FUND v. CIBC WORLD Mkt.S Corp.

• Decision Date: 13 November 2008
• Docket Number: No. B203443.,B203443.
• Citation: 168 Cal.App.4th 185,85 Cal.Rptr.3d 350
• Court: California Court of Appeals Court of Appeals
• Parties: OCM PRINCIPAL OPPORTUNITIES FUND et al., Plaintiffs and Respondents, v. CIBC WORLD MARKETS CORP., Defendant and Appellant; TCW Shared Opportunity Fund II et al., Plaintiffs and Respondents, v. CIBC World Markets Corp., Defendant and Appellant.

168 Cal.App.4th 185

85 Cal.Rptr.3d 350

OCM PRINCIPAL OPPORTUNITIES FUND et al., Plaintiffs and Respondents,

v.CIBC WORLD MARKETS CORP., Defendant and Appellant;

TCW Shared Opportunity Fund II et al., Plaintiffs and Respondents,

v.CIBC World Markets Corp., Defendant and Appellant.

No. B203443.

Court of Appeal, Second District, California.

Nov. 13, 2008.

COPYRIGHT MATERIAL OMITTED.

Mayer Brown LLP, Donald M. Falk, Neil M. Soltman, Fredrick S. Levin and Melissa J. Pastrana, Los Angeles, for Defendant and Appellant.

Hennigan, Bennett & Dorman LLP, J. Michael Hennigan, Michael Swartz, Allison Chock, Los Angeles; Greines, Martin, Stein & Richland LLP, Irving H. Greines and Marc J. Poster, Los Angeles, for Plaintiffs and Respondents.

MANELLA, J.

After respondents renewed a judgment in their favor, the trial court denied a motion by appellant CIBC World Markets Corp. (CIBC) to vacate the renewed judgment. We affirm.

RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

This is the second time that this case has come before us on appeal. In April 2000, OCM Principal Opportunities Fund, L.P. (OCM), together with Pacholder Value Opportunity Fund, L.P., and Pacholder Heron Limited Partnership (collectively, Pacholder), initiated an action against CIBC, asserting claims that CIBC had engaged in fraud, misrepresentation, and violations of federal and state securities laws. TCW Opportunities Fund II, L.P., TCW Shared Opportunities Fund IIB, L.L.C., TCW Shared Opportunity Fund III, L.P., TCW Leveraged Income Trust, L.P., and TCW Leveraged Income Trust II, L.P. (collectively, TCW) initiated a similar action in May 2001. These actions were later consolidated.

On October 15, 2003, following a jury trial, the trial court entered a judgment that awarded OCM, Pacholder, and TCW, respectively, $13,412,489, $2,440,504, and $16,249,490 in damages. CIBC appealed from the judgment, and OCM and Pacholder cross-appealed from the denial of their request for prejudgment interest under Corporations Code section 25500.

On May 4, 2007, while the appeal and cross-appeals were pending, respondents applied for renewal of the judgment pursuant to the Enforcement of Judgments Law (Code Civ. Proc., § 680.010 et seq.). ¹ The Los Angeles County Superior Court Clerk filed a notice of renewal of judgment on July 19, 2007. CIBC filed a motion to vacate the renewed judgment, which the trial court denied on September 25, 2007. CIBC noticed the appeal before us from the denial.

On December 5, 2007, we issued our opinion in the first appeal and related cross-appeals ( OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 68 Cal.Rptr.3d 828). ² We affirmed the judgment in favor of respondents, reversed the denial of prejudgment interest, and remanded the matter to the trial court for further proceedings.

DISCUSSION

CIBC contends that the trial court erred in denying its motion to vacate the renewed judgment, which argued that the renewal improperly accorded respondents compound postjudgment interest on the 2003 judgment. We disagree.

A. Renewal of Money Judgments

[1] [2] Under the Enforcement of Judgments Law, a money judgment is enforceable for a 10-year period following the date of entry. ³ (§ 683.020.) The judgment creditor may renew the judgment by filing an application for renewal with the clerk of the court prior to the end of the 10-year period. (§ 683.120.) The renewal “does not create a new judgment or modify the present judgment,” but merely extends the enforceability of the judgment-in effect, it resets the 10-year enforcement clock. ( Jonathan Neil & Associates, Inc. v. Jones (2006) 138 Cal.App.4th 1481, 1489, 42 Cal.Rptr.3d 350.) Once a judgment has been renewed, a new application for renewal may not be submitted within five years of the previous renewal. (§ 683.110, subd. (b).) Although entry of the renewed judgment is a ministerial act accomplished by the clerk of the court ( Goldman v. Simpson (2008) 160 Cal.App.4th 255, 262, 72 Cal.Rptr.3d 729; § 683.150), the judgment creditor may challenge the renewal by filing a motion to vacate or modify the renewed judgment (§ 683.170, subd. (b)).

