Equity, Judgment Enforcement, Tort Of Another: Law Corporation’s Attempts To Setoff Adverse Judgment For Tort Of Another Fees Were Rebuffed By Court Of Appeal

Nothing Demonstrated Setoff For Tort Of Another Fee Damages Could Be Obtained In A Postjudgment Phase.

            The result in David S. Karton, A Law Corporation v. Musick, Peeler, Garrett LLP, Case No. B305837 (2d Dist., Div. 1 Oct. 3, 2022) (published), was driven by a prior appellate opinion where a default in favor of the law corporation was found to be void, such that an assignor of adverse judgments impacting the law corporation to Musick, Peeler became the prevailing party.  (Substantial fees were spent on both sides for a claimed law corporation receivable of $65,246.23.)  The lower court denied law corporation’s motion to set off from the adverse judgment certain claimed “tort of another” fees incurred in actions alleging that judgment assignor had attempted to hinder the collection of the vacated default judgment.

            The appellate court determined that set off was procedurally and substantively not available.  On the procedural front, CCP § 431.70 does not allow for postjudgment set off versus simply pleading it as an affirmative defense in an answer, and law corporation failed to meet the judgment satisfaction acknowledgment requirements in trying to obtain a set off.  On the merits, the “tort of another” doctrine was not available because no third-party litigation was involved in the hinderance lawsuits in other states, which substantively meant there could be no set off on this basis.