Second District, Division 8 Finds Globalist Distinguishable in Priority Battle.
In Globalist Internet Technologies v. Reda, 167 Cal.App.4th 1267 (2008), the Court of Appeal found that Code of Civil Procedure section 685.040 allowed attorney’s fees recovery to a judgment creditor in efforts pursuing collection of the judgment against judgment debtor. The next case involved a clash between judgment creditors, with the lower court refusing to award $72,807.79 in postjudgment costs (consisting mainly of $61,853.50 in fees) against the judgment debtor for judgment creditor’s successful litigation of the priority issue against another judgment creditor when it was clear that the judgment debtor had insufficient assets to satisfy both judgments. Winning judgment creditor appealed the denial of fees, arguing that Globalist should be extended to encompass priority disputes with respect to assessing section 685.040 fees against judgment debtor.
Acting Presiding Justice Rubin, writing for a 3-0 panel of the Second District, Division 8, found that the lower court properly refused to extend Globalist to a priority battle between two judgment creditors. “Section 685.040 ensures that a recalcitrant judgment debtor does not reduce a creditor’s judgment to a hollow victory by forcing the creditor to eat up a judgment’s value with attorney fees trying to enforce the judgment. Extending section 685.040 to permit recovery of fees from the debtor for acts by third parties over whom the debtor has no control will not advance that purpose. Indeed, [winning judgment creditor’s] proposal risks imposing open-ended liability on judgment debtors such as respondents for events, such as [losing judgment creditor’s] intervention against [winning judgment creditor], beyond a judgment debtor’s control.”
The decision is Slates v. Gorabi, Case No. B217067 (2d Dist., Div. 8 Nov. 5, 2010) (certified for publication).