What Is A Judgement?
At the end of a dispute in court, an order is issued, and that becomes a money judgment. In an arbitration proceeding, an award is rendered and registered with the court before it becomes the final judgment. At the end of a dispute, someone is going to say that one party owes another party a certain amount of money. Sometimes it’s just that simple. In the cases involving fraud, there are often very long and detailed opinions due to the bad conduct of the bad actor. For a number of reasons, this becomes important down the road in a collection and realization effort. But when the judge enters that last order saying that one party owes another party a certain amount of money, we call detailed finding the findings of fact, conclusions of law, order, and judgment. When the judge issues that, it is a judgment.
However, the other side has rights to appeal the judgment. So during the appeal period, it’s not final. Now, does that mean that while they are trying to delay me through an appeal I cannot go after the assets or the money which the court has said you are due? It depends. If they post a bond for 100% of what the judge says you are owed, plus the interest, plus the legal fees on appeal that you are likely to incur, then we call that posting a supersedeas bond. Once that bond is posted and accepted (usually posted by a 3rd party insurance company, and occasionally in cash), then we cannot proceed. If they don’t post that bond, we are free to collect whatever we can collect it during the appeal, but we typically only do it in the jurisdiction where the judgment was issued. Once the time to file an appeal has expired or an appeal has been undertaken and they lose it, then it becomes a final money judgment. If they have posted a bond, you don’t need anything else; you’ve got your money. If they don’t post a bond, then it’s a final money judgment. I am free to continue efforts and progress in turning your judgment into money. I’m also free at that point to register that judgment or domesticate that judgment in any other state in the US. If it’s a judgment from the federal courts, then I am free to register in any other federal district and in any state in the US. Once it’s properly registered or domesticated, it’s a final money judgment in other states or federal districts and we can collect against the debtor’s assets in these other locations as well. So that’s a final judgment. When it’s for money, we call it a final money judgment.
What Is A Good Judgment?
That’s probably one of the first things I want to consider when you bring me a judgment because not all judgments are created equal. A naked judgment says that one party owes another party a certain amount of money, period. Other judgments will have findings of fact, conclusions of law, an order and judgment. Such a judgment will tell a story of what happened to you that got you into such a horrible predicament in the first place. How it was that someone like you got into the clutches of someone who managed to gain your faith, trust and confidence to such a degree that they could harm you for that much money? That story is very helpful because it usually tells a story of fraud and conniving misrepresentation, or worse. That becomes useful to poison the well with the judge after the trial, as well as with other judges in seeking different forms of post-judgment relief in certain orders. Many of those orders are discretionary for the trial court, but the judge has to know more in order to do it. The more a judge understands your story, the better your situation. So that’s one part of a good judgment.
Another part of a good judgment is that it should provide for post-judgment interest, hopefully at a rate greater than the statutory rate. Most states have a provision that your judgment will have some percentage of interest after the judgment is entered absent other higher rates by agreement. Most states allow judgments to gain at a much greater rate than the agreement between the parties under certain specific statutes. Colorado and one other state have a concept called moratory interest, which is unusual. The type of interest in Colorado that we get to go after is up to the plaintiff to choose when they are getting the judgment. Moratory interest isn’t a set percentage. It says that you are going to get the rate of interest which is equal to the value of having deprived you wrongfully of money in the hands of the person who took it. That leads us to the discussion of the debtor’s average cost of capital.
If the debtor is highly leveraged or highly dishonest, we get into all kinds of interesting things both for discovery and for imposing the rate of interest. When we are talking about a million dollars, a difference between six percent, eight percent and ten percent interest over a period of even a few years becomes quite substantial. That’s particularly the case if the judgment had a provision for post-judgment interest, but failed to provide for post-judgment attorney’s fees. A really good judgment would always provide that you not only get your attorney’s fees up until the judgment, but also that you recover all of the attorney’s fees that you incur in collecting your judgment and turning it into money.
Some of the judgments I work with will have injunctive relief built in or barring the debtor from doing certain things or engaging in certain businesses or business practices. Some injunctions will have negative covenants, if you will. If it’s a business transaction, we call it negative covenants, as in “Thou shalt not do this” where you owe the money. Sometimes we get those built into a really good judgment. These are some of the things that make a really good judgment possible. We want to make sure that the judgment is a live judgment. A judgment has a limited lifetime, which I address elsewhere.
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