Case of the Day: Markin v. Grohmann

The case of the day is Markin v. Grohmann (Idaho 2012). In 1997, Thomas Grohmann sued Ron Markin on a promissory note Markin had given Grohmann in 1988 connection with a half-million dollar business loan. The suit was in the Central District of California. The parties settled the suit, and their settlement agreement provided that Markin would pay the principal and interest due, which by then amounted to nearly a million dollars, and that Grohmann would dismiss the action if and when he received payment, but that the court would retain jurisdiction to enforce the settlement agreement. The agreement also provided that if Markin didn’t pay in full, Grohmann could obtain a judgment under § 664.6 of the California Code of Civil Procedure, which provides:

If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.

Markin failed to pay, and in 2000, the Grohmann obtained an ex parte judgment for more than $1.2 million

Grohmann then brought an action in Germany, where Markin owned real property. The German trial court refused to recognize the US judgment, and the appellate court affirmed. The German courts’ central objection was to the California procedure permitting the court to enter an ex parte judgment upon Markin’s failure to perform under the settlement agreement, without reaching the merits of the settlement agreement itself. However, the German courts permitted Markin to bring a new claim for breach of the settlement agreement and awarded him damages for Markin’s breach.

Grohmann then sued Markin in Idaho, where Markin apparently had an interest in real property. The action was for recognition and enforcement of the German judgment under the UFCMJRA. The trial court entered a summary judgment for Grohmann, rejecting Markin’s arguments that the doctrines of res judicata and merger barred recognition of the German judgment and that the German judgment conflicted with the California judgment. Markin’s idea was that under the Full Faith and Credit clause, the Idaho court had to give the California judgment the same preclusive effect it would have in California, and that the German action was therefore barred by the doctrine of merger. The court agreed, noting that the German action was not an action on the California judgment, but rather an action on the settlement agreement, and that the California court had already entered judgment for Grohmann on the settlement agreement. It seems that under California procedural law, Grohmann’s time to bring an action on the earlier California judgment had expired. Thus, the court reasoned, the German judgment conflicted with the California judgment and could not be recognized.

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