Thursday, December 4, 2008
Court Upholds $3.1 Million Award Against Sacramento Lawyer
Rules Assessing Cost of Foreign Litigation Not Violation of Public Policy
By SHERRI M. OKAMOTO, Staff Writer
This district’s Court of Appeal has upheld a $3.1 million foreign judgment against a Sacramento attorney, ruling that the judgment was enforceable under the Uniform Foreign Money-Judgments Recognition Act.
In the published portion of its opinion Tuesday, Div. Eight concluded that the award entered by the Supreme Court of Gibraltar against Harold Vincent Sullivan II as compensation for expenses incurred by two corporations in defending a fraudulent lawsuit did not constitute an impermissible penalty and did not offend California public policy.
Sullivan assisted Peter Laycock in a lawsuit against Java Oil Limited and Brightside Services Limited in the Supreme Court of Gibraltar, the British territory’s trial court.
Laycock claimed that he was injured at a construction site where Brightside Services Limited was excavating a pipeline owned by Java Oil Limited, sustaining brain damage, aggravation of back and neck injuries, permanent deterioration in the frontal and prefrontal lobes of the brain, organic mood disorder, an impairment to his ego structure and personality, and complete disability. He sought over £2 million—about $2.9 million at the current exchange rate—in damages.
The chief judge of the Gibraltar court dismissed the claim and ordered Laycock to pay the costs of the action incurred by both defendants.
Brightside and Java subsequently filed a claim in Gibraltar, alleging that Sullivan had filed false evidence in support of Laycock’s claims. Five days before a hearing in Gibraltar on this claim, Sullivan filed a Chapter 13 bankruptcy petition.
Following a two-day hearing at which Sullivan failed to appear, the Gibraltar court found Sullivan had been guilty of complicity in Laycock’s fraudulent claims and ordered that he pay the defendants’ costs “on an indemnity basis.”
Costs and attorney fees in the amount of £1,775,983.75 were assessed against Sullivan.
The U.S. bankruptcy court subsequently annulled the automatic stay which would have voided the Gibraltar judgment, finding that Sullivan had failed to disclose the claim in his bankruptcy petition to appear he qualified for bankruptcy relief, and failed to be candid with the court, trustee, and creditors regarding his income.
The district court affirmed the bankruptcy court’s judgment.
Subsequently, Brightside and Java filed a complaint against Sullivan in the Los Angeles Superior Court, requesting the entry of judgment on a foreign money judgment pursuant to the UFMJRA.
Gibraltar Judgment Honored
Los Angeles Superior Court Judge Soussan G. Bruguera determined that the judgments of the Gibraltar court were not impermissible fines or penalties, and awarded judgment of $3,159,758.50, plus costs of suit, in favor of Brightside and Java.
Writing for the appellate court, Presiding Justice Candace Cooper explained that the Legislature amended that act in 2007, while Sullivan’s appeal was pending, but that the prior version applied to this case, which had commenced in 2005.
Subject to certain exceptions, a foreign judgment is enforceable in the same manner as the judgment of a sister state which is entitled to full faith and credit, Cooper wrote, but that foreign judgments do not include a judgment for a penalty.
Citing Huntington v. Attrill (1892) 146 U.S. 657, Cooper explained that a “penalty” is used to “‘punish an offense against the public justice of the State, or to afford a private remedy to a person injured by the wrongful act.’”
The Restatement of the Law, The Foreign Relations Law of the United States, similarly states that “a judgment in favor of a foreign state arising out of a contract, a tort, a loan guaranty, or similar civil controversy is not penal,” Cooper noted.
Reasoning that the Gibraltar judgment was not payable to the state, did not arise from enforcement of penal laws, was not designed to punish Sullivan, and did not impose a mandatory fine, sanction or multiplier, Cooper concluded the judgment was not a penalty within the meaning of the UFMJRA.
Cooper further concluded that a foreign award for attorney fees incurred in defending a lawsuit that was the result of bad faith conduct and based on false evidence is not repugnant to California public policy because attorney fees are recoverable as damages in the malicious prosecution context.
Although she acknowledged that in America, attorney fees are generally paid by the party employing the attorney, and under English law, the rule is that generally the loser must pay the winner’s attorneys fees, Cooper wrote that the difference in the law did not demonstrate that the British law ran afoul of California public policy.
In the unpublished portion of the opinion, the panel rejected Sullivan’s due process and procedural challenges to the judgment.
Justices Madeline Flier and Patricia A. Bigelow joined Cooper in her opinion.
David A. Steinberg and Paul Guelpa of Mitchell Silberberg & Knupp represented Java and Brightside. Steinberg said that Tuesday’s decision “provides some guidance on enforcing foreign judgments which previously may have been lacking,” noting that the appellate court had to rely on out-of-state precedent in reaching its ruling.
“Now we’ve got some California law interpreting and implementing the Uniform Foreign Money-Judgments Recognition Act,” he said.
Sullivan represented himself, with co-counsel Christopher Granville-Mathews of Mathews & Weisser. Neither could be reached for comment.
In July, the State Bar placed Sullivan on an interim suspension, and he has a lengthy history of discipline, including suspensions in 1997, 2000, and 2002 for failing to properly maintain his client trust account, deposit settlement funds in the account, promptly disburse client funds, return client files or perform legal services competently.
The case is Java Oil Limited v. Sullivan, 08 S.O.S. 6525.
Copyright 2008, Metropolitan News Company