SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-14-496624

DATE: 20140429

RE: Johnson & Johnson Finance Corporation, Applicant

AND:

The Estate of Key Kavoussi, Deceased, by His Executor, Howard Kavoussi, Iran Kavoussi, Howard Kavoussi, Harold P. Kavoussi, M. D. Inc., Second California Independent Physicians Association, Inc. and Pomona Equity Fund, Inc., Respondents

BEFORE: Carole J. Brown J.

COUNSEL:
Kristina Desimini, for Applicant

No one appearing for the Respondents, although duly served

HEARD: March 28, 2014

ENDORSEMENT

[1] The Applicant, Johnson & Johnson Finance Corporation (“the Applicant” or “J & J”) brings this application for an order recognizing and enforcing the Amended Judgment entered April 7, 2006, by the United States Bankruptcy Court, Central District of California in the matter of Chapter 7 Trustee v The Estate of Key Kavoussi, Deceased, by His Executor, Howard Kavoussi, Iran Kavoussi, Howard Kavoussi, Harold P. Kavoussi, M.D., Southern California Independent Physicians Association, Inc. and Pomona Equity Fund, Inc., Case Number LA 00-10729-ES, Adversary No. AD 01-01606-ES (the Fraudulent Transfer Action).

[2] The Amended Judgment was assigned to J & J Finance Corporation pursuant to a Notice of Assignment of Amended Judgment and Assignment of Amended Judgment dated July 20, 2010.

[3] The Amended Judgment is a final monetary judgment and all relevant appeal periods have expired.

[4] The Bankruptcy Court properly exercised its jurisdiction over the respondents in the Fraudulent Transfer Action and, as such, the plaintiff seeks to have the Amended Judgment recognized in Ontario.

[5] In the Fraudulent Transfer Action, J & J alleged, among other things, that the debtors made a series of fraudulent transfers of real property to the Kavoussis which were designed to render the debtors insolvent and unable to pay the J & J loans.

[6] On January 10, 2000, the debtors filed a voluntary Chapter 7 petition under the United States Bankruptcy Code in Bankruptcy Court with case number SA 00-19717-ES and a Trustee was appointed. The proceeding stayed the Fraudulent Transfer Action against the debtors under the US Bankruptcy Code. As a result of the commencement of the Chapter 7 proceedings, the Fraudulent Transfer Action became the property of the debtors' estate and, accordingly, the Trustee took over the action against the defendants.

[7] As regards jurisdiction of the California court, the Kavoussis resided or carried on business in the State of California at all material times. The loans were entered into in California. The defendants were duly served with notice of the action, retained counsel, and fully defended the action, delivering a defence, appearing in court and making submissions.

[8] The Amended Judgment includes reconveyance of certain properties located in California to the estate of Dr. Kavoussi and monetary judgment in the amount of $4,148,000.00 US to be paid by the defendants, less the value of Dr. Kavoussi's interest in the reconveyed properties, plus interest commencing October 20, 2004. The Amended Judgment remains outstanding.

[9] Certain of the defendants obtained judgment against Mr. Moos in an action for fraud commenced in the Superior Court of Orange County, California, with Superior Court number 30-2009-00126207. A Notice of Lien in respect of the California action was filed by the plaintiff on July 1, 2013, which attaches to all recoveries received by the Estate of Key Kavoussi and Howard Kavoussi individually and as agents of service for process for Pomona Equity Fund, Ltd. and Pomona Equity Fund, Inc. until the amount owing to J & J under the Amended Judgment is satisfied in full.

[10] J & J seeks recognition of the Amended Judgment to further protect and preserve its rights in Ontario pursuant to the Amended Judgment and Notice of Lien, and to ensure that any amounts owing to or received by the Kavoussi plaintiffs in respect of the recognition proceedings brought in Ontario (Court File No. CV-12-458484) are remitted to J & J until the outstanding indebtedness under the Amended Judgment is satisfied in full.

[11] I am satisfied that the tests for recognition and enforcement of foreign judgments have been met in this case.

Recognition of Foreign Judgments

[12] The law on the enforcement of foreign judgments in Ontario is well-established. The courts will generally enforce a foreign judgment when the foreign court properly took jurisdiction, the judgment is final and conclusive and the order is of a nature that the principle of international comity requires the Ontario court to enforce the order.

[13] As stated in Beals v Saldana, 2003 SCC 72, [2003] 3 S.C.R. 416, in enforcing a foreign judgment, the enforcing court must first determine whether the foreign court properly took jurisdiction, and the overriding factor in this determination is whether the foreign court had a real and substantial connection to the action or the parties. This connection must be of some significance, and must not be "fleeting or relatively unimportant".

[14] In the present case, the Bankruptcy Court properly took jurisdiction over all respondents. I find the real and substantial connection test is met. There is no question that the respondents attorned to the jurisdiction by defending the actions with retained counsel, attending the multiple hearings, serving written materials, making oral submissions and opposing the transfer of the Fraudulent Transfer Action to Bankruptcy Court. Based on the evidence before me, the Amended Judgment was properly obtained pursuant to California law.

[15] While a responding party may raise the limited defences available, including fraud, natural justice or enforcement of the foreign judgment being contrary to Canadian public policy, in the present case, the responding parties, although duly served, have not responded to this application.

[16] There is no evidence to suggest that the foreign judgment was obtained by fraud undetectable by the foreign court, that there was a failure of natural justice or that enforcing the California Amended Judgment would be contrary to public policy.

[17] Accordingly, I find that the Amended Judgment of the Superior Court of California is to be recognized and enforced in Ontario. In the coordinate action, Court file No CV-12-458484, above-mentioned at paragraph 10, I have held that the judgment of the Superior Court of California is to be recognized and enforced in Ontario.

Carole J. Brown J.

Date: April 29, 2014