Opinion
NOT TO BE PUBLISHED
Santa Clara County Super. Ct. No. CV074325
Duffy, J.
Anthony Vassallo appeals from the trial court’s order vacating entry of a New York state judgment entered in California against Nayna Networks, Inc. under Code of Civil Procedure section 1710.25, which provides for entry of judgment on sister state judgments. Vassallo contends that the trial court abused its discretion in vacating the judgment because Nayna had failed to meet the statutory grounds for vacation of judgment on a sister state judgment under section 1710.40. We conclude that Vassallo has failed to carry his burden on appeal of demonstrating the trial court’s abuse of discretion and we accordingly affirm the order.
Further unspecified statutory references are to the Code of Civil Procedure.
STATEMENT OF THE CASE
On August 3, 2004, Vassallo, acting on his own behalf as well as guardian for his two “infant” sons, obtained entry of a default judgment in the state of New York against Christian Nigohossian, Rescon Technology Corporation, Radical Technologies, Inc., and GIT Securities Corporation in the total amount of $310,165. Liability for the judgment was expressly provided to be joint and several.
On November 6, 2006, Vassallo, apparently acting solely on his own behalf, applied for and obtained entry of judgment on sister state judgment in Santa Clara County Superior Court under the Sister State and Foreign Money Judgment Act, codified in California at section 1710.10 et seq. (the Act). The judgment was entered not against any of the debtors as they were named in the New York judgment but against “Nayna Networks, Inc., a Nevada corporation formerly Rescon Technology Corporation” in the amount of $348,821.39. This figure included the principal amount of the New York judgment plus accrued interest (at the simple rate of nine percent per New York law) and filing fees for the application. Vassallo timely served Nayna Networks with notice of entry of judgment on sister state judgment under the Act.
On December 6, 2006, Nayna Networks timely moved to vacate the judgment on the ground that it was not enforceable against Nayna Networks in the state of rendition, a defense to an action in California on the sister state judgment, as provided at section 1710.40, subdivision (a). The factual basis for the motion was that, pursuant to a series of events and corporate transactions described below, the New York judgment entered against Rescon Technology was not enforceable against Nayna Networks. What follows is a rough description of these transactions, as evidenced in the record before the trial court on the motion to vacate.
According to Nayna Networks, the New York judgment debtor Rescon Technology was originally formed as a Wyoming corporation in or around 1976. Its officers and directors included Henrik Klausgaard, Ilona Klausgaard, and Tristan V. Voth-Stonger. Its “controlling shareholder” was Christian Nigohossian, one of the other New York judgment debtors. Rescon Technology, a public company, had “liquidated all of its assets by 1994 and had no business activity for about ten years.” In 2004, Henrik Klausgaard, Ilona Klausgaard, and Tristan V. Voth-Stonger formed another company called Northeast Development, Inc., which was incorporated in Nevada and is also publicly traded. These individuals were Northeast Development’s “controlling shareholders.”
The record shows that a “Rescon Technology Corp.” was incorporated in Nevada in 1999. It also shows that in December 1999, Articles of Merger were filed with the Nevada Secretary of State pursuant to which “Rescon Technology Corporation, a Wyoming Corporation,” merged with “Rescon Technology Corporation, a Nevada Corporation.” The Wyoming corporation was stated in the Articles to own all of the outstanding stock of the Nevada corporation. The Articles further provided that the surviving corporation would be “Rescon Technology Corporation, the Nevada corporation.” The surviving Nevada corporation amended its Articles in December 2004 to reflect a “reverse split of issued and outstanding shares of the Corporation,” which presumably was related to Rescon’s Agreement and Plan of Reorganization with Nayna Networks, as described herein.
