Vacating or preserving stale judgments bearing inherent defects: setting aside the final judgment

By David J. Cook

The Free Press – Volume 10, Summer 2011

Published by the Commercial Law League of America

The crucible of every judgment is enforcement, compelling the judgment debtor to involuntarily compensate the plaintiff. Absent insurance or a solvent defendant, judgments do not reach a flash point until the debtor sells valuable property encumbered by a judgment lien, or confronted by aggressive and successful campaign of civil enforcement.

View the complete article here…

Post judgment subpoena power: Creditors need not fly blind into the quagmire of enforcement.

This ruling demonstrates that a judgment creditor is generally entitled to use the power of a subpoena to marshal financial records at a debtors exam. This is important in enabling the judgment creditor to meaningfully examine the judgment debtor with bank statements, and financial statements at hand.

Read the full opinion here.

Arbitration: An iron clad, albeit not infallible form of dispute resolution.

Arbitration benefits litigants by offering finality. As the California Court of Appeal held in Sappal v. Business Investment Management,  absent the most extreme ruling, an arbitrators decision is not subject to judicial review.

Why is this important? Winners like arbitration as they offer finality, assuming they got what they wanted. Losers abhor arbitration, as they offer finality, assuming that they are disappointed with the result.

Read the full opinion here.

 

Fraudulent Conduct and Jurisdiction

In Kraus-Anderson Capital v. Alamo Medical Supply & Equipment, Inc. the California Court of Appeal (2nd Dist.) upheld a trial court’s finding that the Minnesota Courts had the jurisdiction to enforce a promisory note executed in California.

The facts here are typical of many finance transactions. An out of state financier lends money to a customer of expensive, specialized equipment. The customer executes a promisory note and security agreement. The vendor executes a remarketing agrement obligating the vendor to recover the collateral and provide for remarketing, a common mechanism facilitating the sale of specialized equipment.

The customer in this case defaulted, and the financier sought to recover its collateral and call upon the vendor to re-market the equipment. The financier then discovered that the equipment was misrepresented and that the vendor defaulted on the remarketing agreement. The financier obtained a judgment in its home state (Minn.) against the vendor for the fraudulent equipment and the breach of the remarketing agreement. The financier then sought to domesticate the sister-state judgment in California, prompting the vendor to challenge the judgment on jurisdictional grounds. The California trial court denied the motion and the Court of Appeal affirmed.

In a scholarly analysis the appellate court found that the sister-state court properly had jurisdiction over the vendor.

The message from this case is that a financier is entitled to seek relief in its home court given a breach of a remarketing agreement by an out of state vendor.

Read the full opinion here.

The Chapter 11 Reset: Can Plans Die of Old Age?

Originally published in Commercial Law World, July/August 2011, Volume 28 | Issue 3

By David J. Cook

Chapter 11 confirmed plans are born, live and die of old age. This article explains how Chapter 11 plans, like any other federal judgment, can expire.

Read the complete article here.

The Discretionary Stay Against Enforcement of a Judgment

Los Angeles Lawyer – April 2011

By David J. Cook

THE RACE TO ENFORCEMENT begins as soon as a judgment creditor wins a lawsuit. While typically the plaintiff, a judgment creditor can also be the defendant in an anti-SLAPP suit. In either situation, the judgment creditor can begin enforcement procedures immediately upon entry of judgment and can go so far as to direct the sheriff to appear at the defendant’s front door, break it down, and seize the contents from ?oor to ceiling, including the family dog. Only settlement, posting of an expensive appeal bond, or entry of a discretionary stay of enforcement by the trial court can prevent enforcement…

Continue reading the full article here.

The Digital Sherpa Lifts The Veil of Asset Protection

Debt3 May/June 2011

By David J. Cook

How can the internet identify the liable party, describe its status and offer up new remedies? You are a self-selecting audience. What does this mean to you?

Read the full article here.

Bankruptcy as an Impregnable Shield to Enforcement? Not So Fast.

 

 

 

A quick hypothetical: A debtor isn’t paying. You’ve unleashed your full arsenal of enforcement allowed under the law, bank levies,  a motion for the appointment of a receiver, motion for sale of a dwelling house, etc. The whole gamut.

Everything is going along well enough, until your fax machine coughs out a friendly notice from your local bankruptcy court that your debtor filed Chapter 13.

That’s funny, you were sure that your debtor had deep pockets. Bankruptcy? This debtor could write you a check tomorrow if he weren’t still bitter that you had the sheriff sell his Lamborghini. No, this time it’s personal. Your debtor just doesn’t want to pay.

