made to a limited liability company owned by Elieff. (See SCC Acquisitions, Inc. v. Central Pacific Bank (2012) 207 Cal.App.4th 859, 861-862 [143 Cal.Rptr.3d 711].) The written guaranties contained provisions providing for the award of attorney fees. (SCC Acquisitions, Inc. v. Central Pacific Bank (Oct. 30, 2012, G045718) [nonpub.
Defendants made no payments on the judgment until June 8, 2012. On that date, defendants’ attorney hand delivered to Gray1‘s attorneys a cashier‘s check in the amount of $12,918,654.46 and a letter. According to the letter, the cashier‘s check covered the amount of the judgment, including accumulated interest, and the judgment was now fully satisfied. The letter also demanded Gray1 immediately file a full satisfaction of judgment. Additionally, the letter contained a notice in the language of
“‘Important warning. If this judgment has been satisfied, the law requires that you comply with this demand not later than 15 days after you receive it. If a court proceeding is necessary to compel you to comply with this demand, you will be required to pay my reasonable attorney‘s fees in the proceeding if the court determines that the judgment has been satisfied and that you failed to comply with the demand. In addition, if the court determines that you failed without just cause to comply with this demand within the 15 days allowed, you will be liable for all damages I sustain by reason of such failure and will also forfeit one hundred dollars to me.‘”
Twelve days after receiving the cashier‘s check, on June 20, 2012, Gray1 filed a motion for postjudgment costs, including attorney fees incurred in attempting to enforce the judgment. Gray1 alleged that in the two years following the judgment, it had incurred more than $3.1 million in attorney fees in efforts to collect on its judgment.1 On June 22, 2012, Gray1 filed an acknowledgment of partial satisfaction of judgment. Gray1 contended it was entitled to costs (including attorney fees) incurred in attempting to enforce its judgment, and therefore, the amount paid by defendants was not in full satisfaction of the judgment.
Gray1 deposited the cashier‘s check on June 21, 2012, the day after it filed the motion for postjudgment costs. The bank funded the check on June 25, 2012.
Fifteen days after hand delivering the cashier‘s check and letter, defendants filed a motion to compel Gray1 to file an acknowledgement of full satisfaction of judgment on June 27, 2012. (
The court heard the parties’ respective motions on September 12, 2012. Defendants argued Gray1‘s motion for postjudgment attorney fees was untimely because
In a five-page ruling, the court denied as untimely Gray1‘s motion for postjudgment costs. The court also denied defendants’ motion for damages and sanctions (
II
DISCUSSION
A. Gray1‘s Appeal
Gray1 appeals, contending the trial court erred in finding its motion for postjudgment costs untimely. As we are not faced with disputed facts and this matter involves statutory interpretation, our review is de novo. (Jaffe v. Pacelli (2008) 165 Cal.App.4th 927, 934 [82 Cal.Rptr.3d 423].)
Under the “American rule,” followed in California, “each party to a lawsuit ordinarily must pay his or her own attorney fees. [Citations.]” (Musaelian v. Adams (2009) 45 Cal.4th 512, 516 [87 Cal.Rptr.3d 475, 198 P.3d 560].) An exception to this rule exists where the parties have agreed to “the measure and mode of compensation of attorneys.” (
In Chelios v. Kaye (1990) 219 Cal.App.3d 75 [268 Cal.Rptr. 38], the plaintiffs appealed an order denying postjudgment costs “consisting principally of postjudgment attorney‘s fees.” (Id. at p. 77.) The plaintiffs argued they were entitled to attorney fees as costs in enforcing their judgment because the contract underlying the action contained a unilateral attorney fee provision, and
In response to the Chelios decision, the Legislature amended
There does not appear to be any dispute concerning Gray1‘s right to timely seek reasonable attorney fees as costs in efforts to enforce its judgment. That having been said, any motion for such costs must be timely made. To be timely, the motion must be made before the underlying judgment has been fully satisfied and within two years of the fees being incurred. (
“‘[T]he statutory purpose of requiring that the motion for enforcement costs be brought “before the judgment is satisfied in full” (
§ 685.080, subd. (a) ) is to avoid a situation where a judgment debtor has paid off the entirety of what he [justifiably] believes to be his obligation in the entire case, only to be confronted later with a motion for yet more fees.’ (Lucky United Properties Investment, Inc. v. Lee, supra, 185 Cal.App.4th at p. 144.)” (Conservatorship of McQueen, supra, 59 Cal.4th at pp. 615-616.) That is the present situation.
