Hyundai Securities Co. v. Ik Chi Lee

The Act, which is based on the Uniform Foreign-Country Money Judgments Recognition Act (U. Laws Ann., supra, at p. 23; § 1713), applies to foreign-country judgments that grant or deny recovery of a sum of money and that are final, conclusive, and enforceable under the law of the foreign country. (§§ 1715, subd. (a), 1724.) The Act allocates the burden of proof for establishing whether a foreign-country money judgment is within the scope of the Act and whether there is any ground for not recognizing the existence of the judgment. (§§ 1715, subd. (c), 1716, subd. (d).) The party seeking recognition of a foreign-country money judgment has the burden to establish entitlement to recognition under the Act, while the party resisting recognition has the burden of establishing a specified ground for nonrecognition. (§§ 1715, subd. (c), 1716, subd. (d).) The Act specifies that if the trial court finds that a foreign-country money judgment is entitled to recognition in California then, to the extent the judgment grants or denies recovery of a sum of money, it is conclusive between the parties to the same extent as the judgment of a sister state entitled to full faith and credit in this state would be conclusive, and the foreign-country money judgment is enforceable in the same manner and to the same extent as a judgment rendered in this state. (§ 1719.)

The Act provides for various defenses if the foreign-country money judgment is final, conclusive, and enforceable where rendered. Thus, under section 1716, subdivision (c), “A court of this state is not required to recognize a foreign-country judgment if any of the following apply: [¶]... [¶] (3) The judgment or the cause of action or claim for relief on which the judgment is based is repugnant to the public policy of this state or of the United States.” The Act “does not apply to a foreign-country judgment, even if the judgment grants or denies recovery of a sum of money, to the extent that the judgment is . . . [¶] . . . [j[] (2) A fine or other penalty.” (§ 1715, subd. (b).) Unless one of the specified defenses applies, a court of this state “shall recognize a foreign-country judgment to which [the Act] applies.” (§ 1716, subd. (a).)

C. Rules of Interpretation

“Our fundamental task in interpreting a statute is to determine the Legislature’s intent so as to effectuate the law’s purpose. We first examine the statutory language, giving it a plain and commonsense meaning. We do not examine that language in isolation, but in the context of the statutory framework as a whole in order to determine its scope and purpose and to harmonize the various parts of the enactment. If the language is clear, courts must generally follow its plain meaning unless a literal interpretation would result in absurd consequences the Legislature did not intend. If the statutory

D. Fine or Other Penalty

As noted, the Act does not apply to a foreign-country judgment to the extent it is a “fine or other penalty.” (§ 1715, subd. (b)(2).) In a criminal action, Hyundai was ordered to pay a fine to a Korean government agency. In the derivative action in the Korean court, Hyundai sought to recover and did recover from Lee the amount of that fine. Lee argues that this portion of the judgment is a fine. He notes that section 1715, subdivision (b)(1) says a foreign-country judgment cannot be recognized to the extent it is “[a] judgment for taxes” but does not require for nonrecognition an actual judgment for a “fine or penalty” (id., subd. (b)(2)). Lee also argues that a judgment awarding damages based on a fine or penalty violates the public policy against enforcing another country’s penal laws, which policy is incorporated in the Act. (See Java Oil Ltd. v. Sullivan (2008) 168 Cal.App.4th 1178 , 1187 [ 86 Cal.Rptr.3d 177 ]; Huntington v. Attrill (1892) 146 U.S. 657 , 670, 673-674 [ 36 L.Ed. 1123 , 13 S.Ct. 224 ]; Rest.3d Foreign Relations Law of the U.S., § 483.) Lee says that the “ ‘essential character and effect’ ” (Java Oil Ltd. v. Sullivan, supra, 168 Cal.App.4th at p. 1187) of the KRW7 billion judgment are penal. According to Lee, that he had to reimburse Hyundai for this amount, which is based on a fine, does not make it any less a fine. Lee also asserts that the Korean court ordered him to indemnify Hyundai for the fine it paid because he engaged in a public wrong and was responsible for the fine in the first place.

Hyundai argues that the judgment is not for a fine, but rather is to indemnify Hyundai for damages it suffered for having had to pay the fine. Hyundai further asserts that the judgment is compensatory in nature and not punitive, and that Lee was ordered to pay money to Hyundai and not to any agency of the government of Korea.

The language of the Act does not support Lee’s position. The Korean Judgment was a damage award to compensate Hyundai for the damages it suffered from having to pay a fine. That judgment was not to any extent a “fine or other penalty.” There is nothing in the legislative history of the Act that suggests otherwise. (See Stats. 2007, ch. 42, p. 154 [enacting Sen. Bill No. 639 (2007-2008 Reg. Sess.)]; Sen. Com. on Judiciary, Analysis of Sen. Bill No. 639 (2007-2008 Reg. Sess.) May 8, 2007.)

