Fidelity National Financial v. Colin Friedman ( 2019 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FIDELITY NATIONAL FINANCIAL, No. 17-15913
INC., a Delaware corporation;
FIDELITY EXPRESS NETWORK, INC., a D.C. No.
California corporation, CV 15-2288 DJH
Plaintiffs-Appellants,
v. OPINION
COLIN H. FRIEDMAN, individually
and as trustee of Friedman Family
trust UDT Dated 7/23/87; HEDY
KRAMER FRIEDMAN, individually
and as trustee of Friedman Family
trust UDT Dated 7/23/87; FARID
MESHKATAI, an individual; ANITA
KRAMER MESHKATAI, individually
and as trustee of Anita Kramer
Living Trust Dated 7/23/87,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Arizona
Diane J. Humetewa, District Judge, Presiding
Argued and Submitted October 12, 2018
San Francisco, California
Filed August 22, 2019
2 FIDELITY NAT’L FIN. V. FRIEDMAN
Before: A. Wallace Tashima and Mary H. Murguia,
Circuit Judges, and Robert N. Chatigny,* District Judge.
Opinion by Judge Tashima
SUMMARY**
Registration of Judgments
The panel reversed the district court’s order vacating a
registered judgment and remanded.
Plaintiffs obtained a civil fraud judgment in California
federal court and registered this California judgment in the
District of Arizona pursuant to 28 U.S.C. § 1963. Plaintiffs
later attempted to renew the Arizona judgment, but the
district court ruled that the renewal or re-registration was void
as untimely. Plaintiffs next registered the California
judgment in Washington federal court and then registered the
newly-obtained Washington judgment in the District of
Arizona. The district court granted defendants’ motion under
Fed. R. Civ. P. 60(b) to vacate the newly-registered second
Arizona judgment as void. In a prior appeal, the court of
appeals reversed, holding that registering the California
judgment in Washington created a “new” Washington
judgment that could be re-registered in another state under
*
The Honorable Robert N. Chatigny, United States District Judge for
the District of Connecticut, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
FIDELITY NAT’L FIN. V. FRIEDMAN 3
§ 1963. On remand, the district court again granted relief
under Rule 60(b) on the ground that the Washington
judgment was void because the Western District of
Washington lacked personal jurisdiction over the defendants
at the time of registration.
The panel reversed, holding that a court need not have
personal jurisdiction over a judgment debtor in order to
“merely register” a previously obtained judgment pursuant to
§ 1963. The panel held that § 1963 itself does not require that
the court have personal jurisdiction. Further, the Due Process
Clause does not require that a court in which a judgment
creditor registers a pre-existing federal judgment have
personal jurisdiction over judgment debtors at the time of
registration. The panel held that once a federal court of
competent jurisdiction has determined the parties’ substantive
rights and entered a judgment following a proceeding that
comports with due process, that federal judgment should be
enforceable in any other federal district by way of the federal
judgment registration statute.
COUNSEL
Thomas H. Case (argued) and Michael G. King, Hennelly &
Grossfeld LLP, Marina del Rey, California, for Plaintiffs-
Appellants.
David M. Bass (argued), David M. Bass & Associates Inc.,
Los Angeles, California; Dominica J. Minore, The Law
Offices of Dominica J. Minore P.C., Scottsdale Arizona; for
Defendants-Appellees.
4 FIDELITY NAT’L FIN. V. FRIEDMAN
OPINION
TASHIMA, Circuit Judge:
In order to facilitate the enforcement of federal
judgments, 28 U.S.C. § 1963 provides that a judgment
entered in a federal court may be registered in any other
federal district by “filing a certified copy of the judgment” in
that district. In this case we address, as a matter of first
impression in our Circuit, whether personal jurisdiction over
the judgment debtors in the district of registration is required
for such registration of a judgment. We hold that it is not,
because neither § 1963 nor due process imposes such a
personal jurisdiction requirement. We therefore reverse the
order and judgment of the district court, and remand.
BACKGROUND
In 2002, Plaintiffs-Appellants Fidelity National Financial,
Inc., and Fidelity Express Network, Inc. (collectively,
“Fidelity”), obtained a multimillion dollar civil fraud
judgment (the “California Judgment”) against Defendants-
Appellees the Friedmans and Meshkatais (collectively,
“Defendants”) in the U.S. District Court for the Central
District of California. This judgment became final on May
15, 2003, after this Court dismissed Defendants’ appeal from
the judgment.
