After respondents renewed a judgment in their favor, the trial court denied a motion by appellant CIBC World Markets Corp. (CIBC) to vacate the renewed judgment. We affirm.
RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
This is the second time that this case has come before us on appeal. In April 2000, OCM Principal Opportunities Fund, L.P. (OCM), together with Pacholder Value Opportunity Fund, L.P., and Pacholder Heron Limited Partnership (collectively, Pacholder), initiated an action against CIBC, asserting claims that CIBC had engaged in fraud, misrepresentation, and violations of federal and state securities laws. TCW Shared Opportunity Fund II, L.P., TCW Shared Opportunity Fund IIB, L.L.C., TCW Shared Opportunity Fund III, L.P. TCW Leveraged Income Trust, L.P., and TCW Leveraged Income Trust II, L.P. (collectively, TCW), initiated a similar action in May 2001. These actions were later consolidated.
On October 15, 2003, following a jury trial, the trial court entered a judgment that awarded OCM, Pacholder, and TCW, respectively, $13,412,489, $2,440,504, and $16,249,490 in damages. CIBC appealed from the judgment, and OCM and Pacholder cross-appealed from the denial of their request for prejudgment interest under Corporations Code section 25500.
On May 4, 2007, while the appeal and cross-appeals were pending, respondents applied for renewal of the judgment pursuant to the Enforcement of Judgments Law (Code Civ. Proc., § 680.010 et seq.).
On December 5, 2007, we issued our opinion in the first appeal and related cross-appeals (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835 [68 Cal.Rptr.3d 828]).
A. Renewal of Money Judgments
CIBC's contentions target the provisions in the Enforcement of Judgments Law governing the accrual of interest on a renewed judgment. Under section 685.010, "[i]nterest accrues at the rate of 10 percent per annum on the principal amount of a money judgment remaining unsatisfied." (§ 685.010, subd. (a).) In turn, the term "`[p]rincipal amount of the judgment'" is defined as "the total amount of the judgment as entered or as last renewed," together with costs added to the judgment, with adjustments for partial satisfaction of the sums in question. (§ 680.300.) Upon an application for renewal of the judgment, the clerk of the court is directed to enter the renewal "show[ing] the amount of the judgment as renewed." (§ 683.150, subd. (c).) When, as here, the judgment does not require installment payments, "this
B. CIBC's Contentions
CIBC contends that the trial court (1) improperly construed the renewal provisions to allow the compounding of postjudgment interest upon renewal of the 2003 judgment; (2) permitted respondents to renew the 2003 judgment without establishing a risk to its enforceability; and (3) contravened article XV, section 1 of the California Constitution, which limits the interest rate on judgments to 10 percent per annum. For the reasons explained below, we reject these contentions.
1. Compounding of Postjudgment Interest upon Renewal
2. No Requirement for Risk to Enforceability
CIBC contends that the trial court erred in permitting the renewal when there was no danger that the judgment would not be paid. CIBC argues that the judgment was properly bonded pending the outcome of the appeal, and was enforceable until 2013. As explained below, this contention also fails in light of the language of the renewal provisions, and the available extrinsic evidence of legislative intent.
Prior to the 1982 enactment of the Enforcement of Judgments Law, California law provided two methods by which a judgment creditor could extend the enforcement period of a money judgment. Under former section
In addition, the judgment creditor was entitled to commence an independent action on the judgment within the 10-year limitation period defined in section 337.5. (Alonso Inv. Corp. v. Doff, supra, 17 Cal.3d at p. 545; United States Capital Corp. v. Nickelberry (1981) 120 Cal.App.3d 864, 866 [174 Cal.Rptr. 814].) If the judgment creditor began an action within this period, "the creditor's right to recover remain[ed] alive, even though the 10-year period . . . subsequently expire[d]." (Alonso Inv. Corp. v. Doff, supra, 17 Cal.3d at p. 545.)
In enacting the Enforcement of Judgments Law, the Legislature abrogated the first method of extending the period for the enforcement of a judgment, and replaced the method with the renewal procedure described above (see pt. A., ante). The Law Revision Commission explained: "Renewal under this article permits enforcement of a judgment beyond the 10-year period prescribed by Section 683.020. This procedure supersedes the procedure under former Section 685 pursuant to which a judgment could be enforced upon noticed motion after the expiration of 10 years in the discretion of the court upon a showing of the reasons for failure to enforce the judgment during the first 10 years. This article does not require the judgment creditor to demonstrate diligence in enforcing the judgment, but if renewal is not accomplished within 10 years after entry of the judgment, the judgment becomes unenforceable." (Cal. Law Revision Com. com., 17 West's Ann. Code Civ. Proc., supra, foll. § 683.110, p. 76, italics added.)