1. Attorney Fees Not Awarded by the Court Are Not Part of the Judgment.
Before addressing the issue of when a judgment paid with a cashier‘s check is satisfied, we address another of Gray1‘s arguments. Gray1 claims defendants did not fully satisfy the judgment because the amount tendered, almost $13 million, did not include the substantial postjudgment attorney fees Gray1 incurred in attempting to enforce its judgment by bringing an action to set aside the alleged fraudulent liens on Elieff‘s real estate holdings, although such fees were never awarded by a court. Those attorney fees, therefore, were not part of the judgment. “The amount required to satisfy a money judgment is the total amount of the judgment as entered or renewed with the following additions and subtractions: [[] (a) The addition of costs added to the judgment pursuant to Section 685.090. [][] (b) The addition of interest added to the judgment as it accrues pursuant to Sections 685.010 to 685.030, inclusive. [][] (c) The subtraction of the amount of any partial satisfactions of the judgment. [¶] (d) The subtraction of the amount of any portion of the judgment that is no longer enforceable.” (
Gray1 relies on out-of-state cases for the proposition that payment of an amount excluding attorney fees incurred in enforcing the judgment does not fully satisfy the judgment. The out-of-state decisions cited by Gray1 are not relevant to our analysis because they do not involve analogous controlling statutes. As stated above, at least two sections of the
Gray1 also relies on Heimstadt v. Tapered Parts, Inc. (1957) 155 Cal.App.2d 711 [318 P.2d 689], claiming it is “directly on point” in arguing California public policy requires a judgment debtor to pay the judgment as well as reasonably incurred attorney fees in an effort to collect on the judgment. Heimstadt is not directly on point, and in fact, is inapposite.
In Heimstadt, the parties entered into a contract that provided:
“‘Should an attorney be employed to procure payment hereof by suit or otherwise, the undersigned, jointly and severally, agree to pay a reasonable sum as attorney‘s fees therefor.‘” (Heimstadt v. Tapered Parts, Inc., supra, 155 Cal.App.2d at p. 712.)
Prior to the plaintiff filing a lawsuit, the defendant offered payment of an amount that did not include the $300 the plaintiff claimed was the reasonable amount of attorney fees incurred as a result of the defendant‘s breach of the contract. (Id. at pp. 712-713.) It was in this context that the court stated, “It cannot be seriously maintained that an obligation which includes a liability for attorney‘s fees can be satisfied by the payment of the sum exclusive of attorney‘s fees.” (Id. at p. 714.) The court continued: “When the obligation to pay such a charge has accrued it becomes a part of the principal obligation. A creditor to whom payment is due has no duty to accept less than the entire debt.” (Ibid.) We agree.
Because the cashier‘s check was sufficient to cover the outstanding judgment and accrued interest, it fully satisfied the judgment. The question is: When did it satisfy the judgment? Gray1 contends the judgment was not satisfied until the bank honored the check, which occurred on June 25, 2012, five days after Gray1 brought its motion for postjudgment attorney fees as costs. Defendants argue the judgment was fully satisfied when Gray1 accepted the cashier‘s check, 12 days before Gray1 filed its motion.
2. The Motion for Postjudgment Attorney Fees Was Untimely.
Gray1 argues the statutory scheme states a judgment paid with a check is not satisfied until the check is cashed. It relies on
“‘Performance of an obligation for the delivery of money only, is called payment.’ [Citation.] Payment to a judgment creditor is governed by the cases and statutes which govern commercial transactions. [Citation.]” (Long v. Cuttle Construction Co., supra, 60 Cal.App.4th at p. 837.) In the present case, that means
California Uniform Commercial Code section 3310 . “Unless otherwise agreed, if a certified check, cashier‘s check, or teller‘scheck is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken in payment of the obligation.” ( Cal. U. Com. Code, § 3310, subd. (a) .)
We reject Gray1‘s contention that the Enforcement of Judgments Law conflicts with and prevails over
Thus, while Gray1 had the right to reject the cashier‘s check and demand payment in cash (Conservatorship of McQueen, supra, 59 Cal.4th at p. 615; Long v. Cuttle Construction Co., supra, 60 Cal.App.4th at p. 837), having failed to do so, “the determination of the time of payment is governed by the rules pertaining to commercial transactions generally. [Citation.]” (Long v. Cuttle Construction Co., supra, 60 Cal.App.4th at p. 837.) When Gray1 accepted the cashier‘s check, which was subsequently honored, the effect was the same as if it had accepted cash. (
Gray1 argues its motion for attorney fees was not untimely under Conservatorship of McQueen, supra, 59 Cal.4th 602, because a judgment paid by check is not satisfied until the check has been honored. (Id. at p. 616.) Gray1 takes language from McQueen out of context. Addressing when a judgment is deemed satisfied, the court stated, “If the tendered payment is by uncertified check, as it was in this case, the creditor may postpone presenting the check for payment and, in the meantime, file his or her cost memorandum or motion. (See
That statement in McQueen is entirely consistent with our conclusion Gray1 accepted the cashier‘s check. Absent an agreement to the contrary,
If a judgment creditor is presented with a cashier‘s check for the amount of the judgment plus accrued interest and awarded costs, but the judgment creditor wants to seek additional attorney fees incurred in enforcing its judgment, the judgment creditor “retains, at the least, the option of rejecting the certified check and filing the motion or memorandum for enforcement costs and fees.” (Conservatorship of McQueen, supra, 59 Cal.4th at p. 615.) Gray1 did not reject the cashier‘s check. It accepted the check. Having accepted it, the judgment was satisfied and its subsequent motion for attorney fees was untimely. (Id. at p. 616.)