Your debtor then sets forth a plan which purports to pay his creditors (You) 100 cents on the dollar, but in monthly payments spread out over 5 years and with no interest.  This doesn’t sound appealing at all.

The court in the case of  In re Steven Allan Korn (CAEB, Case No: 11-91339) rejected precisely such a plan, finding that when bankruptcy is filed for the sole purpose of frustrating the enforcement attempts of a single creditor the filing was in bad faith.

Read the full opinion here.

Checks and Wire Transfers to Counsel are not Privileged: Discovery Reveals Clients’ Accounts.

In the case of Garza v. ACL the judgment creditors sought to obtain a corporate debtor's financial records through a subpoena targeted at the debtor's attorneys.  In answering the question of  "Are canceled checks  protected by attorney client privilege?" the court, Hon. John K. Stewart, Judge Presiding, answered with a resounding No.

“THE COURT: I think the difference is that a check or a money transfer, these have lives of their own. They are not communications. They are instruments of commerce. They are negotiable instruments. A letter accompanying a check would be a communication, but a check is really a communication to a bank. It’s telling the bank to pay a certain amount of money on behalf of a client. So I think the Harris analysis, to me, is the most appropriate and on point. And that’s the Ninth Circuit Court of California — Ninth Circuit Court in California. It’s 413 F.2d 316. But they say, and they are quoting another case, but they say “The canceled checks and bank statements are not within the attorney-client privilege. These items were negotiable instruments in commerce and were never confidential from the time of their creation.Their transfer from the client to the attorney did not constitute a confidential communication.”In those cases, they were trying to subpoena those records from a bank.And again, if those documents ultimately end up in a bank, and they do, when the check comes into your firm, you endorse it, and it goes back to the bank. The original sometimes is referred to the person who signed the check. Now, for example, my own bank account, I get little microfiche reprints and the originals are either in my bank or else they are kept on microfiche somewhere. But they are ultimately in the bank.”

(See attached transcript, Pg. 13)

Read the full transcript here.

A Blast From the Past

Circa 1985

The 1980’s was a good decade for a lot of things:  new wave music, cheesy movies, nuclear proliferation, and apparently hair.

California Court of Appeal Affirms: No Attorney Fees in Anti-SLAPP Cases Where Law Firm is Represented by an Associate

CARPENTER & ZUCKERMAN et al., v. PAUL COHEN et al.,

Court of Appeals of California, Second District, Division Five.

Filed May 10, 2011.

         The trial court in granting defendants’ request to strike plaintiffs’ memorandum of costs seeking attorney fees incurred as the prevailing parties in a prior appeal, a law firm and its two partners, by using an associate in the law firm, had, in effect, represented themselves in the prior appeal. In this appeal, plaintiffs contend that the trial court erred in granting the motion to tax costs because the attorney who represented them on appeal was not a partner and otherwise had no financial interest in their law firm. Also, plaintiffs contend that, even if the law firm plaintiff cannot recover fees for the legal services of the associate, the individual plaintiffs can recover fees attributable to that associate’s services rendered on their behalf.

        In affirming the order denying plaintiffs’ request for attorney fees for services rendered by the associate to the firm and its partners, we hold that (1) substantial evidence supports the trial court’s finding that the attorney who represented plaintiffs in the prior appeal was doing so as an associate of the law firm and not as an independent contractor, and, therefore, plaintiffs legally are not entitled to an award of attorney fees; and (2) the trial court was justified in concluding that based on the record, the individual plaintiffs could not recover attorney fees in connection with the appeal because there was no showing of any distinction between the cross-claims against the law firm plaintiff and those against the individual plaintiffs.

Read the full opinion here.

Foreign Manufacturers are Offshore But Not Out of Reach

Pratt’s Journal of Bankruptcy Law May/June 2011

By David J. Cook

This article discusses post judgment strategies to reach the assets of uncooperative, distant, or reclusive judgment debtors.

Read the full article here.

Disentitlement of the Debtor from Judicial Proceedings Defiant to the End

Debt3 March/April 2011

By David Cook

Ray Charles taught us disentitlement: “Hit the road, Jack, and don’t you come back no more, no more, no more, no more.” Disentitlement offers the nuclear remedy to compel payment, if possible, from the recalcitrant debtor — and, like “Jack” in Ray Charles’ wonderful song, hits the road. This article is a primer on civil disentitlement.

Read the full article here.

