Bank One Texas v. Pollack
| Decision Date | 29 April 1994 |
| Docket Number | No. B072997,B072997 |
| Citation | 29 Cal.Rptr.2d 510,24 Cal.App.4th 973 |
| Court | California Court of Appeals Court of Appeals |
| Parties | BANK ONE TEXAS, N.A., Plaintiff and Appellant, v. Sheldon L. POLLACK, Defendant. BANK OF MONTREAL, Real Party in Interest and Respondent. |
Mayer, Brown & Platt, Neil M. Soltman and Jacqueline R. Brady, Los Angeles, for real party in interest and respondent.
Bank One Texas, N.A. 1 appeals from an order granting a motion to amend a judgment
but denying the request that the amendment be entered nunc pro tunc as of the date of the entry of the original judgment.
Texas American Bank/Galleria secured a judgment in Texas against Sheldon L. Pollack (Pollack) and others on May 10, 1988. The judgment, which awarded Texas American Bank/Galleria approximately $1.2 million in damages, was affirmed on appeal. The basis for the judgment against Pollack was his personal guarantee of a series of real property development loans which originated in 1981 and on which the borrowers later defaulted. The original loan of $2 million was increased in February 1982 by $1.5 million and again in February 1984 by an additional $500,000.
Texas American Bank/Galleria became insolvent during the pendency of the appeal of the Texas judgment. Pollack died in February 1989. Texas American Bank/Galleria's successor in interest, Team Bank, sought and secured the entry of a judgment on a sister state judgment on November 13, 1989. Notice of the entry of the judgment was served on the administrator of Pollack's estate on December 4, 1989. An abstract of judgment was recorded in Los Angeles County on December 29, 1989. Following settlements with other judgment debtors, $746,789.07 plus accrued interest remains unpaid on the judgment.
On March 4, 1982, Pollack established the Sheldon L. Pollack Trust of 1982. He placed all of his material assets in the trust, named himself as the trustee and inter vivos beneficiary and retained the power of revocation until his death. Pollack and his wife acquired a residence on July 20, 1984, at which time Pollack transferred his community property interest in the residence to the trust. The existence of the trust and the transfer of Pollack's assets thereto was not disclosed to or learned of by appellant's predecessors in interest until approximately June 1989.
In 1985 and 1988, respondent Bank of Montreal loaned a partnership in which Pollack was a general partner approximately $15 million for real property development in Las Cruces, New Mexico. Pollack, his wife and the trust each guaranteed the loan. When the partnership defaulted in 1988, respondent made unsuccessful demands for payment upon the guarantors. On April 17, 1989, respondent filed suit against the trust and Mrs. Pollack. In addition, respondent filed a claim against Pollack's estate; it withdrew this claim on December 14, 1989.
The claim for $1.26 million which appellant's predecessor in interest filed against the Pollack estate was allowed in December 1989, after appellant's predecessor in interest agreed to defer enforcement proceedings against the trust. According to counsel for the estate, Pollack had less than $100,000 in assets upon his death. It is conceded that the estate is insolvent, and respondent knew this as of October 27, 1989.
In December 1989, respondent and the trust settled the suit. The trust agreed to give respondent a $3 million limited recourse term note secured by the trust's interest in various real property and assorted real estate partnerships. Included among the security for the note was the trust's one-half interest in the Pollack residence. When respondent entered into the settlement agreement, the only recorded encumbrance on the Pollack residence was a first deed of trust in the face amount of $625,000. Respondent recorded a deed of trust on the trust property on May 4, 1990.
Following the borrowers' default on the first deed of trust on the residence, respondent purchased the note, received an assignment of the deed of trust and purchased the property at the foreclosure sale in May 1991 for $1,095,000. The $439,329.06 paid by respondent at the foreclosure sale in excess of the sum due under the first deed of trust is the surplus at issue in this case and in an interpleader action filed in Orange County Superior Court. (T.D. Service Co. v. Uta Pollack et al. (Super.Ct. Orange County, 1992, No. 69565).)
Appellant contends the trial court erred in denying its request to file the amended abstract
of judgment nunc pro tunc as of the date of the original abstract. For the reasons set forth below, we agree.
