Judge Michael P. Linfield, Case 21STCP00038 2022-08-30 Tentative Ruling

Judge: Michael P. Linfield, Case: 21STCP00038, Date: 2022-08-30 Tentative Ruling

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Case Number: 21STCP00038 Hearing Date: August 30, 2022 Dept: 34

SUBJECT: Motion for Order Recognizing Foreign Judgment Pursuant to CCP § 1718(a) and Entering Judgment

Moving Party: Ningbo Brother Apparel Co., Ltd.

Resp. Party: Star Ace Asia, Ltd.

Plaintiff’s motion is GRANTED.

BACKGROUND:

Plaintiff Ningbo Brother Apparel Co., Ltd. (“Ningbo”) commenced this action on January 8, 2021. Ningbo has amended its Complaint twice, and the Second Amended Complaint (“SAC”) was filed June 29, 2021. Ningbo filed its motion for an order recognizing and entering a foreign-country judgment on August 3, 2022.

Defendant Star Ace Asia, Ltd. (“Star”) has not responded or otherwise participated in this matter. Ningbo filed its Request for Entry of Default Ningbo on July 1, 2022, and the Clerk entered default against Star that same day.

Ningbo’s request for relief in its SAC is that the Court: (1) recognize Ningbo’s foreign-country judgment against Star; (2) determine that the judgment is enforceable in the same manner and to the same extent as a judgment rendered in the State of California; (3) determine that the judgment is conclusive between Ningbo and Star to the same extent as a sister-state judgment; and (4) award Ningbo the costs of this lawsuit. Ningbo’s request for relief in its motion is that the Court enter the proposed judgment adopting the terms of the foreign-county judgment.

ANALYSIS:

I. Whether the Action is Procedurally Correct.

a. Legal Standard

“If recognition of a foreign-country judgment is sought as an original matter, the issue of recognition shall be raised by filing an action seeking recognition of the foreign-country judgment.” (CCP § 1718(a).) “Except as otherwise provided in subdivision (b), this chapter applies to a foreign-country judgment to the extent that the judgment both: (1) Grants or denies recovery of a sum of money[;] and (2) Under the law of the foreign country where rendered, is final, conclusive, and enforceable.” (CCP § 1715(a).) “This chapter 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 any of the following: (1) A judgment for taxes[;] (2) A fine or other penalty[;or] (3) [domestic relations matters].” (CCP § 1715(b).)

b. Discussion

The action is procedurally correct. Ningbo filed the issue of recognition by filing an action seeking recognition of the foreign-country judgment. Moreover, the foreign-country judgment relates to a sum of money from a contract claim (as opposed to a tax judgment, fine, or other penalty) and is final, conclusive, and enforceable in the issuing country.

II. Whether the Court Should Recognize the Foreign-Country Judgment.

a. Legal Standard

“Except as otherwise provided in subdivisions (b), (c), (d), and (f), a court of this state shall recognize a foreign-country judgment to which this chapter applies.” (CCP § 1716(a).)

Certain exceptions are absolute while others are not. Among the absolute restrictions are that “[a] court of this state shall not recognize a foreign-country judgment if any of the following apply:

(1) The judgment was rendered under a judicial system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law.

(2) The foreign court did not have personal jurisdiction over the defendant.

(3) The foreign court did not have jurisdiction over the subject matter.” (CCP § 1716(b)(1–3).)

In contrast, the other exceptions that would otherwise be grounds for nonrecognition may be overcome “if the party seeking recognition of the judgment demonstrates good reason to recognize the judgment that outweighs the ground for nonrecognition.” (CCP § 1716(c)(2).) These grounds for nonrecognition include:

(A) The defendant in the proceeding in the foreign court did not receive notice of the proceeding in sufficient time to enable the defendant to defend.

(B) The judgment was obtained by fraud that deprived the losing party of an adequate opportunity to present its case.

(C) The judgment of the cause of action or claim for relief upon which the judgment is based is repugnant to the public policy of this state or the United States.

(D) The proceeding in the foreign court was contrary to an agreement between the parties under which the dispute in question was to be determined otherwise than by proceedings in that foreign court.

(E) In the case of jurisdiction based only on personal service, the foreign court was a seriously inconvenient forum for the trial of the action.

(F) The judgment was rendered in circumstances that raise substantial doubt about the integrity of the rendering court with respect to the judgment.

(G) The specific proceeding in the foreign court leading to the judgment was not compatible with the requirements of due process of law.

(CCP §1716(c)(1)(A–G).)

“A party seeking recognition of a foreign-country judgment has the burden of establishing that the foreign-country judgment is entitled to recognition under this chapter.” (CCP § 1715(c).) “If the party seeking recognition of a foreign-country judgment has met its burden of establishing recognition of the foreign-country judgment pursuant to subdivision (c) of Section 1715, a party resisting recognition of a foreign-country judgment has the burden of establishing that a ground for nonrecognition stated in subdivision (b), (c), or (d) exists.” (CCP § 1716(e).)

b. Discussion

For the following reasons, Ningbo meets its burden of establishing that the foreign-country judgment is entitled to recognition.