The Discretionary Stay Against Enforcement of a Judgment

Los Angeles Lawyer, April 2011
by David J. Cook

The race to enforcement begins as soon as a judgment creditor wins a lawsuit. While typically the plaintiff, a judgment creditor can also be the defendant in an anti-SLAPP suit. In either situation, the judgment creditor can begin enforcement procedures immediately upon entry of judgment and can go so far as to direct the sheriff to appear at the defendant’s front door, break it down, and seize the contents from floor to ceiling, including the family dog. Only settlement, posting of an expensive appeal bond, or entry of a discretionary stay of enforcement by the trial court can prevent enforcement.
Continue reading the full article here.

Having Trouble Collecting from a Bar? Seek an Appointment of the Liquor License

In the case of J & J Sports Productions v. Jorge Alberto, et al., 2011 WL 1134265 the judgment creditor received a judgment against the owner of a bar who had broadcast a pay per view boxing match without authorization.

When the bar owner refused to pay the judgment, the judgment creditor moved for the appointment of a receiver of the bar’s liquor license which was granted.

Read the order here.

OFFSHORE IS NOT OUT OF TOUCH

Originally published in Debt3, Vol. 26, Issue No. 1, January/February 2011

Knock-off, counterfeit items, forgeries and fakes can be found everywhere from New York City alleyways to online stores. How can the law help manufacturers fight back?

View the article here.

Luc v. Chien – A Cautionary Tale

These three appellate opinions depict the classic story of a plaintiff enjoying victory in a civil proceeding, only to but find recovery illusory. The plaintiff files a fraudulent conveyance action and scores a money judgment against the conveyee. However, the fraudulent conveyee declines payment.

When pressed for payment the fraudulent conveyee files Chapter 7. Claiming that she was the victim of wrongful conduct, the plaintiff files an action to exempt the debt from the discharge under Bankruptcy Code Section 523(a)(6) [willful and malicious conduct].

The victim however, runs out of luck and loses.

The first appellate opinion describes her victory against the landlord.
LUC v CHIU 3/30/2001

The second appellate opinion describes her victory against the conveyee.

LUC v CHIEN 10/28/2003

The third appellate opinion describes the conveyee’s victory in securing a discharge of the debt.

LUC v CHIEN 2/7/2008

The Hidden Pitfalls of Drafting Personal Guarantees

Credit applications which merge credit terms and a personal guarantee are frought with ambiguities and the potential for judicial scrutiny. In this case the credit application failed to carefully lay out the terms of the guarantee which would be borne by the individual who signed on behalf of his company. The district court found that the credit application lacked the specificity and the language to denote a guarantee and therefor enter judgment in favor of the individual on the guarantee itself. However, the facts of the case suggested an ostensible basis for liability by way of alter ego and other equitable claims. These claims kept the individual in as a viable defendant. This case is important in discussing the prerequisites for a guarantee and also a summary analysis of alter ego law in California and Virginia.

View the court’s opinion here

Intervention by the Peterson Plaintiffs in Rubin v. Iran

The Rubin family levied upon the antiquities collection owned by Iran in the hands of the Oriental institute of the University of Chicago.  The Peterson plaintiffs survivors and family members of the marine barracks bombing successfully intervened.  As of February 2011, the seventh circuit is considering jurisdictional challenges.

View the minute order here

Seeking a Homestead Exemption? Do Not Fraudulently Convey Your Home.

Prior to the filing of his bankruptcy, the debtor conveyed his residence to his parents. This conveyance apparently constituted a fraudulent conveyance. The debtor claimed the property as exempt in order to protect some of the equity. Bankruptcy Code Sec. 522(g) bars a debtor from exempting property which was fraudulently conveyed.  This case is important in illustrating the dire risks of any type of asset protection strategy.

View the order here

District Court Order Authorizing Process Server to Serve Post-Judgment Process

Enforcement of judgments in federal court compels the judgment creditor to take many steps in order to engage the marshal or a process server. Many marshals decline service of a garnishment and instruct the judgment creditor to use a process server. The practice in most districts is that the judgment creditor must obtain an order from the district court authorizing the process server to serve the enforcement.  This is a requirement in several districts of California.

View the order here

Obtaining Answers to Discovery from Foreign Sovereigns

While foreign sovereigns are generally immune from falling under the jurisdiction of US courts, the Foreign Sovereign Immunities Act (FSIA) provides that state sponsors of terrorism are no longer protected from being sued in US courts if certain conditions are met.

Once a court acquires jurisdiction over a foreign sovereign, it also has jurisdiction to compel compliance with its orders. In the case of Peterson v. Islamic Republic of Iran, the judgment creditors sought  post judgment discovery responses from Iran to aid in the collection of a $2.7 Billion  judgment.  Iran failed to respond to the discovery requests, and the court entered an order compelling discovery.