While Defendants’ appeal in the original case was
pending, Fidelity registered the California Judgment in the
District of Arizona pursuant to the federal registration statute,
28 U.S.C. § 1963. In 2007, Fidelity attempted to renew the
Arizona judgment. However, on March 2, 2012, the District
Court of Arizona ruled that Fidelity’s 2007 renewal or re-
FIDELITY NAT’L FIN. V. FRIEDMAN 5
registration of the Arizona registered judgment were void as
untimely, because the judgment had already expired under
Arizona’s five-year statute of limitations for the enforcement
of judgments.
Unable to enforce the Arizona registered judgment or re-
register the original California Judgment in Arizona, Fidelity
came up with a creative alternative. Fidelity registered the
California Judgment in the Western District of Washington
(the “Washington Judgment”) Fidelity then registered the
newly-obtained Washington Judgment in the District of
Arizona (the “Second Arizona Judgment”).
Several months later, Defendants moved the Arizona
District Court under Federal Rule of Civil Procedure 60(b) to
vacate the newly-registered Second Arizona Judgment as
void, arguing that § 1963 did not allow successive registration
of federal judgments. That is, Defendants argued that
registering the California Judgment in Washington did not
create a new Washington judgment that could then be
registered in Arizona under § 1963. Defendants also argued
that, in any case, the Washington Judgment was invalid for
lack of personal jurisdiction over Defendants. The Arizona
district court granted Defendants’ motion and vacated the
Second Arizona Judgment, holding that § 1963 did not allow
successive registration of judgments—in other words, that
only an original judgment, such as the California Judgment in
this case, may be registered in another district under § 1963.
See Fid. Nat’l Fin., Inc. v. Friedman, 939 F. Supp. 2d 974,
979–87 (D. Ariz. 2013). The district court did not reach
Defendants’ second argument regarding lack of due process
and personal jurisdiction. Id. at 986–87.
6 FIDELITY NAT’L FIN. V. FRIEDMAN
Fidelity appealed, and this Court reversed. Fid. Nat’l
Fin., Inc. v. Friedman, 803 F.3d 999 (9th Cir. 2015)
(“Fidelity I”). We held that registering the California
Judgment in Washington created a “new” Washington
judgment that, like any other Washington judgment, could be
re-registered in another state under the plain terms of § 1963.
Id. at 1003. We remanded the case to the Arizona district
court on that basis, without reaching Defendants’ alternative
argument that the Washington Judgment was void for lack of
jurisdiction over Defendants. See id. at 1003 n.3.
On remand, the district court again granted Defendants’
Rule 60(b) motion for relief from judgment, after allowing
supplemental briefing on Defendants’ contention that the
Washington Judgment was void because the Western District
of Washington lacked personal jurisdiction over Defendants
at the time of registration. See Fid. Nat’l Fin. Inc. v.
Friedman, No. CV-15-2288-PHX-DJH, 2017 WL 6049376
(D. Ariz. May 1, 2017). The district court held that
registration of a judgment pursuant to § 1963 requires that the
court of registration have personal jurisdiction over the
judgment debtors. See id. at *6–7. In reaching this
conclusion, the district court first noted that a judgment is
void if the court that “rendered” the judgment lacked
jurisdiction over the parties. Id. at *5. It then reasoned that
because we suggested in Fidelity I that registering a judgment
under § 1963 creates a “new” judgment, the court of
registration can be said to have “rendered” a judgment such
that the normal jurisdictional requirements apply. See id. at
*5–7. Because Defendants had no assets or other contacts in
Washington, the district court concluded that the Washington
court lacked personal jurisdiction over Defendants;
consequently, that the Washington Judgment was void and
could not have been validly registered in Arizona. Id. at *4,
 FIDELITY NAT’L FIN. V. FRIEDMAN 7
*7. As a result, the district court vacated the Second Arizona
Judgment. Fidelity again appealed.
