Judge Ronald F. Frank, Case Number: 23TRCP00298, Date: 2023-11-17 Tentative Ruling

Judge: Ronald F. Frank, Case: 23TRCP00298, Date: 2023-11-17 Tentative Ruling

Case Number: 23TRCP00298 Hearing Date: November 17, 2023 Dept: 8

Tentative Ruling¿

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HEARING DATE: November 17, 2023¿¿

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CASE NUMBER: 23TRCP00298

CASE NAME: Stone & Paper Investors, LLC v. Richard Blanch, et al.

MOVING PARTY: Defendants, Richard Blanch, Vivianna Blanch, and Red Bridge & Stone, LLC

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RESPONDING PARTY: Plaintiff, Stone & Paper Investors, LLC

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TRIAL DATE: Not Set.

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MOTION:¿ (1) Defendant’s Motion to Set Aside Sister State Judgment

Tentative Rulings: (1) DENY motion to vacate, without prejudice to being renewed upon the finality of the appeal in Delaware, STAY the California litigation, and require Defendants file an undertaking of $988,510.

I. BACKGROUND¿¿

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A. Factual¿¿

On July 20, 2023, Plaintiff, Stone & Paper Investors, LLC (“Plaintiff”) filed an Application for Entry of Judgment. No opposition was filed. This Court GRANTED this motion on July 17, 2023.

Defendants, Richard Blanch, Vivianna Blanch, and Red Bridge & Stone, LLC now file a Motion to Set Aside Sister State Judgment, or, in the alternative, to Stay Execution Pending Appeal in Delaware.

B. Procedural

On October 4, 2023, Defendants filed this motion to set aside. On November 2, 2023, Plaintiff filed an opposition. On November 13, 2023, Defendants filed a reply brief.

II. REQUEST FOR JUDICIAL NOTICE

Filed concurrently with their motion, Defendants also requested this Court take Judicial Notice of the following documents:

1. Exhibit 1: Order and Final Judgment filed on July 7, 2023 in Stone & Paper Investors, LLC v. Richard Blanch, et al. and Related Counterclaims; Court of Chancery of the State of Delaware, Case No. C.A. No. 2018-0394-PAF.

2. Exhibit 2: Judgment Based on Sister-State Judgment dated August 1, 2023 in Stone & Paper Investors, LLC v. Richard Blanch, et al.; Los Angeles Superior Court Case No. 23TRCP00298.

3. Exhibit 3: Notice of Appeal filed on July 25, 2023 in Richard Blanch, et al. v. Stone & Paper Investors, LLC, et al.; Supreme Court of the State of Delaware Case No. 262,2023.

This Court GRANTS Defendants’ motion and takes judicial notice of the above.

III. ANALYSIS¿

A. Legal Standard

Pursuant to Code of Civil procedure § 1710.10, a “Sister state judgment” means that party of any judgment, decree, or order of a court of a state of the United States, other than California, which requires the payment of money, but does not include a support order as defined in Section 155 of the Family Code.

The application for a sister state judgment shall be executed under oath and shall include all of the following: (1) a statement that an action in this state on the sister state judgment is not barred by the applicable statute of limitations; (2) a statement, based on the applicant’s information and belief, that no stay of enforcement of the sister state judgment is currently in effect in the sister state; (3) a statement of the amount remaining unpaid under the sister state judgment and, if accrued interest on the sister state judgment is to be included in the California judgment, a statement of the amount of interest accrued on the sister state judgment (computed at the rate of interest applicable to the judgment under the law of the sister state, and a citation to the law of the sister state establishing the rate of interest; (4) a statement that no action based on the sister state judgment is currently pending in any court in this state and that no judgment based on the sister state judgment has previously been entered in any proceeding in this state; (5) where the judgment debtor is an individual, a statement setting forth the name and last known residence address of the judgment debtor. Where the judgment debtor is a corporation, a statement of the corporation's name, place of incorporation, and whether the corporation, if foreign, has qualified to do business in this state under the provisions of Chapter 21 (commencing with Section 2100) of Division 1 of Title 1 of the Corporations Code. Where the judgment debtor is a partnership, a statement of the name of the partnership, whether it is a foreign partnership, and, if it is a foreign partnership, whether it has filed a statement pursuant to Section 15800 of the Corporations Code designating an agent for service of process. Except for facts which are matters of public record in this state, the statements required by this paragraph may be made on the basis of the judgment creditor's information and belief; and (6) a statement setting forth the name and address of the judgment creditor.