The Sister State and Foreign Money Judgments Act (Code Civ.Proc., § 1710.10 et seq.) permits a judgment creditor to "apply for the entry of a judgment based on a sister state judgment" by filing an application therefor. (Id., § 1710.15, subd. (a).) Under the authority of the Act, appellant's predecessor in interest applied for the entry of a sister state judgment on the 1988 Texas judgment against Pollack, and judgment was entered accordingly on November 13, 1989. The administrator of Pollack's estate was served with notice of entry of the judgment on December 4, 1989, and the estate allowed a claim for the amount of the judgment shortly thereafter. An abstract of judgment was recorded on December 29, 1989.
When appellant's predecessor in interest discovered the Pollack estate was insolvent, but Pollack had transferred his assets to a revocable inter vivos trust created on March 4, 1982, after the origination of and a substantial increase in the loan guarantees which underlay the Texas judgment, appellant's predecessor moved to amend the judgment to name the trust as the judgment debtor and to relate the amended judgment back to the date of the entry of the original judgment. Due to the intervening bankruptcy filing of the trust, the motion was not heard until October 20, 1992. The court granted the amendment, but refused to enter the amended judgment nunc pro tunc.
Respondent argues that this court need not decide whether the court should have entered the amended judgment nunc pro tunc, in that the original judgment entered on the sister state judgment is void as a matter of law due to Pollack's death and the court's consequent failure to secure personal jurisdiction over him. Respondent misunderstands the purposes and effect of the statutory scheme.
The rendition of a judgment is a judicial act, and a judgment thus has full force and effect once it has been rendered, regardless of whether it has been entered. (Brown v. Superior Court (1925) 70 Cal.App. 732, 735, 234 P. 409.) Entry simply provides record evidence of a judgment. (7 Witkin, Cal.Procedure (3d ed. 1985) Judgment, § 50, p. 487.) Clearly, a judgment duly rendered, being complete at the moment of rendition, may be entered after the death of a party without first substituting into the case the administrator of the deceased party's estate.
The Sister State and Foreign Money Judgments Act " (Aspen Internat. Capital Corp. v. Marsch (1991) 235 Cal.App.3d 1199, 1203, 286 Cal.Rptr. 921.) In other words, the Act simply permits the registration of a sister state judgment so it may be enforced against property located in this state. (Liebow v. Superior Court (1981) 120 Cal.App.3d 573, 575, 175 Cal.Rptr. 26.)
Inasmuch as the superior court was not required to obtain jurisdiction over Pollack, entry of the sister state judgment was a valid ministerial act. Nothing more was required beyond subsequently serving notice of the entry on the administrator of Pollack's estate (Code Civ.Proc., § 416.90), in the same manner as a summons, and filing the proof of service with the court. (Tsakos Shipping & Trading, S.A. v. Juniper Garden Town Homes, Ltd. (1993) 12 Cal.App.4th 74, 85, 15 Cal.Rptr.2d 585.) Appellant's predecessor in interest did this, properly making substituted service (Code Civ.Proc., § 415.20, subd. (b)) on the estate administrator and filing with the court the proof of service and its accompanying declaration of diligence.
Respondent additionally argues that the judgment is void for procedural defects. As respondent sees it, service of the notice of entry was defective and an abstract of judgment was issued prematurely. Neither of these defects would void the judgment as a matter of law. Defective or delayed service alone does not provide grounds to vacate the entry of a sister state judgment (Tsakos Shipping & Trading, S.A. v. Juniper Garden Town Homes, Ltd., supra, 12 Cal.App.4th at pp. 89-90, 15 Cal.Rptr.2d 585; Epps v. Russell (1976) 62 Cal.App.3d 201, 205, 133 Cal.Rptr. 30), and the premature issuance of an abstract of judgment would not affect the validity of the entry of the judgment itself. Moreover, it is clear respondent has no standing to seek vacation of the judgment or the abstract, actions which may be taken only by the judgment debtor or, in this case, the judgment debtor's representative. (See Code Civ.Proc., § 1710.40, subd. (a).)
Turning to the merits of the matter, appellant's predecessor in interest relied on Probate Code section 18201 2 as authority for the amendment of the judgment entered on the sister state judgment. Section 18201 and a companion statute, section 18200 3, were enacted in 1986 (Stats.1986, ch. 820, §...
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