STANDARD OF REVIEW
This Court “review[s] de novo . . . a district court’s ruling
upon a Rule 60(b)(4) motion . . . because the question of the
validity of a judgment is a legal one.” Export Grp. v. Reef
Indus., Inc., 54 F.3d 1466, 1469 (9th Cir. 1995); see also
Fidelity I, 803 F.3d at 1001.
DISCUSSION
On appeal, Fidelity asserts that the district court
improperly granted relief from judgment because a court need
not have personal jurisdiction over a judgment debtor in order
to “merely register” a previously obtained judgment pursuant
to § 1963. For the reasons explained below, we agree.
First, neither the relevant statute’s plain language nor its
purpose supports a personal jurisdiction requirement for
registration of a judgment. Section 1963 provides:
A judgment in an action for the recovery of
money or property entered in any court of
appeals, district court, bankruptcy court, or in
the Court of International Trade may be
registered by filing a certified copy of the
judgment in any other district . . . when the
judgment has become final by appeal or
expiration of the time for appeal or when
ordered by the court that entered the judgment
for good cause shown. . . . A judgment so
registered shall have the same effect as a
8 FIDELITY NAT’L FIN. V. FRIEDMAN
judgment of the district court of the district
where registered and may be enforced in like
manner.
28 U.S.C. § 1963. Nothing in this provision limits the district
courts in which a judgment may be registered to only those
that can assert personal jurisdiction over the judgment
debtors. Instead, the provision’s text is extremely broad,
allowing a judgment entered in “any . . . district court” to be
registered “in any other district.” Id. Furthermore, the fact
that registering a judgment in another district simply requires
“filing a certified copy of the judgment” suggests that the
registration process is intended to be simple, essentially an
administrative task that does not require any additional
judicial action. See id.
Giving effect to this broad statutory language also accords
with the provision’s purpose, which is “to simplify and
facilitate collection on valid judgments.” Fidelity I, 803 F.3d
at 1003 (citation omitted). Section 1963 aims to spare
creditors and debtors “the additional cost and harassment of
further litigation which would otherwise be required by way
of an action on the judgment in a district court other than that
where the judgment was originally obtained.” S. Rep. No.
83-1917 (1954), as reprinted in 1954 U.S.C.C.A.N. 3142; see
also Stanford v. Utley, 341 F.2d 265, 270 (8th Cir. 1965)
(“[T]he purposes of § 1963 were to simplify and facilitate the
enforcement of federal judgments, . . . to eliminate the
necessity and expense of a second lawsuit, and to avoid the
impediments, such as diversity of citizenship, which new and
distinct federal litigation might otherwise encounter.”).
Adhering to the statutory text’s expansive license to register
FIDELITY NAT’L FIN. V. FRIEDMAN 9
judgments in other districts effectuates those purposes;1
reading a non-existent jurisdictional requirement into the
statute would contravene Congress’ intent by placing limits
on registration that would make the process more onerous and
potentially require additional litigation regarding
jurisdiction.2 Thus, we hold that § 1963 itself does not
1
Defendants point out that Fidelity’s registration of the California
Judgment in Washington was not for the purpose of enforcing the
judgment in Washington, but rather for the purpose of creating a new
judgment that could subsequently be registered in Arizona and thus
provide an end-run around Arizona’s statute of limitations on the
enforcement of judgments. Defendants’ argument that imposing a
jurisdictional requirement for registration under § 1963 is appropriate
simply because, as applied to the facts of this case, such a requirement
would not contravene the statute’s underlying purpose of facilitating
enforcement in the state of registration and would close a seeming
loophole, is unpersuasive. In Fidelity I, this Court rejected Defendants’
invitation to “refuse to give effect to Congress’ chosen words” simply
because doing so “potentially allows plaintiffs to register a judgment that
has previously expired under a state’s statute of limitations,” noting that
such an effect is “irrelevant in view of the plain language of § 1963.” 803
F.3d at 1003.
2
For example, a personal jurisdiction requirement could hamper a
judgment creditor’s ability to register and enforce a judgment when a
judgment debtor has no contacts with a state beyond assets that are
controlled by a third party in the state. Cf. U.S.I. Props. Corp. v. M.D.
Const. Co., 230 F.3d 489, 497 (1st Cir. 2000). In fact, the Supreme Court
has explicitly recognized that in some cases, the “presence of the
defendant’s property in a state . . . alone would not support . . .
jurisdiction” under the minimum contacts test for personal jurisdiction.
