Arrow Highway Steel, Inc. v. Dubin ( 2020 )

Filed 10/29/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
ARROW HIGHWAY STEEL, B303289
INC.,
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. EC068969)
v.
ROBERT DUBIN,
Defendant and
Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County, John J. Kralik, Judge. Affirmed.
Law Offices of Matthew C. Mickelson and Matthew C.
Mickelson for Plaintiff and Appellant.
Alpert Barr & Grant and David M. Almaraz for Defendant
and Respondent.
******
In Bendix Autolite Corp. v. Midwesco Enterprises, Inc.
(1988) 486 U.S. 888 (Bendix), the United States Supreme Court
held that an Ohio statute that tolled the statute of limitations
while a defendant is out of state impermissibly burdened
interstate commerce and was accordingly unconstitutional. (Id.
at pp. 891-895.) California has a similar tolling statute—Code of
Civil Procedure section 351—that, as relevant here, applies when
a defendant “departs from the State” “after [a] cause of action
accrues.” (Code Civ. Proc., § 351.)1 In this case, a creditor sued
in 2018 to enforce a 1997 judgment against a judgment debtor
who departed California in 1998 to start a new business in
Nevada. Because this lawsuit is timely only if section 351
applies, this case squarely presents the question: Does section
351 impermissibly burden interstate commerce—and hence
violate the so-called “dormant Commerce Clause”—when it is
used to toll the statute of limitations against a judgment debtor
who moved away from California to engage in commerce after the
judgment was entered? We conclude that the answer is “yes.”
This is the answer most consistent with California case law. The
creditor urges us to follow a recent Sixth Circuit case that charts
a different path than this California precedent, Garber v.
Menendez (6th Cir. 2018) 888 F.3d 839 (Garber), but we find
Garber to be unpersuasive. Accordingly, we affirm the trial
court’s grant of summary judgment to the debtor on the ground
that the creditor’s lawsuit is time-barred.
1 All further statutory references are to the Code of Civil
Procedure unless otherwise indicated.
2
FACTS AND PROCEDURAL BACKGROUND
I. Facts
Between 1967 and 1994, Arrow Highway Steel, Inc. (Arrow)
hired Robert Dubin (Dubin) to do its bookkeeping and to obtain
credit financing for its operations. Both Arrow and Dubin were,
during that time, based in California. Dubin obtained Arrow’s
credit financing from out-of-state lenders, and many of Dubin’s
other clients were located outside California.
In the early 1990s, Dubin embezzled money from Arrow.
For his crimes, Dubin was convicted of bankruptcy fraud in
federal court and served time in federal prison between 1995 and
1998, and after a brief period of parole, in 1998 and 1999.
In March 1994, Arrow and its principals—Seymour and
Henrietta Albert—sued Dubin and others to recover the money
Dubin embezzled from Arrow.2 On February 27, 1997, Arrow and
Dubin entered into a stipulated judgment pursuant to which
Dubin agreed to pay Arrow $937,000.
Dubin moved to Nevada after he was released from federal
prison (the first time) in 1998. After his final release from prison,
Dubin founded a new accounting, bookkeeping and tax business
that currently has clients all around the United States and
around the world.
At no point since 1997 did Arrow “renew” its judgment
against Dubin.
2 Arrow sued others as well, but they are not relevant to this
appeal.
3
II. Procedural Background
On July 3, 2018, Arrow filed a complaint seeking to enforce
its 1997 judgment against Dubin, along with interest and
attorney fees.
Dubin filed a motion for summary judgment on the ground
that Arrow’s lawsuit was time-barred because section 351, the
tolling statute Arrow relies upon to render its action timely,
violated the dormant Commerce Clause as applied to Dubin.3
Following further briefing, and a hearing, the trial court granted
summary judgment on the ground that Arrow’s lawsuit was time-
barred because section 351 was unconstitutional. The court
reasoned that the dormant Commerce Clause was, as a threshold
matter, implicated in this case because “Dubin [had] . . . engaged
in interstate commerce while he performed accounting services
for Arrow . . . .” To decide whether section 351 violated the
dormant Commerce Clause as applied in this case, the court
engaged in a two-part inquiry by (1) “assess[ing] the burden
section 351 would impose on interstate commerce under the
circumstances,” and (2) “determin[ing] whether the burden is
counterbalanced by state interests supporting section 351.” As to
the first part, the court found that section 351 imposed an
“unreasonable burden on interstate commerce” because it
“force[d]” a “‘nonresident individual engaged in interstate
commerce’” “‘to choose between [abandoning his Nevada business
and returning to] California for several years’” in order to run
down the limitations period or staying in Nevada to maintain his
business but forfeiting his limitations defense and remaining
3 Dubin also argued that Arrow, as a dissolved corporation,
lacked standing to enforce the lawsuit. This second ground
(which the trial court rejected) is not before us in this appeal.
4
“‘subject to suit in California in perpetuity.’” As to the second
part, the court found that California’s interests did not “outweigh
[this] burden” because the justification for tolling lawsuits
against out-of-state defendants was largely undermined by
“California[’s] . . . long-arm statute,” which “would permit service
on a[n out-of-state] defendant like Dubin.” Balancing these
factors, the court found that applying section 351 “to this case
would impermissibly burden interstate commerce and thereby
violate the [dormant] Commerce Clause as applied to Dubin.”
