What Do You Win When You Win At Trial?
Many people remember the long-running Broadway (and national) show, Les Miserables, or, at least, its music. Some may also remember that it was based on Victor Hugo’s 19th century novel Les Miserables and that both the old TV program and the movie, The Fugitive, loosely reflect the same novel in story and concept. The character, Inspector Javert, the detective who doggedly pursues the main character, Jean Valjean, for years, may be less-well remembered.
I was reminded by a recent court decision that many prospective plaintiffs need to contemplate whether they will have to become Javerts themselves in order to gain any benefits from their litigation.
Thus was I thinking when I read the decision reported recently in the private blog of the Real Property Law Section of the New York State Bar Association. A New York County Appellate Division decision (for out-of-staters: first level of appeal after a trial in the court of general jurisdiction, the Supreme Court), held that a renewal judgment is entered as of the date it was granted, and the liens of mortgages (recorded prior to that date) receive priority over that judgment. Gletzer v. Harris, 2008 WL 678589 (Sup.Ct., N.Y. Co.). The controversy arose when a judgment creditor applied for renewal of a judgment lien for a second ten-year run and was ultimately granted the renewal but nunc pro tunc (retroactively) to a date four years earlier.
The decision is somewhat technical and its impact may not be appreciated without a great deal of background. However, the decision affords the opportunity to fill-in some of that background by reviewing fundamentals that should be reviewed with a client before commencing a lawsuit. One can start with a very fundamental question: what do you win when you win at trial?
In most cases, you win a judgment. If it is a money judgment, you hope that the defendant will simply pay it. And, many do pay, which in that case ends the discussion. If the defendant doesn’t pay it, what have you won?
A few more fundamentals:
In New York:
1. A judgment is good for 20 years but it is lien against real property for only 10 years.
2. The lien can be renewed for another 10. N.Y.C.P.L.R. §5014.
3. During those 10 (or 20) years, the plaintiff has won the right to attempt to enforce it, using a variety of devices and proceedings.
4. During those 10 (or 20) years, the judgment lien encumbers real estate owned by the judgment debtor in the county where the judgment was recorded. It will be very difficult to sell real estate in that county without paying off the judgment.
5. The judgment (or technically a transcript of it) can be recorded in any number of counties; thus, if you win in one county, you can take it to a county where the defendant owns property.
6. During those 10 (or 20) years, the judgment accrues interest at the statutory rate of 9 percent. N.Y.C.P.L.R. §§5003, 5004.
7. As a lien, a judgment is subject to the rules of priority among liens, along with mortgages, support liens, mechanics liens and other varieties. Hence, a controversy arose in the case discussed above over whether a late-granted renewal lost its priority when two mortgages were recorded in the meantime. N.Y.C.P.L.R. §5203(a).
From the above, we can discern both good news and bad news for the plaintiff or would-be plaintiff.
The good: a judgment lasts a long time, accrues interest (in New York) at 9 percent and can be enforced by a variety of legal means.
The bad: it can take 10, 20 years (even after years of litigation) to obtain payment, it is subject to a prescribed pattern of priority among other liens (meaning other creditors may get paid first), the legal enforcement devices add the expenses of collection to the expenses of the original litigation and, if the defendant honestly, truly has no assets (or is truly good at hiding them) may never be paid.
Thus, another fundamental principle: before litigation is commenced, there should be a careful discussion with the would-be plaintiff about expectations. Sometimes the results of litigation are fairly immediate. Sometimes, the results of litigation are not immediate or self-implementing and after spending money for many years, the prevailing plaintiff has only won the right to spend more money to try to enforce a judgment by chasing the defendant for still many more years, somewhat like Javert.
Note: Javert was obsessive and in the end was faced with moral ambiguity that his rigid personality could not handle because Valjean’s original crime was petty and while a fugitive he lived an exemplary life. So, although the analogy in many respects does not quite work, we use it anyway to make a narrow point for which it does work: “the chase” can be maddening. Ultimately, Javert jumped into the Seine.
