AO Alpha-Bank v. Yakovlev

• Citation: 230 Cal.Rptr.3d 214,21 Cal.App.5th 189
• Decision Date: 12 March 2018
• Docket Number: D071872
• Court: California Court of Appeals
• Parties: AO ALPHA-BANK, Plaintiff and Appellant, v. Oleg Nikolaevich YAKOVLEV, Defendant and Respondent.

21 Cal.App.5th 189

230 Cal.Rptr.3d 214

AO ALPHA-BANK, Plaintiff and Appellant,

v.Oleg Nikolaevich YAKOVLEV, Defendant and Respondent.

D071872

Court of Appeal, Fourth District, Division 1, California.

Filed March 12, 2018

As Modified on Denial of Rehearing April 3, 2018

Norton Rose Fulbright, Robin Dale Ball and Susan St. Denis for Plaintiff and Appellant.

Lawstache Law Firm, Anton Vialtsin, San Diego; Knight Johnson and James Michael Johnson for Defendant and Respondent.

DATO, J.

Plaintiff AO Alpha Bank (Alpha Bank) initiated this lawsuit pursuant to the Uniform Foreign-Country Money Judgments Act (Recognition Act; Code Civ. Proc., §§ 1713 – 1725 )¹ to recognize a Russian judgment against defendant Oleg Nikolaevich Yakovlev. Yakovlev moved for summary judgment, arguing the judgment could not be recognized because (1) the Russian court lacked personal jurisdiction; (2) he did not receive notice of the Russian proceeding in sufficient time to enable a defense; and (3) the Russian court proceeding was incompatible with due process. (§ 1716, subd (b)(2), former subd. (c)(1), now subd. (c)(1)(A) & former subd. (c)(8), now subd. (c)(1)(G).)² His central premise was that service of process in the Russian proceedings was ineffective. The trial court agreed and denied recognition of the Russian judgment on personal jurisdiction grounds. It granted Yakovlev's motion for summary judgment and denied Alpha Bank's cross-motion for summary judgment.

We reverse. As we explain, due process does not require actual notice; it requires only a method of service "reasonably calculated" to impart actual notice under the circumstances of the case. ( Mullane v. Cent. Hanover Bank & Trust Co. (1950) 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 ( Mullane ).) Service by registered mail to the address Yakovlev designated in the surety agreement met that standard. Yakovlev did not meet his burden to establish a basis for nonrecognition on grounds of lack of personal jurisdiction, lack of notice, or incompatibility with due process. Accordingly, the presumption in favor of recognition applies, and the Russian judgment is entitled to recognition. (§ 1716, subds. (a), (d).)

FACTUAL AND PROCEDURAL BACKGROUND

Yakovlev is a Russian businessman who owned several entities, including a children's retail chain. Alpha Bank is a Russian bank that loaned millions of dollars in 2007 and 2008 through a series of cash advances to a Russian company named Trial Trading House, LLC. These loans were secured by Yakovlev's personal guarantee, subject to terms set forth in a separate surety agreement. With each cash advance to Trial Trading House, Yakovlev executed a supplemental agreement to the surety agreement guaranteeing the amount of that advance.

The surety agreement selected the Meschansky District Court in Moscow as the exclusive forum for resolving disputes.³ The parties agreed that notices would be sent to Yakovlev at his residence in Moscow: 27 Bratislavskaya Street, building 3, apartment 113. If he moved, Yakovlev was contractually obligated to give written notice to Alpha Bank within five days of his new address. Under Russian law, Russian citizens must register their residence address with the government. Yakovlev's registered address matched the address he provided in the surety agreement.

Trial Trading House defaulted, and Alpha Bank turned to the sureties for repayment.⁴ In May 2009, Alpha Bank filed a statement of claim against Yakovlev in the Meschansky District Court. Unbeknownst to Alpha Bank, Yakovlev had fled Russia a month earlier and sought political asylum in the United States. Yakovlev did not notify Alpha Bank of any change in address before leaving the country. Nor did he deregister his Moscow address with the Russian government.

The Meschansky District Court attempted to serve Yakovlev with process at his Moscow residence; thereafter, the case proceeded to trial in his absence.⁵ On September 15, 2009, the Russian court entered judgment in Alpha Bank's favor but reduced the amount of default interest Alpha Bank claimed. In total, the court ordered Yakovlev to pay Alpha Bank 11,643,136.82 United States dollars and 569,177,514.05 Russian rubles to cover outstanding principal debt and interest and 20,000 Russian rubles to cover court costs.⁶ The judgment became enforceable in Russia on September 28, 2009. It was not appealed within the 10-day window and enforcement of the judgment has not been stayed.

Yakovlev revealed in a 2011 interview that he was no longer living in Russia. He settled in San Diego, California in 2012 and worked for a brief period at a clothing store before becoming a rideshare driver. Alpha Bank learned he was living in the United States in 2013 and hired an investigator to locate him.

