Wednesday, April 09, 2014

Gray1 CPB LLC v. SCC Acquisitions, Inc. (Cal. Ct. App. - April 9, 2014)

I love this opinion.  Love it.  Both because I can use it to give practical, concrete advise to attorneys and also because portions of that advice seem to bizarre.

First, the straightforward advice.  When you're seeking to enforce a judgment, and you're entitled to recover attorney's fees in enforcing that judgment, don't wait until the very end to request your fees.  Otherwise what transpired here may well happen to you.

Here, Judgment Creditor incurred over $3 million in fees trying to enforce a $13 million judgment against Judgment Debtor that the latter was going to great lengths not to pay.  Rather than requesting recovery of those fees as they were incurred, Creditor did what many attorneys do -- waited until the end of enforcement efforts to so move.  But the Court of Appeal hold here that's too late.  Once the judgment debtor fully pays the amount due, your fee request is untimely.  So you're out of luck.

So don't make the same mistake.  Occasionally file a motion to enforce your accrued enforcement costs.  A hassle, I know.  But essential in order to avoid getting zeroed out.

Second, the weird advice.  The Debtor here paid the $13 million due with a cashier's check.  Creditor held on to that check for several days and, in the interim, filed its motion to recover fees.  That doesn't work.  Too late.  Motion for fees untimely.  Even though you haven't yet cashed the check.

But here's what would work:  Reject the check.  Demand cash.

Even though the cashier's check was clearly valid, the Creditor was entitled under California law to reject the check and demand payment of the full $13 million in cash.  Despite the fact that this amount is absurdly large, and no way would demanding cash make sense.  Once it rejected the cashier's check, then Creditor could have filed its motion for fees (presumably during the period in which Debtor was trying to amass and arrange for delivery of $13 million in cash).  Then it'd have been timely.  And the creditor would have recovered another $3 million in fees.

Neat little trick.  Works, too.

So, weirdly, next time someone tries to give you a cashier's check for $13 million, think deeply about saying to them:  "No thanks.  I'd rather have cash."  Those simple words might get you several million additional dollars as well.