National Grange Victorious in Vacating Satisfaction of Judgment

Legal Alert

April 18, 2018

On April 17, 2018, the Eastern District of California set aside a partial satisfaction of judgment at the request of client the National Grange of the Order of Patrons of Husbandry (the “National Grange”) when it came to light that an attorney fee award had been improperly paid with monies belonging to the National Grange’s chartered California chapter. Jim Bikoff and Bruce McDonald argued for the plaintiff at the April 16 hearing before U.S. District Court Judge Shubb. Two years prior the National Grange had been awarded attorneys’ fees of approximately $240,000 based on Defendant California Guild’s deliberate and willful violation of the district court’s injunction. On June 2017, the California Guild’s attorney produced multiple checks drawn on his firm’s client trust account in “purported satisfaction of all remaining costs and fees”. Believing the funds to be legitimate, the National Grange filed an acknowledgment of full satisfaction of the judgment. In December 2017, the National Grange learned through discovery in a related case that the funds used to satisfy over $93,000 of the attorneys’ fee award came from an account belonging to the California State Grange, National Grange’s chartered California chapter. This account had been restricted to use by the defendant for “normal business expenses” by the Sacramento Superior Court. On March 21, 2018, Judge Brown of the Sacramento Superior Court appointed a receiver over the California Guild’s accounts based on its unlawful dissipation of these restricted assets to satisfy the National Grange’s attorney fees’ award in this case, holding that the California Guild had “willfully violated this Court’s injunction order.”

As “the uncontroverted evidence indicates that defendant’s partial payment of plaintiff’s attorney fee award in the amount of $93,707.78 came from funds that the defendant had been enjoined from accessing,” the Eastern District of California found that the Satisfaction of Judgment was entered in error because “Defendant convinced plaintiff that the funds it used to pay plaintiff came from defendant” and “[h]ad plaintiff known the true source of the money, it would not have entered an Acknowledgement of Full Satisfaction of Judgment.”

Finally, since “defendant attempted to deceive plaintiff by paying the judgment using misappropriated funds” and did not offer a plausible explanation for why it used those funds, the Court awarded sanctions in the amount of $9,000 to the National Grange.

The National Grange is represented by Jim Bikoff, Bruce McDonald, Holly Lance and Darlene Tzou. National Grange of the Order of Patrons of Husbandry v. California Guild, No. 2:14-cv-00676-WBS-DB (E.D. Cal.).