In 2014, Alpha Bank filed this action in San Diego Superior Court to recognize the Russian judgment under the Recognition Act. Yakovlev opposed recognition on three main grounds—lack of personal jurisdiction, insufficient notice, and incompatibility with due process.⁷ Following cross motions for summary judgment and summary adjudication, the trial court granted Yakovlev's motion and denied Alpha Bank's cross-motion. It concluded the Russian court lacked personal jurisdiction over Yakovlev because service of process was ineffective.

DISCUSSION

Yakovlev asserted three grounds for nonrecognition based on his contention that the Russian court's attempts at service of process were inadequate. The trial court agreed with that premise and declined to recognize the Russian judgment on personal jurisdiction grounds. Because we conclude mail service of the summons letter and attached statement of claim to Yakovlev's residence was "reasonably calculated, under all the circumstances" to impart actual notice ( Mullane, supra, 339 U.S. at p. 314, 70 S.Ct. 652 ), Yakovlev did not meet his burden to defeat the presumption in favor of recognition on any of the asserted grounds. (§ 1716, subds. (a), (d).)

1. Legal Principles Governing the Recognition of Foreign Country Judgments

a. Historical overview

In Hilton v. Guyot (1895) 159 U.S. 113, 16 S.Ct. 139, 40 L.Ed. 95 ( Hilton ), the United States Supreme Court declared the enforceability of foreign country money judgments to be a matter of the " ‘comity of nations.’ " ( Id. at p. 163, 16 S.Ct. 139.) The court rejected arguments that a French judgment could not be enforced because of procedural differences, the lack of cross examination, or looser evidentiary rules. ( Id. at pp. 204-205, 16 S.Ct. 139.) As it explained,

"[w]hen an action is brought in a court of this country, by a citizen of a foreign country against one of our own citizens, to recover a sum of money adjudged by a court of that country to be due from the defendant to the plaintiff, and the foreign judgment appears to have been rendered by a competent court, having jurisdiction of the cause and of the parties, and upon due allegations and proofs, and opportunity to defend against them, and its proceedings are according to the course of a civilized jurisprudence, and are stated in a clear and formal record, the judgment is prima facie evidence, at least, of the truth of the matter adjudged; and it should be held conclusive upon the merits tried in the foreign court, unless some special ground is shown for impeaching the judgment, as by showing that it was affected by fraud or prejudice, or that by the principles of international law, and by the comity of our own country, it should not be given full credit and effect." ( Id. at pp. 205-206, 16 S.Ct. 139.)⁸

Comity remained the basis for recognizing foreign judgments until 1962 when the National Conference of Commissioners on Uniform State Laws (Uniform Law Commission) promulgated the Uniform Foreign Money-Judgments Recognition Act (1962 Uniform Act). The 1962 Uniform Act sought to codify rules as to foreign money judgments that had "long been applied by the majority of courts" in order to encourage the reciprocal recognition of United States judgments abroad. (West's U. Laws Ann. (1962) U. Foreign Money Judgments Recognition Act, Prefatory Note.)⁹ It defined threshold requirements for recognition and delineated mandatory and discretionary grounds for nonrecognition. (Id. , §§ 3–4.)

In 1986, the American Law Institute adopted the Restatement (Third) of Foreign Relations Law of the United States (hereafter Restatement). (See generally, Brand, The Continuing Evolution of U.S. Judgments Recognition Law (2017) 55 Columbia J. Transnational L.J. 277, 288 (hereafter Brand).) Sections 481 and 482 of the Restatement cover the recognition of foreign judgments and closely track the provisions in the 1962 Uniform Act.¹⁰ (Rest.3d Foreign Relations Law of the U.S., § Scope.)

The Uniform Law Commission updated the 1962 Uniform Act in 2005 and renamed it the Uniform Foreign Country Money Judgments Recognition Act (2005 Uniform Act). The 2005 Uniform Act clarified the procedure for seeking recognition of a foreign judgment, added a statute of limitations, and set forth applicable burdens of proof. (See Brand, supra , 55 Columbia J. Transnational L.J. at pp. 290–291.) It also created two new discretionary bases for nonrecognition. (West's U. Laws Ann. (2005) U. Foreign-Country Money Judgments Recognition Act, § 4, subd. (c)(8).)

As of January 2018, twenty-three states and the District of Columbia have adopted the 2005 Uniform Act.¹¹ Another eleven states and the United States Virgin Islands apply the 1962 Uniform Act.¹² "In the remaining sixteen states, judgments recognition remains primarily a matter of common law, heavily influenced by the Restatement." (Brand, supra, 55 Columbia J. Transnational L.J. at p. 295.)

b. Recognition of Foreign Country Money Judgments in California

California adopted the 1962 Uniform Act in 1967 and the 2005 Uniform Act in 2007. ( Manco Contracting Co. v. Bezdikian (2008) 45 Cal.4th 192, 195, fn. 1 & 198, 85 Cal.Rptr.3d 233, 195 P.3d 604 ( Manco ).) In its present form, the Recognition Act is...