In the fall of 2004, Nayna Networks, which was a privately held company formed in Delaware in 2000, “desired to obtain additional funding through a public offering.” It entered into negotiations with Rescon Technology, one of the New York judgment debtors, “to execute a reverse merger” whereby Nayna Networks “would be able to operate its business under Rescon’s empty public shell corporation.” Under that arrangement, Nayna Networks understood that “Rescon would assign all of its assets and liabilities” to Northeast Development, “which would continue to operate Rescon’s former business.” Nayna Networks further understood that as a result of Northeast Development’s “assumption of Rescon’s former business,” and the “reverse merger” with Rescon Technology, Nayna Networks would operate its business free and clear of “any liabilities arising from Rescon’s former business.”
On October 16, 2004, after the New York judgment had been entered, Nayna Networks entered into a written Agreement and Plan of Reorganization with Rescon Technology. The contract provided the structure for the “reverse merger.” On April 1, 2005, pursuant to that Agreement and Plan of Organization, an entity called “Nayna Acquisition Corp., a Nevada corporation and wholly owned subsidiary of Rescon,” “merged with and into Nayna Networks, with Nayna Networks becoming a wholly owned subsidiary of Rescon.” After the reverse merger, “the stockholders of Nayna Networks owned 89 [percent] of the outstanding shares of Rescon’s common stock, and the then existing shareholders of Rescon held [the balance of] 11 [percent] of the outstanding shares of Rescon’s common stock.”
As provided in the Agreement and Plan of Reorganization, Rescon Technology’s directors and officers resigned from their positions and were replaced with three different people who had been the officers and directors of Nayna Networks before the reverse merger. Further incident to the plan, after the merger, Rescon Technology, through its new management, entered into a General Assignment and Assumption Agreement with Northeast Development, the officers and directors of which were the same as Rescon Technology’s former officers and directors. Under the Assumption Agreement, “Rescon transferred all of its assets and liabilities to Northeast Development, so that Northeast Development could take over the former Rescon business.” Northeast Development agreed to assume and “faithfully . . . perform and fulfill, all of the Assumed Liabilities.” “Assumed Liabilities” were defined to include “all liabilities . . . whether arising before, on or after the date hereof, primarily relating to, arising out of or resulting from: [¶] . . . the operation of the Former Rescon Business [defined as the business owned and operated by Rescon as of March 23, 2005], as conducted at any time prior to or on the Balance Sheet Date [defined as ] . . . [¶] . . . [¶] any Purchased Assets or Assumed Liabilities.” Under the Assumption Agreement, Rescon Technology also transferred assets to Northeast Development totaling $806,631, as listed in the “Condensed Balance Sheet” attached to the Assumption Agreement. This Balance Sheet listed liabilities of $715,926 but did not include the New York judgment in favor of Vassallo.
“After Northeast Development’s assumption of the former Rescon business, Nayna Networks took over the empty Rescon corporate shell so that it could operate its [business].” On April 6, 2005, Rescon Technology changed its name to Nayna Networks, Inc. Northeast Development remains a publicly traded company, which, according to Nayna Networks, is solvent, operational, and liable for the Vassallo judgment by reason of its contractual assumption of Rescon Technology’s liabilities, which extinguished any liability Nayna Networks might bear as a result of its merger with Rescon Technology, the New York judgment debtor.
Based on the foregoing facts and transactions, Nayna Networks argued on its motion to vacate the California judgment against it that the New York judgment against Rescon Technology could not be enforced against Nayna Networks in New York—the state of rendition—and that that judgment was instead properly enforceable against Northeast Development, which had by contract assumed Rescon Technology’s liabilities after the date that the New York judgment was entered. Over Vassallo’s opposition, the trial court granted Nayna Network’s motion to vacate under section 1710.40. This timely appeal followed.
