So you won a huge court case? Big deal — can you collect? Judgment enforcement, and defense against judgment enforcement, are critically important to litigants. But enforcement sits in that twilight region in between the trial and the appeal, so most trial and appellate attorneys do not know a lot about it. But Joseph Chora does. Judgment enforcement is all he does.
We ask Joseph to share some of his best enforcement tips (a teaser: don’t file fraudulent-transfer actions; file a lien instead—it’s faster, cheaper, and it flips the burden of proof). And some of the biggest pitfalls (e.g., failing to make an enforcement plan early).
We also discuss:
Joseph Chora’s website and LinkedIn profile.
Appellate Specialist Jeff Lewis' biography, LinkedIn profile, and Twitter feed.
Appellate Specialist Tim Kowal's biography, LinkedIn profile, Twitter feed, and YouTube page.
Sign up for Tim Kowal’s Weekly Legal Update, or view his blog of recent cases.
Use this link to get a 25% lifetime discount on Casetext.
Joseph Chora 0:03
Find something that is difficult, arcane and that other attorneys don't know how or don't like to do, and you'll always have work.
Announcer 0:11
Welcome to the California appellate podcast, a discussion of timely trial tips and the latest cases and news coming from the California Court of Appeal, and the California Supreme Court. And now your hosts, Tim Kowal and Jeff Lewis.
Jeff Lewis 0:25
Welcome, everyone. I am Jeff Lewis.
Tim Kowal 0:27
And I'm Tim colwall. The California appellate law podcast is a resource for trial and appellate attorneys. Both Jeff and I are appellate specialists. And we also split our time about evenly in the trial court as well. And in each episode of the podcast, we tried to bring our audience of trial attorneys and appellate attorneys some legal news and insights they can use in their practice. And a quick
Jeff Lewis 0:49
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Tim Kowal 1:14
Now, Jeff, as appellate attorneys at about the time you and I are preparing to close our doors and turn off our phones and spend many quiet hours alone with the appellate record. There are other attorneys out there doing much more exciting things, and I'm talking about judgment enforcement. I've done only a little bit of collection work myself. But in preparing for doing that work. I spent many entertaining hours online reading about exotic things like Sheriff auctions and till taps and even how you can send the sheriff to a debtors home to take their cash, cars, valuables, or even for the sake of leverage his beloved little pet dog judgment. Enforcement and defense against judgment enforcement are very important to litigants facing an appeal, but it kind of sits in that Twilight space in between the trial and the appeal. So most trial and appellate attorneys don't know a lot about judgment enforcement and defensive judgment enforcement. So we thought that today our audience might enjoy hearing from a specialist in the area of judgment enforcement and defense and the judgment enforcement attorney on my speed dial is Joseph Chaura. Joseph is a judgment enforcement attorney whose practice focuses exclusively on the enforcement of judgments not only in California, but also nationally and internationally. In addition to enforcing judgments. Joseph works with both trial and appellate attorneys with sensitive investigations that need the confidentiality of a law office and also the technical knowledge of a private investigation firm. So Joseph Tura, welcome to the podcast.
Joseph Chora 2:41
Happy to be here. Thank you, Tim. Thank you, Jeff. Now,
Tim Kowal 2:45
Joseph years ago, I listened to a collection attorney suggest using a Writ of Execution to have the sheriff visit the debtors house. And like I mentioned earlier, take his beloved pet for the sake of leverage, because often at that point, the debtor will just get out his checkbook and start writing the check to the creditor. Does that sort of thing really happened in your practice and forcing judgments?
Joseph Chora 3:06
Well, first of all, let me just be clear that anytime assets, any property that's taken, it's taken for the financial value not for leverage, that would be an improper purpose. And that would be a great way to have your levy undone. So if a pet were valuable, say a show dog or a rare bird, then that would make sense. But if you have a mutt that's 10 years old, and you're the end of his life, no real value or they've been sentimental, the judge would probably put a kibosh on that.
Tim Kowal 3:37
I see. So if you start going through the house and and pointing to family portraits on the wall and start taking those that would be only for sentimental value and for leverage and not a proper purpose of judgment enforcement.
Joseph Chora 3:48
Exactly right. And there there are exemptions that exempt normal typical household goods, fine art, whether or not it has sentimental value that has real value to it is always available for seizure.
Tim Kowal 4:01
Okay, interesting. Well, that's an important nuance that that was not related. When I watched that video by another judgment enforcement attorney years ago. I wonder if you. Nonetheless, you must have some interesting stories from your practice in judgment enforcement and defense. I wonder if you could, if you could tell us one.
Joseph Chora 4:18
Sure. I'll tell you an urban legend that my firm may or may not have been involved with small judgment about $75,000, the lead attorney decided to examine the debtor. And during our discovery, we discovered that the debtor had a girlfriend and so the lead attorney decided it might be beneficial. If we examined the wife, the girlfriend and the husband all on the same day. Let's just say that exam those examinations never took place checkbook came out and the $75,000 were
Tim Kowal 4:54
satisfied. Well that's, that is very that's very clever. So that's so obviously The debtor got got service of a copy of those judgment debtor, third party judgment debtor examinations,
Joseph Chora 5:05
the debtor must be notified of everything that's filed, whether or not it involves them directly. Yeah.
