Post Judgment Enforcement and Remedies in the Federal Courts and California Courts

• Publication year: 2023
• Author: Written by David J. Cook*

POST JUDGMENT ENFORCEMENT AND REMEDIES IN THE FEDERAL COURTS AND CALIFORNIA COURTS

Written by David J. Cook*

Federal Rule of Civil Procedure ("FRCP") 69(a)(1) and (2) inserts state remedies in the enforcement of a judgment handed down from federal courts.

Rule 69(a), for instance, permits judgment creditors to use any execution method consistent with the practice and procedure of the State in which the district court sits. Rule 62(a) further protects judgment creditors by permitting execution on a judgment at any time more than 10 days after the judgment is entered.⁰¹

We open the door:

WALKING DOWN THE STEPPING STONES FOR STATE AND FEDERAL JUDGMENTS

California's Enforcement of Judgments Law ("EJL")⁰² offer these EJL stepping stones of State and Federal judgments:

1. "Except as otherwise provided by statute or in the judgment, a judgment is enforceable under this title upon entry." (California Code of Civil Procedure section 683.010, "EJL Enforcement"). Notice to the judgment is not required, but FRCP 62(a) stays enforcement, save a court order and the right to record an abstract. Rule 62(a) even applies to default judgment: "Months have passed since the Clerk of Court made an entry of default against each Defendant. Despite this, no Defendant has appeared or given any indication of intent to participate in this litigation."⁰³
2. "Except as otherwise provided by law, all property of the judgment debtor is subject to enforcement of a money judgment." (California Code of Civil Procedure section 695.010(a), "EJL Property") (Except immune property. Some property might require an affirmative claim of exemption and others do not. FRCP 69(a) follows this path.).
3. "Except as otherwise provided by law, all property that is subject to enforcement of a money judgment pursuant to Article 1 (commencing with § 695.010) of Chapter 1 is subject to levy under a writ of execution to satisfy a money judgment." (California Code of Civil Procedure section 699.710, "EJL Execution"). (FRCP 62(a) stays enforcement for thirty days, save a court order for cause and the right to record an abstract. 28 U.S.C. § 1963 stays registration in another district, save a court order for good cause.).
4. "The exemptions provided by this chapter apply only to property of a natural person."⁰⁴ "Natural person" sometimes includes family members, i.e., residential real

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property levies subject to a homestead. FRCP 69(a) follows this path.
5. If in state court, "[s]ubject to subdivision (b), the trial court may stay the enforcement of any judgment or order." California Code of Civil Procedure section 918(b)'s discretionary stay is limited to "for a period which extends for more than 10 days beyond the last date on which a notice of appeal could be filed" (i.e., seventy days). Upon entry of the judgment, rule 62(a) stays enforcement for thirty days absent lifting the stay. Post rule 62(a), generally rule 62 offers its own rules, i.e., a discretionary stay or bond.
6. If in state court "[t]he power of the court to stay execution is limited by statute. There is no provision for a stay of execution upon the giving of security and the court may not extend its purely statutory authority on condition that security be given."⁰⁵ The quote from Del Riccio v. Super. Ct., 115 Cal. App. 2d 29, 31 (1952) is worthwhile:
When the writ has been regularly issued and executed, money collected, while in the hands of the officer, is property of the judgment creditors and not the debtor. (Under FRCP 69(a), if the writ is valid and seized the assets, generally, the creditor is entitled to assets.)⁰⁶

Rule 62(a), once thirty (or ten) days expires, leaves the district court powerless:

The execution of judgment structure set up by the Federal Rules of Civil Procedure does, to a certain extent, reward the quickest party to take legally effective action concerning a pending judgment. See Moses, 922 F.Supp. at 604 ("Once the automatic stay provisions of FRCP 62(a) have expired, the enforcement of a judgment becomes a race between Plaintiff (seeking to seize assets to secure a judgment) and Defendant (posting an approved supersedeas bond to avoid the embarrassment of public seizure)."). The Court is powerless to change this legal reality, and will not invoke its general equitable authority to enable TIP to avoid it.⁰⁷
7. Application and Order for Appearance and Examination under California Code of Civil Procedure section 708.110(a) ("OEX"), liens created under section 708.110(d), and third party liens under section 708.120(c), summary trials, limited discovery, turnover orders, and second round of liens (California Code of Civil Procedure section 708.205(a) ("Such an order creates a lien on the property or debt") are execution remedies under rule 69(a), while FRCP rule 45 subpoenas ("SDT") fall under rule 69(a)(2) and all are non-exclusive remedies.

