Blizzard Energy, Inc. v. Schaefers

Filed 1/13/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
BLIZZARD ENERGY, INC., 2d Civil No. B290492
(Super. Ct. No. 17CVP-0266)
Plaintiff and Respondent. (San Luis Obispo County)
v.
BERND SCHAEFERS,
Defendant and Appellant,
Bernd Schaefers appeals an order denying his motion to:
(1) vacate entry of a $3.825 million Kansas judgment, and (2) post
a $5,737,500 undertaking to stay enforcement of the sister-state
judgment (Code Civ. Proc., § 1710.50, subd. (c)(1)). 1 We affirm.
Facts and Procedural History
In 2017, a Kansas jury awarded Blizzard Energy, Inc.
(Blizzard), a Kansas corporation, $3.825 million damages in a
fraud action against appellant. He appealed the judgment to the
Kansas Court of Appeals but did not request a stay of
All statutory references are to the Code of Civil Procedure
1
unless otherwise stated.
enforcement or post a supersedeas bond as required by Kansas
law. (K.S.A. § 60-2103(d).)
After Blizzard registered the judgment in California
pursuant to the Sister State Money Judgment Act (SSMJA;
§ 1710.10 et seq.), appellant filed a motion to vacate entry of the
judgment and an ex parte application to stay enforcement of the
judgment. (§ 1710.50.) The San Luis Obispo County Superior
Court denied the motion to vacate entry of the judgment but
stayed enforcement of the judgment pending resolution of the
Kansas appeal, subject to the condition that appellant post a
$5,737,500 undertaking by April 6, 2018. (See § 1710.50, subds.
(a)(1) & (c)(1).)
Appellant failed to post the undertaking and appealed the
SSMJA orders. On April 19, 2019, the Court of Appeals of the
State of Kansas affirmed the $3.825 million judgment. (Blizzard
Energy, Inc. v. Alexandrov et al., Case No. 118,656.)
Res Judicata
We review the SSMJA order for abuse of discretion.
(Conseco Marketing, LLC v. IFA & Ins. Services, Inc. (2013) 221
Cal. App. 4th 831, 841; Tsakos Shipping & Trading, S.A. v.
Juniper Garden Town Homes, Ltd. (1993) 12 Cal. App. 4th 74, 88-
89.) Here, the Kansas Court of Appeals decision moots the
appeal based on res judicata principles. Appellant argues that he
is innocent of fraud but a Kansas jury found that appellant
fraudulently induced Blizzard to build and operate a pyrolysis
plant in Kansas to convert millions of used car tires into fuel.
The Kansas Court of Appeals affirmed the judgment, holding that
the verdict was supported by substantial evidence. We have
taken judicial notice of the opinion and the December 19, 2019
2
Kansas Supreme Court order denying petition for review. (Evid.
Code, §§ 452, subds. (a) & (d); 459, subd. (a).)
Appellant contends that the Kansas judgment “could not
take place by definition in California” because California has a
different standard for fraud and requires a malicious act. The
argument fails based on res judicata. “Courts often speak of
applying full faith and credit to a sister state’s judgment in order
to implement res judicata principles. [Citation.] ‘With respect to
judgments, “the full faith and credit obligation is exacting.”
[Citation.] . . . A State may not disregard the judgment of a sister
State because it disagrees with the reasoning underlying the
judgment or deems it to be wrong on the merits.’ [Citation.]”
(Hawkins v. SunTrust Bank (2016) 246 Cal. App. 4th 1387, 1393–
1394.) A California court, in ruling on a motion to vacate entry of
a sister state judgment, may not retry the case. (Washoe
Development Co. v. Guaranty Federal Bank (1996) 47 Cal. App. 4th
1518, 1523.) The court, “‘must, regardless of policy objections,
recognize the judgment of another state as res judicata, and this
is so even though the action or proceeding which resulted in the
judgment could not have been brought under the law or policy of
California.’ [Citation.]” (Silbrico Corp. v. Raanan (1985) 170
Cal. App. 3d 202, 207 (Silbrico).)