We reject Gray1‘s contention that it could not refuse the tendered cashier‘s check because had it done so, defendants would have claimed the judgment was fully satisfied upon the “tender” of the check, based on
The Legislature has declared interest on a judgment ceases to accumulate on the date a check in the amount of the judgment and accumulated interest is delivered to the judgment creditor, notwithstanding the fact that the honoring of the check may take a period of days. (
The rule we announce today does no disservice to judgment creditors who have incurred postjudgment costs they wish to add to the judgment. Like Gray1, if they have not yet filed a motion for postjudgment costs at the time the judgment debtor tenders a cashier‘s check in full payment of the outstanding judgment, they are free to reject the payment and to file a motion for postjudgment costs. In fact, for purposes of filing a timely motion for postjudgment costs, postjudgment creditors who are provided a cashier‘s check may be in a better situation than those who are paid in cash. A judgment creditor must accept cash, but may reject a cashier‘s check and instead file a motion for postjudgment costs, including attorney fees.
This is not to say Gray1‘s argument is not without sympathetic appeal. If Gray1 is to be believed, Elieff‘s slippery efforts to evade paying the judgment against him required Gray1 to follow a tortuous paper (or rather, electronic) trail—with discovery battles in foreign jurisdictions—to prove the liens on Elieff‘s properties were fraudulent and put in place by a company run by a close associate of Elieff‘s based on phony loans. That being said, Gray1 could have made a motion or motions for postjudgment costs, including attorney fees, prior to defendants fully satisfying the judgment nearly two years after entry of the judgment. “If the creditor has reason to believe cash may imminently be tendered to pay the judgment, prudence counsels filing a motion or memorandum for the costs and fees accumulated to that point . . . .” (Conservatorship of McQueen, supra, 59 Cal.4th at p. 615.) And as stated earlier, Gray1 could have refused the cashier‘s check and prepared its motion for postjudgment costs. (Ibid.) Having accepted the cashier‘s check, however,
Contrary to Gray1‘s contention, the trial court did not “allow[] Elieff to escape his obligation to pay for” postjudgment costs, including attorney fees. The court applied the plain language of the applicable statutes. If Elieff escaped, it is not because the trial court “allowed” it, but rather because Gray1 did not file its motion before the outstanding judgment was fully satisfied, as required by law. (
Lastly, Gray1 urges us to find
Even were we to assume for purposes of argument equitable tolling applies to motions as well as actions, Gray1 forfeited this issue by not raising it below. “‘“[I]t is fundamental that a reviewing court will ordinarily not consider claims made for the first time on appeal which could have been but were not presented to the trial court.“‘” Thus, “we ignore arguments, authority and facts not presented and litigated in the trial court. Generally, issues raised for the first time on appeal which were not litigated in the trial court are [forfeited]. [Citations.]“‘” [Citation.]’ [Citation.]” (In re Marriage of Zimmerman (2010) 183 Cal.App.4th 900, 912 [109 Cal.Rptr.3d 96] [equitable tolling issue forfeited].)
“When a money judgment is satisfied, the judgment creditor immediately shall file with the court an acknowledgment of satisfaction of judgment.” (
Defendants contend they were not obligated to submit their costs, attorney fees, or damages because
Whether viewed under a substantial evidence test (George S. Nolte Consulting Civil Engineers, Inc. v. Magliocco (1979) 93 Cal.App.3d 190, 193-194 [155 Cal.Rptr. 348] [substantial evidence supported trial court‘s
III
DISPOSITION
The orders of the trial court are affirmed. In the interests of justice, the parties shall each bear their own costs on appeal.
Rylaarsdam, Acting P. J., and Bedsworth, J., concurred.
A petition for a rehearing was denied February 20, 2015, and the petition of appellant Gray1 CPB, LLC, for review by the Supreme Court was denied April 15, 2015, S224914.