The record on appeal does not include a reporter’s transcript of the hearing on the motion, which might illuminate the court’s reasoning for granting the motion. Nor did the record include the trial court’s ruling, substituting instead the “Notice of Ruling on Defendant’s Motion to Vacate Entry of Sister-State Judgment” prepared by Nayna Network’s counsel, which did not attach a ruling by the court and which is not appealable. Thus, lacking a ruling by the court below, the record as designated precluded appellate review. On our own motion, we have augmented the record to include the clerk’s minutes of the motion proceeding, which reflect that the motion was granted and that no one was directed to prepare a written order, rendering the permanent minutes the appealable order. (Cal. Rules of Court, rule 8.104(d)(2); In re Marriage of Lechowick (1998) 65 Cal.App.4th 1406, 1410-1411.)
ANALYSIS
I. The Act
Article IV, section 1 of the United States Constitution provides that “[f]ull faith and [c]redit shall be given in each [s]tate to the public [a]cts, [r]ecords and judicial [p]roceedings of every other [s]tate.” “The purpose of the clause ‘was to alter the status of the several states as independent foreign sovereignties, each free to ignore obligations created under the laws or by the judicial proceedings of the others, and to make them integral parts of a single nation throughout which a remedy upon a just obligation might be demanded as of right, irrespective of the state of its origin.’ (Milwaukee County v. White Co. (1935) 296 U.S. 268, 277.)” (Bank of America v. Jennet (1999) 77 Cal.App.4th 104, 113.) Under the full faith and credit clause, “[a] final judgment in one State, if rendered by a court with adjudicatory authority over the subject matter and persons governed by the judgment, qualifies for recognition throughout the land.” (Baker v. General Motors Corp. (1998) 522 U.S. 222, 233.)
In order to enforce a sister state judgment, it is first necessary to obtain a domestic judgment on it. (8 Witkin, Cal. Procedure (4th ed. 1997) Enforcement of Judgment, § 414, p. 418.) The California Legislature enacted the Act (§ 1710.10 et seq.) to provide an economical and expeditious means for doing so. (Bank of America v. Jennet, supra, 77 Cal.App.4th at p. 114.) A California judgment can be obtained simply by registering the sister state judgment with the superior court, “thus avoiding the necessity of bringing a completely independent action” on the sister state judgment. (Washoe Development Co. v. Guaranty Federal Bank (1996) 47 Cal.App.4th 1518, 1522 (Washoe).) “With certain statutory exceptions, the new judgment has the same effect as an original California money judgment and ‘may be enforced or satisfied in like manner.’ (§ 1710.35.)” (Ibid.)
The Act also provides the exclusive means for attacking a judgment entered on a sister state judgment. (Liquidator of Integrity Ins. Co. v. Hendrix (1997) 54 Cal.App.4th 971, 973-979 [§ 473 not applicable to vacate judgment entered on sister state judgment]; but see Tsakos Shipping & Trading, S.A. v. Juniper Garden Town Homes, Ltd. (1993) 12 Cal.App.4th 74, 94 (Tsakos) [grounds for vacation of judgment entered on sister state judgment include mistake, surprise, or excusable neglect as provided in § 473].) Section 1710.40, subdivision (a), reads: “A judgment entered pursuant to this chapter may be vacated on any ground which would be a defense to an action in this state on the sister state judgment, including the ground that the amount of interest accrued on the sister state judgment and included in the judgment entered pursuant to this chapter is incorrect.”
Although the Act does not elaborate regarding the defenses that may be asserted on a sister state judgment, the Law Revision Commission comments to section 1710.40 state: “Common defenses to enforcement of a sister state judgment include the following: the judgment is not final and unconditional (where finality means that no further action by the court rendering the judgment is necessary to resolve the matter litigated); the judgment was obtained by extrinsic fraud; the judgment was rendered in excess of jurisdiction; the judgment is not enforceable in the state of rendition; the plaintiff is guilty of misconduct; the judgment has already been paid; suit on the judgment is barred by the statute of limitations in the state where enforcement is sought.” (Cal. Law Revision Com. com., 20 West’s Ann. Code Civ. Proc. (2007 ed.) foll. § 1710.40, p. 385, italics added.)
