An Out-Of-State Judgment May Not Be Enforceable In California If Obtained In Violation Of Due Process Rights
A judgment entered in another state may not be enforceable in California if the judgment debtor (the person who owes money pursuant to a judgment) was denied due process in the out-of-state case. In State of Arizona v. Yuen, the California Court of Appeal affirmed a trial court decision vacating a judgment entered in California pursuant to California’s Sister State Money-Judgments Act. Under this Act, a judgment from another state may be entered in California by filing it with the court clerk and then serving the papers on the judgment debtor. However, once the judgment is entered under this process, a California court may vacate the judgment if the judgment debtor did not receive due process in the out-of state case.
In the Yuen case, Ms. Yuen, a California resident, signed some papers to help her husband’s friend establish a corporation in Arizona. About a year later, the friend told Ms. Yuen that there were some problems with the corporation and that Ms. Yuen needed to participate in a conference call. Ms. Yuen never received any papers indicating that she was a party to any litigation. The conference call turned out to be a deposition in which Ms. Yuen was represented by the company’s attorney. However, the company’s attorney was simultaneously representing the friend of Ms. Yuen’s husband. The “friend” was not so friendly — he was blaming everything on Ms. Yuen.
The California Court of Appeal held that the trial court’s order vacating the judgment was correct because Ms. Yuen was not afforded due process in the Arizona case. First, Ms. Yuen was denied due process because she never received notice that she was a party to the Arizona case. Second, Ms. Yuen was deprived of due process because, unknown to her, she was being represented by an attorney with a conflict of interest. Under California law, an attorney’s failure to disclose a conflict of interest results in the denial of the right to a fair trial.
If there are grounds to vacate the judgment, the judgment debtor must act quickly. Under the Sister State Money-Judgments Act, the motion to vacate the judgment must be filed within 30 days.