HYUNDAI SECURITIES CO., LTD., Plaintiff and Respondent, v. IK CHI LEE, Defendant and Appellant.
No. B257276
Second Dist., Div. Five.
Jan. 13, 2015.
232 Cal.App.4th 1379
Kim, Park, Choi & Yi, Tony K. Kim, Michael Yi and Michael Schillaci for Defendant and Appellant.
Lim, Ruger & Kim, Richard M. Ruger, Lisa J. Yang and George T. Busu for Plaintiff and Respondent.
OPINION
MOSK, Acting P. J.-
INTRODUCTION
We hold that under California‘s Uniform Foreign-Country Money Judgments Recognition Act (
BACKGROUND2
Defendant and appellant Ik Chi Lee (Lee) was the chief executive officer of plaintiff Hyundai Seсurities Co., Ltd. (Hyundai), from 1996 to 2000. Several individual shareholders of Hyundai brought in Korea a shareholders’ derivative action in the Seoul Southern District Court against Lee, as an officer of Hyundai, for, among other things, securities fraud by Lee during his
In the Korean Action, the Seoul Southern District Court entered against Lee and in favor of Hyundai a judgment in the principal amount of 26,538,718,051 Korean Wоn (KRW) or approximately US $24,000,000,3 plus prejudgment and postjudgment interest. (Korean Judgment.) A component of the damages was KRW7 billion for a criminal fine paid by Hyundai in Korea for the acts of Lee. The Korean Judgment also provided for prejudgment interest at 5 percent per annum and postjudgment interest at the Korean statutory rate of 20 percent per annum.
Lee appealed the Korean Judgment to the Seoul Court of Appeals, which court “dismissed” the appeal. Lee then аppealed the Seoul Court of Appeals decision to the Korean Supreme Court, which court also “dismissed” the appeal. Both “dismissals” were based on the appeals lacking merit.
The Korean Supreme Court, by upholding the monetary portions of the Korean Judgment, rendered the Korean Judgment final, conclusive, and enforceable. There is no evidence that the monetary portions of the Korean Judgment were vacated, modified, or set aside, or that there сould be any further appeal.
Hyundai filed an action in the Superior Court of the State of California, County of Los Angeles, pursuant to the Act, seeking recognition of the Korean Judgment. Thereafter, Hyundai filed a first amended complaint in which Hyundai alleged the existence of the Korean Judgment that awarded money damages; that the Korean Judgment was final, conclusive, and enforceable in Korea; that Hyundai had already taken steps to execute, and did execute, the Koreаn Judgment against certain of Lee‘s real and personal properties in Korea; and that after the amount collected by Hyundai and with accrued interest, Lee owed Hyundai a sum of money plus interest. The trial court entered judgment in favor of Hyundai after granting a petition for entry of judgment pursuant to the Act. In a prior appeal, we reversed the judgment on the ground that recognition of a foreign-country money judgment could not be obtained by petition, but rather had to be based upon a duly noticed motion for summary judgment, judgment on the pleadings, or trial. (Hyundai Securities, Co., Ltd v. Lee, supra, 215 Cal.App.4th 682.)
Upon remand, Hyundai filed a motion for summary judgment seeking recognition of the unpaid portion of the Korean Judgment, ($5,031,231—
The trial court granted Hyundai‘s motion for summary judgment and awarded Hyundai the principal sum of $5,031,231, interest in the amount of $3,787,397, daily interest of $2,756 per day from May 27, 2014, until entry of judgment, and postjudgment interest on the California judgment at the rate of 20 percent per annum “on the outstanding principal amount of $5,031,231 from the dаte of entry of this judgment until paid in full.” Lee appeals.4
DISCUSSION
A. Standard of Review
A summary judgment, having been given as a matter of law, is reviewed de novo. (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476 [110 Cal.Rptr.2d 370, 28 P.3d 116].) The parties do not contend there are any triable issues of fact. Questions of law regarding the application of statutes, such as the Act, are reviewed de novo. (See People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 432 [101 Cal.Rptr.2d 200, 11 P.3d 956]; Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799-801 [35 Cal.Rptr.2d 418, 883 P.2d 960]; MacIsaac v. Waste Management Collection & Recycling, Inc. (2005) 134 Cal.App.4th 1076, 1081-1082 [36 Cal.Rptr.3d 650].) A determination of whether to recognize a foreign-country money judgment under the public policy provision of the Act (
The Act, which is based on the Uniform Foreign-Country Money Judgments Recognition Act (U. Laws Ann., supra, at p. 23;
The Act provides for various defenses if the foreign-country money judgment is final, conclusive, and enforceable where rendered. Thus, under section 1716, subdivision (c), “A court of this state is not required to recognize a foreign-country judgment if any of the following apply: [] ... [] (3) The judgment or the cause of action or claim for relief on which the judgment is based is repugnant to the public policy of this state or of the United States.” The Act “does not apply to a foreign-country judgment, even if the judgment grants or denies recovery of a sum of money, to the extent that the judgment is ... [] (2) A fine or other penalty.” (
C. Rules of Interpretation
“Our fundаmental task in interpreting a statute is to determine the Legislature‘s intent so as to effectuate the law‘s purpose. We first examine the statutory language, giving it a plain and commonsense meaning. We do not examine that language in isolation, but in the context of the statutory framework as a whole in order to determine its scope and purpose and to harmonize the various parts of the enactment. If the language is clear, courts must generally follow its plain meaning unless a literal intеrpretation would result in absurd consequences the Legislature did not intend. If the statutory
D. Fine or Other Penalty
As noted, the Act does not apply to a foreign-country judgment to the extent it is a “fine or other penalty.” (
Hyundai argues that the judgment is not for a fine, but rather is to indemnify Hyundai for damages it suffered for having had to pay the fine. Hyundai further asserts that the judgment is compensatory in nature and not punitive, and that Lee was ordered to pay money to Hyundai and not to any agency of the government of Korea.
