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LLC v. SCC Acquisitions, Inc.

California Court of Appeals, Fourth District, Third Division

January 27, 2015

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

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.

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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 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. (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 (including attorney fees) must “be made before the judgment is satisfied in full.” (§ 685.080, subd. (a).) 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.

We previously issued a published opinion in this matter, holding Gray1’s motion for attorney fees was untimely because it was made after defendants

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gave Gray1 and Gray1 accepted a cashier’s check for the full amount of the judgment, plus accrued interest and awarded attorney fees. Gray1 then filed a petition for review. Our Supreme Court granted review and stayed further briefing pending its decision in Conservatorship of McQueen. In Conservatorship of McQueen (2014) 59 Cal.4th 602, 605 [174 Cal.Rptr.3d 55, 328 P.3d 46], the Supreme Court held attorney fees on appeal from the underlying judgment are not subject to section 685.080 (motion for attorney fees must be brought before the judgment is paid in full). After the Supreme Court decided McQueen, it transferred the present case back to this court to decide in light of the decision in McQueen. We have and conclude our earlier decision was correct.

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. Welfare and Institutions Code section 15657.5, subdivision (a) provides for an award of attorney fees to a prevailing plaintiff. The plaintiff also brought a separate action in an effort to prevent or reverse defendant’s transfer of real property to third persons. The Supreme Court held section 685.080’s timeliness requirement for a motion for attorney fees did not apply to attorney fees incurred in defending the judgment on appeal in the conservatorship matter because those fees were incurred in defending the elder financial abuse judgment, not in an effort to enforce the judgment. (Conservatorship of McQueen, supra, 59 Cal.4th at p. 605.) Attorney fees incurred in the separate action, however, were incurred in an effort to enforce the judgment plaintiff obtained in the elder financial abuse case and are subject to the time limit set forth in section 685.080. (Conservatorship of McQueen, supra, 59 Cal.4th at p. 605.) Because Gray1’s motion for attorney fees incurred in a separate action to enforce its judgment in the underlying matter was not filed before defendants paid Gray1 with a certified cashier’s check accepted by Gray1 and in an amount in excess of the full judgment (including awarded attorney fees and accrued interest), Gray1’s motion was untimely and properly denied by the superior court.

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)

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[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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