The Legislature otherwise retained the second method of extending the period for enforcing a judgment (§ 683.050
3. No Violation of Constitutional Limits on Interest
CIBC contends that the renewal procedure, as applied to the 2003 judgment, contravened article XV, section 1, subdivision (2) of the California Constitution, which limits interest on judgments to 10 percent per annum.
The question before us, therefore, is whether article XV, section 1, of the California Constitution "positively and certainly" prohibits the compounding of postjudgment interest on renewed judgments at intervals of five or more years (Methodist Hosp. of Sacramento v. Saylor, supra, 5 Cal.3d at p. 692). California law has long regulated interest on loans and judgments, first by statute, then by initiative measure, and finally by Constitutional amendment. (See Penziner v. West American Finance Co. (1937) 10 Cal.2d 160, 170-172 [74 P.2d 252] (Penziner).) In 1918, an initiative measure expressly repealed the early statutes and set forth an uncodified statute (the 1918 Usury Law). (Stats. 1919, p. lxxxiii; Deering's Uncod. Initiative Measures & Stats. 1919-1 (1973 ed.) p. 35; Penziner, supra, 10 Cal.2d at pp. 170-172.) Sections 1 and 2 of the 1918 Usury Law set the interest rate on loans, forbearances, and judgments at seven percent per annum, but permitted parties to a written contract to agree to a rate not exceeding 12 percent per annum; in addition, section 2 barred parties to a contract from indirectly exceeding the rate of 12 percent per annum through an exchange of "money, goods or things in action, or in any manner whatsoever." (Stats. 1919, p. lxxxiii.) Section 2 also provided: "[I]n the computation of interest upon any bond, note, or other instrument or agreement, interest shall not be compounded, nor shall the interest thereon be construed to bear interest unless an agreement to that effect is clearly expressed in writing and signed by the party to be charged therewith." (Stats. 1919, p. lxxxiii.) Section 3 accorded a party who paid interest exceeding the limits in sections 1 and 2 the right to recover "treble the amount of the money so paid or value delivered in violation of said sections."
We find guidance on the issue before us from our Supreme Court's decision in Heald v. Friis-Hansen (1959) 52 Cal.2d 834, 837 [345 P.2d 457] (Heald), which addressed the limitations on interest regarding loans found in former section 22 of article XX. There, the borrowers executed promissory notes that required annual interest payments at a rate of 10 percent or 12 percent per annum—the notes were ambiguous on this point—and provided that interest, if not paid when due, was to be incorporated into the principal and thereafter bear interest. (Heald, supra, 52 Cal.2d at pp. 835-836.) When the borrowers defaulted on the notes, the creditors demanded the balance due, plus interest on the balance calculated at a rate of 10 percent per annum, compounded annually. (Id. at p. 836.) The trial court determined that the notes imposed a 12 percent interest rate, and thus were facially usurious; in addition, it awarded the borrowers treble interest pursuant to section 3 of the 1918 Usury Law. (Heald, supra, 52 Cal.2d at pp. 836-837.)
In our view, Heald is dispositive of the issue before us. Section 1 of article XV of the state Constitution, like former section 22 of article XX, contains no express prohibition regarding compound interest on loans or judgments; moreover, section 1 of article XV authorizes the Legislature to set the interest rate on judgments up to a maximum of 10 percent per annum, just as its predecessor permitted parties to set the interest rate on loans up to a maximum of 10 percent per annum.
In so concluding, the court in Westbrook stated that the Constitution "limit[s] postjudgment interest to 10 percent simple interest." (Westbrook, supra, 7 Cal.App.4th at p. 893.) In a footnote, it added: "Since the Constitution. . . do[es] not specify simple or compound interest, we think that it limits all interest to a maximum of 10 percent. Thus, any rate, simple or compound, that exceeds 10 percent is prohibited." (Id. at p. 893, fn. 4, italics omitted.) The court advanced these opinions without discussing Heald or examining article XV, section 1, of the Constitution in its historical context; moreover, the court did not attempt to reconcile these statements with its reliance on the renewal provisions in resolving the issue before it. Because Westbrook does not address the question before us, it is not authority on the issue. (Santa Clara County Local Transportation Authority v. Guardino (1995) 11 Cal.4th 220, 243 [45 Cal.Rptr.2d 207, 902 P.2d 225].) To the extent Westbrook may suggest that the renewal provisions offend article XV, section 1, it is unpersuasive in view of Heald.