Apart from these defenses, “ ‘California must, regardless of policy objections, recognize the judgment of another state as res judicata, and this is so even though the action or proceeding which resulting in the judgment could not have been brought under the law or policy of California.’ ” (Silbrico Corp. v. Raanan (1985) 170 Cal.App.3d 202, 207; Traci & Marx Co. v. Legal Options, Inc. (2005) 126 Cal.App.4th 155, 160-161 [on motion to vacate, California law not relevant to question whether default sister-state judgment was enforceable in Ohio, the state of rendition]; Washoe, supra, 47 Cal.App.4th at pp. 1522-1524 [vacation of judgment entered on Nevada judgment not properly granted on grounds that judgment would have been precluded in California based on antideficiency laws].)
On a judgment debtor’s motion to vacate a judgment entered on a sister state judgment, the moving party bears the burden of showing by a preponderance of the evidence why relief should be afforded. (Tsakos, supra, 12 Cal.App.4th at p. 88; Tom Thumb Glove Co. v. Han (1978) 78 Cal.App.3d 1, 5.) The trial court’s ruling on the motion is appealable and an appellate court reviews the order for abuse of discretion. (Liebow v. Superior Court (1981) 120 Cal.App.3d 573, 576; Fishman v. Fishman (1981) 117 Cal.App.3d 815, 819; Tsakos, supra, 12 Cal.App.4th at pp. 88-89.) The court of appeal views all factual matters most favorably to the party prevailing below and the trial court’s order will not be set aside unless clear abuse of discretion affirmatively appears. (Id. at p. 89.)
II. Vassallo Has Failed to Show Abuse of Discretion
While Vassallo acknowledges that the applicable standard of review is abuse of discretion, he has not provided an appellate record from which such abuse may be shown. There is no written ruling from the trial court and no transcript of the oral proceedings. Nor did Vassallo request a statement of decision, which section 1710.40, subdivision (c), expressly provides for on a motion to vacate a judgment entered on sister state judgment by its reference to sections 632 and 634. We are left without any inkling of the court’s reasoning or the analysis that led to its decision and, thus, the doctrine of implied findings applies against Vassallo to support the order. (Michael U. v. Jamie B. (1985) 39 Cal.3d 787, 792-793, [failure to request statement of decision results in all intendments favoring the judgment or order below and the reviewing court’s assumption that the trial court made all necessary factual findings to sustain its ruling], superseded on other grounds by statute as stated in In re Zacharia D. (1993) 6 Cal.4th 435, 448; see also In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133-1138; In re Marriage of Ditto (1988) 206 Cal.App.3d 643, 647-649.) An appellant cannot obtain reversal of a trial court’s discretionary ruling on the basis of abuse of discretion when, as here, there is no record explaining the trial court’s reasoning. (Vo v. Las Virgenes Municipal Water Dist. (2000) 79 Cal.App.4th 440, 447-448 [statutory attorney fee award]; Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1264 [§ 998, subd. (c)(1) expert witness fee award]; Great Western Bank v. Converse Consultants, Inc. (1997) 58 Cal.App.4th 609, 615 [prevailing party costs].)
Compounding these gaps in the record, Vassallo has not cited any New York law to the effect that the judgment was indeed enforceable against the entity called Nayna Networks in that state, such that the trial court’s vacation of the judgment could only have been the result of an abuse of discretion by its failure to have applied operative legal principles to the matter at issue. (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 393 [action that transgresses confines of applicable legal principles of law is outside the permissible scope of discretion and constitutes abuse].) And we are not bound to look for such law on our own. (People v. Stanley (1995) 10 Cal.4th 764, 793 [court may treat as waived point that is asserted without legal argument and citation to authority]; Associated Builders & Contractors, Inc. v. San Francisco Airports Com. (1999) 21 Cal.4th 352, 366; Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785; Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 979 [conclusionary arguments without citation to recognized legal authority disregarded on appeal]; Reyes v. Kosha (1998) 65 Cal.App.4th 451, 466 [principle applies even on de novo review]; Dills v. Redwoods Associates, Ltd. (1994) 28 Cal.App.4th 888, 890 [reviewing court will not develop appellants’ arguments for them]; In re Marriage of McLaughlin (2000) 82 Cal.App.4th 327, 337 [where any error is relied on for reversal, it is not sufficient for appellant to point to the error and rest there].)
