Judgments and Jurisdiction

WV 23 Jumpstart v. Mynarcik, No. C095046 (D3 Nov. 21, 2022)

This is a weird opinion, in that it is deciding collections-related issues in a context where collections―at least collections in California―don’t appear to be a viable option.

Back in 2010, Creditor won a $1.4 million judgment against three individuals and a company. Shortly thereafter, it domesticated the judgment in California, where some of the defendants apparently had assets. Creditor ultimately settled with two of the individuals. And the company went Chapter 7. But there was still about a million bucks uncollected, with interest accruing, and the third Debtor to collect against. 

Unlike California judgments, which last ten years, Nevada judgments only last six. So when, slightly less than ten years after the California domestication, Creditor assigned the judgment to Plaintiff, the time to renew the underlying Nevada judgment in Nevada had already run.  

It appears, however, that Debtor doesn’t have any assets in California, only in Nevada. So to get around the expiration of the Nevada judgment, Plaintiff timely renewed the California judgment and then went back to Nevada to re-domesticate it. Debtor moved in Nevada to quash the judgment, claiming it was invalid. The Nevada court stayed the case pending a ruling from the California court on the judgment’s validity under California law. Debtor then argued to the California court that the renewed judgment was invalid because there was no personal jurisdiction over him in California to enter the original domesticated judgment. The trial court agreed. Plaintiff appealed.

The Court of Appeal reverses. In a basic sense, the idea that a court needs personal jurisdiction over a judgment debtor to domesticate a judgment doesn’t make sense. Collections is basically in rem. You domesticate a judgment because there are assets in the jurisdiction to be levied against. But if some separate minimum contacts style test is the rule, a judgment debtor could render itself collection proof just by moving its assets to a state with which it has no contacts.

The Court points out that nothing in the Sister State Money Judgments Act requires personal jurisdiction to domesticate a judgment. Indeed, the process is essentially ministerial. You attach the judgment to a form and the clerk stamps it as enforceable in California. While the Act permits challenges based on jurisdictional defects in the underlying merits judgment, it does not layer on any requirements beyond those.

Nor are any of the due process concerns from which personal jurisdiction requirements arise implicated. There is no dispute that the Nevada court that actually adjudicated the claim had personal jurisdiction over Debtor. He had notice and an opportunity to be heard in a court in a jurisdiction where he had contacts that bore a substantial relationship to the claims. There was thus no need for a separate jurisdictional analysis to justify out-of-state collections, which, after all are guaranteed under the Full Faith and Credit clause of the federal constitution.

There is, however, a different concern that is suggested, but not raised in the opinion. As I said, reading between the lines, there doesn’t appear to be any evidence that Debtor has assets in California to collect against. So can a creditor renew a domesticated Nevada money judgment in California, which can’t actually be enforced in California, in order revive an otherwise lapsed judgment in Nevada, to be enforced there? That seems a little squirrelly. But it's a Nevada problem, not a California one.

Reversed.