Creditor spent years trying to collect a judgment from a guarantor/debtor. Around the time the creditor started to see a light at the end of the tunnel, the debtor’s lawyer walked into the office of the creditor’s lawyer late on a Friday afternoon with a cashier’s check for almost $13 million, covering the entire judgment as well as all accumulated interest. But the creditor felt it was also due almost $3 million more for postjudgment attorney fees since it spent that money to try to collect the judgment. What to do? The creditor did not present the check for payment until it filed a motion for attorney fees in the superior court. The trial court ruled the motion for postjudgment costs and fees was untimely and the creditor appealed. The appellate court stated: “To be timely, the motion must be made before the underlying judgment has been fully satisfied” in order “to avoid a situation where a judgment debtor has paid off the entirety of what he believes to be his obligation in the entire case, only to be confronted later with a motion for yet more fees.” The creditor argued, however, that a judgment paid with a check is not fully satisfied until the check is cashed, but the debtor argued the judgment was fully satisfied when the creditor accepted a cashier’s check. The appellate court discussed two California statutes, Code of Civil Procedure section 724.010 [“Where a money judgment is satisfied by payment to the judgment creditor by check or other form of noncash payment that is to be honored upon presentation by the judgment creditor for payment, the obligation of the judgment creditor to give or file an acknowledgement of satisfaction of judgment arises only when the check or other form of noncash payment has actually been honored upon presentation for payment.”] and Commercial Code section 3310 [“Unless otherwise agreed, if a certified check, cashier’s check, or teller’s check is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken in payment for the obligation.” The appellate court affirmed the ruling of the trial court, stating: “When [the creditor] accepted the cashier’s check, which was subsequently honored, the effect was the same as if it had accepted cash.” With regard to what alternatives were available once the cashier’s check was tendered, the appellate court stated: “[H]ad [the creditor] rejected [debtor’s] payment with the intent to file a motion for postjudgment attorney fees before defendants returned with cash, no mischief would have been done on either side. [The creditor] could then have filed a timely motion for postjudgment costs, and interest on the judgment would have stopped accruing as defendant tendered full satisfaction of the outstanding judgment with accrued interest.” (Gray1 CPB, LLC v. SCC Acquisitions, Inc. (Cal. App. Fourth Dist., Div. 3; January 27, 2015) 233 Cal.App.4th 882, [182 Cal.Rptr.3d 654].)Attorney Fees: Is A Bird In The Hand Worth Two In The Bush?
Creditor spent years trying to collect a judgment from a guarantor/debtor. Around the time the creditor started to see a light at the end of the tunnel, the debtor’s lawyer walked into the office of the creditor’s lawyer late on a Friday afternoon with a cashier’s check for almost $13 million, covering the entire judgment as well as all accumulated interest. But the creditor felt it was also due almost $3 million more for postjudgment attorney fees since it spent that money to try to collect the judgment. What to do? The creditor did not present the check for payment until it filed a motion for attorney fees in the superior court. The trial court ruled the motion for postjudgment costs and fees was untimely and the creditor appealed. The appellate court stated: “To be timely, the motion must be made before the underlying judgment has been fully satisfied” in order “to avoid a situation where a judgment debtor has paid off the entirety of what he believes to be his obligation in the entire case, only to be confronted later with a motion for yet more fees.” The creditor argued, however, that a judgment paid with a check is not fully satisfied until the check is cashed, but the debtor argued the judgment was fully satisfied when the creditor accepted a cashier’s check. The appellate court discussed two California statutes, Code of Civil Procedure section 724.010 [“Where a money judgment is satisfied by payment to the judgment creditor by check or other form of noncash payment that is to be honored upon presentation by the judgment creditor for payment, the obligation of the judgment creditor to give or file an acknowledgement of satisfaction of judgment arises only when the check or other form of noncash payment has actually been honored upon presentation for payment.”] and Commercial Code section 3310 [“Unless otherwise agreed, if a certified check, cashier’s check, or teller’s check is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken in payment for the obligation.” The appellate court affirmed the ruling of the trial court, stating: “When [the creditor] accepted the cashier’s check, which was subsequently honored, the effect was the same as if it had accepted cash.” With regard to what alternatives were available once the cashier’s check was tendered, the appellate court stated: “[H]ad [the creditor] rejected [debtor’s] payment with the intent to file a motion for postjudgment attorney fees before defendants returned with cash, no mischief would have been done on either side. [The creditor] could then have filed a timely motion for postjudgment costs, and interest on the judgment would have stopped accruing as defendant tendered full satisfaction of the outstanding judgment with accrued interest.” (Gray1 CPB, LLC v. SCC Acquisitions, Inc. (Cal. App. Fourth Dist., Div. 3; January 27, 2015) 233 Cal.App.4th 882, [182 Cal.Rptr.3d 654].)
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