View the order here
Citation: 2008 WL 8216327

Reviewing Records For Fraud

Financial Fraud Law Report, February 2011

By David J. Cook

There are numerous irregularities in financial records that can be the touchstones of financial fraud.

View the full article here.

 

Judgment Debtor Won’t Pay? Seek an Assignment of Funds Held in Their Attorney’s Trust Account.

When faced with a judgment debtor who is a defendant in multiple cases, there is a high probability that they have turned over significant funds to their attorneys from which to pay out settlements in the various matters.

Such was the case with Asbestos Corporation Limited (ACL), a Canadian corporation that is frequently sued in the United States for personal injuries related to, you guessed it, asbestos.

Believing that ACL had deposited significant funds with the Pennsylvania law firm of Goldfein & Joseph, the judgment creditors obtained an assignment order which then allowed them to seek a turnover of funds held by the judgment debtor’s attorneys.

View the assignment order here

Civil Disentitlement as a Remedy in the Post Judgment Setting

In the case of Garza v. Asbestos Corporation Limited, the judgment creditors faced the uphill battle of collecting against a judgment debtor located in Canada.

When the judgment debtor (ACL) failed to respond to post-judgment discovery, the judgment creditors moved to have ACL disentitled from responding to any further motions in the case.

The basis of the disentitlement was the simple notion that if a party avails itself  to the courts they must play by the rules. A party who is in contempt cannot participate in further proceedings until they comply with the court’s orders.

View the disentitlement order here

The Death of Chapter 11 Plans: Are Confirmed Chapter 11 Plans Subject to Statutory Renewal?

Pratt’s Journal of Bankruptcy Law: Volume 7 – Number 1 – January 2011

By David J. Cook

Are confirmed Chapter 11 plans of reorganization immortal or do they have an expiration date like any other federal district court judgment? This article will answer this question and will conclude that a Chapter 11 confirmed plan — the order confirming the plan — is not immortal. A confirmed plan of reorganization under Chapter 11 requiring the payment of money is a federal money judgment and therefore subject to the requirements of state statutory renewal similar to any federal or state money judgment based on the law of the domicile where the district or bankruptcy court is sited. Confirmed plans expire like any other federal or state money judgment. Upon expiration of the confirmed plan and depending upon the renewal statutory scheme of the domicile state statute, the debtor is discharged of all continuing obligations under the plan including obligations to pay creditors directly or a trust established by a the plan for benefit of creditors.

Read the Full Article Here

City of San Francisco v. Esmas

In City of San Francisco v. Esmas, the City of San Francisco faced the uphill task of unwinding multiple fraudulent conveyances.

After the city obtained a judgment against the defendants for running an illegal “flophouse”, the defendants transferred the property through a series of transactions which left the chain of title hopelessly tangled.

The following documents provide insight into the multiple steps used by the city to unwind the fraudulent conveyances and sell the property free and clear of the debtors’ interest.

First, the city obtained a Restraining Order. Next a receiver was appointed. The receiver was then able to sell the property. The Sheriff Sale Order, as well as the Order Allowing Access to Property, Second Restraining Order, and Amended Sale Order can be viewed by clicking on the preceding links.

Ultimately the fraudulent conveyees appealed the order. You can view the Appellate Decision here.

This case provides the reader with a narrative commencing from the first restraining order to the appellate decision, which is a rarity in fraudulent conveyances. The seminal aspect of this case is that the trial court vacated six separate post judgment transfers in a post judgment trial. The court found that the debtor had made a series of fraudulent conveyances and vacated all of them .

Assignment Orders in Federal Court as a Method For Collecting Out of State Assets

Assignment orders can be a useful method of collecting assets which are located outside of a court’s immediate jurisdiction. In two recent decisions federal courts held that once the court obtains jurisdiction over a defendant, the court has jurisdiction over property of the defendant located out of state.

In UMG Recordings v. BCD Music Group a judgment creditor sought an assignment of the right to receive payments from third parties, some of whom were located out of state,  to aid in the recovery of a $7.2 million judgment. The court in UMG held that “When a court has personal jurisdiction over an individual defendant, it also has jurisdiction over the defendant’s property.”

View the opinion granting the assignment order here.

In Global Money Management v. Steven B. McDonnald, the judgment debtor opposed a motion for assignment of rights concerning property located out of state.  Citing UMG v. BCD, supra, the court found that “Because the Court has personal jurisdiction over Defendant in this matter, the Court has “the power to affect out-of-state property by means of decree, based on personal jurisdiction over the parties, which determines the parties’ personal rights or equities in that property.” Read the full opinion here.