Shaffer v. Heitner, 433 U.S. 186, 209 (1977). Thus, imposing a minimum
contacts jurisdictional limit on the registration of judgments, as
Defendants suggest is required, risks allowing a judgment debtor to “avoid
payment of his obligations by the expedient of removing his assets to a
place where he is not subject to an in personam suit.” Id. This would be
directly at odds with § 1963’s purpose of facilitating collection on valid
judgments. See Fidelity I, 803 F.3d at 1003.
10 FIDELITY NAT’L FIN. V. FRIEDMAN
require that a court have personal jurisdiction over a
judgment debtor in order to register an existing judgment.
We next turn to the due process basis of the district
court’s ruling. The district court noted that under this Court’s
ruling in Fidelity I, registering a judgment in another district
pursuant to § 1963 creates a “new judgment” that is treated as
if it had been rendered in the new district and that “[a]
judgment is void ‘if the court that rendered the judgment
lacked jurisdiction over the parties . . . .’” Fid. Nat’l Fin.
Inc., 2017 WL 6049376, at *5 (quoting In re Ctr. Wholesale,
759 F.2d 1440, 1448 (9th Cir. 1985)). This reasoning,
however, is flawed because it incorrectly presumes that
constitutional due process protections in the form of a
personal jurisdiction requirement attach based on the
appearance of a judgment, rather than based on the
characteristics of the process that results in that judgment.
We must therefore ask this crucial constitutional question:
does the Due Process Clause require that a court in which a
judgment creditor registers a pre-existing federal judgment
have personal jurisdiction over judgment debtors at the time
of registration? We hold in the negative.
A long line of Supreme Court cases reflects that the
personal jurisdiction requirement of due process is grounded
in protecting litigants from being unfairly dragged into a
faraway court to defend a suit.3 See, e.g., World-Wide
3
Another function of the personal jurisdiction requirement is
preserving the balance of powers between coequal states. See World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980) (“[The
minimum contacts test] acts to ensure that the States through their courts,
do not reach out beyond the limits imposed on them by their status as
coequal sovereigns in a federal system.”). But that issue is not of concern
FIDELITY NAT’L FIN. V. FRIEDMAN 11
Volkswagen Corp. v. Woodson, 444 U.S. 286, 291–92 (1980)
(“The concept of minimum contacts . . . protects the
defendant against the burdens of litigating in a distant or
inconvenient forum.”). The constitutional standard focuses
on “whether the ‘quality and nature’ of the defendant’s
activity is such that it is ‘reasonable’ and ‘fair’ to require him
to conduct his defense in that State,” i.e., whether the
defendant has sufficient “contacts with the forum state such
that the maintenance of the suit does not offend ‘traditional
notions of fair play and substantial justice.’” Kulko v.
Superior Court, 436 U.S. 84, 92 (1978) (quoting Int’l Shoe
Co. v. Washington, 326 U.S. 310, 316–17 (1945)).
A key distinction here, however, is that the process of
registering a federal judgment in another federal district
pursuant to § 1963 does not involve “maintenance of a suit”
or “[conducting a] defense.” See id. Instead, registration
simply requires “filing a certified copy of the judgment.”4
here, because we are dealing with judgments issued by federal, not state,
courts.
4
In fact, as discussed above, legislative history documents show that
§ 1963 was specifically intended to avoid additional litigation. The report
issued by the Senate Judiciary Committee explains:
[R]egistration of judgments in other districts is a
modern legal device. It assists judgment creditors by
making it possible for them to pursue the property of a
debtor in satisfaction of a judgment by the ordinary
process of levying execution on a judgment in any
district where the judgment is registered. The result is
that both creditors and debtors are relieved of the
12 FIDELITY NAT’L FIN. V. FRIEDMAN
See 28 U.S.C. § 1963. Defendants make no substantive
argument about why, even in the absence of the central
concern animating the due-process-based personal
jurisdiction requirement, courts must nonetheless have
personal jurisdiction to register judgments under 28 U.S.C.
