10 Feb Enforcing Judgments: the Basics

This week Edwards Law is starting a new series of blogs and podcasts focusing on an important topic for small business owners looking to recover on business debt: enforcing judgments.  This blog and podcast series will focus on who may enforce judgments; where you can go about enforcing judgments and when judgments may be enforced, and the basic steps necessary to enforce a judgment.

Know the Who, What, When and Where

Before attempting to enforce a judgment, you and your attorney must understand the basics to enforcing judgments, including (1) what constitutes a judgment; (2) what relief you as a judgment creditor is entitled to; (3) who may enforce a judgment; (4) against whom a judgment may be enforced; (5) where judgments may be enforced; (6) when judgments may be enforced; and (7) the typical procedures for enforcing judgments

What is a Judgment?

According to Rule 54, a judgment is a court decree and any order from which an appeal lies.  A final judgment ends your litigation on the merits, pertaining to all parties and all claims, leaving the court with nothing to do but execute the judgment.

If there is no just reason for delay, the court can also designate certain judgments as final that would otherwise be non-final.  Specifically, the court can direct entry of a final judgment as to one or more, but fewer than all (1) claims in an action with more than one claim for relief; or (2) parties in an action with multiple parties.

What is Not a Judgment?

The following are not judgments:

Settlements. A settlement is not an order or judgment of the court and typically cannot be enforced in the same way. However, consent judgments or consent decrees can typically be enforced in the same manner as a judgment on the merits.

Decisions, opinions, orders, rules, verdicts, or findings of fact or law. While these items may be the bases on which a judgment is later issued, only a judgment orders the relief.

Documents that look like judgments but are not a separate docket entry. A document may be a judgment as defined by Rule 54, but still lack the qualities necessary for entry, a prerequisite to enforcement.  For example, if the document is not entered as a separate document on the court’s docket, it’s not amenable to enforcement.

Enforcing Judgments: Who Can Do It and Who is Subject to It?

Usually a judgment can be enforced by: (1) a party who receives the judgment; (2) an entity to which the judgment was properly assigned; or (3) a non-party granted relief by the judgment.

Typically, a judgment can be enforced only against an entity or individual who was a party to the lawsuit where the judgment was rendered.  Also, a joint and several judgment may be enforced against some or all of the judgment debtors.

However there are circumstances under statute that would allow you as a judgment creditor to enforce a judgment against a party not named in the judgment.  For example, certain state’s laws permit enforcing judgments against the debt owed by non-parties to the judgment debtor.

What Relief is Available on a Judgment?

Absent a demonstration of prejudice to the opposing party, if you have a judgment from the court, the court must pursuant to Rule 54(c) grant you all the relief that you are entitled to, regardless of whether you specifically requested the relief in your original pleadings.  This includes both monetary and injunctive relief, even if you and your attorney did not request it specifically.

There are however exceptions to this general rule, including:

Lack of Notice/Default. The court cannot grant relief that was not requested if you are entering a default judgment against another party, or otherwise fail to provide notice to the judgment debtor.  This is different than raising issues at trial without objection, because there is no issue of notice in that scenario.

Special damages. According to Rule 9, special damages—such as mental suffering or lost income and incurred expenses for medical and psychological treatment resulting from a defamation claim—cannot be awarded on judgment unless they are specifically stated in the pleading.  This is because a special damage is a damage that is not a usual and natural consequence of an alleged wrong; thus the judgment debtor is entitled to notice if he/she/it is liable for a judgment on this basis.

Where Can You Enforce a Judgment?

Enforcing judgments is very specific to the court.  Typically a money judgment may only be enforced in: (1) the district court where the judgment was rendered and later entered on the docket; (2) the district court where a judgment rendered in another court was registered; or (3) any state court that statutorily permits the direct registration of a federal court judgment in its courts.

However a judgment requiring the defendant to perform a specific act may only be enforced in the district court which rendered the judgment, regardless of where the act was to occur.

When Can a Judgment Be Enforced?

The timing for enforcing judgments is also tricky.  A judgment cannot be enforced before entry, or, for a money judgment sought to be enforced outside of the rendering district, before the registration of the judgment.  Also a judgment cannot be enforced if it is stayed by state or federal law, although actions short of enforcement may be permitted.  Moreover, judgments must be enforced within the applicable state statute of limitations.

There are several types of limitations periods which may affect your company’s enforcement of a judgment, including:

• The time within which action must be taken to enforce the judgment before it becomes dormant and requires an application to the court by the judgment creditor before it can be renewed;
• The period in which a creditor may revive a dormant judgment; and
• The time within which a writ of execution must be enforced against a debtor’s property. Depending on the state, the expiration of this period may also cause the debt to be extinguished.

Enforcing judgments can be overwhelmingly cumbersome.  Call Edwards Law today if you have a money judgment that you are seeking to enforce in Colorado.