California Court of Appeal, Crystal Bergstrom v. Zions Bancorporation, Docket No. B309154

 

Enforcement of Judgments

 

Judgment Creditor

 

Writ of Execution

 

Notice of Levy

 

Service of Process

 

Motion for a Court Order Imposing Third Party Liability

 

Garnishee’s Memorandum

 

When Account in the Name of Someone Other Than Judgment Debtor

 

Execution Lien

 

Oral Argument

 

California Law

 

 

 

 

A judgment creditor seeking to seize funds in bank accounts held by the judgment debtor’s spouse served a notice of levy on the bank’s agent for service of process.  Although the notice of levy form unambiguously listed the bank as the party to be served, the agent misread the form and rejected it.  By the time the agent informed the bank of its mistake and the bank then froze the funds, the spouse had all but drained the accounts. The Enforcement of Judgments Law (Code Civ. Proc., § 680.010 et seq.) provides that a third person’s “failure or refusal” to deliver property subject to a levy “without good cause” renders the third person “liable to the judgment creditor” for the amounts withdrawn and covered by the levy. (§ 701.020, subd. (a).) In deciding whether the bank is liable to the judgment creditor for the agent’s mistake in this case, we must answer two questions: (1) When does an agent’s mistake constitute “good cause” that therefore excuses its principal’s failure to deliver property subject to a levy, and (2) was the agent negligent in this case for misreading the form?  Because “good cause” exists if a third party does “not know or have reason to know of the levy” (§ 701.010, subd. (c)), because the “reason to know” standard looks to what “a reasonable person . . .  would have inferred” (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 547 (Doe)), and because an agent’s knowledge is imputed to its principal (Civ. Code, § 2332), we hold that “good cause” exists only when the agent’s mistake that causes the agent (and, hence, the principal) to not have reason to know of the levy is a mistake that a reasonable person would make—in other words, when the agent’s mistake does not amount to negligence. Further, because the agent in this case was negligent in misreading the standardized form it was served with, the agent for service of process—and hence its principal, the bank—had reason to know of the levy, such that the bank is liable to the judgment creditor for some (though not all) of the funds withdrawn. Accordingly, we reverse the trial court’s ruling in the bank’s favor and remand for further proceedings.

 

 

(…) Corporation Service Company (CSC) was acting as Zions’s agent for service of process for California-based matters. On March 29, plaintiff obtained a writ of execution in the amount of $4,944,759.25 from the Los Angeles Superior Court.

 

 

On April 2, plaintiff had a process server serve CSC with (1) the writ of execution, (2) a notice of levy on “all accounts standing in the name of” North american, Michaels, or Pitcock, (3) a spousal affidavit attesting that Pitcock was Michaels’s spouse, and (4) a blank memorandum of garnishee form listing “ZB, National Association” as the “garnishee.” The notice of levy is a one-page standardized form that in this case had the following information filled in:

 

•Among a series of boxes in the top third of the form, the notice of levy had a box that listed the “PLAINTIFF” as “Judicial Judgment Enforcement Services” (which is plaintiff’s company) and the “DEFENDANT” as “North american Sureties, Ltd., and Robert S. Michaels.”

 

•Immediately under the boxes, the notice of levy stated: “TO THE PERSON NOTIFIED (name):  ZB, NATIONAL ASSOCIATION.”

 

•Beneath that notification, the notice of levy stated that “the property to be levied upon is described . . . as . . . all accounts in the name of North american, and/or Michaels, and/or his spouse Pitcock . . ..”

 

 

(…) In January 2020, plaintiff filed a motion for a court order imposing third party liability on Zions for its noncompliance with the April 2 notice of levy. Plaintiff sought to hold Zions liable for the $117,815.97 Pitcock was able to withdraw on April 3 and April 10 due to Zions’s delay in freezing the funds in the accounts plaintiff controlled.

