California court upholds $30 million judgment against Russian businessman

By Amanda Thomas | Mar 19, 2018

SAN DIEGO – A California appeals court has upheld a Russian court’s $30 million judgment against a businessman who fled the country to seek political asylum in the United States.    

The 4th Appellate District Court of Appeal’s March 12 decision reversed a lower court ruling that denied recognition of the Russian judgment. The appeal court ruled that Russia’s Alpha Bank followed due process when filing a claim against Russian businessman Oleg Nikolaevich Yakovlev. 

Russian’s Alpha Bank loaned millions of dollars to a Russian company that later defaulted on the loan, according to the decision. Alpha Bank then turned to Yakovlev who personally guaranteed the loans in a surety agreement. In May 2009, the bank filed a statement of claim against Yakovlev in the Meschansky District Court in Moscow. 

But the claim was filed a month after Yakovlev fled Russia to seek political asylum in the U.S. In his asylum application, he claimed to have faced persecution from high-ranking Russian officials. He didn’t notify Alpha Bank about his change of address before leaving the country, and the case continued in his absence, according to the decision.

A judgment was entered in favor of the bank in September 2009. Court records show that the judgment totaled $30,530,136.66. 

Alpha Bank learned Yakovlev was living in the United States in 2013 and hired an investigator to find him. The investigator located Yakovlev in San Diego, and the bank filed suit against him in 2014, seeking to enforce the Russian judgment. But Yakovlev argued that the judgment couldn’t be recognized because he did not receive timely notice of the Russian proceeding and the court lacked personal jurisdiction. The Superior Court of San Diego County agreed and denied recognition of the Russian judgment, citing a lack of personal jurisdiction and ineffective service of process. 

While the summons letter had been mailed, the trial court found that there was no evidence Yakovlev received it. But the decision was reversed when the appeals court ruled that the Russian judgment was entitled to recognition. In an opinion by Judge William Dato, the appeals court found that due process doesn’t require actual notice but only a method of service “reasonably calculated” under the circumstances of the case. In this case, the standard was met when registered mail was delivered to Yakovlev’s address designated on the surety agreement.  

The court ruled that Yakovlev was obligated to notify Alpha Bank of his change of address, but failed to do so. 

“Were we to side with Yakovlev, a defendant contractually obligated to maintain an updated address for service could avoid recognition of a foreign judgment by evading services,” according to the opinion. “This would conflict with settled California law.” 

According to the surety agreement, Yakovlev was required to notify the bank within five days of his change of address. The decision also noted that Russian courts may authorize a search for a defendant under certain circumstances, but this case doesn’t qualify.

“Once the court received notice from the telegram operator that Yakovlev no longer resided at this last known place of residence, it satisfied its service obligations under Russian law,” the opinion reads. 

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