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Case of the Day: Lombard-Knight v. Rainstorm Pictures

The case of the day is Lombard-Knight v. Rainstorm Pictures, Inc. (Cal. Ct. App. 2015). Rainstorm was a California movie production company. It entered into two investment agreements with Fortnom & Co. SA, under which Fortnom was required to provide $300 million upon Rainstorm’s delivery to it of performance bonds. It turned out, according to the court, that “Fortnom was never formed and did not exist as a separate legal entity at the time the agreements were executed.” Oops! Both contracts were signed on Fortnom’s behalf by Anthony Lombard-Knight. Both agreements had arbitration clauses, and both contained the following provisions:
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Case of the Day: Hyundai Securities v. Lee

The case of the day is Hyundai Securities Co. v. Lee (Cal. Ct. App. 2015). Lee was the CEO of Hyundai Securities from 1996 to 2000. Several Hyundai shareholders brought a shareholder derivative action against Lee in the Seoul Southern District Court, claiming that Lee was guilty of securities fraud. Lee appeared and defended. The Korean court entered judgment in favor of Hyundai for approximately $24 million plus interest at 20%. A portion of the damages were for a criminal fine Hyundai paid in Korea on account of Lee’s acts. Lee appealed to the Seoul Court of Appeals and then to the Korean Supreme Court. Both appellate courts dismissed the appeals. The dismissals were based on the merits. Hyundai then sought recognition of the judgment in the Los Angeles Superior Court. The court entered judgment in favor of Hyundai in a summary proceeding, but the Court of Appeal reversed on the grounds that Hyundai could not proceed by way of a petition but had to seek summary judgment. I covered this aspect of the case in April 2013. On remand, Hyundai moved for summary judgment. Lee argued that the court could not recognize the portion of the judgment attributable to the criminal fine, or the 20% interest rate. The court entered judgment in favor of Hyundai, and Lee appealed.
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Case of the Day: St. Philip Catholic Church v. Kubicek

The case of the day is St. Philip Catholic Church v. Kubicek (Cal. Ct. App. 2014). Josef Kubicek borrowed 19 million Czech crowns from three parishioners of St. Philip’s church in 1992, promising to repay them by 1995. When he defaulted, the Church, which had guaranteed the loans, repaid the parishioners and then sued Kubicek in the Czech Republic. The Church was not able to effect service of process on Kubicek. Under Czech law, a legal guardian was therefore appointed to represent Kubicek’s interests, but for some reason she failed to appear in court, and the court proceeded to hear the case in her absence. The court entered a judgment in favor of the Church.

Kubicek died in 2009. A probate proceeding regarding his estate was filed in Los Angeles. The Church filed a claim against the estate to recover the judgment debt, but the estate rejected the claim as untimely. The Church then sued in the Los Angeles Superior Court.

The court granted summary judgment for the estate, and on appeal the court affirmed. It held that under California’s judgment recognition statute, the judgment could not be recognized if the Czech court had lacked personal jurisdiction, if Kubicek had had no notice of the action, or if there had been a lack of due process. All three of these tests were met. The notice point was obvious. The due process point rested on the fact that the legal guardian appointed by the court to represent Kubicek’s interests was herself a court employee, contrary to Czech law, and that the guardian failed even to show up in court. The court lacked personal jurisdiction because the only effort made at service was a letter addressed to an address in the Czech Republic where Kubicek did not reside.