 

 

(…) When a creditor has a judgment in its favor against a debtor, the creditor seeking to enforce that judgment against the debtor’s property must (1) obtain a writ of execution from the trial court, which is directed to the sheriff or other levying officer and authorizes them to enforce the judgment (§§ 699.510, subd. (a), 699.520), and (2) complete and serve a notice of levy, which is directed to the judgment debtor or third person holding the debtor’s property and notifies them of their duties and rights (§ 699.540). (See Meyer v. Sheh (2022) 74 Cal.App.5th 830, 837-838.) When the debtor’s property is in the possession of a third person (such as a financial institution), the judgment creditor may serve the writ of execution and the notice of levy upon the third person.

 

 

(…) Within 10 days after service, the third person must also complete a garnishee’s memorandum. (§ 701.030.)

 

 

(…) When the third person is a “financial institution” and the property to be levied is a deposit account with that institution, the procedures to be followed turn on whose name is on the account. When the account is in the judgment debtor’s name, the judgment creditor must follow the procedures applicable to any levy served on a third person and must also serve the judgment debtor with notice of the levy. (§§ 700.140, subd. (a), 699.550.) When the account is in the name of someone other than the judgment debtor, the judgment creditor must not only follow the procedures applicable to any levy served on a third person and serve the judgment debtor with notice of the levy, but must also (1) obtain “a court order authorizing the levy” unless, as pertinent here, the account is in the name of the “judgment debtor’s spouse or registered domestic partner,” in which case an “affidavit” attesting to the relationship will suffice, and (2) serve the account holder with notice of the levy. (§ 700.160, subds. (a), (b)(2).)

 

 

(…) Once the financial institution is properly served as detailed above, an execution lien “arises” as to the “amounts in the deposit account at the time of service on the financial institution.” (§ 700.140, subds. (b) & (c).) While this lien is in effect, the financial institution is not to “honor a withdrawal request or a check or other order for the payment of money from the deposit account” unless there still will be “sufficient funds... available to cover the levy” (id., subd. (d)), and the institution cannot be held liable to the depositor for doing so (id., subd. (e)). This limitation on the financial institution’s discretion is an express statutory exception to the usual duty of a financial institution to honor its contractual relationship with its depositor even when third parties might make a claim against funds in a depositor’s account. (Grover v. Bay View Bank (2001) 87 Cal.App.4th 452, 456 [noting bank’s obligations to depositor except when the Law applies]; Chazen v. Centennial Bank (1998) 61 Cal.App.4th 532, 537, 539, 542; Fin. Code, § 1450, subd. (b) [obligating banks to honor depositor’s checks absent an “appropriate order against the bank from a court”].)

 

 

(…) If the financial institution (as a third person) “fails or refuses” to “deliver property to the levying officer” “without good cause to do so,” the financial institution “is liable to the judgment creditor for” the amount of the levy. (§ 701.020, subd. (a).)

 

 

(…) (E.g., Jespersen v. Zubiate-Beauchamp(2003) 114 Cal.App.4th 624, 633 [“a judge’s comments in oral argument may never be used to impeach the final order”].)

 

 

Section 701.020 entitles the judgment creditor to “the value of the judgment debtor’s interest in the property,” but only to the extent that the third person “fails or refuses without good cause” to deliver property to the levying officer. (§ 701.020, subd. (a).) Although the execution lien comes into being upon service of the notice of levy (§ 700.140, subd. (b)), the third person’s duty to deliver comes into being “at the time of the levy or promptly thereafter.” (§ 701.010, subd. (a).) Zions explained its internal policy of responding to notices of levy by freezing the affected funds by 4:00 p.m. on the business day after the notice of levy is served. Because CSC (and hence Zions) had “reason to know” of the levy on April 2, Zions is responsible for any withdrawals after 4:00 p.m. the next day—on April 3. Thus, Zions is not liable for the $15,000 withdrawn by Pitcock prior to 4:00 p.m. on April 3, but is liable for all of the withdrawals thereafter because Zions thereafter “failed or refused without good cause” to freeze the assets. This makes Zions liable for Pitcock’s two withdrawals on April 10, which total $102,610.97. Zions may also be liable for costs and reasonable attorney fees incurred by the judgment creditor in establishing the liability. (§ 701.020, subd. (c).)

 

 

DISPOSITION

 

The order is reversed with directions. The trial court is directed to enter an order awarding plaintiff $102,610.97, and to conduct a further hearing on whether to award costs and reasonable attorney fees. Each party is to bear its own costs on appeal.