Tim Kowal 5:11
Well, and that's and, and obviously that was done, partly for leverage. But ostensibly they had, they may have some useful information as well. So it was it was still a proper purpose. Certainly, the leverage was just a bonus.
Joseph Chora 5:26
Yes. Another example, if you're interested is a little more technical. There was a debtor, it was a bicycle company, and they had a large judgments 600 $700,000 against them. They had been around for 30 years, they had developed intellectual property, they went into bankruptcy, but they created a shadow Corporation in which they transferred all their assets, except for the intellectual property. And so the leverage that we were able to put on them was, we're going to sell your intellectual property for $1. And the creditor will buy it, and you will forever be without your intellectual property, or you can sell this judgment, they ended up settling for about 125% of the judgment. Wow, the alternative would be to lose their IP. Yeah, the golden goose? Well,
Tim Kowal 6:19
well, I can't I can't ask the question that artists get asked and writers and things that how do you come up with these with your ideas? But is there a network of judgment enforcement attorneys? Where do you get the these ideas to put leverage? Are these are these original ideas? Or are they kind of industry secrets,
Joseph Chora 6:37
I would say about half and half, we have seven lawyers at our firm. And there is nothing better in the world. And maybe I'm outing myself as a dinosaur. But remote work has no place in my firm. There's nothing better than two attorneys staring each other in the eye and talking about a case than synergy that spontaneous generation of of ideas is so valuable when you have to be creative.
Tim Kowal 7:02
Tell us more about about how you got in to developing a specialty doing collection work. Have you always done collection work? Or did you start out as a business litigation attorney, or some other sort,
Joseph Chora 7:13
I have always done collection work. When I finished law school, I didn't know a thing. I like most of us, like all of us, right? And I thought, I'm gonna do everything. I'm gonna do family law, commercial law, environment, everything I could do so that anybody who came to me I could do, I could take care of their case,
Tim Kowal 7:32
you're you're a door attorney, as they call it, take on any client who walks in the door, toaster whatever pops
Joseph Chora 7:38
up. But some I was networking with other attorneys, and a senior told me that's a stupid idea. Don't do that. He said, find something that is difficult, arcane, and that other attorneys don't know how or don't like to do, and you'll always have work. And I thought, okay, I can do that. And so I was going to do pre judgment work, like pre judgment writs of attachment, written possession. And then I ran into my now partner who was already doing collections, and it was a match made in heaven, as they say the rest is history.
Tim Kowal 8:13
Yeah, pre judgment, writs of attachment, that that would be highly specialized. So this is, so you branched out a little bit from from that? Well, very interesting. And then I do note that there, there are only 11 legal specialty areas that are recognized by the state bar. And as you mentioned, judgment enforcement is a specialized and arcane area of law. But it's not one of the recognized specialty areas in which you can certify or get as good as a certified license from the State Bar, should it be an area of legal specialty that the state bar should recognize, in your opinion?
Joseph Chora 8:46
You know what I think it shouldn't be. But I'm okay that it's not, it makes me more of a specialist that there are no titles. It's kind of just me, there is a specialty but and it's called creditors rights, but it's specifically as slanted toward bankruptcy.
Tim Kowal 9:02
I see. Does much of your work bleed into the bankruptcy sphere?
Joseph Chora 9:07
Oftentimes, typically, the lifecycle for a case for us is to evaluate the judgment determine if the debtor has money, and then or assets, I should say. And so if we're pursuing people who have the assets to pay and they want relief, they typically reach toward an appeal, bond, or bankruptcy. So all our cases from the outset, are prepared for those two eventualities.
Tim Kowal 9:30
And we'll talk a little bit more about appeal bonds later, I wanted to ask if you tell us just a little bit about your national and international practice, obviously, some debtors will, will skip town and go across state lines, and so domestication of judges of california judgments and other states may be necessary. Tell us a little bit about that aspect of your practice. So
Joseph Chora 9:50
I'm a minimalist. If I don't have to file a lawsuit, I would much prefer to take care of things via motion. And I recommend that if a person's Major nexus of assets is in a different state, that you hire an attorney in that local state. Typically, my multi state enforcement is either when their assets are concentrated in California, and they have smaller assets, satellite assets in different states, or they're just entirely spread out throughout the entire country. And it wouldn't matter who you worked with. I can't hear you, Tim,
Tim Kowal 10:25
a couple more questions about your by way of introduction here. What is something that a lot of civil attorneys don't know about judgment enforcement, but should know about judgment enforcement,
Joseph Chora 10:34
I've got two big ones for you. Gold Nuggets. If nothing else you can get from this this interview. And my my presence here is one if you have a judgment against someone, and they transfer an asset, you don't have to file another lawsuit. You don't have to file a fraudulent transfer action. You can just levy on the asset transfers,
Tim Kowal 10:56
you can just levy so instead of having to file a separate judgment enforcement complaint, what is the process of living on the action? Is it through the sheriff? Yeah,
Joseph Chora 11:06
yeah. So let's just say the debtor owns a house, it's in his name, you levy on it, you go through the process, you sell the house scenario to before you're able to get a hold of the debtor, he transfers the asset the house to his 17 year old son, rather than filing a fraudulent transfer action to unwind that transfer. You simply levy on the house in the name of the sun, and you unwind transfer via motion through the levee process.