As noted, the Act is based on the Uniform Foreign-Country Money Judgments Recognition Act. (U. Laws Ann., supra, at p. 23; see Assem. Com.

In Java Oil Ltd. v. Sullivan, supra, 168 Cal.App.4th at page 1187, the court quoted from the Restatement Third of the Foreign Relations Law of the United States, section 483, comment b, pages 611 to 612 as follows: “ ‘A penal judgment, for purposes of this section, is a judgment in favor of a foreign state or one of its subdivisions, and primarily punitive rather than compensatory in character. A judgment for a fine or penalty is within the section ....’” (See Huntington v. Attrill, supra, 146 U.S. at p. 673 [“The question whether a statute of one State, which in some aspects may be called penal, is a penal law in the international sense, so that it cannot be enforced in the courts of another State, depends upon the question whether its purpose is to punish an offence against the public justice of the State, or to afford a private remedy to a person injured by the wrongful act.”]; 2 Beale, A Treatise on the Conflict of Laws (1935) § 421.1, p. 1339 [“Since no recovery is allowable on a penal claim, . . . damages which are purely penal will not be given on a foreign cause of action.” (italics added).]) The court, in interpreting former section 1713.1, which as its successor, section 1715, excluded from enforceability a “judgment for taxes, a fine or other penalty,” suggested that factors in determining whether the judgment is for a fine or penalty include whether the judgment is for punishment rather than compensation; the judgment is payable to the state as opposed to a private party; the judgment arose from the penal laws of the country rather than a civil action; the damages were designed to make the defendant an example or punish the defendant; and a mandatory fine, sanction or multiplier was imposed on the defendant. (Java Oil Ltd. v. Sullivan, supra, 168 Cal.App.4th at pp. 1186-1189.) All of these factors militate against the conclusion that the Korean Judgment here included an unenforceable fine or penalty.

Lee’s argument attempting to distinguish a tax judgment and penalty or fine is unavailing. Section 1715, subdivision (b) provides that the Act does not apply “to the extent that the judgment is . . . [][] (1) A judgment for taxes [][] (2) A fine or other penalty.” Nothing in the Act suggests that judgments for penalties are treated differently than judgments for taxes.

Just because the Korean Judgment awards damages to indemnify Hyundai for a penalty it paid, does not mean that the compensatory damages

F. Postjudgment Interest on California Judgment

Lee contends that the trial court erred in imposing a 20 percent postjudgment interest rate on the California judgment. Lee notes that section 1719, subdivision (b), part of the Act, provides that a foreign-country money judgment that is recognized is “[enforceable in the same manner and to the same extent as a judgment rendered in this state.” (See Manco, supra, 45 Cal.4th at p. 207.) Hyundai argued that the Korean Judgment includes 20 percent postjudgment interest and that judgment should be enforceable in full as entered by the Korean court, even after recognition by the California court. At oral argument, Hyundai conceded that once a California judgment is entered recognizing the Korean Judgment, California’s postjudgment interest rate of 10 percent should apply to that California judgment. As noted, section 1719 provides that the recognition of a foreign-country money judgment is conclusive between the parties to the same extent as a judgment of a sister state judgment is entitled to full faith and credit. Section 1710.25 provides that upon entry of a sister state money judgment, interest shall accrue on the judgment so entered “at the rate of interest applicable to a judgment entered in this state.” (Id., subd. (b).) Thus, a foreign-country money judgment entered in this state bears postjudgment interest at the California rate of 10 percent from the date of the judgment recognizing the foreign judgment.

In Society of Lloyd’s v. Reinhart (10th Cir. 2005) 402 F.3d 982 , 1003-1005, the court held that an English judgment recognized under New Mexico’s Uniform Foreign Money-Judgments Recognition Act by a United States District Court became a federal judgment to which the postjudgment interest rate specified in 28 United States Code section 1961 applied. According to the court, the federal provision should be applied uniformly. Once a claim is reduced to a judgment, the original claim is extinguished and merged into the new judgment. (Society of Lloyd’s v. Reinhart, supra, 402 F.3d at p. 1004.) “The U.S. post-judgment rate should apply as of the date of the entry of the judgment in the U.S. district court.” (Id. at p. 1005.) This reasoning supports our view of California law.

Postjudgment interest on the California judgment is not part of the recognition of the Korean Judgment. The Korean Judgment is enforceable “in the same manner and to the same extent as a judgment rendered in this state.” (§ 1719, subd. (b).) Postjudgment interest on a California judgment is 10 percent and should apply in this case to the California judgment recognizing the Korean Judgment.