 

 

 

 

(California Court of Appeal, Crystal Bergstrom v. Zions Bancorporation, May 5, 2022, Docket No. B309154, Certified for Publication)

U.S. Court of Appeals for the Fourth Circuit, SAS Institute, Inc. v. World Programming Ltd., Docket No. 19-1290, Published

 Judgment (attack abroad on a US judgment)

Injunctions

Remedies

All Writs Act

Comity

Equity

Preclusive Effect

License Agreement

Breach (Reverse Engineering)

 

WPL turned to the English courts and engaged in a two-pronged attack on the U.S. judgment

 

 

In this appeal, we affirm the district court’s grant of two complementary injunctions issued pursuant to its All Writs Act authority. While we take the occasion to express our respect for the judicial system and judges of the United Kingdom, the district court here needed to ensure that a money judgment reached in an American court under American law—based on damages incurred in America—was not rendered meaningless. The court chose to enforce its judgment in the most measured terms, concentrating on the litigants’ U.S. conduct and collection efforts. Failing to take even these modest steps would have encouraged any foreign company and country to undermine the finality of a U.S. judgment.

 

World Programming Limited (WPL), a U.K. company, and SAS Institute, a U.S. company, are software developers that compete in the market for statistical analysis software.

 

When WPL installed the SAS software, it had clicked “Yes” to indicate it would comply with SAS’s license agreement prohibiting “reverse engineering” and allowing only “non-production” use of the software.

 

(…) Soon after SAS initiated the U.K. enforcement proceedings, it brought additional enforcement proceedings in the Central District of California. The California district court granted an order “providing for direct assignment to SAS of rights to payment from specified WPL customers located anywhere in the world, except in the United Kingdom, until [the U.S.] judgment is satisfied,” (the “assignment order”). SAS Inst., Inc. v. World Programming Ltd., No. 5:10-CV-25-FL, 2019 WL 1447472, at *2 (E.D.N.C. Mar. 18, 2019) [hereinafter SAS-2019]; see also J.A. 3135. WPL appealed the assignment order to the Ninth Circuit.

 

(…) We agreed that the U.K. litigation did not have a preclusive effect, given the “many legal and factual differences between the U.K. litigation and the present [U.S.] suit.” SAS-2017, 874 F.3d at 378-79.

 

(…) The U.K. court declined to enforce any portion of the U.S. judgment. Further, the court ordered that WPL could recover two-thirds of any amount it paid towards the U.S. judgment, corresponding to the non-compensatory portion of damages (the “U.K. clawback order”). Clawback could occur even though SAS had “not yet recovered more than the compensatory damages awarded.” J.A. 1030.

 

The week after the U.K. court issued its judgment, it entered an anti-suit injunction requiring SAS to take certain actions in the United States but forbidding others (the “U.K. injunction”). For instance, the U.K. court ordered SAS to “take all reasonable steps” to prevent entry of the turnover order in California. J.A. 1035. It forbade SAS from seeking— in the United States—an anti-anti-suit injunction or similar relief designed to protect the U.S. judgment and the California collection proceedings. The injunction threatened criminal sanctions if SAS disobeyed.

 

SAS stayed its motion to the Ninth Circuit to comply with the U.K. injunction.

 

(…) This court previously declined to issue an injunction impacting WPL’s United States licensing, based on an expectation that WPL would devote some portion of its revenues to satisfaction of the U.S. judgment. SAS-2017, 874 F.3d at 386-88. In a way, we cut WPL a break; the absence of an injunction was intended to help WPL earn additional revenues from U.S. operations that it could use towards the judgment. Things did not go as planned. Since the case was last before this court, WPL has tried to evade, in every way and at every turn, using any revenues for satisfaction of the U.S. judgment. This left the district court with limited options—but options it needed to exercise in order to prevent its judgment from being rendered completely hollow.