Tim Kowal 11:36
Wow. So that, that short circuits a lot of unneeded civil procedure, I guess.
Joseph Chora 11:42
I mean, lawsuits discovery, a skillet, the debtors. Number one defense is delay. And if you have a multimillionaire defendant $300,000 buys a lot of delay.
Tim Kowal 11:55
There must still be some some due process that the son would have in that scenario. Could he file objections? How could he still delay that process of the levying on the on the fraudulently transferred asset,
Joseph Chora 12:07
anytime you levy on an asset, the debtor can make a claim of exemption that this property shouldn't be levied upon. And any third parties can make a third party claim of ownership. And so the Son would have to come forward and the note the burden of proof is on the son to prove that he owns the property, and that it was purchased for value that he paid the real value to his father for that property.
Tim Kowal 12:33
Whereas if if the creditor had filed an independent collection action, the creditor would have the burden of proof. Exactly right. That's a very interesting, very, very useful nugget of information. Let's see. And one other kind of book and that question about something that civil attorneys should know, what is something that civil attorneys definitely should not try to do on their own without a judgment enforcement specialist?
Joseph Chora 12:59
You know, I think it's like anything, it depends on the on the practitioner, if you're used to getting out of your comfort zone, doing a lot of research, you can do just about anything, a good practice guide, a couple calls to your friend Joseph Chara, and and away you go, the only thing I would absolutely suggest that you outsource is the asset investigation. The second and most important step is to make sure the guy you're chasing or the gal you're chasing has assets that you can eventually take and convert into money.
Tim Kowal 13:30
Yeah, well, the What about after after the attorney has made a couple of calls for advice to his good friend Joseph Chara, and and then kind of run into a brick wall. What is the brick wall that that attorneys often run into and decide? You know, this is this is too much research. I haven't spent this much time in the rudder guide since I was a first year associate Joseph, can you can you take over x? What is what is x?
Joseph Chora 13:54
The one that scares most attorneys is living upon a house. Because everyone you talk to says it can't be done. It's never done. It's so complicated. It doesn't work to find someone to tell you. It's easy peasy. 123 I'll probably be the only person who tells you that
Jeff Lewis 14:12
still even in during the pandemic with some of the measures that courts have put into place in terms of the pandemic. Yeah, we
Joseph Chora 14:20
took several houses during the pandemic, it the hard part isn't taking the house. The hard part is getting the people out of the house. Yeah, if you do it right. You sell the house to a third party. You've got the money. You don't care if the people get out of the house or not.
Jeff Lewis 14:34
Wow, okay, Tim, remind me never to cross this guy.
Tim Kowal 14:39
Okay, let's uh, let's get into still more some some nitty gritty questions about judgment enforcement. Let's, let's start with an overview. Joseph, I wonder if you could kind of give us just a general outline overview of the judgment enforcement process. Maybe we start at you know, that maybe the moment the judgment is entered, I assume that's that's whenever what's that's when the creditor starts So looking at Judgment enforcement options, and that's when the debtor, and often me, as the appellate attorney will will say, Well, you can appeal this, but you got to make sure that, you know, you're not going to lose your house and get your bank account wiped out. Otherwise, how are you going to pay me for this all this great appellate work if the plaintiff is wiping your bank account, so maybe give us an overview of the process to all
Joseph Chora 15:20
the trial attorneys out there, you know, before you file the lawsuit, you should know that the person has money to pay the amount that you want, you can conduct an asset investigation, it happens sometimes where I'll get a claim, and I'll look at the debtor and he didn't hide his assets. He just never really had the assets. The second is the is the judgment facially valid, I would say one out of maybe 10. I look at the judgment, and it can't be enforced the way it was written. And so we'll have to go back in and get it amended or inter lineated or something, just to get it fixed up.
Tim Kowal 15:55
Can you give an example of, of how a judgment can be facially invalid? I hadn't actually thought about that before. Sure,
Joseph Chora 16:01
sure. It happens a lot. When we get to the third part where we're enforcing, we have to send instructions to the sheriff. And the sheriff is a stickler. They're not lawyers and writing clerks. But the names of the entities have to be described, it has to be ABC, Inc, ABC LLC, if it's just ABC, you've got an unenforceable judgment. That can really be an issue. If there's a question. Sometimes these debtors will have entities with similar names. And there's some confusion. And it can be a problem
Tim Kowal 16:36
is that that sort of thing happened with DBAs. And other aka A's,
Joseph Chora 16:43
it does aliases. You know, sometimes women will get married and their last name will change. But those kinds of aka aliases, and when names change for marriage, those are relatively easy fixes where the judgment doesn't have to be amended. It's typically business entities where we find the most problems.
Tim Kowal 17:00
Okay. Anything else in the kind of the outline of judgment enforcement? What what happens when when judgment enforcement gets started? What typically, do you see at that point as the does the debtor decide? Okay, well, it looks like now the rubber has hit the road and and they're going to start enforcing, so maybe I better just write the check.
Joseph Chora 17:19
So, you know, after the review of the facially valid judgment, it's the acid investigation to find out what assets this debtor has, and how is he holding them that kind of leads right into the next step, which is developing an enforcement plan, whether he's got money in an offshore Trust Bank Accounts of business, you know, valuable art, whatever the asset is, that kind of sets the shape. And at this point, you'll also kind of get some information as to whether or not there has been transfers. And whether you want to again, like we talked about before levy on the asset anticipating unwinding that transfer through the levy process. But you're right there first response is to run, hide in delay.