§ 1963. Constitutional due process requirements depend on
the procedures at issue, not semantics—just because a court
might be said to “render” a “new” judgment pursuant to
registration does not mean that no meaningful distinction
exists between, on the one hand, subjecting a person to a
lawsuit in which claims are litigated in an ongoing
proceeding before a court that may determine or alter
substantive rights when it renders a final judgment, and, on
the other hand, registering a pre-existing judgment, a process
additional cost and harassment of further litigation
which would otherwise be required by way of an action
on the judgment in a district other than that where the
judgment was originally obtained.
S. Rep. No. 1917 (1954) (emphasis added), as reprinted in 1954
U.S.C.C.A.N. 3142, 3142; see also Air Transport Ass’n of Am. v. Prof’l
Air Traffic Controllers Org. (PATCO) (In re Prof’l Air Traffic
Controllers Org. (PATCO)), 699 F.2d 539, 544 (D.C. Cir. 1983)
(“Registration is a rapid procedure that does not require the intervention
of a judge. It is merely a matter of having the clerk of the court in which
the judgment is registered enter the pertinent provisions of the . . . sister
court’s judgment on the judgment docket.” (internal quotation marks and
alterations omitted)); Ohio Hoist Mfg. Co. v. LiRocchi, 490 F.2d 105, 107
(6th Cir. 1974) (“This statute has been held to have been adopted to
protect both judgment creditors and judgment debtors from the additional
cost and harassment of further litigation which otherwise would be
incident to an action on the judgment in a foreign district.”); Stanford,
341 F.2d at 270 (“[T]he purposes of § 1963 were . . . to eliminate the
necessity and expense of a second lawsuit, and to avoid the impediments,
such as diversity of citizenship, which new and distinct federal litigation
might otherwise encounter.”).
FIDELITY NAT’L FIN. V. FRIEDMAN 13
which does not require any party to appear in court and in
which no judicial action is taken. See Shaffer, 433 U.S. at
210 n.36 (holding that, once a judgment is validly rendered
against a debtor, the judgment creditor may sue to satisfy the
debt with property in a state that lacks personal jurisdiction
over the judgment debtor).
Registration of a judgment pursuant to § 1963 can only
occur after a court of competent jurisdiction has rendered the
original judgment (otherwise there would be no judgment to
register). Of course, the court that adjudicated the parties’
claims and issued the original judgment must of course
satisfy due process requirements such as ensuring personal
jurisdiction. Thus, registration will only happen after full due
process has been provided during the original adjudication on
the merits that determined the parties’ substantive rights and
obligations. We see no reason why—based on case law,
policy, or otherwise—why the simple act of subsequently
registering a judgment alters a debtor’s substantive rights
such that a due process right is triggered.5 To the contrary,
registration itself does not change the amount of money or
property owed; it only facilitates collection of a pre-existing
judgment.
5
Moreover, the practical reality is that judgment debtors must have
some sort of presence or property in the state before judgment creditors
can attempt to enforce a judgment, because without a judgment debtor’s
presence or property in the state, there is nothing against which the
judgment can be “enforced.” The district court elided this fact, concluding
that any potential distinction between registration and enforcement was
eliminated by this Court’s determination in Fidelity I that registration of
a judgment has the same effect as creating a new judgment. We see no
basis for such a conclusion. Enforcement involves additional steps
beyond registration, such as moving to execute on a judgment debtor’s
assets, and nothing we said in Fidelity I changed this.
14 FIDELITY NAT’L FIN. V. FRIEDMAN
We therefore hold that once a federal court of competent
jurisdiction has determined the parties’ substantive rights and
entered a judgment following a proceeding that accords with
due process, that federal judgment should be enforceable in
any other federal district by way of the federal judgment
registration statute.
CONCLUSION
For the foregoing reasons, we hold that valid registration
of a federal judgment under § 1963 does not require that the
court of registration have personal jurisdiction over the
judgment debtors. The statute permits a judgment creditor to
register a federal judgment “in any other district.” 28 U.S.C.
§ 1963 (emphasis added). Because the Due Process Clause
does not require that this broad statutory language be cabined
by a jurisdictional limitation, “any . . . district” includes
districts in which personal jurisdiction over judgment debtors
may be lacking. As a result, the Washington Judgment was
not void for lack of jurisdiction, and the district court erred by
vacating the Second Arizona Judgment on that basis.
REVERSED and REMANDED.