The issue of the time period for enforceability of a judgment originally entered in one state but registered in another state under 28 U.S.C. §1963 has recently come up in the United States Court of Appeals for the Fourth Circuit. See Wells Fargo Equipment Finance, Inc. v. Asterbadi, 841 F.3d 237 (2016).
CIT/Equipment Financing obtained a $2.63 million judgment against a debtor in 1993 in the Eastern District of Virginia. Under Virginia law, the judgment would be viable for 20 years. Approximately 10 years later, CIT registered the judgment on August 27, 2003 in the District of Maryland under 28 U.S.C. §1963. Under Maryland law, judgments expire 12 years after entry of the judgment.
CIT then sold the judgment to Wells Fargo Equipment Finance who began collection efforts in Maryland in 2015 by renewing the judgment on August 26, 2015. Debtor then challenged and contended that the enforcement of the judgment by Wells Fargo was barred because the efforts to enforce the judgment began more than 12 years after the judgment had been originally been entered in Virginia ( i.e. in 1993). Wells Fargo responded that the registration of the original Virginia judgment in Maryland before it had expired under Virginia law became a new judgment that was subject to Maryland law for enforcement. As a result, Wells Fargo argued that the 12 year limitation period began to run when the judgment was registered in the District of Maryland in August 27, 2003 not when the judgment was originally entered in Maryland in 1993. The district court agreed with Wells Fargo concluding that the time limitation for enforcement of the judgment began with the date of registration in Maryland. From this ruling, Debtor appealed to the United States Court of Appeals for the Fourth Circuit (“Fourth Circuit”).
The Fourth Circuit reviewed the relevant parts of §1963 which states in part:
“A judgment in an action for the recovery of money … entered in any … district court … may be registered by filing a certified copy of the judgment in any other district…. A judgment so registered shall have the same effect as a judgment of the district court of the district where registered and may be enforced in like manner.”
Further, the Fourth Circuit looked at the purpose of § 1963 which was to avoid the necessity and expenses of litigation of a judgment to obtain a judgment. The purpose was to obtain a speedier more efficient method to enforce judgments. As such, the Fourth Circuit construed § 1963 to provide for a new judgment in the district court where the judgment is registered, as if the new judgment had been entered in the district after filing an action for a judgment on a judgment. Accordingly, just as a new judgment obtained in an action on a previous judgment from another district would be enforceable as any judgment entered in the district court, so too is a registered judgment. In affirming the district court, the Fourth Circuit held that the time period for enforcement begins to run from the date of the new registration, not the date of the original judgment.
The enforcement of foreign judgments is a very commonplace event in today’s economy. It has also been my experience that judgment debtors move back and forth across different state borders all the time. Having the ability to extend the time period for enforcement of a judgment under 28 U.S.C. § 1963 from the date of the registration in the new district is a very useful tool and will help enforce judgments from debtors who too often skip across state lines. The opinions in this blog are solely the author’s and any comments, suggestions or replies are welcome at john@jrjoneslaw.com.
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