Tim Kowal 18:02
Yeah. All right. Well, here is in one of my exposures to judgment enforcement and defensive judgment enforcement, I came across an important California Supreme Court case conservatorship of McQueen. It's a 2014 case. And what I learned from that case, in representing an appellant defendant who was trying who had stage judgment forcement, and was trying to minimize his exposure to attorney fees for judgment forcement McQueen says that the right to seek judgment forcement fees is cut off if the judgment is fully satisfied. So what that means, I take it is that if the plaintiff creditor has spent $100,000, on Joseph Chara, to to enforce the judgment, but the but the appellant defendant writes a check and fully satisfies the face amount of the judgment plus any interest accrued before Joseph Chara files his Motion for Judgment enforcement fees, then the right to judgment forcement fees is cut off. Is that the gist of what McQueen says Joseph?
Joseph Chora 19:07
That's exactly right. And I've seen it, I've seen it happen, where I call it sloppy, but maybe in a tension, where someone will be a little slow asking for fees, you can file a memorandum of cost after judgment at any interval, we typically do it around five or $6,000. So as we as we're generating fees, we're adding that adding them to the judgment immediately. Again, $5,000 is just enough that it's low enough that they're not going to want to pay their attorney to fight it. And even if they do, we're going to win. And then we add our fees for fighting it onto the judgment as well. You teach the judge the judgment debtor right away, don't fight my fees, and that's more pressure to settle.
Tim Kowal 19:47
Got it so you don't have to file a full fledge Motion for Judgment enforcement fees. You can just keep putting these bookmarks in by way of memoranda.
Joseph Chora 19:57
Exactly right. And by picking small
Jeff Lewis 19:59
them bounce, maybe the other side wouldn't go through the bother of filing a motion to tax or strike or whatever the opposition is interesting.
Joseph Chora 20:06
Exactly. Right. Yeah. Well, that's
Tim Kowal 20:08
a good tip. One of the other one of the exceptions to McQueen. Again, McQueen says that, that the debtor can cut off the right to judgment enforcement fees by fully satisfying the judgment before the creditor formally requests the enforcement fees. The exception to that is that is that to satisfy the judgment, it has to be not only paid or not only tendered but paid and received. So a check, or even a cashier's check doesn't work if the creditor because the creditor can simply hold on to the check and not cash it until the creditor has filed the enforcement the fee motion. So the exception or to really make the remedy of the Queen work, you would have to the debtor has to pay the creditor in cash. Is that Is that right, Joseph?
Joseph Chora 20:53
Oh, I'll tell you my experience has been not as technical. I know. That's what the case says. But as we all know, judges will do whatever they want, whenever they want. Let them be appealed. Typically, what I've seen is that there's an understanding when counsel has been presented with the law, as long as there's received once you receive the check, I suppose a cashier's check would would make a stronger case cash an even stronger case. But yes, cash is what's required. But there's some wiggle room and maybe that's honor among attorneys. And you know, sometimes attorneys don't necessarily have that honorable stance.
Tim Kowal 21:31
Interesting. Okay. Yeah, my my experience with that I once tried to make use of McQueen and add a mic. My client, the debtor had paid the fully satisfied the judgment by paying in cash quite a large sum of money in order to cut off judgment enforcement fees. And we cited McQueen to the trial court, but the trial court still granted the later filed motion for enforcement fees. So I was very frustrated that McQueen was not was not given force in effect, in my experience, and then I'll just bookmark a couple of other cases for the audience here. We don't have to go into detail here. But but just to kind of underscore what you just said, Joseph that your mileage may vary. So there's there's a case a gray one, CP B versus SEC acquisitions, a 2015. Court of Appeal decision that held that if a judgment were were not fully satisfied because of the existence of as yet on awarded attorney fees, the phrase before the judgment is fully satisfied with serve no purpose, which is basically confirming what we had just been been talking about in McQueen, it held to kind of a literal reading of McQueen. But another court of appeal out of the second district went a different direction last year in Wertheim LLC versus currency court, where it held that additional fees were potentially award double pursuant to the creditors motion for them, because that right had been revived by a previous appeal. So even though that motion had been filed after the judgment was fully satisfied, the court said well, but the payment in full satisfaction of the judgment wasn't conditioned on it being accepted as full satisfaction. So we're going to let the creditor file and potentially receive fees for enforcement even after satisfaction of the judgment. So it kind of undermined the holding of McQueen and as confirmed by gray one CPB. And, and I wonder, Joseph, if, you know, is there any requirement that the defendant when the defendant or a debtor pays the judgment in full satisfaction that does the creditor hat? Or does the debtor have to indicate on the form of payment that it's being made on the condition that it'd be accepted as full satisfaction?
Joseph Chora 23:43
Well, I'll tell you, there is no condition. But every time we get right up to the end, there's always a question to the penny, how much is owed. And you'd be surprised how difficult the accounting can be. And the smart lawyers will overpay because there's no question that it's been paid. Because if you're one penny short, you leave the door open.
Tim Kowal 24:06
I have noticed that it's it can be difficult to calculate it. I myself will do it multiple times and kind of do it different ways. And then opposing counsel will still have something that's just a little bit different and always gives me heartburn. So I agree with what you say about you know, maybe just write how much over should you write write the check.
