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LLC v. SCC Acquisitions, Inc.

California Court of Appeals, Fourth District, Third Division

April 9, 2014

GRAY1 CPB, LLC, Plaintiff and Appellant,
v.
SCC ACQUISITIONS, INC., et al., Defendants and Appellants.

[REVIEW GRANTED BY CAL. SUPREME COURT]

Appeals from orders of the Superior Court of Orange County No. 30-2008-0112660, Charles Margines, Judge.

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COUNSEL

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.

OPINION

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 asserts 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. (Code Civ. Proc., §§ 685.040, 685.070, subd. (a)(6); all statutory references are to the Code of Civil Procedure unless otherwise stated.) However, a motion for postjudgment costs must “be made before the judgment is satisfied in full.” (§ 685.080, subd. (a).)

Page 415

The trial court denied Gray1’s motion for postjudgment costs, finding the motion was made after the judgment had been fully satisfied. Gray1 appealed. In this appeal we are called upon to determine when a judgment paid with a cashier’s check is deemed satisfied.

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. (§ 724.050, subd. (e).) The trial court denied defendants’ motion, finding defendants failed to prove damages, and concluding Gray1’s failure to file a timely full satisfaction of judgment was not without just cause. Defendants appealed from that order.

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.opn.].) The judgment provided Gray1 was entitled to attorney fees and costs to be established by a cost bill or motion. By interlineation, the court amended the judgment to reflect the award of over $1.5 million in attorney fees and more than $44, 000 in costs.

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 section 724.050, subdivision (b): “‘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 ...


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