The language of the Act does not support Lee‘s position. The Korean Judgment was a damage award to compensate Hyundai for the damages it suffered from having to pay a fine. That judgment was not to any extent a “fine or other penalty.” There is nothing in the legislative history of the Act that suggests otherwise. (See Stats. 2007, ch. 42, p. 154 [enacting Sen. Bill No. 639 (2007-2008 Reg. Sess.)]; Sen. Com. on Judiciary, Analysis of Sen. Bill No. 639 (2007-2008 Reg. Sess.) May 8, 2007.)
As noted, the Act is based on the Uniform Foreign-Country Money Judgments Recognition Act. (U. Laws Ann., supra, at p. 23; see Assem. Com.
In Java Oil Ltd. v. Sullivan, supra, 168 Cal.App.4th at page 1187, the court quoted from the Restatement Third of the Foreign Relations Law of the United States, section 483, comment b, pages 611 to 612 as follows: “‘A penal judgment, for purposes of this section, is a judgment in favor of a foreign state or one of its subdivisions, and primarily punitive rather than compensatory in character. A judgment for a fine or penalty is within the section....‘” (See Huntington v. Attrill, supra, 146 U.S. at p. 673 [“The question whether a statute of one State, which in some aspects may be called penal, is a penal law in the international sense, so that it cannot be enforced in the courts of another State, depends upon the question whether its purpose is to punish an offence аgainst the public justice of the State, or to afford a private remedy to a person injured by the wrongful act.“]; 2 Beale, A Treatise on the Conflict of Laws (1935) § 421.1, p. 1339 [“Since no recovery is allowable on a penal claim, damages which are purely penal will not be given on a foreign cause of action.” (italics added).]) The court, in interpreting former section 1713.1, which as its successor, section 1715, excluded from enforceability a “judgment for taxes, a fine or other penalty,” suggested that factors in determining whether the judgment is for a fine or penalty include whether the judgment is for punishment rather than compensation; the judgment is payable to the state as opposed to a private party; the judgment arose from the penal laws of the country rather than a civil action; the damages were designed to make the defendant an example or punish the defendant; and a mandatory fine, sanction or multiplier was imposed on the defendant. (Java Oil Ltd. v. Sullivan, supra, 168 Cal.App.4th at pp. 1186-1189.) All of these factors militatе against the conclusion that the Korean Judgment here included an unenforceable fine or penalty.
Lee‘s argument attempting to distinguish a tax judgment and penalty or fine is unavailing. Section 1715, subdivision (b) provides that the Act does not apply “to the extent that the judgment is ... [] (1) A judgment for taxes [] (2) A fine or other penalty.” Nothing in the Act suggests that judgments for penalties are treated differently than judgments for taxes.