CIBC's contentions target the provisions in the Enforcement of Judgments Law governing the accrual of interest on a renewed judgment. Under section 685.010, “[i]nterest accrues at the rate of 10 percent per annum on the principal amount of a money judgment remaining unsatisfied.” (§ 685.010, subd. (a).) In turn, the term “[p]rincipal amount of the judgment” is defined as “the total amount of the judgment as entered or last renewed,” together with costs added to the judgment, with adjustments for partial satisfaction of the sums in question. (§ 680.300.) Upon an application for renewal of the judgment, the clerk of the court is directed to enter the renewal “show[ing] the amount of the judgment as renewed.” (§ 683.150.) When, as here, the judgment does not require installment payments, “this amount is the amount required to satisfy the judgment on the date of the filing of the application for renewal....” (§ 683.150.) The amount ultimately required to satisfy a money judgment is characterized as “the total amount of the judgment as entered or renewed” with the addition of “interest added to the judgment as it accrues pursuant to Section[ ] 685.010....” (§ 695.210 subd. (b).)

B. CIBC's Contentions

CIBC contends that the trial court (1) improperly construed the renewal provisions to allow the compounding of postjudgment interest upon renewal of the 2003 judgment; (2) permitted respondents to renew the 2003 judgment without establishing a risk to its enforceability; and (3) contravened article XV, section 1 of the California Constitution, which limits the interest rate on judgments to 10 percent per annum. For the reasons explained below, we reject these contentions.

[3] [4] CIBC's contentions present questions of first impression regarding the interpretation of the renewal statutes and the California Constitution. Generally, “[i]n construing constitutional and statutory provisions, ... the intent of the enacting body is the paramount consideration.” ( In re Lance W. (1985) 37 Cal.3d 873, 889, 210 Cal.Rptr. 631, 694 P.2d 744.) To determine this intent, we look first to the plain language of the law, read in context. ( People ex rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 301, 58 Cal.Rptr.2d 855, 926 P.2d 1042.) Both the legislative history of a statute and the wider historical circumstances of its enactment may also be considered in ascertaining the legislative intent. ( Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1386-1387, 241 Cal.Rptr. 67, 743 P.2d 1323.) ⁴ Because the Legislature enacted the Enforcement of Judgments Law in 1982 upon the Law Revision Commission's recommendation ( 8 Witkin, Cal. Procedure (5th ed. 2008) Enforcement of Judgment, § 18, pp. 53-54), we may also consult the commission's comments on the relevant statutory provisions ( Conservatorship of Wendland (2001) 26 Cal.4th 519, 530, 110 Cal.Rptr.2d 412, 28 P.3d 151). “Whenever possible, statutes are to be interpreted as consistent with applicable constitutional provisions so as to harmonize both.” ( Mendez v. Kurten (1985) 170 Cal.App.3d 481, 485, 215 Cal.Rptr. 924.)

1. Compounding of Postjudgment Interest Upon Renewal

[5] CIBC contends that the renewal provisions do not require that postjudgment interest be incorporated into the total amount of the renewed judgment so as to permit the accrual of interest upon interest. This contention fails in light of the plain language of the pertinent provisions, as well as the extrinsic evidence of Legislative intent. Under the provisions, interest accrues on the “principal amount of a money judgment remaining unsatisfied,” which is “the total amount of the judgment as ... last renewed.” (§ 685.010, subd. (a), § 680.300, italics added.) As the court observed in Westbrook v. Fairchild (1992) 7 Cal.App.4th 889, 894-895, 9 Cal.Rptr.2d 277 ( Westbrook ), the renewal provisions effectuate a compounding of postjudgment interest when a judgment is renewed: Accrued postjudgment interest on the judgment is incorporated into the principal of the renewed judgment, which then bears interest at the legal rate. The Law Revision Commission expressly noted this feature of the renewal procedure: “Renewal has the effect of compounding the interest on the judgment, since interest accrues on the total amount of the judgment as renewed [citations] and the judgment as renewed includes accrued interest on the date of filing the application for renewal [citations].” (Cal. Law Revision Com. com, 17 West's Ann.Code Civ. Proc. (1987 ed.) foll. § 683.110, p. 76.) ⁵

2. No Requirement for Risk to Enforceability

CIBC contends that the trial court erred in permitting the renewal when there was no danger that the judgment would not be paid. CIBC argues that the judgment was properly bonded pending the outcome of the appeal, and was enforceable until 2013. As explained below, this contention also fails in light of the language of the renewal provisions, and the available extrinsic evidence of legislative intent.

Prior to the 1982 enactment of the Enforcement of Judgments Law, California law provided two methods by which a judgment creditor could extend the enforcement period of a money judgment. Under former section 681, after entry of the judgment, the judgment creditor was entitled to a writ of execution regarding the judgment for a 10-year period. (8 Witkin, supra, Enforcement of Judgment, § 22, pp. 60-61.) Once the 10-year period ended, former section 685 permitted the trial court to enforce the judgment upon a showing by the judgment creditor that there had been an “excusable failure” to seek satisfaction of the judgment. ( Alonso Inv. Corp. v. Doff (1976) 17 Cal.3d 539, 543-544, 131 Cal.Rptr. 411, 551 P.2d 1243, italics deleted; 8 Witkin, supra, Enforcement of Judgment, § 22, at...