Retamco Operating, Inc. v. Paradigm Oil, Inc.

Filed 9/27/07 Retamco Operating, Inc. v. Paradigm Oil, Inc. CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

This appeal arises from the domestication of a Texas judgment in Santa Barbara Superior Court, pursuant to the Sister State Money-Judgments Act. The judgment debtors allege procedural error by the California trial court in entering the judgment and request that we take judicial notice of documents in a federal court action in California. We affirm the judgment of the trial court and deny their request for judicial notice.

FACTS

Texas Judgment

Retamco Operating, Inc. (Retamco) filed a breach of contract and fraud action against Paradigm Oil, Inc., Pacific Operators, Inc. and Pacific Operators of Texas, Inc. (appellants) in the Texas trial court. The lawsuit stemmed from the parties' interests in various oil and gas leases. Appellants failed to cooperate with discovery and "engaged in an egregious and flagrant pattern of discovery abuse." After a hearing on July 3, 2003, the Texas trial court struck appellants' answers, disallowed it from opposing Retamco's claims and granted Retamco's motion for a default judgment. It issued an award in favor of Retamco and against appellants in the amount of $1.6 million with post-judgment interest of 10 percent per annum. The award consisted of $850,000 imposed against each appellant jointly and severally, and $750,000 against appellants severally, but not jointly.

California Judgment

On December 9, 2004, Retamco applied for entry of a sister state judgment in Santa Barbara Superior Court, pursuant to the Sister State Money-Judgments Act (SSMJA). (Code Civ. Proc.,  1710 et seq.)^[1] Counsel for Retamco, Marcus J. Kocmur, filed a declaration alleging that Pacific Operators, Inc. operates platforms off the coast of Santa Barbara. The oil and gas production from the platforms is transported onshore.

Kocmur stated that Pacific Operators, Inc. "has undergone a 'name change' to Pacific Operators Offshore LLC, as the successor to Judgment Debtor Pacific Operators, Inc." He declared that appellants' most significant assets are in California and that various corporate affiliates and principal shareholders are also located in California. The California trial court entered judgment against each appellant in the amount of $1,831,183.10 with post judgment interest of 10 percent per annum.^[2]

Appeal & Remand of Texas Action

Appellants appealed the Texas judgment to the Texas Court of Appeals. On December 15, 2004, it affirmed the ruling as to liability, but vacated and remanded the matter to the Texas trial court for further proceedings on the issue of damages. Appellants moved the California trial court to vacate the California judgment on the ground that there was no final judgment in Texas upon which to base the California judgment.

On February 15, 2005, the California trial court denied appellants' motion to vacate. It stayed enforcement of the California judgment pursuant to section 1710.50, pending further proceedings in the Texas trial court. Appellants filed a petition for review with the Texas Supreme Court, which was denied. The Texas trial court conducted a hearing on the issue of damages, and on November 23, 2005, it entered a new judgment totaling approximately $16.5 million against each appellant.^[3]

Entry of New Judgment in California

Retamco moved the California trial court to vacate the December 9, 2004, California judgment and enter the new Texas judgment. On February 28, 2006, the California trial court granted Retamco's motion and entered a judgment of approximately $16.5 million against each appellant, together with post-judgment interest of 10 percent per annum.

DISCUSSION

The SSMJA governs money judgments rendered in a state outside California. ( 1710.10, subd. (c).) It was created as a summary procedure for registration of enforcement, while affording the judgment debtor an opportunity to present available defenses. (8 Witkin, Cal. Procedure (4th ed. 1997) Enforcement of Judgment,  418.)

Under the SSMJA, a judgment creditor may apply for entry of a sister state judgment in superior court and the clerk will enter a judgment based upon the application. ( 1710.15, subd. (a); 1710.20, subd. (a); 1710.25, subd. (a).) A judgment entered pursuant to section 1710.10 has the same effect as an original money judgment of the court and may be enforced or satisfied in the same way. ( 1710.35.)

The trial court must grant a stay of enforcement of the judgment if an appeal from the sister state judgment is pending or may be taken in the state which originally rendered the judgment. ( 1710.50, subd. (a)(1).) Judgment may not be entered if: 1) a stay of enforcement of the sister state judgment is currently in effect in the sister state; 2) an action based on the sister state judgment is currently pending in a California court; or 3) a judgment based on the sister state judgment has previously been entered in a California proceeding. ( 1710.55.) A trial court is permitted to vacate a judgment on any ground which would be a defense to an action in this state, and enter a new and different judgment. ( 1710.40, subd. (c).)

Request for Judicial Notice

Appellants request that we take judicial notice of selected documents filed in a California federal district court action brought by Retamco against Richard Carone.^[4] Appellants state that these documents establish the existence of a judgment in California federal court against Carone. They argue that, pursuant to the SMMJA, the federal judgment against Carone precludes entry of judgment against appellants in the California trial court.

Retamco originally filed an action against appellants and Richard Carone in Texas. Carone is a resident of Santa Barbara and objected to the assertion of long-arm jurisdiction by the Texas trial court. He was ultimately dismissed from the action. Retamco then brought a diversity action against Carone in the federal district court in California, alleging that Carone was appellants' alter ego. The California federal district court "adopted" the Texas trial court decision awarding Retamco approximately $36.5 million in damages. According to appellants, that decision has been appealed and is pending before the Ninth Circuit. They estimate that oral argument will not be held for at least two years.