First, this Court does not have evidence that the tribunal in which the foreign-country judgment was entered (the Ningbo Municipal Intermediate People’s Court in Zhejiang Province, China) does not provide impartial tribunals or procedures compatible with the requirements of due process of law. (SAC, Ex. A., p. 1.) Rather, the reasoning in the decision appears on its face to have been done in a manner that does respect due process. The trier of fact appears to have: (1) taken testimony from Ningbo (the plaintiff in the original case), Shanghai Yexin Trading Co., Ld. (“Yexin,” who was one of the defendants in the original case), and Shang Ying Global Co., Ltd. (“Shang Ying,” who was one of the other defendants in the original case (Id., p. 2–4); (2) admitted evidence submitted by both Ningbo (trade documents, communications, an audit report of Shang Ying, and documents demonstrating a shared address between Star and Yexin) and Shang Ying (audit reports and payment vouchers) (Id., 2–3); (3) considered evidentiary issues related to the admitted evidence, such as issues with authenticity (Id.); and (4) conducted itself according to the governing Civil Procedure Law of the People’s Republic of China, including Article 64, which provides rules of evidence. (Id., p. 6.)

Second, this Court does not have evidence that the foreign court did not have personal jurisdiction over the defendant. Indeed, there may be multiple methods through which the foreign court had personal jurisdiction. To start, Star is a Hong Kong company that, according to the SAC and the foreign-country judgment, engaged in a long-term business with Ningbo, a mainland Chinese company, regarding Ningbo’s apparel manufacturing in China. (SAC, ¶¶ 1–2, 7–9; SAC, Ex. A., p. 1.) The foreign court expressly stated that “[u]pon trial, the Court ascertained the facts as follows: there exists a contractual relationship on international sale of goods between [Ningbo] and [Star].” (SAC, Ex. A., p. 4.) Such regular contacts may have exposed it to significant contacts in China that would have given China personal jurisdiction over Star. Furthermore, the foreign court appears to have stated that it had jurisdiction, noting that “[i]n terms of the application of law, the Court, following the principle of the closest connection, has the case governed by the laws of the Chinese mainland.” (Id.) Indeed, personal jurisdiction appears to have been invoked, given that the foreign court noted “[Star] refuses to appear in court without any due cause after being served with legal summons by the Court, so the Court judges it absent according to law.” (Id., p. 5, emphasis added.) Finally, Star may actually be a shell corporation for another mainland Chinese company, which would lessen this Court’s concern about personal jurisdiction. Specifically, upon trial, the foreign court found that “Shang Ying Company holds 100% equity of Oneworld Star International Holdings Limited. . . , which holds 100% equity of STAR ACE Company.” (Id., p. 4.)

(This last fact is of particular importance because Star did not appear at the trial in the foreign court, which might normally give this Court pause. However, given that the foreign court found after trial that the actual owner and controller of Star was Shang Ying, and that Shang Ying appeared at trial and argued against Ningbo, this Court’s concerns are mollified as to whether the letter and spirit of the Uniform Foreign-Country Money Judgments Recognition Act would be upheld were the Court to recognize the foreign-country judgment in this matter. (CCP §§ 1713 et seq.))

Third, there is no evidence that the foreign court did not have jurisdiction over the subject matter. While there is not much evidence on this issue, it all indicates that this would be the appropriate court. First, the name of the court (the Ningbo Municipal Intermediate People’s Court in Zhejiang Province, China) makes it appear that it is the appropriate country, region, and type of court to handle this specific claim. Second, the foreign court cited the Contract Law of the People’s Republic of China, which relates to contracts such as the contract between Ningbo and Star. (Id., p. 6.) Thus, the evidence before this Court tends to support the conclusion that the Ningbo Municipal Intermediate People’s Court in Zhejiang Province, China would have subject matter jurisdiction.

Since Ningbo has met its burden, the burden of establishing that a ground for nonrecognition exists shifts to Star. (CCP § 1716(e).) Star has failed to appear or provide any response. Upon its own assessment of the evidence before the Court, the Court does not find any reason to believe that any of the grounds listed in CCP § 1716(c)(1)(A–G) are at issue here. Thus, Star fails to meet its burden.

III. Conclusion

Ningbo’s motion is GRANTED. The foreign-country judgment is RECOGNIZED, and the judgment shall be entered for Ningbo Brother Apparel Co., Ltd. in the amount of $6,494,000.98 against Star Ace Asia, Ltd. Ningbo shall submit an affidavit for attorney fees. Moving party shall provide notice.