Joseph Chora 24:24
Again, it's rare that I've never paid a judgment. But I'll tell you, the attorneys who have circumvented the issue have paid about over $1,000 over just to make sure that it's done done. And of course a scrupulous attorney will return what we feel they should be what they should receive.
Tim Kowal 24:44
Got it. Okay. I wanted to ask you also about trust and probate judgments in my experience, they they have not been subject to the enforcement of judgments law, the EJ L What do you say Are they are are judgments against a trust, an irrevocable trust after the settler has passed away? Are they? Can they be subject to the E jl? Or are they purely creatures of the trial of the probate judges discretion?
Joseph Chora 25:13
So it's been my experience that if you want to bust a trust or reach into the assets that are due to a third party like a beneficiary, then you need to go into probate. But if the trustee on behalf of the trust is a judgment debtor, we have seized trust property.
Tim Kowal 25:35
Is there a way of doing that? Does the does will the trustee say no, no, no, you have to file a creditor claim even judgments are just mere claims against the trust, and they have to be brought by way of a creditor claim.
Joseph Chora 25:49
So what I can tell you what we've done, and I tell my employees is all the time just because it worked doesn't mean you did it. Right. We will if we had a judgment against the trust, and we levied on on Trust Bank account, and the money was seized, and it was sent to the sheriff and the trustee, and the beneficiaries had an opportunity to file claims of exemption or third party claims. They didn't and the money was released to us. Game over once it's released, there's pretty much no going back.
Tim Kowal 26:15
Got it. So even if it's done or not done completely, right, once the money is released, it's pretty much a done deal, you kind of get back into that principle of possession is nine tenths.
Joseph Chora 26:25
There is strong law that once the gavel falls and the auction or turnover by the sheriff is complete. It's very rare to have that undone.
Tim Kowal 26:37
So with that in mind, would you suggest if you were if you were approached by the creditor with a judgment against a trust where the settler passed away and the trust is under administration of the probate court? Would you suggest, you know, taking a stab at using the enforcement of judgments, law and just living upon assets that way before resorting to the creditor claim process? Say that again? Because
Joseph Chora 27:00
I think this is a different set of facts?
Tim Kowal 27:03
Well, you've got to let's say you have a judgment against a trustee, the settler has passed away. So the trust is being administered by the probate court.
Joseph Chora 27:11
So it's going against the person who the decedent or it's against the
Tim Kowal 27:16
successor, successor trustee. So at this, yeah, so at this point, it's against the trust or the trustee, but it's the successor it's not the original settlers. It's because it's it's an irrevocable trust now, because the settler has passed away. So this is the point at which if you have a claim against the trust, any creditor ordinarily needs to file a creditor claim you can't file a lawsuit against the deceased settler, they need to file a creditor claim and they will get meted out that way in the probate court. Now, I've I've seen this in the context where the successor trustee is in litigation following the death of a settler and their claims and cross claims and a judgment is entered against the successor trustee. But the the judgment creditor can't get any satisfaction can't get any any can enforce that judgment, because the probate court says no, no, no, you can only seek satisfaction by way of filing a creditor claim, I'd have
Joseph Chora 28:11
to look at it. But my first instinct would be to move forward through the standard enforcement process
Tim Kowal 28:16
until someone tells you know, exactly right. Yeah, yeah, that was I had I had a miserable experience in that case. And just just to finish that story, we did file the creditor claim, the trustee basically pocketed it and didn't do anything with it. And so we filed a petition to enforce the creditor claim, and then the probate judge basically pocketed it never set it for hearing. And so there we sat for a better part of eight years. Meanwhile, the trustee can continues to litigate paying her own attorneys, of course, well, while we can't get any satisfaction on on our attorney fee judgment against the trustee, and made me think that the EGL probably should apply against truss. Let's see, we also discussed a case recently in which a plaintiff and a defendant agreed to use a general verdict form they were kind of brokering about whether to use general or specific or specific verdict forms, and they agreed to use a general verdict form in exchange for a stipulation to limit judgment enforcement. It would be limited to just collecting against the insurance policy and indemnity duties. I wonder if you had ever seen this sort of thing. And it seemed, seemed very, very creative solution. And I just wondered, gosh, does that does a stipulation like that hold up by the time you get a judgment, can your rights to enforce a judgment under the the full panoply of enforcement methods under the EGL be limited by pre judgment? stipulations?
Joseph Chora 29:45
It certainly can. there's case law that a judgment is a contract, and if you get into that frame of mind, you can craft it any way you like, you know, we talked about invalid judgments earlier with the wrong parties. You can definitely limit and shape how a judgment comes out.
Tim Kowal 30:03
Now, would you have to incorporate that stipulation into the face of the judgment?
Joseph Chora 30:09
Absolutely. There's a doctrine, the merger doctrine that says all claims are merged into that piece of paper. And so, you know, every time I talk to a trial attorney, this is another nugget, all your work, all your depositions, all that discovery, all that trial prep, everything comes down to that piece of paper. If it's not on the piece of paper, it's not there.