Peterson v. Iran

On October 23, 1983, 241 U.S. Servicemen serving as civilian peace keepers in Beirut, Lebanon were killed when two converted water tankers loaded with explosives were detonated next two the barracks where the servicemen slept. This attack was the single deadliest terror attack on American citizens prior to 9/11.

The attack was perpetrated by the terrorist organization Hezbollah and funded by the Islamic Republic of Iran. The families of the victims of this attack eventually obtained a $2.6 billion judgment against Iran for its involvement in the attacks.

The families of the victims sought to collect their judgment by levying on the shipping companies which conducted business with Iran. In response to these levies, the shipping companies raised the sovereign immunity of Iran as a shield to not comply.

The trial court found that rather than being an affirmative defense which could only be raised by Iran, the issue of sovereign immunity could be raised sua sponte by the court.

In a 2-1 decision, The 9th Circuit upheld the decision of the trial court. Read the 9th Circuit Court of Appeals Decision Here

Assignment Orders

Assignment orders are one method of reaching monies which are owed to the judgment debtor by third parties.

Below are two assignment orders, the first order is a general assignment of all rights to payment owed to the judgment debtor. This order can be sent to third parties along with a “Pay me, not them letter”.  An additional advantage to assignment orders is that they can be sent to third parties without the need of being formally served by a process server or sheriff.  These orders can be sent out by mail, fax, or even email, meaning that there are much less cost prohibitive.  The second order specifically reaches funds held by factors.

General Assignment Order

Further Assignment Order Reaching Funds Held By Factors

The successful use of an assignment order can often lead to  settlement.

Intentional Infringement in IP Cases as a Bar to Discharge in Bankruptcy

In Smith v. Entrepreneur Media, the 9th Circuit BAP held that intentional infringement of a trademark is the equivalent of an intentional injury so as to preclude a bankruptcy discharge. Furthermore, a finding of an intentional infringement at the trial court level will have collateral estoppel effect in a subsequent bankruptcy proceeding.

The Rolex Watch

While refusing to pay the civil judgment entered against him, O.J. Simpson was seen sporting a suspiciously expensive looking Rolex watch. The Goldman family then moved for a turnover order.

View the order here

In the end the watch turned out to be a fake, but let this be a warning to judgment debtors: it is unwise to flaunt seizable assets .

 

The Las Vegas Hotel Room Memorabilia

When O.J. Simpson broke into the Las Vegas Hotel Room, he famously declared “Think you can steal my [expletive] and sell it?”

The most important part of that phrase is the word “my”.  If the sports memorabilia truly was Simpson’s, and had value, it could be sold to satisfy the judgment.

The Goldman family first attempted to seize the memorabilia via ex parte motion. This application failed, and you can read the Order denying ex parte application for turnover order here.

However a second application was successful. View the turnover order here.

Video Game Rights

In August 2007, the video game publisher Take-Two Interactive chose to feature O.J. Simpson in it’s video game All-Pro Football 2K8. A trailer for the video game can be viewed here.

Simpson allegedly received $50,000 for his participation in the game, however the court subsequently ordered the money to be turned over to the Goldman family.

View the Court’s Order Here

 

View the Order Granting Assignment and Turnover of the Video Game Rights

 

Strategies & Techniques for Dealing With Delinquent Credit Accounts

Originally published in The Credit and Financial Management Review, First Quarter 1996, Volume 2, Number 1

A Q & A by David J. Cook.

Several questions are answered regarding guarantees, inferior products, personal guarantees, and preferences are answered.

Read the Full Article Here

Dishonesty in the Workplace: Stolen Instruments and Allocation of Loss – This Loss May Be Yours, Alone

Originally Published in Commercial Law Bulletin May/June 1995

By David J. Cook

A primer on stemming the tide of employee theft.

Read the Full Article Here

Road Map Through Fraud: Stops, Back Roads, Turnouts and Detours

Originally published in Commercial Law Bulletin November/December 1995

Dealing with fraudulent conveyances can be frustrating to say the least. This article demystifies the most common debtor strategies and provides a road map to recovery.

Read the Full Article Here

Resins, Epoxies, Super Glue and the Uniform Commercial Code

Originally Published in Commercial Law Bulletin November/December 1996

By David J. Cook

Super Glue is great stuff. Super Glue repairs china, leather, plastic and metal… The Uniform Commercial Code likewise dispenses an invisible Super Glue, which welds together a deal.

