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State ex rel Arizona Dep't of Revenue v. Yuen

November 12, 2009


APPEAL from orders of the Superior Court of Los Angeles County, Coleman A. Swart, Judge. Affirmed. (Los Angeles County Super. Ct. No. GS 010367)

The opinion of the court was delivered by: Flier, J.


The State of Arizona (Arizona) appeals from orders granting the motion of respondent Jean Yuen to vacate a sister state judgment, which originated in the superior court for the State of Arizona, and denying Arizona‟s motion for reconsideration. The trial court found Yuen had been deprived of a fair trial in the Arizona proceedings and had a proper defense to the entry of the sister state judgment. Arizona contends the trial court abused its discretion in refusing to give full faith and credit to a final sister state judgment. We affirm, holding the trial court did not abuse its discretion in vacating the judgment.


1. Entry of Sister State Judgment

In August 2007, Arizona initiated the present proceeding in the superior court of Los Angeles, when it applied for entry of judgment on a sister state judgment in the amount of about $682,000 against Yuen. An attorney for Arizona signed an affidavit attesting that in 2000 the Arizona Corporation Commission had obtained a judgment in Arizona against Yuen. The judgment amounted to approximately $436,000, with accrued interest of about $246,000, and Arizona purportedly had received nothing from Yuen on the debt. The clerk of the Los Angeles Superior Court entered a judgment by clerk on a sister state judgment in August 2007.

2. Motion to Vacate Clerk's Judgment

In March 2008, Yuen moved to vacate the clerk‟s judgment.*fn1 Her declaration in support of the motion stated as follows.

Yuen was briefly involved with an entity known as Forex Investment Services Corporation (FISC). FISC attempted to open offices in Phoenix in approximately 1997. Yuen became involved with FISC through a friend, Win Ming Tam (Tam).

In 1996, Yuen and her three children were living in San Francisco with her in-laws. Yuen‟s husband, Scott, was spending about one half of his time in China for his business of exporting California wines to China. About this time, Scott Yuen told his wife a colleague, Sammy Lee Chun Wing (Wing), needed help in opening a currency trading business in Arizona. Because he was often out of the country for his business, Scott Yuen asked his wife to be the incorporating person for Wing‟s business.

At her husband‟s request, Yuen signed articles of incorporation to form FISC in Maricopa County, Arizona. Although she did not recall it, Yuen was also listed as the secretary for FISC. Yuen decided to disengage from FISC shortly afterwards. As a consequence, Yuen was never involved in any activities of FISC.

Yuen never owned any FISC stock or directed the company‟s activities, supervised its employees or arranged or opened accounts for its customers. Yuen never traveled to, resided in or conducted business in Arizona in 1997 or at any relevant time. She never conducted business for FISC even by telephone from San Francisco. She never received any monies from FISC and had "no idea what was going on, if anything with the company." Yuen‟s only involvement with FISC was as incorporator. She had no experience nor any employment, education or training in financial matters, and particularly not in monetary matters. Throughout this period, she was a housewife in San Francisco raising three young boys.

Around 1997, Tam called Yuen and told her there was a "problem" with the Arizona company and an attorney in Arizona needed to speak with her. At Tam‟s request, Yuen went to Tam‟s office in San Francisco and had a "conference call" with an attorney in Arizona.*fn2 Yuen stated she did not retain the Arizona attorney and did not pay him. She received no documents from the Arizona attorney nor authorized him to appear on her behalf. She never received nor sent any correspondence to the Arizona attorney. Other than the conference call, she never spoke with the Arizona attorney.

After the telephone conference call, Yuen heard nothing else about the FISC matter for the next "approximately ten years."

In July 2007, Yuen received a letter from a California attorney. The letter notified Yuen that Arizona had a monetary claim against her. The attorney attached a copy of an opinion and order of the Arizona Corporation Commission to his letter. Until Yuen read the opinion, she was not aware of any of the facts or findings contained in the opinion. This was the first time Yuen learned of any adverse proceedings against her in Arizona.

Yuen immediately retained an attorney to respond to the demand letter. Yuen stated she was not served with any application for entry of sister state judgment or any notice of entry of judgment. She first became aware of the existence of a California judgment against her when a bank gave notice that it had turned over funds in response to a writ of execution.

3. Opposition to Motion to Vacate Judgment

In opposition to Yuen‟s motion to vacate, Arizona asked the court to take judicial notice of certified copies of various documents from proceedings in Arizona, including certified copies of a July 1998 letter from Arizona‟s counsel to the Arizona Corporation Commission hearing officer, a procedural order of the Arizona Corporation Commission, an administrative order issued by the Arizona Corporation Commission, and a minute order and judgment entered by the Maricopa County Superior Court in Arizona.

The July 1998 letter written by counsel for Arizona to the hearing officer for the Arizona Corporation Commission referred to partial written waivers of conflict of interest that had been executed by one of the 13 respondents (Simmons) in the Arizona proceedings. Yuen was one of the 13 named respondents in the proceeding brought by Arizona. The letter written on behalf of Arizona alerted the hearing officer to potential "conflict of interest issues" that counsel believed might result in "material breaches of procedural due process and/or state supreme court professional conduct rules."

Specifically, counsel for Arizona raised a concern after reviewing Simmons‟s partial written waivers. The letter requested that the hearing officer develop a record in order to comply with Arizona Rules of Professional Conduct, Rule 42 of the Supreme Court Rules (ER) and decisional law, namely, Sellers v. Superior Court (Ct.App. 1987) 154 Ariz. 281 (Sellers), regarding potential conflicts of interests. Arizona‚Äüs counsel asked the hearing officer to conduct a "Sellers-type inquiry" at an upcoming prehearing conference and make certain findings, including "whether there are adverse conflicts of interest ...

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