Pointing to the usury statutes in effect prior to the 1918 Usury Law, CIBC contends that the 1918 Usury Law and section 1 of article XV must be construed as barring any form of compound interest on judgments. Former sections 1917 and 1918 of the Civil Code provided for a maximum interest rate of 10 percent per annum on loans in the absence of a written agreement to the contrary, but permitted parties to "agree in writing to any rate of interest" (italics added); in addition, Civil Code former section 1919 permitted parties to agree that interest, if "not punctually paid," was to be
The language of the 1918 Usury Law itself supports this conclusion. The new law set interest rates on loans, forbearances, and judgments (§ 1), and expressly barred compound interest on loans and forbearances, unless the parties to the relevant contract agreed to it (§ 2). Notably, although the 1918 Usury Law reinstated the presumptive interest rate of seven percent per annum on judgments found in Civil Code former section 1920, it omitted judgments from the provisions regulating compound interest, and otherwise imposed no prohibition against compound interest on judgments. The failure
The order denying the motion to vacate the renewed judgment is affirmed. Respondents are awarded their costs on appeal.
Epstein, P. J., and Suzukawa, J., concurred.
"§ 2[:] . . . No person, company, association or corporation shall directly or indirectly take or receive in money, goods or things in action, or in any other manner whatsoever, any greater sum or any greater value for the loan or forbearance of money, goods or things in action than at the rate of twelve dollars upon one hundred dollars for one year; and in the computation of interest upon any bond, note, or other instrument or agreement, interest shall not be compounded, nor shall the interest thereon be construed to bear interest unless an agreement to that effect is clearly expressed in writing and signed by the party to be charged therewith. Any agreement or contract of any nature in conflict with the provisions of this section shall be null and void as to any agreement or stipulation therein contained to pay interest and no action at law to recover interest in any sum shall be maintained and the debt cannot be declared due until the full period of time it was contracted for has elapsed." (Deering's Uncod. Initiative Measures & Stats. 1919-1, supra, p. 40.)
"§ 3[:] . . . Every person, company, association or corporation, who for any loan or forbearance of money, goods or things in action shall have paid or delivered any greater sum or value than is allowed to be received under the preceding sections, one and two, may either in person or his or its personal representative, recover in an action at law against the person, company, association or corporation who shall have taken or received the same, or his or its personal representative, treble the amount of the money so paid or value delivered in violation of said sections, providing such action shall be brought within one year after such payment or delivery." (Deering's Uncod. Initiative Measures & Stats. 1919-1, supra, p. 78.)
"§ 4[:] . . . Section one thousand nine hundred seventeen, one thousand nine hundred eighteen, one thousand nine hundred nineteen and one thousand nine hundred twenty of the Civil Code and all acts and parts of acts in conflict with this act are hereby repealed." (Deering's Uncod. Initiative Measures & Stats. 1919-1, supra, p. 117.)
"(1) For any loan or forbearance of any money, goods, or things in action, if the money, goods, or things in action are for use primarily for personal, family, or household purposes, at a rate not exceeding 10 percent per annum; provided, however, that any loan or forbearance of any money, goods or things in action the proceeds of which are used primarily for the purchase, construction or improvement of real property shall not be deemed to be a use primarily for personal, family or household purposes; or
"(2) For any loan or forbearance of any money, goods, or things in action for any use other than specified in paragraph (1), at a rate not exceeding the higher of (a) 10 percent per annum or (b) 5 percent per annum plus the rate prevailing on the 25th day of the month preceding the earlier of (i) the date of execution of the contract to make the loan or forbearance, or (ii) the date of making the loan or forbearance established by the Federal Reserve Bank of San Francisco on advances to member banks under Sections 13 and 13a of the Federal Reserve Act as now in effect or hereafter from time to time amended (or if there is no such single determinable rate of advances, the closest counterpart of such rate as shall be designated by the Superintendent of Banks of the State of California unless some other person or agency is delegated such authority by the Legislature).
"No person, association, copartnership or corporation shall by charging any fee, bonus, commission, discount or other compensation receive from a borrower more than the interest authorized by this section upon any loan or forbearance of any money, goods or things in action."
Civil Code former section 1918 provided: "Parties may agree in writing for the payment of any rate of interest, and it shall be allowed, according to the terms of the agreement, until the entry of judgment."
Civil Code former section 1919 provided: "The parties may, in any contract in writing whereby any debt is secured to be paid, agree that if the interest on such debt is not punctually paid, it shall become a part of the principal, and thereafter bear the same rate of interest as the principal debt."