Tim Kowal 30:30
So if you forget to put that in your proposed form of judgment, and the judge has signs that without that, without any evidence of that stipulation being in the form of judgment, then you're out of luck, that stipulation for all intents and purposes does not exist. I take it correct. Yeah, there was
Joseph Chora 30:45
a case that we had, and it was a while ago, and we litigated it post judgment. But attorneys fees were awarded, but did not show up on the face of the judgment. And so we ended up not being able to get attorneys fees for enforcement. Wow.
Tim Kowal 31:02
All right, let's move on, I want to ask you a little bit about Alter Ego judgments. Now, most attorneys know that they have the option whenever they are suing a defendant. And they think that there there are or may be alter egos that they can get liability attached to, they have the option to either allege those alter egos in the complaint and go forward with Discovery against those alter egos and prove the alter ego at trial. Or they can just ignore all those alter egos get the judgment against the primary defendant and then seek alterego liability afterward, after entry of the judgment in a Code of Civil Procedure, section 187 motion? And I wonder, Joseph, what, what do you think attorneys ought to know when considering these two routes?
Joseph Chora 31:46
So we just had a case that we dealt with on this where the plaintiff waited too long in the trial cycle, and it was too close to trial. And the judge said, Yeah, you know what, I think he is an alter ego, but I'm not gonna let you add them because you're going to disrupt my docket, too bad. If you have what you need to make that person an alter ego, do it sooner than later. It's better to do it before Entry of Judgment. Because then even if you fail, we still have post judgment for a second swing.
Tim Kowal 32:21
went about trying to add an alter ego after the after the entry of judgment, where that alter ego individual did not appear was not a participant in the lawsuit are litigants are plaintiff still able to add those kinds of non appearing alter egos after the entry of the judgment?
Joseph Chora 32:39
So there's a there's a lot of nuance in that, in that area. In order to find an alter ego, you need to have a unity of interest, unjust result will occur if the corporate entity or the non Alter Ego is respected. And finally, the proposed Alter Ego has to have had their due process rights protected by participation, even if only vicariously in the underlying litigation. So there's a lot of analysis that would go into that.
Tim Kowal 33:11
Right. So it might be different out analysis, if you're if the lead defendant is the individual who's already participating in the trial, and you're just thinking about maybe adding other partnerships or maybe a trustee capacity or LLCs, that maybe potential alter egos, you could maybe leave those for after the entry of the judgment, but you can't proceed against the LLC, for example, as the lead defendant and then count on later adding the individual members as alter egos under CCP 187.
Joseph Chora 33:41
You could if the member or members were virtually represented by control of the
Tim Kowal 33:49
LLC, you'd have to establish that, that they control the litigation.
Joseph Chora 33:53
Exactly right. Yeah. And the due process is that their due process rights are protected, they were virtually represented in the lawsuit.
Tim Kowal 34:00
Okay. All right, next subject. Now, now here, I thought maybe you could settle a dispute between Jeff and me about anti slap fee awards. As the audience may know, I've taken the position that I published an article in California litigation magazine last month that that anti slap fee awards are automatically stayed on appeal, even without the need to post a bond. That's because under the 1992 legislative amendments, there is there's no more no longer the routine versus non routine cost distinction. So slap fee awards are treated just like any other kind of fee awards or costs, which are automatically stayed. There is a little bit of an older kid, and that's confirmed and then in the coils, decision coils versus parents. There's a slightly older appellate decision in Dalling that says slap fees are non routine costs. So they're more like they're they're more like money judgments. They're they're not automatically stayed without without the appeal. Not like we say without a bond. And I wonder if you've said that'll that settle that bet. Are they are they automatically state or not?
Joseph Chora 35:05
Jeff, did you want to be heard before I? Well, I
Jeff Lewis 35:07
was gonna bring a motion that that grossly misstates the holding of Darling Darling. The court said that it was the intent of the legislature to deter frivolous slap lawsuit and that by not recognizing automatic stay, they were furthering the legislative intent in protecting litigants from slabs. That was my reading of darling. But go ahead.
Tim Kowal 35:30
Well, that sounds like the daily court was making a very impassioned campaign statement to join the legislature and rewrite that statute.
Joseph Chora 35:38
So we use anti slap quite a bit, oftentimes judgment, debtors will feel the pressure of our enforcement and they'll want to hit back. And so we get sued on a regular basis. And we act we're constantly anti slapping, picking up fees, and then applying additional pressure. my law partner does the majority of the anti slap work and I had to phone a friend this morning to get his take on it. We had a good discussion about it. And the winner is Jeff.
Jeff Lewis 36:05
Your partner's brilliant.
Joseph Chora 36:08
Not stayed. They are not routine, cos that analysis is still good.
Tim Kowal 36:12
All right. Well, there, there are two different Court of Appeal decisions on that standing for either proposition. So whatever side of that issue you find yourself on, there is a court of appeal decision that meets your needs. And you can cite either one of them and any trial court is free to accept either one that the court happens to feel is more persuasive. All right. Let's see, I wanted to move on on the related issue of bonds and stays. I wondered, I think you mentioned that issue comes up. Sometimes in your practice of judgment enforcement, do you get involved in litigation over appellate stays of enforcement,
Joseph Chora 36:47
we do that that typically comes up, we have started to develop an appellate practice, as part of our judgment enforcement will do a little bit of pre litigation or pre judgment, bankruptcy, appellate work, a little bit of probate, but again, it's all focused on the judgment. So those state motions, you know, again, they'll cite that it's doesn't have to be stayed, whether it's anti slap, or just in general, that we do some of that work.