 

Despite a complicated procedural history stemming from years of litigation, the case before us is straightforward. WPL, a foreign company doing business in the United States, has attempted to evade a U.S. judgment. Instead of making a good-faith effort to pay up, WPL has repeatedly engaged in collateral attacks on the district court’s judgment by calling upon the U.K. court system. So far, its tactics have been successful. To date, WPL has only paid a small fraction of the judgment, and it is attempting to undo even that much. The district court could not allow WPL’s evasion to continue. One need look no further than the extensiveness of WPL’s attack on the U.S. judgment to see why the court’s two injunctions were necessary.

 

Although founded in the U.K., WPL is a company “doing business in America” subject to “American law in American courts.” Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 940 (D.C. Cir. 1984). WPL violated North Carolina law by using SAS software to create a competing product in breach of a license agreement. A jury in North Carolina set compensatory damages at $26.4 million, based solely on harm SAS incurred from lost U.S. customers and revenues. Under North Carolina law, these compensatory damages were trebled to total damages of $79.1 million.

 

After obtaining the U.S. judgment, SAS set about to collect on it—as it had every right to do. SAS commenced an enforcement action in the Central District of California and received the assignment order assigning to SAS “WPL’s right to payments from” specified non-U.K. customers “until such a time as the North Carolina judgment in the amount of $79,129,905.00 is fully satisfied.” J.A. 3135; see also SAS-2019, 2019 WL 1447472, at *2.

 

Unhappy with the pace of collections and possessing evidence to suggest that WPL instructed customers to disregard the assignment order, SAS moved for entry of the turnover order obligating WPL to deliver to SAS “all income received from customers located worldwide, except in the United Kingdom.” SAS-2019, 2019 WL 1447472, at *3. Rather than challenge SAS’s efforts in the Ninth Circuit, WPL turned to the English courts and engaged in a two-pronged attack on the U.S. judgment.

 

First, WPL attacked the U.S. judgment by requesting to claw back two-thirds of SAS’s collections—corresponding to the non-compensatory portion of damages. A U.K. court granted this relief under the PTIA, even though WPL had “not yet paid sums exceeding the value of the compensatory part of the [U.S.] judgment.” J.A. 1026-30; see also SAS-2019, 2019 WL 1447472, at *4. By seeking and receiving the U.K. clawback order, WPL fundamentally altered the U.S. judgment. Practically speaking, WPL relitigated the U.S. damage amount, lowering it by two-thirds.

 

Second, WPL sought relief designed to interfere with the California collection proceedings. Its efforts were successful. A U.K. court granted an injunction preventing SAS from pursuing normal collection efforts “in this country, the country of origin of the judgment at issue.” SAS-2019, 2019 WL 1447472, at *11. The U.K. injunction forbade SAS from pursuing entry of the turnover order. It explicitly directed SAS not to file a brief with the Ninth Circuit due that very day. It limited SAS’s ability to enforce aspects of the assignment order that WPL did not challenge. It broadly prohibited SAS from seeking an anti-anti-suit injunction or similar relief related to either the California or North Carolina proceedings. Finally, the U.K. injunction warned of criminal sanctions if SAS did not comply, a serious threat since SAS has around 637 employees in the U.K., J.A. 2715, and “none of those employees wants to go to jail,” J.A. 1257.

 

(…) The combined impact of WPL’s actions was particularly destructive. The U.K. injunction undermined SAS’s ability to enforce the U.S. judgment, while the U.K. clawback order attempted to undo SAS’s limited collection success.

 

(…) An immediate response was required, so the district court turned to the anti-clawback injunction and the U.S. expansion injunction.

 

The anti-clawback injunction provides that “no sum previously collected or to be collected by [SAS] in the United States is subject to payment to [WPL] on the basis of the [PTIA].” J.A. 1185.

 

(…) There is an irony here. Rather than the district court’s anti-clawback injunction being an affront to comity, actions by WPL have shown a lack of respect for American courts and American law. “The conflict . . . we confront today has been precipitated by the attempts of another country to insulate its own business entities from the necessity of complying with legislation of our country designed to protect this country’s domestic policies.” Laker Airways, 731 F.2d at 955. Comity is not advanced when a foreign country condones an action brought solely to interfere with a final U.S. judgment.