Just because the Korean Judgment awards damages to indemnify Hyundai for a penalty it paid, does not mean thаt the compensatory damages
E. Postjudgment Interest on Korean Judgment
The Korean Judgment awarded postjudgment interest at the rate of 20 percent per annum. Section 1719, subdivision (a) provides that recognition of a foreign-country money judgment has the same conclusive effect as does entry of a sister state judgment. Upon entry of a sister state money judgment, that judgment includes the amount of interest accrued on the judgment “computed at the rate of interest applicable to the judgment under the law of the sister state.” (
Hyundai argues that whether to recognize the postjudgment interest rate is a matter of discretion, citing Southwest Livestock & Trucking Co. v. Ramon (5th Cir. 1999) 169 F.3d 317. In that case, the court held that the public policy against usury did not require nonrecognition under the Texas version of the Uniform Foreign-Country Money Judgments Recognition Act of a Mexican judgment on a promissory note bearing interest at 48 percent. Thаt rate of interest was based on a contractual agreement. Here, the Korean court imposed the postjudgment interest rate of 20 percent “pursuant to the ‘Special Law regarding Litigation Acceleration.‘” (See Samyang Food Co., Ltd. v. Pneumatic Scale Corp. (N.D. Ohio 2005) 2005 U.S.Dist. Lexis 25374, p. *5, fn. 2 [“Under Korean Law, the 20% rate only became effective after May 31, 2003, Korean Special Law No. 6868.“]; id. at p. *4, fn. 1 [“Korea uses a high post-judgment interest rate to encourage payment of judgments.“].)
The court in Java Oil Ltd. v. Sullivan, supra, 168 Cal.App.4th at page 1189 said, “The standard [for nonrecognition of a foreign-country money judgment] is not simply that the law is contrary to our public policy, but
A usurious postjudgment interest rate does not fit this description of a law repugnant to the public policy of this state. For example, in Ury v. Jewelers Acceptance Corp. (1964) 227 Cal.App.2d 11, 20 [38 Cal.Rptr. 376] the court said that “California does not have such a strong public policy against any and all contracts which would be usurious if they were made and to be performed here ....” The court noted that the California Constitution (now art. XV, § 1) exempts certain institutions from the usury laws and gives the Legislature the right to presсribe maximum limits for exempted lenders. (Ury v. Jewelers Acceptance Corp., supra, 227 Cal.App.2d at p. 20.) “A strong public policy, based on a settled concept of justice or morality would not be meshed with such alterable rates as the Legislature might choose to impose.” (Ibid.; see generally Note, “The Public Policy Exception, ‘The Freedom of Speech, or of the Press,’ and the Uniform Foreign-Country Money Judgments Recognition Act” (2008) 36 Hofstra L.Rev. 1139, 1164-1168.)7
It is true that the California Constitution limits the postjudgment interest rate to 10 percent. But the concept of a higher rate presented by a foreign law does not fit within the stringent test set forth by the uniform law for a public policy violation. It is not clear if the trial court exercised discretion in applying the postjudgment interest rate. But Lee has not argued that the trial
F. Postjudgment Interest on California Judgment
Lee contends that the trial court erred in imposing a 20 percent postjudgment interest rate on the California judgment. Lee notes that section 1719, subdivision (b), part of the Act, provides that a foreign-country money judgment that is recognized is “[e]nforceable in the same manner and to the same extent as a judgment rendered in this state.” (See Manco, supra, 45 Cal.4th at p. 207.) Hyundai argued that the Korean Judgment includes 20 percent postjudgment interest and that judgment should be enforceable in full as entered by the Korean court, even after recognition by the California court. At oral argument, Hyundai conceded that once a California judgment is entered recognizing the Korean Judgment, California‘s postjudgment interest rate of 10 percent should apply to that California judgment. As noted, section 1719 provides that the recognition of a foreign-country money judgment is conclusive between the parties to the same extent as a judgment of a sister state judgment is entitled to full faith and credit. Section 1710.25 provides that upon entry of a sister state money judgment, interest shall accrue on the judgment so entered “at the rate of interest applicable to a judgment entered in this state.” (Id., subd. (b).) Thus, a foreign-country money judgment entered in this state bears postjudgment interest at the California rate of 10 percent from the date of the judgment recognizing the foreign judgment.
In Society of Lloyd‘s v. Reinhart (10th Cir. 2005) 402 F.3d 982, 1003-1005, the court held that an English judgment recognized under New Mexico‘s Uniform Foreign Money-Judgments Recognition Act by a United States District Court became a federal judgment to which the postjudgment interest rate specified in
Postjudgment interest on the California judgment is not part of the recognition of the Korean Judgment. The Korean Judgment is enforceable “in the same manner and to the same extent as a judgment rendered in this state.” (
The judgment is affirmed, in part, and reversed, in part, and remanded for further proceedings in accordance with this opinion. No costs are awarded.
Kriegler, J., and Goodman, J.,* concurred.
On January 14, 2015, the opinion was modified to read as printed above. Appellant‘s petition for review by the Supreme Court was denied April 29, 2015, S224555.
*Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.