However, Code of Civil Procedure section 1710.40 provides, in pertinent part:

“(a) A judgment entered pursuant to this chapter may be vacated on any ground which would be a defense to an action in this state on the sister state judgment, including the ground that the amount of interest accrued on the sister state judgment and included in the judgment entered pursuant to this chapter is incorrect.

(b) Not later than 30 days after service of notice of entry of judgment pursuant to¿Section 1710.30, proof of which has been made in the manner provided by Article 5 (commencing with¿Section 417.10) of Chapter 4 of Title 5 of Part 2, the judgment debtor, on written notice to the judgment creditor, may make a motion to vacate the judgment under this section.”

B. Discussion

Defendants here argue that the California judgment should be vacated because it does not reflect the Delaware judgment. Specifically, the amount awarded for Plaintiff against the moving Defendants in Delaware was $988,510; whereas, the California Judgment awards Plaintiff a total of $5,817,471.30 against all defendants. Defendants suggest that this figure was inserted by Plaintiff’s counsel and is based on several errors compounded together. Defendants also argue that another error with the two judgments is the identity of the Plaintiff. For example, in the Delaware Judgment, the Plaintiff is Stone & Paper Investors, LLC, individually, and derivatively on behalf of Clovis Holdings, LLC. However, the California Judgment is Stone & Paper Investors, LLC individually. Defendant also notes that the California Judgment does not take into consideration the fact that Clovis Holdings, LLC received monetary relief in the Delaware Judgment.

Next, Defendant notes that there are inconsistencies and errors on the face of the Delaware Judgment itself, but notes that under the Full Faith and Credit Clause, this Court in California cannot correct the Delaware Judgment. Defendants suggest that it is next to impossible for this Court to ensure that the Judgment entered in the state of California is the same as that in Delaware because of the multitude of errors and ambiguities in the Delaware Judgment. As noted in the Plaintiff’s opposition to this Motion, Defendant provides no legal authority as to the basis of their argument. Code of Civil Procedure §1710.40 allows for a Court to vacate such a judgment on the grounds the Court could vacate this judgment in this state or the sister state.

The Court can, in the interest of justice, stay this case and stay ruling on this motion until the appeal in the Delaware case has been heard since Defendants argue a mistake in the judgment amount exists. Code of Civil Procedure § 1710.50 states that the Court “shall grant a stay of enforcement where an appeal from the sister state judgment is pending…” (C.C.P. § 1710.50(a)(1).) Plaintiff argues that the Defendants should be ordered to post an undertaking of at least $5,116,917.79 to stay enforcement pursuant to Code of Civil Procedure § 1710.50(c). Although Section 1710.50 does not require the Court to order the posting of a bond, the Court has discretion to do so. Plaintiff argues that the circumstances in this case warrant an undertaking because the Court of Chancery in Delaware found that: (1) “Blanch and Skinner were conscious of their wrongdoing because each engaged in acts of subterfuge designed to concealed their conduct”; (2) “Blanch, with Vivianna’s assistance, attempted to create a misleading paper trial regarding Red Bridge and the source of its funds, and attempted to shelter payments from Clovis to Red Bridge through Vivianna Blanch; (3) Vivianna’s “misrepresentations regarding Red Bridge were intended to assist in sheltering assets from claimants” in a federal investor fraud action previously filed against Blanch in the Southern District of New York. Based upon these, and numerous other findings from the Court, Plaintiff asserts that there is some likelihood the Blanch Defendants will attempt to conceal or transfer assets.

The Court’s tentative ruling is to DENY this motion to vacate, without prejudice to being renewed upon the finality of the appeal in Delaware, STAY the California litigation other than interim status conference pending the outcome of the Delaware appeal, and require Defendants file an undertaking in the face amount of the Delaware judgment, i.e., $988,510.