For the first time on appeal, appellants raise the argument that Retamco has obtained two California judgments on a single Texas judgment. Their reasoning is as follows: the California federal district court action resulted in a $36.5 million judgment against Carone. It was entered before the judgment in the California trial court which resulted in a $36.5 million judgment against appellants. Thus, they claim, Retamco has effectively obtained two judgments against Carone, for a total of $73 million. They contend that this renders the California trial court judgment "null and void" pursuant to the SSMJA. ( 1710.55, subd. (c).)

Appellants contend that it is mandatory, pursuant to Evidence Code sections 453 and 459 that we take judicial notice of their selected documents in the California federal court action.^[5] We decline their request. The requirements for compulsory notice under section 453 have not been met. Contrary to appellants' argument, section 459 is permissive, not mandatory. "An appellate court may properly decline to take judicial notice under Evidence Code section . . . 459 of a matter which should have been presented to the trial court for its consideration in the first instance." (Brosterhous v. State Bar (1995) 12 Cal.4th 315, 325-326.)

In support of their argument that judicial notice is mandatory, appellants cite two juvenile dependency cases, In re Marina S. (2005) 132 Cal.App.4th 158 and In re Zeth S. (2003) 31 Cal.App.4th 396. Marina S. concerned the admissibility of post-judgment evidence. There, the juvenile court terminated parental rights. The minor's mother argued that the court erred by terminating rights without a home study being completed on the adoptive family. (Marina S., at p. 166.) Three months after termination, the appellate court took judicial notice of a minute order indicating that the home study had been completed and was approved by the juvenile court. The reviewing court cited a general prohibition against judicial notice of post judgment evidence, but made an exception under the circumstances in that case. (Ibid.) We fail to see how this authority advances appellants' position.

Zeth S. provides that "'an appeal reviews the correctness of a judgment as of the time of its rendition, upon a record of matters which were before the trial court for its consideration.' [Citation.] Although appellate courts are authorized to make findings of fact on appeal by Code of Civil Procedure section 909 and rule 23 of the California Rules of Court, the authority should be exercised sparingly. . . . Absent exceptional circumstances, no such findings should be made.' [Citations.]" (In re Zeth S., supra, 31 Cal.4th at p. 405.)

No such circumstances exist here. Appellants' request for judicial notice is an attempt to use the California federal court judgment as a defense to the domestication of the amended Texas trial court judgment. However, the California federal court judgment was imposed against only one of the principals--Carone--while the Texas trial court judgment was imposed against appellants.

Appellants have had ample time to inform the California trial court of the extensive federal litigation. They failed to offer evidence before the first domestication hearing (February 15, 2005); failed to offer evidence during the second domestication hearing (February 28, 2006); and made no effort to bring it to the court's attention through a post-judgment challenge. We deny their request for judicial notice.

The parties agreed at oral argument that the only matter before us was appellants' request for judicial notice. The denial of that request disposes of the appeal.

The judgment is affirmed. Costs on appeal are awarded to respondent.

NOT TO BE PUBLISHED.

COFFEE, J.

We concur:

GILBERT, P.J.

PERREN, J.

Thomas P. Anderle, Judge

Superior Court County of Santa Barbara

Publication courtesy of San Diego pro bono legal advice.

Analysis and review provided by Poway Property line attorney.

______________________________

David E. R. Woolley for Defendants and Appellants.

Archbald & Spray, Kenneth L. Moes, Marcus J. Kocmur; Drought, Drought & Bobbit, James L. Drought (pro hac vice), Calhoun Bobbitt (pro hac vice) for Plaintiff and Respondent.

^[1]All further statutory references are to the Code of Civil Procedure unless otherwise stated.

^[2]The California judgment of $1,831,183.10 represented the imposition of $850,000 against appellants jointly and severally; $750,000 severally but not jointly; accrued interest of $230,882.18; and a filing fee in Santa Barbara Superior Court of $301.00.

^[3]The Texas trial court imposed a judgment against appellants representing actual costs of $5,656,409, jointly and severally; and attorneys fees of $767,912 jointly and severally; for a total of $6,424,321. It also imposed exemplary damages of $10 million against each appellant, for a total of $30 million. (There were other provisions as to future fees on appeal and costs.) Retamco refers to the amount of the judgment as "approximately $16.5 million." Appellants argue that the judgment is more accurately characterized as $36.5 million, the total of three separate $10 million judgments plus $6,424,321 imposed jointly and severally.

^[4]We recite the facts alleged in these documents only to provide a context for appellants' argument; we do not grant their request for judicial notice. The documents consist of a second amended complaint, an order for partial summary judgment on the issue of damages; a final judgment on the order; an amended order granting summary judgment; and a print-out of the docket from the federal court's website. In a declaration attached to the request for judicial notice, appellant's counsel states that the documents "have been downloaded by me from the federal PACER docketing record, from the official record of [Retamco Operating, Inc. v. Richard Carone] case [No.] CV 04-2997 CBM. They have been used by me and filed in the Ninth Circuit as part of the record on appeal, and I believe and represent them to be true, complete and authentic records of the District Court."

^[5]Evidence Code section 453 provides, "The trial court shall take judicial notice of any matter specified in Section 452 if a party requests it and: [] (a) Gives each adverse party sufficient notice of the request, through the pleadings or otherwise, to enable such adverse party to prepare to meet the request; and [] (b) Furnishes the court with sufficient information to enable it to take judicial notice of the matter."

Under Evidence Code section 459, subdivision (a)(2), "[t]he reviewing court may take judicial notice of a matter in a tenor different from that noticed by the trial court." (Italics added.)