Bank of Monteal v. SK Foods LLC

Filing 52

ORDER TO SHOW CAUSE why Judgment Should Not Be Amended. Show Cause Response due by 6/14/2012. Signed by Judge Edward J. Davila on 5/15/12. (ejdlc3, COURT STAFF) (Filed on 5/15/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION
CASE NO. 5:11-mc-80133-EJD

BANK OF MONTREAL,

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ORDER TO SHOW CAUSE WHY
JUDGMENT SHOULD NOT BE
AMENDED

Plaintiff,
For the Northern District of California

United States District Court

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v.
SK FOODS LLC et al.,

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Defendants.
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On September 28, 2010, Bank of Montreal (“BMO”) won a $128,256,391 money judgment

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against SK Foods LLC in a civil action in the Northern District of Illinois. N.D. Ill Case No. 09 C

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3479 Dkt. No. 81. On June 13, 2011, it registered that judgment in this district pursuant to 28 U.S.C.

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§ 1963. That registration opened this case file. Two weeks later, BMO filed in this case a request to

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amend the judgment to add three parties as judgment-debtors: (1) SK PM Corp., (2) Frederick Scott

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Salyer as Trustee for the Scott Salyer Revocable Trust, and (3) Frederick Scott Salyer in his

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individual capacity (collectively, the Respondents).1

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The bank’s motion is properly brought in this court pursuant to Fed. R. Civ. P. 69(a), which
“empowers federal courts to rely on state law to add judgment-debtors.” In re Levander, 180 F.3d
1114, 1120–21 (9th Cir. 1999). The Ninth Circuit has approved the addition of judgment-debtors by
district courts under Cal. Civ. Proc. Code § 187 on the alter ego theory of liability. Id. BMO’s
request is not subject to the 28-day time limit of Fed. R. Civ. P. 59(e) because adding a party to a
judgment is not a substantive amendment going to the merits of the case. Cigna Prop. & Cas. Ins.
Co. v. Polaris Pictures Corp., 159 F.3d 412, 421 (9th Cir. 1998).
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CASE NO. 5:11-mc-80133-EJD
ORDER TO SHOW CAUSE WHY JUDGMENT SHOULD NOT BE AMENDED

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On August 8, 2011, the Respondents filed a one-page request to stay the determination of

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whether the Respondents should be added to the judgment until the resolution of a related adversary

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proceeding in the United States Bankruptcy Court for the Eastern District of California. This court

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heard both parties’ motions on August 19, 2011. The court requested further briefing and held

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another hearing on September 23, 2011.

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In the briefing, the Respondents make two arguments why this court should not add them to

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the judgment at this time. First, they contend that the alter ego allegations should be resolved in the

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bankruptcy adversary proceedings since they were first raised there, and that this action should be

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dismissed, stayed, or transferred to the Eastern District of California under the first-to-file rule. In
the alternative, Respondents argue that this matter should be stayed pending resolution of the

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For the Northern District of California

United States District Court

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criminal proceedings against Scott Salyer because his testimony—which cannot be obtained because

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he invokes his Fifth Amendment privilege in light of the criminal case against him—is necessary to

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the Respondents’ defense. Both of Respondents’ requests appeal to the discretion of this court. See

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Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 95, 97 (9th Cir. 1982) (affirming decision to

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decline jurisdiction where a related case had been filed earlier elsewhere under abuse-of-discretion

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standard); Keating v. Office of Thrift Supervision, 45 F.3d 322, 324, 326 (9th Cir. 1995) (affirming

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an ALJ’s decision not to postpone a hearing until a related criminal proceeding ended under abuse-

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of-discretion standard).

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On March 23, 2012, while the parties’ motions were under submission and awaiting ruling

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by this court, Scott Salyer entered into a plea bargain with the prosecuting federal agencies, bringing

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the liability phase of the criminal proceedings in the Eastern District of California to a close.

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Salyer’s sentencing is scheduled for July 10, 2012.

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CASE NO. 5:11-mc-80133-EJD
ORDER TO SHOW CAUSE WHY JUDGMENT SHOULD NOT BE AMENDED

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Now that the criminal case against Salyer is reaching closure, it is incumbent upon the

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Respondents to explain the basis for any objection to BMO’s requested amendment to the registered

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judgment. Within thirty days of the date of this order, Respondents shall file—under seal, if

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necessary—a brief not longer than ten pages supported by any necessary declarations explaining

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what defenses they were unable to present earlier. If upon receiving that brief the court determines

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that a response would be helpful, a further briefing schedule will be set.

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IT IS SO ORDERED.

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Dated: May 15, 2012
EDWARD J. DAVILA
United States District Judge

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For the Northern District of California

United States District Court

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CASE NO. 5:11-mc-80133-EJD
ORDER TO SHOW CAUSE WHY JUDGMENT SHOULD NOT BE AMENDED