 

Read the Full Article Here

Financial Statements: A Map to Hidden Treasure

Originally published in – Commercial Law Bulletin January/February 1998

By David J. Cook

A debtor’s financial statements are a great resource  to aid in the collecting of a debt.

Read the Full Article Here

Settlement Strategies: Preserving Your Place in the Food Chain

Originally published:  Commercial Law Bulletin, November/December 1998

By David J. Cook

While a mutually agreed upon settlement can leave both parties in a position to leave a dispute behind and move on, an ill-conceived or poorly drafted settlement can leave one party significantly worse off. This article discusses some of the common pitfalls awaiting the parties to a settlement agreement.

Read the Full Article Here

The Lorraine Brooke Associates Bankruptcy

The rights to the If I Did It Book were in the hands of Lorraine Brooke Associates, Inc. (LBA), a shell corporation which was in bankruptcy. In order to obtain the rights the Goldman family had to pierce the corporate veil  an seek an order that would find that LBA and Simpson were one in the same.

Read part one of the transcript

Read part two of the transcript

Television and Movie Rights

The Goldman family was successful in obtaining an assignment of Mr. Simpson’s  television and movie rights.

Read the order here.

As well as any payments from NFL Films

Publicity Rights

In late 2006 the Goldman family sought the outright transfer and assignment of Mr. Simpson’s right of publicity. The court’s decision is posted below:

Read the Court’s Opinion Here

The “If I Did It” Saga

The story of the publishing of the book, ‘If I Did It’ begins with the secret deal between O.J. Simpson and Harper Collins, the publisher of the book. Read the contract here.

Nancy Grace – ‘Fox Cancels O.J. Book, TV Interview’ originally aired 11/20/2006: Transcript

Nancy Grace – ‘Did O.J. Spend the Money’ originally aired 11/27/2006: Transcript

Nancy Grace – ‘Ron Goldman Sues O.J. Simpson Over Book Deal’ originally aired12/20/2006: Transcript

The Goldman family was then successful in obtaining an order dirtecting the sheriff to sell Mr. Simpson’s rights in the book.

Read the Application Here.

Read the Court’s Tentative Ruling Here.

Read the transcript of the court hearing

View the Order Here

View the Assignment Order and Restraining Order

On March 23, 2007, LBA attempted to stay the sale of the If I Did It book. Read the Transcript of the Hearing Here

Read the  Order Declaring Lorraine Brooke Associates, Inc. A Surrogate of O.J. Simpson. (3/23/2007)

Nancy Grace – ‘O.J. Simpson Fights Book Auction Order’ originally aired 4/06/2007: Transcript

View the order denying a stay of the sheriff’s sale

Subsequently an Order Staying the Sale Was Entered

The Defendant Has Not Written You the Check, Now What?

Originally published in The Federal Lawyer, February 2010. Reprinted with permission. Copyright The Federal Lawyer.

By David J. Cook

This article provides a field manual for dealing with a defendant or judgment debtor who fraudulently conveys assets in the face of a high dollar judgment.

Full Text

Getting Started

Originally published in Debt3, Vol 25, Issue No. 4 July/August 2010

By David J. Cook

Considering going into private practice by yourself or with others? This simple guide can help you discover gold – and not grief – during this wonderful quest.

Full Text

The Wild West: Shootout in the Law and Motion Department

Originally Published in Debt3 Vol 25, Issue No. 5, September/October 2010

By David J. Cook

Being successful in cases that involve attachments.

Full Text

Metering Relationships in the Era of Deregulation

Originally Published in Public Utilities Fort Nightly, March 1, 1995

By David J. Cook

Deregulation is a battle over metering relationships with commercial customers, not a struggle between competing suppliers of energy. As long as the local electric utility emerges from the process with exclusive control over its metering, credit, and billing relationships, then deregulation will only cement its position as the customer’s primary energy service provider \(em and further enhance the “pool” concept by which the local utility acts as agent for the retail customer to purchase energy from independent power producers (IPPs). This outcome will prevail even if regulators adopt retail wheeling.

Read the Full Article Here

Fraud in the Workplace: Missing, Stolen, and Embezzled Checks.

Originally published in Business Credit, The Publication For Credit And Financial Professionals, June 1995.

By David J. Cook

Customers pay your bills with checks. These checks find their way through accounting departments, accounts receivable, cash posting, and sometimes, credit departments, for posting, reconciliation, and preparation for deposit. Checks are payable to your company and certainly not your employee(s) in every case. These checks, hopefully, find their way into your bank account.

Old Rules: Depositing Bank Usually Takes Loss

Your trusted employee, such as data processing, accounts receivable, or posting clerk steals a customer check. Who bears this loss? Under these facts we’ll apply the “old rules.” We have old and new rules, and this article tells you that the old rules don’t apply and the new rules do apply.