FEDERAL STAYS DIFFER FROM STATE STAYS

The federal stay rules differ from California: "Federal courts have discretion to stay enforcement without a bond or with a reduced bond." (Lightfoot v. Walker 797 F.2d 505, 506-07 (7th Cir. 1986).⁰⁸ Other cases track:

Although some authorities tend to support Federal's position that a supersedeas bond is required, we find more persuasive the contrary view that Rule 62(d) only operates to provide that an appellant in all cases may obtain a stay as a matter of right by filing a supersedeas bond, and does not prohibit the district court from exercising a sound discretion to authorize unsecured stays in cases it considers appropriate.⁰⁹

Upon entry of the federal judgment, FRCP 62(a) [thirty days] and 28 U.S.C. § 1963 ("Fed Stays") (limited to downstream districts) render EJL Property immune from EJL Enforcement (save passive judicial liens), unless the court finds cause and lifts the Fed Stays for rule 62(a), or the judgment become final including the conclusion of the appeal (28 U.S.C. § 1963).

On the other hand, for most cases, and sometimes other stays options, California Code of Civil Procedure section 917.1(b) requires 150% of the judgment for the bond to stay the money judgment. California Code of Civil Procedure section 918(b) grants a seventy-day stay, without a bond, and subject to the court's discretion. California Code of Civil Procedure section 995.240 might even waive a bond if the case is on appeal:

The court may, in its discretion, waive a provision for a bond in an action or proceeding and make such orders as may be appropriate as if the bond were given, if the court determines that the principal is unable to give the bond because the principal is indigent and is unable to obtain sufficient sureties, whether personal or admitted surety insurers. In exercising its discretion the court shall take into consideration all factors it deems relevant, including but not limited to the character of the action or proceeding, the nature of the beneficiary, whether public or private, and the potential harm to the beneficiary if the provision for the bond is waived.

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Indigence on appeal also might justify a waiver of the bond: "[s]ection 995.240, which applies only to indigent parties, gives the trial court discretion to waive the section 917.1 requirement of a bond to stay the enforcement of a money judgment on appeal."¹⁰

Fed Stays immunize EJL Property from EJL Enforcement for thirty days, absent "cause" under FRCP 62(a) or "good cause" under 28 U.S.C. § 1963 brought by a motion filed by the creditor who bears the burden of proof. Upon a motion filed by the creditor, the court can lift the rule 62(a) stay for cause, such as insolvency, evidence of flight to anywhere, absconding with (or without) assets, pending asset sales (even if legitimate), suits or enforcement from any third parties, threats of bankruptcy, evidence of hostility, or other fraudulent conveyances as rendering assets more inaccessible, even if held by the debtor and without a transferee.

Should the creditor fail to prove cause (or good cause under section 1963), and absent passive liens, the EJL Property enters the umbrella of asset protection, at least for thirty days, anticipated or unanticipated, or more time, and sometimes a disaster befalling the judgment creditor when the cabinet is emptied.

BEATING A HASTY RETREAT OUT THE BACK DOOR AND "LEAVING ON A JET PLANE" (ONE WAY TICKET)

Rule 62(a) stays enforcement of the federal judgment for thirty days, i.e., "execution on a judgment and proceedings to enforce it are stayed for 30 days after its entry, unless the court orders otherwise."

Without restraint by statute or rule, rule 62(a) enables the judgment debtor to sell, dispose, encumber, destroy, or convert into cash all its assets or, worse yet, pay off other legitimate creditors including the debtor's attorney as allowed by California Civil Procedure Code section 3432: "A debtor may pay one creditor in preference to another, or may give to one creditor security for the payment of his demand in preference to another." Scary? Consider Wyzard vs. Goller, 23 Cal. App. 4th 1183 (1994) where, prior to judgment, the debtor encumbered his real property to ensure payment due to his counsel and the court held that this did not constitute a fraudulent conveyance. If paying a bona fide debt in good faith, the safe harbor provided by California Civil Procedure Code section 3439.08(a) and rule 62(a) may render the debtor "judgment proof" even when it offloading all its assets, whether bona fide or possibly corrupt.¹¹

However, the creditor can record abstracts of judgment (California Civil Procedure Code section 697.340) notwithstanding the rule 62(a) stay. "The court's refusal to stay execution of the judgment, or to expunge the abstract of judgment from the county records, was not an abuse of discretion. Recording a judgment is generally not held to be prohibited by Fed.R.Civ.P. rule 62(a). [Citation Omitted]."¹²The basis is the following:

As Hartford correctly points out, a judgment lien does not deprive the judgment debtor

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