 

In contrast, the district court showed great respect for comity, limiting the impact of its anti-clawback injunction to sums collected in the U.S.—“monies without any nexus to any enforcement proceeding in the United Kingdom.” SAS-2019, 2019 WL 1447472, at *9. Comity does not advise against such measured relief.

 

(…) “The essence of equity jurisdiction has been the power of the Chancellor . . . to mould each decree to the necessities of the particular case.” Hecht Co. v. Bowles, 321 U.S. 321, 329 (1944).

 

 

(U.S. Court of Appeals for the Fourth Circuit, March 12, 2020, SAS Institute, Inc. v. World Programming Ltd., Docket No. 19-1290, Published)

California Court of Appeal, Fourth Appelate District, Wanke, Inc. v. AV Builder Corp., Docket No. D074392

Enforcement of Judgments Law

Writ of Execution and Notice of Levy

Third Party

Either Creditor's Suit, or Examination Proceedings

Setoff Claims; Right to Offset; Compensation

Two-year lien from issuance of writ of execution

One-year lien from examination order

No requirement for the judgment debtor to have present capacity to collect against the third person

Statute of limitations: four-year limitations period for an "action upon any contract, obligation, or liability founded upon an instrument in writing"

Wanke, Industrial, Commercial, Residential, Inc. (Wanke) obtained a judgment against Scott Keck and WP Solutions, Inc. (WP Solutions). To collect, Wanke filed a creditor's suit against third party AV Builder Corp. (AVB) to recover $109,327 that AVB owed WP Solutions in relation to five construction subcontracts. Following a bench trial, the court entered judgment in Wanke's favor for $83,418.94 after largely rejecting AVB's setoff claims.

The case proceeded to a two-day bench trial in June 2018. The parties stipulated as follows: Wanke obtained a judgment of $1,190,929 against WP Solutions and Keck; Keck discharged his debts in bankruptcy; and after serving a notice of levy on third-party AVB, Wanke learned that AVB owed $109,327 to WP Solutions. The sole issues presented to the court were AVB's setoff claims (§ 431.70) and Wanke's ability to collect given WP Solutions' incapacity.

Enforcement of Judgments Law

"Detailed statutory provisions govern the manner and extent to which civil judgments are enforceable. In 1982, following the recommendations of the California Law Revision Commission, the Enforcement of Judgments Law (EJL) was enacted. The EJL appears in sections 680.101 through 724.260 and is a comprehensive scheme governing the enforcement of all civil judgments in California." (Imperial Bank v. Pim Electric, Inc. (1995) 33 Cal.App.4th 540, 546 (Imperial Bank).)

After entry of a money judgment, the judgment creditor may obtain a writ of execution requiring the levying officer to enforce the judgment. (§ 699.510, subd. (a); Vinyard v. Sisson (1990) 223 Cal.App.3d 931, 939.) If property subject to levy is in a third party's possession, the levying officer serves a copy of the writ of execution and notice of levy on that person, who may not refuse to comply absent a showing of good cause. (§§ 700.040, subd. (a), 701.010.) A third party's failure to deliver property without good cause renders it directly liable to the judgment creditor for the lesser of the judgment debtor's interest in the property or debt, and the amount required to satisfy the money judgment. (§ 701.020, subd. (a).)

"A judgment creditor may enforce the 5 liability imposed by section 701.020 either pursuant to examination proceedings . . . or by way of a separate creditor's suit . . . ." (National Financial Lending, LLC v. Superior Court (2013) 222 Cal.App.4th 262, 271.)

Examination proceedings (§§ 708.110‒708.205) "permit the judgment creditor to examine the judgment debtor, or third persons who have property of or are indebted to the judgment debtor, in order to discover property and apply it toward the satisfaction of the money judgment." (Imperial Bank, supra, 33 Cal.App.4th at pp. 546‒547; see Evans v. Paye (1995) 32 Cal.App.4th 265, 280 (Evans).) Pursuant to section 708.120, a judgment creditor may "discover and specify property of the judgment debtor in the third person's possession, and obtain an order, on motion, determining any claim of exemption asserted by the judgment debtor." (Ilshin Investment Co., Ltd. v. Buena Vista Home Entertainment, Inc. (2011) 195 Cal.App.4th 612, 626 (Ilshin).) "When the third person claims no interest in the property or debt, such a motion procedure may be all that is required in order for the judgment creditor to obtain satisfaction of its judgment in whole or in part." (Ibid.)

