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Alberta Securities Commission v. Ryckman

Superior Court of Delaware, New Castle

May 5, 2015

ALBERTA SECURITIES COMMISSION, Judgment Creditor,
v.
LAWRENCE G. RYCKMAN, Judgment Debtor.

Submitted: February 12, 2015

Upon Judgment Debtor's Motion to Vacate Judgment DENIED

Upon Judgment Creditor's Motion to Compel GRANTED

Upon Garnishee Studio One Media, Inc.'s Motion to Quash DENIED

Robert J. Katzenstein, Esquire, Smith, Katzenstein & Jenkins LLP, Attorney for Judgment Creditor

Colm F. Connolly, Esquire, Morgan, Lewis & Bockius, LLP, Attorney for Judgment Debtor

Kevin A. Guerke, Esquire, Seitz, Van Ogtrop & Green, P.A., Attorney for Studio One Media, Inc.

OPINION

The Honorable Mary M. Johnston Judge

PROCEDURAL CONTEXT

This case presents an issue of first impression in Delaware. The Alberta Securities Commission ("ASC"), the judgment creditor, brought this action against Lawrence G. Ryckman ("Ryckman"), the judgment debtor, to enforce an Arizona judgment, which originated in Canada. The ASC is a duly authorized and constituted administrative body for the Canadian government in Alberta. At the time of the Canadian judgment, Ryckman resided in Alberta, Canada. At the time of the Arizona judgment, Ryckman resided in Scottsdale, Arizona.

Ryckman has moved to vacate the ASC's action to enforce the Arizona judgment in Delaware pursuant to Superior Court Civil Rule 60. Ryckman argues the Arizona judgment is not entitled to full faith and credit under the United States Constitution and Delaware's Uniform Enforcement of Foreign Judgments Act ("UEFJA") because the Arizona judgment is a domesticated Canadian judgment. It is undisputed that Delaware could not directly domesticate the Canadian judgment because it would violate Delaware's Uniform Foreign-Country Money Judgment Recognition Act ("UFCMJRA").

In response, the ASC contends that even if Delaware could not directly domesticate the Canadian judgment, Delaware must enforce the Arizona judgment under the full faith and credit clause and the UEFJA.

On December 17, 2014, the ASC served a subpoena duces tecum directed to garnishee Studio One Media, Inc. ("Studio One") requesting: (1) a corporate designee for a deposition in Delaware pursuant to Superior Court Civil Rule 30(b)(6); and (2) certain documents pursuant to Superior Court Civil Rules 30(b)(6) and 45. On December 30, 2014, Studio One filed objections to every item requested. On January 5, 2015, the ASC filed a motion to compel the subpoena. On January 29, 2015, Studio One filed a motion to quash the subpoena.

UNDISPUTED FACTS

A hearing was held before the ASC in January 1996.[1] The ASC found that Ryckman had violated the Alberta Securities Act in his role as director and chairman of Westgroup when he deliberately engaged in a complex scheme that created a false and misleading appearance of trading designed to deceive investors to trade at artificial prices.[2] The ASC ordered Ryckman to resign any positions that he held as director or officer for any issuer; to cease serving as a director or officer for any issuer for 18 years; to cease trading in all securities for any issuer for 18 years; and to pay $492, 640.14 (Canadian Dollars) in costs to the ASC.[3] On January 18, 1996, the ASC obtained a valid judgment against Ryckman in Canada ("Canadian Judgment").[4]

In January 1997, Ryckman moved his residence from Canada to Scottsdale, Arizona.[5] The Superior Court of Arizona considered the pleadings and heard argument on the ASC's action to domesticate the Canadian Judgment in Arizona. The Arizona court granted the ASC's Motion for Summary Judgment and ordered judgment against Ryckman and his wife.[6] The court ordered judgment for $485, 140.14 (Canadian Dollars) for the principal owed plus 10 percent per annum interest from the date of the Arizona judgment; $87, 222.23 (Canadian Dollars) in past due interest; and $202.50 (U.S. Dollars) for recoverable court costs plus 10 percent per annum interest from the date of the Arizona judgment ("Arizona Judgment").[7]

Ryckman then appealed the lower court's decision to the Arizona Court of Appeals. The court of appeals affirmed the trials court's holding based on principles of comity. The court of appeals found that the Canadian Judgment was final, on the merits, and not procured by prejudice, fraud, unfairness, or irregularities in the foreign-country proceedings.[8] For purposes of the motions at issue, the validity of the Arizona Judgment is not disputed.

On July 31, 2013, the ASC filed a copy of the Arizona Judgment in Delaware, seeking to enforce the judgment pursuant to the UEFJA.[9]

It is undisputed that Delaware could not directly domesticate the Canadian Judgment for two reasons. First, the Canadian Judgment violates the UFCMJRA's statute of limitations. Delaware's UFCMJRA imposes a 15-year statute of limitations on foreign-country judgment recognition.[10] The Canadian Judgment was issued in 1996 and the instant action was filed in Delaware in 2013-a 17-year gap.[11]

Second, the Canadian Judgment constitutes a fine or penalty. The UFCMJRA "does not apply to a foreign-country judgment . . . to the extent that the judgment is: . . . [a] fine or other penalty."[12] The Canadian Judgment is a fine or penalty because the ASC ordered a pecuniary judgment on Ryckman to punish him for his Securities Act violations.

ANALYSIS

Motion to Vacate

The narrow issue presented is a matter of first impression in Delaware. Ryckman argues the enforcement action violates Delaware's UFCMJRA because the Canadian Judgment was not domesticated in Arizona under the UFCMJRA. Consequently, he contends the Arizona Judgment should be analyzed as a foreign-country judgment under the UFCMJRA, not a sister-state judgment entitled to full faith and credit.

Standard of Review

Superior Court Civil Rule 60(b) provides that a Court "may relieve a party . . . from a final judgment, order, or proceeding for. . . (6) any other reason justifying relief from the operation of the judgment." The "catch-all" clause in Rule 60(b)(6) vests power in the Court to vacate judgments in order to accomplish justice.[13]Relief under the catch-all clause requires "extraordinary circumstances."[14]

Full Faith and Credit Clause

Article IV, Section 1 of the United States Constitution states, in pertinent part: "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State."[15] ...


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