United States District Court, N.D. California, San Francisco Division
ORDER DENYING WITHOUT PREJUDICE FORREST STREAM'S
MOTION FOR ASSIGNMENT OF PAYMENTS AND ORDER RESTRAINING
ASSIGNMENT OF PAYMENTS RE: ECF NO. 128
BEELER, UNITED STATES MAGISTRATE JUDGE
a breach-of-contract lawsuit arising from a borrower's
breach of a multi-million-dollar loan
agreement. Forreststream, the lender, sued Gregory
Shenkman, the borrower, for failing to repay the loan and for
failing to pledge his interest in a company called EIS Group
to secure the loan. The court granted Forreststream summary
judgment, found Mr. Shenkman personally liable for the loan,
and entered judgment in the amount of $10, 503, 285.19 plus
interest. Mr. Shenkman appealed and has not paid any
part of the judgment.
asserts that Mr. Shenkman has an equity interest in, and an
entitlement to payments from, several entities; it asks for
an order assigning the payment rights to it and restraining
Mr. Shenkman's assignment of his rights to
payments. The court can decide the motion without
oral argument under Civil Local Rule 7-1(b). The court denies
the motion without prejudice to allow further discovery about
whether Mr. Shenkman has assignable rights to payments.
investigation reveals that Mr. Shenkman has “an equity
interest in and may otherwise be entitled to payments from
the following entities:” (1) Return on Intelligence,
Ltd., a Bermuda chartered corporation (“ROI”);
(2) MeForo USA, Inc., a California Corporation, and its
affiliate MeForo Ltd. (collectively, “MeForo”);
and (3) Exigen East, LLC, a Delaware limited liability
company, and its affiliates Exigen Capital (GP), L.P., Exigen
Capital (GPLLC), LLC, Exigen Capital, L.P., and Exigen
Capital Management, LLC (collectively,
Shenkman apparently invested in and is a shareholder in (and
a former director of) ROI; ROI sued him in January 2016,
alleging that he breached his fiduciary duty as a director by
interfering in a business deal. Exhibit A to that complaint is a
letter agreement that Mr. Shenkman signed as
“Manager” on behalf of each Exigen
entity. Mr. Shenkman is MeForo's CEO and
signed its latest Statement of Information filed with the
California Secretary of State on March 8, 2017. The court
previously ordered Mr. Shenkman to pay Forreststream's
attorney's fees and costs for the default-judgment
motion; he paid those fees from MeForo U.S.A., Inc.'s
account at JPMorgan Chase. Forreststream asserts that Mr.
Shenkman's status as MeForo's CEO and his ability to
pay personal obligations from MeForo's account show that
he controls it and is its sole owner.
least as of the date it filed its motion, Forreststream has
not obtained financial information from Mr.
Shenkman. The due date for Mr. Shenkman's
responses to discovery was June 19, 2017, six days after the
motion filing date. He served his responses, saying that he
would produce relevant information after the parties agreed
on a protective order. The parties stipulated to a
protective order on July 6, 2017. On July 5, 2017, in its
reply brief, Forreststream represented that to date, Mr.
Shenkman had provided no documents and no interrogatory
responses (“beyond where he now claims to
live”). Forreststream re-noticed the
judgment-debtor exam for August 14, 2017.
California Code of Civil Procedure § 708.510,
Forreststream asks for assignment of Mr. Shenkman's right
to payments from the entities. The parties do not dispute
that the court retains jurisdiction to enforce its judgment
or that Mr. Shenkman's appeal does not divest the court
of that jurisdiction. Stein v. Wood, 127 F.3d
1187, 1189 (9th Cir. 1997); Ketab Corp. v. Mesriani Law
Grp., No. 14-CV-7241-RSWL, 2016 WL 5921932, at *1 (C.D.
Cal. Feb. 1, 2016). At least on this record, an order
assigning assets is premature until further discovery
illuminates whether Mr. Shenkman has assignable rights to
payments. The court denies the motion without prejudice.
post-judgment enforcement proceedings here are governed by
California law. Fed.R.Civ.P. 69(a); Hilao v. Estate of
Marcos, 95 F.3d 848, 851 (9th Cir. 1996). Under
California Code of Civil Procedure § 708.510, a court
may assign the judgment debtor's right to payments from
third parties to the judgment creditor to satisfy the
Except as otherwise provided by law, upon application of the
judgment creditor upon noticed motion, the court may order
the judgment debtor to assign to the judgment creditor . . .
all or part of a right to payment due or to become due,
whether or not the right is conditioned on future
developments, including but not limited to the following
types of payments:
(1) Wages dues from the federal government that are not
subject to withholding under an earnings withholding order.
(5) Payments due from a patent or ...