However, "when the claims require a contested adjudication, the parties are entitled to have the issues determined in an independent creditor's action, rather than by the motion procedure under section 708.120, subdivision (d)." (Ilshin, supra, 195 Cal.App.4th at p. 626.) Pursuant to section 708.210, "if a third person has possession or control of property in which the judgment debtor has an interest or is indebted to the judgment debtor, the judgment creditor may bring an action against the third person to have the interest or debt applied to the satisfaction of the money judgment." "This action commonly is referred to as a creditor's suit." (Evans, supra, 32 Cal.App.4th at p. 276; see generally, §§ 708.210‒708.290.) A creditor's suit may be filed in the first instance without resorting to other procedures. (See Cal. Law Revision Com. com., 17 West's Ann. Code Civ. Proc. (2009 ed.) foll. § 708.210, p. 348.)

(…) (§§ 697.710 [two-year lien from issuance of writ of execution], 708.120, subd. (c) [one-year lien from examination order].)

(…) By its plain language, the creditor's suit statute considers solely whether the judgment debtor has an "interest" in property held by the third person or is owed a debt by the third person. There is no requirement for the judgment debtor to have present capacity to collect against the third person. And because no assignment is created, section 368 is not triggered and any incapacity by the judgment debtor does not present a bar to the judgment creditor's recovery.

(…) In short, Wanke could bring a creditor's suit against third party AVB under section 708.210 even though judgment debtor WP Solutions was a suspended corporation that lacked capacity to sue AVB.

Statute of Limitations
A creditor's suit must be commenced before the later of the following: "(1) The time when the judgment debtor may bring an action against the third person concerning the property or debt [and] (2) One year after creation of a lien on the property or debt pursuant to this title if the lien is created at the time when the judgment debtor may bring an action against the third person concerning the property or debt." (§ 708.230, subd. (a).) The levy and examination liens expired long before Wanke filed this creditor's suit. (§ 708.230, subd. (a)(2).) Accordingly, it is undisputed that Wanke's suit is timely only if it was filed within the time that WP Solutions "may bring an action" against AVB to recover the $109,327. (§ 708.230, subd. (a)(1).)

(WP Solutions could bring a collection action against AVB within four years of when AVB failed to meet its payment obligations under the waterproofing subcontracts. (§§ 337, subd. (a) [four-year limitations period for an "action upon any contract, obligation, or liability founded upon an instrument in writing"], 343 [four-year catchall period].) Thus, Wanke's suit is timely under section 708.230, subdivision (a)(1) if it was filed within four years of when WP Solutions' collection action accrued.)

"The right to offset is a long-established principle of equity." (Carmel Valley Fire Protection Dist. v. State of California (1987) 190 Cal.App.3d 521, 550; see Kruger v. Wells Fargo Bank (1974) 11 Cal.3d 352, 363.) As early as the 17th century, English chancery courts permitted a defense of setoff "founded on the equitable principle that 'either party to a transaction involving mutual debts and credits can strike a balance, holding himself owing or entitled only to the net difference.' " (Granberry v. Islay Inv. (1995) 9 Cal.4th 738, 743–744; Jess v. Herrmann (1979) 26 Cal.3d 131, 142 (Jess).) Codifying this principle, section 431.70 provides, in part:

"Where cross-demands for money have existed between persons at any point in time when neither demand was barred by the statute of limitations, and an action is thereafter commenced by one such person, the other person may assert in the answer the defense of payment in that the two demands are compensated so far as they equal each other, notwithstanding that an independent action asserting the person's claim would at the time of filing the answer be barred by the statute of limitations."