Tim Kowal 37:13
Let's see. Have you ever seen? Go ahead, Jeff.
Jeff Lewis 37:16
Oh, just gonna ask. So let me ask you, if there's a case where you've got a judgment, you're doing judgment forcement and the other side appeals? And let's say they post an adequate bond, there's no dispute over the amount of the bond or the adequacy of the collateral or whatever. Do you then cool your jets for two years while the appeal winds its way through? Or is there anything you do during the two years on behalf of creditors? While the case is up on appeal?
Joseph Chora 37:39
There really isn't anything that we can do. You know, I'm sure you're aware it's 150 for 150% for accredited and unaccredited, 200%. All we do is we kind of bookmark and manage to make sure that should we win the appeal, that the money's there, if there's some change? For whatever reason, if the appeal becomes crazy expensive, then, you know, we would go in, you know, fight about the adequacy, but other than that, no, absolutely. We pull our chests. Okay.
Tim Kowal 38:07
Interesting. What if the what if the amount of the judgment changes, such as by a subsequent, a post judgment award of attorneys fees and costs at that point that gets added to the amount of the judgment by operation of statute? Do you? Do you ever advise your clients to go in on a motion to increase the amount of the bond?
Joseph Chora 38:25
We've done it several times for just that kind of thing, where there will be something pending, and I'll post a bond, whether it's adequate at that moment, or it's slightly inadequate. And then when the attorneys fees come in, it is then inadequate? Yes, we will go in and object to the sufficiency of the bond.
Tim Kowal 38:45
Is that useful leverage point? Or is it is it more just because you want to make sure your client is fully protected?
Joseph Chora 38:52
It's a protection thing. And unfortunately, some of these attorneys are short sighted in that they want to fight about the amount of the bond, and we'll spend 20 grand fighting about the bond. And so they'll, they'll then be right minus the 20. And then we'll fight again and it'll go up another 20. And they're always $20,000 behind and we'll go in three or four times before they figure it out.
Tim Kowal 39:14
And you're in adding the enforcement fees on top of everything. Yeah,
Jeff Lewis 39:19
yeah. The first rule of holes for debtors is to put the shovel down and stop digging when you find yourself in a hole and rarely do they do they follow that rule?
Tim Kowal 39:29
All right, and Jeff, Jeff, and I have we're both still looking for someone who has ever seen a personal surety bond. Have you ever encountered one of these personal surety bonds now that everyone knows about if you want to stay a judgment on appeal, you have to post a surety bond but it's an admitted surety bond SB one of the surety that's acknowledged by the what is the California Insurance Commissioner, I think, but you can you could post a personal surety bond basically just another person who's willing to vouch for you. It has to be in I think four times the amount of the judgment at that point, I've never seen that I take it I just said, no,
Joseph Chora 40:05
no, no, no, but you know what? There is a an organization of judgment enforcers. I'm gonna put that out. I'm gonna, I'm gonna see if I can find one for you.
Tim Kowal 40:14
Okay, that'd be interesting. I did read one really interesting case that's always stuck in my head that the name of it is but I don't know how to pronounce it buzz Gaea. And and the issue was, it involved a personal surety bond, the the debtor had transferred assets to his wife, who went and posted the personal surety bond, and the creditor said, but that's a fraudulent transfer. And the judge said, No, it wasn't, it was made for the benefit of the creditor, because that bond is in the benefit, it's now held, you know, that those assets are now held by the wife, who is now essentially a co judgment debtor by virtue of that personal surety bond. So it didn't transfer it out of the hands of away from the reach of the creditor. So it was that was that was all fair.
Joseph Chora 40:57
That sounds like the right decision.
Tim Kowal 41:00
But still, I've never seen seen one of these creatures only heard about them, and they're they seem enticing, but no takers so far. I had another question about now we're getting to the end of the process of the appeal. Let's say that the appellant obtains reversal of the judgment against him, and but the the appellate had made some partial satisfaction had paid some amount of the judgment along the way. So now the formerly prevailing plaintiff is liable to return all the all that partial satisfaction he had received on the judgment. And not only that, but full restitution as well, including interest and even lost business profits. That was a case we saw last year in Dr. Leeville, LLC versus West Lake health care. As I recall, in that case, it involved in eviction of a business from a building, and the tenant appealed the order. In the meantime, the landlord went in and sold the building, maybe didn't sell the building but evicted the plaintiff and the plaintiff evicted, sorry, the tenant, the tenant lost the business, and there was some million dollars in lost profits that I think nearly was was awarded, or I think maybe it was left unsettled. But the upshot was that the formerly prevailing plaintiff may be liable for lost business profits, if they're if their former judgment is reversed. I wondered if that sort of risk ever, ever comes into your thinking when advising whether to go forward with enforcing a judgment?
Joseph Chora 42:33
Absolutely. You know, we talked about debtors running into bankruptcy and the appellate court. And so if the debtor appeals, we want to know, what's the likelihood that this is going to be overturned, and the creditor needs to know that if that happens, there's a good chance that you're going to be responsible for returning that money that we've paid out to you.
Jeff Lewis 42:55
Yeah, better invested better than 10% return? What?
