Monday, July 9, 2012
Page 9
THE LEGAL COMMUNITY
Playing Cards
Who Is the Judgment Debtor?
By DAVID J. COOK
(The author is the senior attorney for Cook Collection Attorneys PLC and publisher of CollectionLawReporter .com )
Second in a Series
Typically, the judgment debtor is the person named on the judgment. The person named on the judgment is also the person named on the Writ, Abstract, or other process. This sounds oblivious, but an error is catastrophic. Sometimes, the name on the judgment might be a nickname, middle name, abbreviated name, or a name which has gone through a transformation from the original ethnic name into an Americanized name. Nebuchadnezzar becomes “Joe.”
Corporations are frequently misnamed in that the plaintiff has sued the business or trade name, as opposed to the corporate entity operating the business. Corporations, limited liability companies, and partnerships all bear very technical names which frequently are mis-identified in the judgment.
Why is clarity of the names so important? Banks, finance companies, and third parties which establish bank accounts, make loans, demand and receive security, demand enormous precision in the names as a condition of any transaction. For example, a bank account in the name of James Viceroy Smyth, III means that this “identified” person is the holder of the bank account. If the judgment is in the name of Jim Smith, a very common name, chances are that a levy on that bank account might not reach those funds, given the great disparity of names. An Abstract of Judgment in the name of Jim Smith might not reach real property in the name of James Viceroy Smyth, III. Americanized ethnic names likewise bear a risk in that the original ethnic name appears in the driver’s license or passport, but may not be the same name in a business contract, and therefore, might not necessarily be reflected in the judgment. Tutankhamen might maintain a bank account at Citibank, but not under Tim, the name appearing on the judgment. Assuming that the judgment creditors has sued the correct person in the first place, and assuming that the default, or other judgment is on the horizon and necessitates enforcement, the judgment creditor should cull through the public records to make sure that the name on the judgment matches the name on the title. The fourth grade teacher was right: Spelling counts.
Name That Debtor
In a judgment, names are very precise. If the plaintiff perceives that the defendant will never pay, that the case will go to judgment, and the debtor will have to sell or refinance real property to pay the debt, the judgment creditor should double check the name of the debtor as the name appears in the County Recorder, on grant deeds and deeds of trust, to insure that the judgment, and therefore, the Abstract of Judgment (the lien recorded with the county recorder) absolutely match.
These are a list of sources to confirm names and identities:
A. Fictitious business names. [usually signed by the debtor years before the debt]
B. County Recorder (deeds, deeds of trust, tax liens and judgments). [These records are highly accurate in identifying the debtor as the lender will demand proof of identity. Why have Osama Bin Laden’s protégée open a US bank account?
C. Lawsuits brought by the debtor and against the debtor; and financial statements and contracts that are attached. [If you didn’t get right, your competitors did. Embrace this skill.]
D. UCC filing what show the name and business of the debtor.
E. Secretary of State Portal and records that show the name of the entities.
F. United States Trademark and Patent Office, and U.S. Copyright office that identify the holders of IP. [The IP owner is probably your debtor, and might vary from the judgment.]
G. Other court filings in tax court, bankruptcy court, the courts in the USPTO. [Collateral estoppel is your new Friend.]
H. Information from third parties, such as trade associations with websites.
I. Information from the Internet, YouTube, Google etc., and other websites, but maybe not FaceBook. Digging the dirt on FaceBook just invites Mr. Trouble. Are you a Friend? What is your name? Will this circulate? Who knows and do you want to find out?
J. Licensing, if the debtor owns and holds a professional, occupational, or other license (contractors).
Some of this information might be online, in part, or available through a commercial service. In other cases, some of this information can be readily downloaded.
How did this round turn out? You went bust? Maybe, if the names are wrong. This is a barn burner and here is the story to prove it. Plaintiff sues defendant whose name is (slightest changes here) Jack Wong. Like my wife, Jack was born in China and raised in Taiwan. Jack was not born Jack but an ethnic name. Plaintiff was bent out of shape because he claimed that Jack cheated him out $800,000. Fearing a catastrophic end, Jack fraudulently conveyed his $7.2mil Pasadena home to himself as trustee in an alleged irrevocable trust for the benefit of his adult sons. Judgment came down in the name of Jack Wong, and not his ethnic name, and permitted the defendant to sell the property free of the abstract of judgment but only ostensibly.
Facing an empty judgment, trial counsel hired us to collect. We bought a title report that showed the abstract an exception to the title in the name of the buyer. We levied the property which prompted the buyer to call (and scream) that he bought the property free of the abstract. Was he mad. The broker called next, somewhat belligerent, which was something of an understatement.
After more chest-beating, the broker informed us that the title company, no fools were they, compelled Jack to indemnify the title company as a condition of insurance but collateralized the indemnification with an $800,000 cash deposit. We sued the title company for the deposit, along with Jack. Jack dodged the our depositions notices, leading to an order to appear for a deposition.
On the day of the appearance, Jack fled to Taiwan (My wife knows the territory). We moved to strike the answer. The judge ordered Jack, again, to sit down and face a deposition or turn over the money.
Still on Appeal
Did I tell you that the case was still on appeal? Ooops, Silly me. Yup, Jack appealed the case and since no case is appeal proof, sought to settle for about $300,000. Nice payday but rejected by the trial counsel. [That taught me to read appellate briefs very carefully. Alice in Wonderland is a poor source of legal cites. ] On the day of deposition, we were set to go: documents stacked neatly, fresh coffee and court reporter in tow, all for the 10:00 a.m. show. Yes Siree. 10:00 a.m. came and 10:00 a.m. went, and no Jack, but the fax machine whirled and out popped copies of six receipts from the Clerk of the Orange County Superior Court that showed the cash deposit (actually certificates of deposit) of $1,200,000.00. The cash deposit mooted out the enforcement action. The issuer of the certificate of deposit, we found, was a newly formed limited liability company in which Jack’s wife established in her ethnic names, warehousing the sale proceeds and of course rendering her and the LLC near invisible.
The devil was in the details such as ethnic names. Worse, the bank that held the money was the bank just down the street from us.
Does all well ends well? Winning is nothing and Collecting is everything is our DNA. Right? No, Wrong. Remember I told you about that pesky appeal. All appeals are pesky. All you had to do was win. Hang on to the judgment. Win, Forest, Win. Right? Right. This was tried before a jury with an 11-1 verdict. The trial judge summarily denied post trial motions. How much more appeal proof can you get? The court of appeal didn’t think so. The court of appeal hated the case, tossed the verdict and deep sixed the judgment over the side. Call this case judicial spam in a can. At least a handful survived the Titanic. Not this case. Other than the defendant, everyone on my side was scraping the ocean floor.
Who won this round: The defendant. Our hand: Total bust.
Copyright 2012, Metropolitan News Company