Traditional setoff rules "operate as an accounting mechanism to avoid a payment and repayment from one party to another," "simply eliminating a superfluous exchange of money between the parties." (Jess, supra, 26 Cal.3d at pp. 134, 137.) Section 431.70 "permits a defendant in a civil action to assert a claim for relief in its answer and allege, in effect, that the defense claim constituted prior payment for the plaintiff's claim and therefore should be set off against any award in the plaintiff's favor." (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 192.) "Relief by way of a section 431.70 setoff is limited to defeating the plaintiff's claim." (Id. At p. 195.) "A defendant may not obtain an award of affirmative relief against a plaintiff by way of section 431.70" and may instead "only assert the setoff defensively to defeat the plaintiff's claim in whole or in part." (Id. at p. 198.)

Section 431.70 requires "cross-demands for money." Mutuality is key—the demands must exist "between the same parties in the same right." (Harrison v. Adams (1942) 20 Cal.2d 646, 649‒650.) Although the statute refers to demands "for money," such demands need not be liquidated. (See Legis. Com., com. 14C West's Ann. Code Civ. Proc. (2009 ed.) foll. § 431.70, p. 226 ["It is not necessary under Section 431.70, as it was not necessary under [former] Section 440, that the cross-demands be liquidated."], citing Hauger v. Gates (1954) 42 Cal.2d 752, 755 ["[Former] section 440 does not require that the cross-demands be liquidated."].) Likewise, the fact that a demand has not been reduced to judgment is not an obstacle to setoff. (Harrison, at p. 649.)

From these authorities we derive a general rule. A setoff may be applied pursuant to section 431.70 between parties who owed each other mutual debts or credits at a time when neither claim was time-barred. By reducing or eliminating a defendant's obligation, setoff serves as an "innocuous accounting mechanism" to eliminate a superfluous exchange between the parties. (Jess, supra, 26 Cal.3d at pp. 137−138.)

(California Court of Appeal, Fourth Appelate District, February 19, 2020, Wanke, Inc. v. AV Builder Corp., Docket No. D074392, Certified for Partial Publication)

U.S. Court of Appeals for the Eleventh Circuit, Fresh Results, LLC, v. ASF Holland, B.V., Total Produce, PLC, Docket No. 18-11595

Forum Non Conveniens

Conflicts of Laws

Dismissal

Jurisdiction

Enforcement of Judgments

Fresh Results, an American company, arranged bulk shipments of blueberries for ASF Holland, a Dutch company that repacks wholesale produce to sell to European customers.

ASF Holland created reports about the results of its inspection of the shipments, and those reports determined the final price it paid for the blueberries. Fresh Results filed a complaint against ASF Holland in the Southern District of Florida, alleging that it had falsified the reports and fraudulently deflated the price. ASF Holland moved to dismiss the complaint on the ground that the Netherlands was a more convenient forum for the suit, and the district court agreed.

Because we agree that the district court abused its discretion when it failed to consider the relevant public factors and committed two errors in its analysis of the private factors, we vacate and remand.

(…) During the second season, one of the growers hired an auditor to make an unannounced inspection of a blueberry shipment at ASF Holland’s facility in the Netherlands. The auditor allegedly discovered that the blueberries were still in their original freight package, even though ASF Holland had reported to Fresh Results that the shipment had been inspected, sorted, and repacked. After learning of the auditor’s inspection, Fresh Results demanded that ASF Holland pay the market price for each shipment of blueberries it had received, but ASF Holland refused.

Fresh Results filed a complaint, which it later amended, against ASF Holland in the Southern District of Florida. Fresh Results asserted claims of breach of contract, negligent misrepresentation, fraud, conversion, and tortious interference with its business relationship with the growers. It alleged that ASF Holland fraudulently promised a high reference price but then deflated the actual price it paid by sending false reports. According to Fresh Results, ASF Holland manipulated the price by understating the amount paid by its European customers and by falsely inflating its expenses in the reports. ASF Holland informed the district court that it would pursue counterclaims against Fresh Results for sending substandard blueberries.

ASF Holland then moved to dismiss the complaint for failure to state a claim and forum non conveniens.

Because “the forum non conveniens determination is committed to the sound discretion of the trial court,” we review for abuse of discretion.