 

Full Text

Winding your way through Chapter 11 Disclosure Statement and Plans of Arrangements

Originally published in  Newspaper Financial Executives Quarterly, April, May, June 1995, Volume 1, Issue 3.

By David J. Cook

Let’s take a guided tour through Plans of Arrangements and Disclosure Statements in Chapter 11 proceedings. This exercise is important in evaluating benefits under any Chapter 11 for purposes of voting on the plan, financial reporting in evaluating write-offs and collectability, and furthermore evaluating offers from brokers and buyers of claims that were solicited in the Texaco, Macy’s, Emporium, Mega-Foods, and Liquor Barn cases. This tour will also identify pitfalls and follies of many Chapter 11 plans which sometimes produce only questionable benefits. Recent studies indicate that most confirmed Chapter 11s produce a paltry dividend averaging about $.10/dollar, and even confirmed Chapter 11s have a high rate of failure and default, foreclosing any likely recovery with further administrative expense.

Full Text

 

When the Garden Hose is the Insurance Policy

Plaintiff  Magazine, January 2010

By David J. Cook

The damages exceed insurance limits, and the value of defendant’s real property value has risen but his liability insurance has not been kept up. A collection attorney looks at when and how to go after hard assets, how to bargain for them, and when to settle for the insurance policy limits.

Full Text

The Morning After – A Romp Through Asset Protection

Commercial Law League of America – The Free Press – Volume 6, Summer 2010

By David J. Cook

This article will survey common asset protection schemes prosecuted by a judgment debtor who face a substantial judgment and decline payment. In the face of post judgment remedies, the judgment debtor will transform assets by retitling the assets in the name of a surrogate entity but retain beneficial use. Asset protection strategies increase the expense of enforcement and drive away most creditors who decline to invest capital in unwinding complex or difficult transfers and abandon enforcement altogether. “Creditors have great difficulty in obtaining control over these assets because often times it is cost prohibitive for the creditor to domesticate the U.S. Judgment in the foreign jurisdiction. As a result, these creditors will often settle their claims for just a few pennies on the dollar.” ¹ Asset protection diminishes the value of the judgment, and absent the most stout hearted and well heeled, most creditors would settle for a pittance than finance and face the rigors of year of post judgment fraudulent conveyance litigation.

This article is written in two parts: First what are basic asset protection strategies how to find assets, and second, how to unwind the transfers and achieve recompense.

Full Text

Lifting the Veil of Asset Protection: Strategies to Uncover Hidden and Secreted Assets Through the Development of Tent Pole Jurisdiction

Financial Fraud Law Report Volume 2 Number 9,  October 2010

By David J. Cook

This article is the judgment creditor’s roadmap to recompense.  This article focuses on, in particular, the California state court remedies available to a judgment creditor to ferret out information that will reveal the assets of a judgment debtor and thereby enable the judgment creditor to reach those assets in the process of satisfying the judgment, but many of the concepts discussed here are, of course, applicable across the country.

Full Text

Class Actions and The Limits of Recovery: The Glass Jaw of Justice

Journal of Legal Technology Risk Management, Fall 2010, Issue 5.1

By David J. Cook

As suggested in this article, pre-judgment remedies available to class action plaintiffs now assume greater importance.  With provisional relief at hand, a plaintiff can assure him/herself of payment, accelerate the pace of litigation, and achieve an earlier final resolution than would be possible with ten (or even twenty) years of bitter and very expensive litigation.  However, the necessity of showing exigent circumstances and posting a security equal to or in excess of the claim renders the pre-judgment attachment inaccessible.

Full Text

Survey of Oppressive Terms in Commercial Real Property Leases: Unintended Consequences, Hidden Risks and Surprises

Commercial Law League of America – The Free Press – Volume 7, Fall 2010

By David J. Cook

What is the rule in Shelly’s case? How about Twine’s case? How about the Rule Against Perpetuities? Do we remember these rules and apply them everyday?

What about the Law of Unintended Consequences? We should all
apply this rule in signing leases, and here is why.For an attorney in private practice, the Law of Unintended Consequences unifies every aspect of running a law office, large, medium and small. This Law focuses our attention to what we fear doing most of all: Signing your name to a business contract and learning later that you affixed your name to a very disastrous deal. You signed your name and what did you get?

Full Text

Contract Terms As Asset Protection

DEBT3, Vol. 25, Issue No. 6, November/December 2010

By David J. Cook

An in-depth analysis of common contractural terms through the prism of hyper-expedited enforcement.

