Tuesday, August 7, 2012
Page 9
THE LEGAL COMMUNITY
Playing Cards
How Much Is Owed?
By DAVID J. COOK
(The author is the senior attorney for Cook Collection Attorneys PLC and publisher of CollectionLawReporter .com )
Third in a Series
The amount which is owed in the judgment is the total of the principal, interest, costs and fees. That total is subject to interest at 10 percent per annum. Payments as received are first applied on account of interest, and thereafter to principal.
A judgment in state court doubles in 10 years, while in the U.S. courts only goes up about 10 percent. When renewed, the interest and costs are added to the judgment, and the total is subject to interest at 10 percent. The 10-year old judgment is doubled, and that “double” is now subject to new interest at 10 percent. There is no compounding, except when a judgment is renewed.
Costs accruing post-judgment can be added through the filing and service of a cost memorandum.
What cards did you draw here? Is this really a problem? Your first bud was the Mr. Judge who handed you victory, or at least a piece of paper that had two comma’s between the zeros. Your next true BFF (best friend forever for the set over 16) is the clerk. If the clerk can issue the writ and abstract as matching the judgment, you walk away with valid and enforceable process. If the judgment is poorly drafted, you have been dealt a joker with the clerk staring at you and no process. Bad hand. You went bust.
What About an Appeal and Stays of Enforcement?
Absent a judgment solely for costs and interest only in a routine case, a judgment can be enforced immediately upon entry unless the case is on appeal and bonded. However, even without an appeal, the court can stay enforcement for up to 60 days (or more depending upon notice issues). This means that a motivated judgment creditor can literally show up at the clerk’s window, seek a Writ, Abstract, or an OEX, and immediately enforce the judgment, even though the case is on appeal, assuming no stay and no bond. Therefore, absent the bond, or stay, an appeal will not stop execution. This is called an unbonded appeal.
Sometimes the judgment debtor will post a bond that assures the judgment creditor of payment. The paperwork to secure a stay might take a few days, and the judgment creditor has a slight advantage in securing execution before the judgment debtor files papers seeking a stay. This is truly a race to the courthouse. The gap of time between the date of the judgment and the probable posting of the bond, and absent a stay of execution, offers the judgment creditor the opportunity to execute on the judgment. This prompt execution might compel the debtor to more quickly post a bond, or consider settlement.
The law does not compel the debtor to post a bond, but any judgment creditor seeking to enforce a judgment on appeal assumes the risk that the appeal might be victorious and money must be returned. There are no certainties in litigation, but just probabilities of success or failure.
Great hand! Double down moment here. The dealer dealt you a pair of “Tens.” Great story. Truck driver was hauling 10,000 pounds of machinery on a flat bed dropped in place by a professional rigger. Trucker ambled along the L.A. freeways when he heard a rattling noise. Got out of the cab to inspect the load, and grabbed the chains to test the tinsel strength. Bad move, stranger. The load toppled and nearly sheared off the trucker’s foot. Blood and gore all over the pavement. Took the hazmat folks all day to clear up the mess. This guy will never appear in Dancing with the Stars. The driver sued the rigger who only had a $1,000,000 in insurance. Chump change, folks, in 2012. Tiny money. The insurer rejected policy limits offer that propelled the case to trial. Apparently Cresci was unknown to them. After Plaintiff’s counsel annihilated the defense expert, the insurer offered policy limits for a complete release. Too little and way too late. Plaintiff blew off the offer and rightfully so. The jury awarded $4.2 million and buried the debtor with about $3.2 million in uninsured debt. Defendant filed an appeal. Plaintiff hired our firm. The Debtor did not secure a stay of enforcement, and did not post a bond.
We knew jack squat about the debtor. Zip. Nada and more nada. Pre-Google, we got a map of the debtor’s neighborhood, and phone book with the listing of the local banks. We hit up 64 banks. After the sweep, trial counsel puts halted our campaign. Why? We hit the payroll account, emptied out the contents and bounced about 50 payroll checks due the riggers. Bouncing a payroll check draws big penalties, but bouncing 50 payroll checks draws the Labor Board cops. Debtor’s counsel screamed bad faith, and big bad and really ugly damages to the insurance company. Punting, the insurance company posted a $6.2 million appellant bond that quashed enforcement. Great hand: double down hit double doubles the jackpot.
What Do You Know About the Debtor?
This is an important question because many judgment creditors lack any information which would disclose the judgment creditor’s assets and liabilities. In the current digital age, the judgment creditors can “Google” the judgment debtor. This information might surface a home address, telephone number, their job, and their place of work. Alternatively, the judgment creditor can purchase for a small fee, reports from any number of service providers, such as Dun & Bradstreet, Experian, Accurint, PeopleMap, LexisNexis, among others. Some judgment creditors will retain the services of a private investigator whose prices range between $200-$20,000, or more.
The frustration facing most judgment creditors is that they do not know anything about the judgment debtor and do not know where to start. This is very common in tort actions, damage claims, automobile accidents cases, as opposed to breach of contract, employment, and other contractual transactions. Information is not only power, as they say, but is the path to collection of the judgment. Some information also could be available through a County Recorders, the secretary of state, court records, and filings with specialized courts, such as the Tax Court, or the courts administered by the U.S. Patent & Trademark Office. Most courts today are online and therefore from the court docket, the judgment creditor could “guesstimate” what documents might contain valuable information, such as contracts or financial statements. Some information is available through litigation by just calling the parties or their lawyers and acquiring copies of documents, such as depositions and answers to interrogatories.
When the cards are dealt, look under each card. Facing a $200,000 judgment, the debtor denied ownership of the home and working gas station. Shortly after judgment the judgment debtor cycled through a collusive divorce that turned over every asset to the wife, leaving the debtor dirt broke. Is this a bust? Shall we fold and order another watered drink? Not yet. Culling though the local records dredged up a lawsuit by a lumber yard for an unpaid bill. In establishing a credit account with the debtor, the debtor furnished a credit application, which, you guessed it, listed the debtor as owner of the home and gas station. Signed by the debtor in good clear handwriting. Dropped a subpoena on the gas wholesaler who produced a credit application revealing the debtor as owner. Call this a pair of jacks.
Copyright 2012, Metropolitan News Company