Tim Kowal 43:00
Yeah, so is it is it a good idea for the for the creditor to kind of once once recover once having recovered either part or all of the of the judgment? Is it? Is it good to sit on it until the resolution of the appeal?
Joseph Chora 43:15
You know, that's the recommendation that we make to clients. One of the strategies that we employ is the DIS entitlement doctrine. Oftentimes, again, people who have money don't want to pay and so they will fraudulently transfer, they won't provide documents, they won't sit for examinations, they'll engage in obstructive litigation tactics. I we've brought a couple successful. We have one patent pending right now this entitlement motion to dismiss the appeal without reaching the merits. And so if, if our appellate standing isn't that great, and I'll try it, it is the disentanglement. Yeah, that's
Tim Kowal 43:50
a great tip. how egregious does the do the debtors evasions need to be in order to kind of meet that threshold for dismissal under the DIS entitlement doctrine.
Joseph Chora 44:00
So like most cases, it says, contempt is not required, but contempt would work, right. And contempt is relatively easy to show. I mean, you can get contempt for not complying with a subpoena not appearing at a court order debtor examination, that's a court order to appear and you are in violation of that court order. Typically, for us, it's obstructive litigation tactics. It's a pattern of continually taking actions to disrupt to hinder delay and defraud the creditor.
Tim Kowal 44:32
Is that an active strategy in some of your cases to to kind of check those boxes to see if you can satisfy the elements of a dis entitlement motion?
Joseph Chora 44:42
Absolutely. So again, from the beginning of the case, we're thinking appeal, what are our what are the merits of our appeal? Are we in a strong position, but at the same time, are they shooting themselves in the foot by opening themselves up to be dismissed on before They reached the merits.
Tim Kowal 45:01
That's I think that's a great tip. I love I love bringing this entitlement motions when, when when they're justified I think in the last year or so, Jeff, in the in the cases I think both of us are always looking out for for opinions that dismiss appeals on this entitlement grounds. It seems to be getting, at least from my eyes, it seemed to be getting a little bit harder to to meet this standard for dis entitlement. I wondered if that met with your experience, Joseph are are they harder to achieve than they used to dismissals on disinter this entitlement grounds?
Joseph Chora 45:31
I'll be honest, I think we're at a total of four that we've done. So I don't have a tremendous amount of experience. But no, I don't I don't find them any more difficult. That being said, the debtors that we deal with are the worst of the worst. They're the 1% that when you hear the facts, you're like, Oh, my God, why didn't this person in jail?
Tim Kowal 15:52
Yeah, yeah. All right. So now, to wrap all this up, we've talked about a lot of things relating to judgment enforcement, from the technical to gold nuggets of tips that that attorneys both trial and appellate attorneys should employ. And I wonder, Jeff, if you can kind of Joseph if you could bring it full circle and, and tell us now, many, many attorneys will, as I mentioned earlier, will try to take some of the steps themselves to enforce a judgment or defend enforcement of judgment, what are some signals that attorneys should should look out for to read to tell them that it might be time to bring in a judgment enforcement specialist at this point,
Joseph Chora 46:28
my advice is always the same. Call me early or call me late. But I'll be more effective if you call me early. Again. When you're thinking about filing a case, check to make sure he has the money. When you're getting ready to enter judgment, there are certain things you want to do immediately, right? Just from an appellate point of view, if you file a notice of ruling, you shorten their window to file an appeal, if you don't, they have six months, little things like that, that you may not be thinking about preparation for bankruptcy, we prepare all our cases that they're gonna go into bankruptcy. If you call me after they've gone into bankruptcy, I can still help but not nearly as much if we prepared six months ago, then we're going to bank so early is better late, I might still be able to do something.
Tim Kowal 47:12
Yeah, well, I've got a number of tips that I've written down that I plan to use in my own practice. I'm sure you have to Jeff, I want to thank Joseph Chaura, for joining us on this on this episode. I think this has been enormously helpful for me at a minimum and hopefully for the rest of our audience. And Jeff, I think that wraps us up this episode.
Jeff Lewis 47:30
Yeah. First, I'm going to go tell my staff not to cease dogs as part of debtors examinations. And yeah, we want to thank you for being here and want to thank case tax for sponsoring our podcast each week, we include links to the cases we discuss using case text and listeners of the podcast can find a 25% discount available to them if they sign up at case text.com/scalp. That's case text.com/ca LP.
Tim Kowal 47:52
And if you have suggestions for future episodes, or topics that we should cover on future episodes of the podcast, please email either Jeff or me at info at cow podcast.com. In our upcoming episodes, look for more tips on how to lay the groundwork for an appeal and preparing for trial.
Jeff Lewis 48:07
See you next
Announcer 48:08
time. You have just listened to the California appellate podcast, a discussion of timely trial tips and the latest cases the news coming from the California Court of Appeal and the California Supreme Court. For more information about the cases discussed in today's episode our hosts and other episodes, visit the California appellate law podcast website at ca elf podcast.com. That's c a l podcast.com. Thanks to Jonathan Caro for intro music. Thank you for listening and please join us again.
Tim Kowal is an appellate specialist certified by the California State Bar Board of Legal Specialization. Tim helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at www.CALPodcast.com, and publishes a newsletter of appellate tips for trial attorneys at www.tvalaw.com/articles. Contact Tim at [email protected] or (714) 641-1232.
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