Pursuant to the SSMJA, the grounds for vacating notice of
entry of a sister state judgment are limited to “any ground which
would be a defense to an action in this state on the sister state
judgment . . . .” (§ 1710.40, subd. (a).) The statute does not
identify the available defenses, but the Law Revision’s comment
to section 1710.40 states that “[c]ommon defenses to enforcement
of a sister state judgment include the following: the judgment is
not final and unconditional . . . ; the judgment was obtained by
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extrinsic fraud; the judgment was rendered in excess of
jurisdiction; the judgment is not enforceable in the state of
rendition; the plaintiff is guilty of misconduct; the judgment has
already been paid; [and] suit on the judgment is barred by the
statute of limitations in the state where enforcement is sought.”
(Cal. Law Revision Com. com., West’s Ann. Cal. Code Civ. Proc.
(2007 ed.) foll. § 1710.40, p. 385; see Ahart, Cal. Practice Guide:
Enforcing Judgments and Debts (The Rutter Group 2018)
¶ 6:1831a, pp. 6J-11 to 6J-12 [listing “common defenses”];
Silbrico, supra, 170 Cal.App.3d at p. 207 [same].)
Appellant argues that Blizzard engaged in misconduct and
tricked the Santa Barbara County Superior Court into dismissing
his 2015 California action for breach of contract, conversion, and
accounting. The record reflects that the action was dismissed on
forum non conveniens grounds and because Blizzard was an
indispensable party. California lacked personal jurisdiction over
Blizzard, and Blizzard was already prosecuting the fraud action
in Kansas. Appellant did not appeal the dismissal. Instead, he
filed a counter claim for damages in the Kansas action. After the
Kansas state court granted Blizzard’s summary judgment motion
on part of the counter claim, a Kansas jury awarded Blizzard
$3.825 million fraud damages and returned a verdict in favor of
Blizzard on appellant’s claim for breach of a joint venture
agreement and unjust enrichment. Based on the doctrines of res
judicata and issue preclusion, appellant is precluded from
arguing that Blizzard was guilty of misconduct or that the Santa
Barbara Superior Court was misled when it dismissed the 2015
action for breach of oral agreement, conversion, and accounting.
(See DKN Holdings LLC v. Faerber (2015) 61 Cal. 4th 813, 823-
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824 [discussing concepts of res judicata and issue and claim
preclusion].)
Undertaking
Equally without merit is the argument that the trial court
erred in ordering appellant to post a $5,737,500 undertaking to
stay enforcement of the judgment. Section 1710.50, subdivision
(c) provides: “The court shall grant a stay of enforcement under
this section on such terms and conditions as are just including
but not limited to the following: [¶] (1) The court may require an
undertaking in an amount it determines to be just, but the
amount of the undertaking shall not exceed double the amount of
the judgment creditor’s claim.”
Here the superior court ordered appellant to post an
undertaking for 150 percent of the judgment, not quite the
maximum security amount. It found that appellant “had a full
opportunity to litigate his claims before a jury, and the Court
agrees that an undertaking should be required as a condition of
the stay of execution of the Kansas judgment. If this were a
California judgment, [appellant] would be required to post an
undertaking of at least one and one-half times the judgment in
order to stay execution pending appeal, and no bond or
undertaking has been posted in the Kansas appeal to protect
[Blizzard]. . . . [T]he Court finds it reasonable to believe that
with a judgment of this amount, particularly in the case of a
verdict for fraud, that there is at least some likelihood that
[appellant] will attempt to conceal or transfer assets. [Appellant]
argues it will take at least seven months before a ruling on the
Kansas appeal, and it is just that [Blizzard] receive protection
pending that appeal.”
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The superior court has broad discretion in fashioning the
terms and conditions of a SSMJA stay order. (Ahart, Cal.
Practice Guide: Enforcing Judgments and Debts, supra,
¶¶ 6:1839, 6:1840, pp. 6J-14 to 6J-15.) Appellant makes no
showing that the order to post an undertaking was an abuse of
discretion. (§ 1710.50, subd. (c)(1).)
Disposition
The judgment (order denying motion to vacate notice of
entry of sister state judgment and order to post a $5,737,500
undertaking to stay enforcement of the Kansas judgment) is
affirmed. Blizzard is awarded costs on appeal.
CERTIFIED FOR PUBLICATION.
YEGAN, J.
We concur:
GILBERT, P. J.
TANGEMAN, J.
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Linda D. Hurst, Judge
Superior Court County of San Luis Obispo
______________________________
Bernd Schaefers, in pro. per., for Defendant and Appellant.
Rogers, Sheffield & Campbell and John H. Haan, Jr., for
Plaintiff and Respondent.