Under the doctrine of forum non conveniens, a district court may decline to exercise its jurisdiction when a foreign forum is better suited to adjudicate the dispute. See Kolawole v. Sellers, 863 F.3d 1361, 1369 (11th Cir. 2017). The “central purpose” of forum non conveniens is “to ensure that the trial is convenient.” Id. The doctrine should not be invoked “lightly . . . because it effectively deprives the plaintiff of his favored forum,” id., and so a defendant bears the burden of justifying dismissal based on forum non conveniens, La Seguridad, 707 F.2d at 1309. To satisfy this burden, the defendant must establish that “(1) an adequate alternative forum is available, (2) the public and private factors weigh in favor of dismissal, and (3) the plaintiff can reinstate his suit in the alternative forum without undue inconvenience or prejudice.” Tazoe v. Airbus S.A.S., 631 F.3d 1321, 1330 (11th Cir. 2011) (quoting Leon v. Millon Air, Inc., 251 F.3d 1305, 1310–11 (11th Cir. 2001)).

The second part of the forum non conveniens analysis—the balancing of the private and public factors—is a “comparative inquiry that requires the district court to weigh the ‘relative’ advantages and disadvantages of each respective forum.” The private factors “pertain to the interests of the participants in the litigation.” One of these factors is “the relative ease of access to sources of proof,” which includes the “availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses.” Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947); see also Piper Aircraft, 454 U.S. at 241 n.6. Other factors are the “possibility of view of premises, if view would be appropriate to the action” and the enforceability of a judgment, if one is obtained, Gulf Oil, 330 U.S. at 508. And a court may consider “all other practical problems that make trial of a case easy, expeditious and inexpensive.” Id. The public factors “pertain to the relative interests of the two fora.” Tazoe, 631 F.3d at 1333. Among other things, the public factors consider “the administrative difficulties flowing from court congestion,” “the ‘local interest in having localized controversies decided at home,’” and “the unfairness of burdening citizens in an unrelated forum with jury duty.” Piper Aircraft, 454 U.S. at 241 n.6 (quoting Gulf Oil, 330 U.S. at 509). A court may also consider what law will govern the action, including “the avoidance of unnecessary problems in conflicts of laws” and “the application of foreign law.” Id.

Fresh Results argues that the district court abused its discretion when it failed to consider all relevant public factors after concluding that the private factors were not in equipoise. The equipoise standard employed by the district court comes from dicta in our caselaw. Although our holdings are precedential, our dicta are not. See United States v. Caraballo-Martinez, 866 F.3d 1233, 1244 (11th Cir. 2017). Dicta refer to “those portions of an opinion that are not necessary to deciding the case then before us.” Id. In contrast, our holdings “constitute the precedent, as a point necessarily decided” in that case. Bryan A. Garner et al., The Law of Judicial Precedent § 4, at 44 (2016); accord Powell v. Thomas, 643 F.3d 1300, 1304–05 (11th Cir. 2011) (explaining that “a holding is comprised both of the result of the case and those portions of the opinion necessary to that result by which we are bound”). And we have explained that, “regardless of what a court says in its opinion, the decision can hold nothing beyond the facts of that case.” Edwards v. Prime, Inc., 602 F.3d 1276, 1298 (11th Cir. 2010).

(…) We clarified that the public factors do not “enter the equation only when the private interest factors are at or near equipoise.” Leon, 251 F.3d at 1311. Although “the private factors are generally considered more important than the public factors,” we explained that the public factors are not superfluous, even when the private factors are far from equipoise. Id. And we opined that “the better rule is to consider both factors in all cases,” which “has been our approach in recent cases.” Id.; see also SME Racks, Inc. v. Sistemas Mecanicos Para Electronica, S.A., 382 F.3d 1097, 1100 n.5 (11th Cir. 2004) (“We have clarified that . . . courts should consider both public and private factors in all cases.”)

(…) Enforcement of Judgments, U.S. Dep’t of State,

https://travel.state.gov/content/travel/en/legal/travel-legal-considerations/internl-judicial-asst/Enforcement-of-Judges.html

(U.S. Court of Appeals for the Eleventh Circuit, Fresh Results, LLC, a Delaware LLC, v. ASF Holland, B.V., a Dutch Corporation, Total Produce, PLC, an Irish Public Limited Company, April 22, 2019, Docket No. 18-11595, Circuit Judge William Pryor, for Publication)