This article discusses how the drafter might inadvertently render the contract “sue and attachment proof,” favoring the buyer of product and probable debtor. The article also explains and explores contractual asset
protection fostered by the creditor (perfectly legal). The debtor will say, “Why commit a fraudulent conveyance, when I can hide behind the creditor’s own contract?

Full Text

The Liability of Financial Institutions to an Attorney’s Client When the Attorney Endorses a Settlement Check Without Authorization

Financial Fraud Law Report, Volume 3 Number 1 January 2011

By David J. Cook

This article explores the scope of an attorney’s authority, if any, to endorse a client’s name to a settlement check and deposit the check in the attorney’s trust account.  It also analyzes the bank’s liability to the client for conversion under the Uniform Commercial Code and the statute of limitations in these matters

Full Text

Seizure of Intellectual Property Rights

Northwestern Journal of Technology and Intellectual Property – Volume 9, Number 3 (Fall 2010)

By David J. Cook

Post-Judgment Remedies in Reaching Patents, Copyrights and Trademarks in the Enforcement of A Money Judgment

http://www.law.northwestern.edu/journals/njtip/v9/n3/3/Cook.pdf

Garza v. Asbestos Corporation Limited

Garza v. Asbestos Corporation Limited

In the case of Garza v. Asbestos Corporation Limited the judgment creditors sought enforcement of their California judgment in Quebec, Canada. While Quebec law prohibits the enforcement of a foreign judgment based on an asbestos claim, the judgment creditors were never the less able to obtain an assignment of the debtors rights to payment from nearly every bank in Canada.  Furthermore, the judgment creditors where successful in compelling the judgment debtors to answer post-judgment discovery regarding the location of its assets.

The transcripts of the hearings in which these motions were heard offer a fascinating insight into the often uncharted territory of enforcement of U.S. judgments over international borders.

This case revolves around the ability of a judgment creditor to reach assets of the judgment debtor which are located off-shore. These facts unfortunately predominate in many mass tort or significant damage actions in which the perpetrator is domiciled off shore. typically these fact patterns reveal that the off shore manufacturer has put into commerce dangerous or defective goods which kill maim or injure.  As expected American consumers suffer greatly in that these products cause unbelievable losses. Lawsuits and big judgments follow.

The off-shore manufacturer routinely ignore legal process leading to multi-million dollar default judgments and thereby leading to a massive campaign initiated by the judgment creditors to collect these judgments.  This case provides for a linear stream of orders which illustrates the power of the court to issue orders for the assignment of rights and orders compelling discovery.

Transcripts:

1. Hearing re: assignment of rights – October 28, 2010

2. Hearing re: Motion to compel answers to discover requests, November 23, 2010

3. Hearing re: assignment of rights – December 1, 2010

Orders:

1. Order Compelling Discovery Responses – 11/23/2010

2. Assignment Order (Five Banks)

3. Assignment Order – All Banks

Third Party Claims

In Sanfer Sports Cars v. Shisler, the judgment creditor levied on several of the judgment debtor’s automobiles. In an effort to mask the ownership of the automobiles the judgment debtor had previously attempted to transfer title to each of the automobiles his parents, who then filed a third party claim.

This case is instructive for a host of reasons. The judgment creditor sought and received extensive post judgment orders to gain access to the cars, pink slips, keys to the car (mailed from Italy), orders for the fraudulent conveyees to appear for an examination, restraining orders, and an order setting the third party claim. These orders are extremely extensive in their scope and breath and serve as a virtual carousel of post-judgment remedies.

The irony is that the judgment debtor filed a petition under Chapter 13, and the schedules are likewise uploaded.  while the filing of the chapter 13 is unremarkable, and clearly the exercise of the judgment debtor’s constitutional rights, the judgment debtor sought to assert a claim of exemption of the vehicles in Schedule C. This comes as no surprise. As a matter of California law a fraudulent conveyor cannot unwind a fraudulent conveyance as the conveyance between the conveyor and the conveyee is absolute and only subject to attack in favor of a creditor.  Whether or not that exemption stands or fails is for another day.

Tune in.

The following order denied the third party claim of the judgment debtor’s parents and awarded the automobiles to the judgment creditor:

Sanfer Sports Cars v. Shisler Sister State Judgment and 3rd Party Claim – Part I

Sanfer Sports Cars v. Shisler – Third Party Claim Part II

OEX of Brian Shisler

OEX of Dee Shisler

OEX of Isabel Shisler

Sanfer Sports Cars v. Shisler – Third Party Claim Order