The essence of Vassallo’s claim that the trial court abused its discretion in vacating the judgment comes down to the bare contention that Nayna Networks had failed to meet its burden on the motion to vacate the judgment because it cited no New York law in its papers demonstrating that the New York judgment was not enforceable against it in that state. In other words, it was Nayna Network’s burden to show by a preponderance of the evidence that as a result of the various corporate events and transactions that occurred after entry of the New York judgment, that judgment was not enforceable against it as the successor in name only to the judgment debtor Rescon Technology, and that as a result of those events and transactions, the proper party against whom the judgment could be enforced was Northeast Development, the entity that had assumed Rescon’s liabilities by contract. And, so the argument goes, because Nayna failed to meet that burden, the motion should have been denied and the trial court’s order must be reversed.
When Vassallo applied for entry of the California judgment on sister state judgment, he properly presented a certified copy of the New York judgment. But the party known as Nayna Networks is not included among the parties that the judgment was rendered against. Vassallo’s application for entry of judgment on sister state judgment identifies the judgment debtor as “Nayna Networks, Inc., a Nevada corporation formerly Rescon Technology Corporation.” And the actual judgment was then entered against “Nayna Networks, Inc.” But this was done without Vassallo establishing with evidence submitted with the application that the named New York judgment debtor Rescon Technology Corp. was in fact now known as Nayna Networks, Inc. and that Nayna Networks, Inc. was thus the same entity as the New York judgment debtor against whom the judgment on sister state judgment should be entered. Thus, before entry of the California judgment, there was no evidentiary fact linking Rescon to Nayna Networks other than the bare allegation, only attested to by Vassallo’s attorney in the Judicial Council form application, that Nayna Networks was formerly known as Rescon Technology—the name of the New York judgment debtor. This may have had something to do with the trial court’s vacation of the judgment.
But establishing the trial court’s abuse of discretion on appeal requires more than the bare assertion that the court below was wrong. (Denham v. Superior Court (1970) 2 Cal.3d 557, 566 [discretion is abused only when, in its exercise, the trial court exceeds the bounds of reason, all of the circumstances before it being considered].) As we have discussed, general principles of appellate review include the presumption of correctness afforded to the ruling below and the appellant’s burden to affirmatively show error on an adequate record (Ketchum v. Moses, supra, 24 Cal.4th at pp. 1140-1141), coupled with the presentation of argument and authorities on each point raised. (People v. Stanley, supra, 10 Cal.4th at p. 793.)
It remains the appellant’s burden to affirmatively demonstrate error even when, as in this case, respondent does not file a brief. (Kriegler v. Eichler Homes, Inc. (1969) 269 Cal.App.2d 224, 226-227.)
Were we to substitute our own judgment for that of the trial court, we might agree with Vassallo and conclude that Nayna Networks did not demonstrate that the New York judgment was not enforceable against it in that state and, therefore, that the judgment below should not have been vacated under section 1710.40. But it is not the function of an appellate court reviewing a matter that lies within the sound discretion of the trial court to substitute its own judgment for that of the court below. (Avant! Corp. v. Superior Court (2000) 79 Cal.App.4th 876, 881-882.) In this context, it remains the appellant’s burden to affirmatively demonstrate error by furnishing a record on which we might evaluate the trial court’s reasoning and providing legal authorities to demonstrate action outside the bounds of reason or applicable legal principles. As Vassallo has not done either, we are left with no choice but to affirm the trial court’s discretionary order.
DISPOSITION
The order vacating the judgment against respondent Nayna Networks, Inc. is affirmed.
WE CONCUR: Bamattre-Manoukian, Acting P.J., Mihara, J.