Following the entry of judgment, Arrow filed this timely
appeal.
DISCUSSION
Arrow argues that the trial court erred in granting
summary judgment for Dubin because, in its view, section 351
does not run afoul of the dormant Commerce Clause on the facts
of this case. As a result, Arrow continues, its action against
Dubin has been tolled since 1998, and thus its 2018 lawsuit on
the 1997 judgment is still timely.
A party in a civil case is entitled to summary judgment if,
among other things, he can show that the undisputed facts
“establish[] an affirmative defense” “as a matter of law.” (§ 437c,
subds. (c) & (o)(2).) Thus, summary judgment is appropriate
where the undisputed facts establish that a claim is barred by the
statute of limitations. (Jolly v. Eli Lilly & Co. (1988) 44 Cal. 3d
1103, 1112; Romano v. Rockwell Internat., Inc. (1996) 14 Cal. 4th
479, 487.) We independently review a trial court’s grant of
summary judgment. (Hartford Casualty Ins. Co. v. Swift
Distribution, Inc. (2014) 59 Cal. 4th 277, 286.)
California’s Enforcement of Judgments Law (§ 680.010 et
seq.) grants judgment creditors seeking to extend the
5
enforceability of a final judgment two options: (1) they can file an
application with the court that issued the judgment to renew that
judgment for another 10 years (§§ 683.110, 683.120), or (2) they
can file an action to enforce the judgment, and as long as that
action is timely filed, the creditors are entitled to enforcement
(§ 683.050 [authorizing such actions]; Green v. Zissis (1992) 5
Cal. App. 4th 1219, 1222-1223 (Green) [entitlement to relief
automatic]; Trend v. Bell (1997) 57 Cal. App. 4th 1092, 1098
[same]). (See generally Kertesz v. Ostrovsky (2004) 115
Cal. App. 4th 369, 372-373 (Kertesz) [detailing two options];
Pratali v. Gates (1992) 4 Cal. App. 4th 632, 637-638 (Pratali)
[same].)
If the judgment creditor pursues the latter option, it must
file its action within 10 years of the final entry of judgment or its
last renewal of judgment, whichever comes later. (§§ 337.5, subd.
(b) [setting 10-year limitations period for such actions], 683.220
[renewal extends time for such actions].) Section 351 is an
exception to all statutes of limitations in California, including
this one. It provides:
“[1] If, when the cause of action accrues against a
person, he is out of the State, the action may be
commenced within the term herein limited, after his
return to the State, and [2] if, after the cause of
action accrues, he departs from the State, the time of
his absence is not part of the time limited for the
commencement of the action.”
(§ 351.) As the bracketed numbers indicate, section 351 tolls the
limitations period in two different situations—namely, (1) when
the defendant is outside California at the moment the plaintiff’s
cause of action accrues, and (2) when the defendant is present in
6
California at the moment the cause of action accrues, but he
subsequently “departs” the state. (Kohan v. Cohan (1988) 204
Cal. App. 3d 915, 920 (Kohan).) This second clause applies
whether the departure is temporary (Green, supra, 5 Cal.App.4th
at p. 1223) or permanent (Heritage Marketing & Ins. Services,
Inc. v. Chrustawka (2008) 160 Cal. App. 4th 754, 761 (Heritage)).
In this case, Arrow’s stipulated judgment against Dubin
was finally entered on the day it was signed—February 27, 1997.
(See Cadle Co. II, Inc. v. Sundance Financial, Inc. (2007) 154
Cal. App. 4th 622, 624 [generally, “[a] stipulated judgment
. . . becomes final when entered”].) As a consequence, Arrow had
10 years—until February 27, 2007—to bring its enforcement
action. Arrow did not do so until July 3, 2018. The only way that
Arrow’s enforcement action is timely is if section 351 applies,
which occurs only if it withstands the dormant Commerce Clause
challenge leveled by Dubin. The constitutionality of a statute is a
question of law we independently review. (In re Taylor (2015) 60
Cal. 4th 1019, 1035.)
I. The Law of the Dormant Commerce Clause
A. Generally
The Commerce Clause of the United States Constitution
grants Congress the power “[t]o regulate Commerce . . . among
the several States.” (U.S. Const., art. I, § 8, cl. 3.) By entrusting
Congress with this power, the clause implies that the states lack
that power. (McBurney v. Young (2013) 569 U.S. 221, 235
(McBurney) [“the Court has long inferred that the Commerce
Clause itself imposes certain implicit limitations on state
power”]; Dep’t of Revenue v. Davis (2008) 553 U.S. 328, 337
(Davis) [same]; see also Pac. Merch. Shipping Ass’n. v. Goldstene
(9th Cir. 2011) 639 F.3d 1154, 1177 (Pacific Merchant) [“the
7
whole objective of the dormant Commerce Clause doctrine is to
protect Congress’s latent authority from state encroachment”].)
This “negative implication” of the clause is commonly referred to
as the “dormant Commerce Clause.” (Davis, at pp. 337-338.) In
defining the contours of the dormant Commerce Clause, the
courts have sought to preclude states from engaging in “economic
protectionism” (that is, from adopting laws “designed to benefit
in-state economic interests by burdening out-of-state
competitors”) while at the same time allowing the states to retain
one of the chief attributes reserved to them as members of our
federalist system of government (that is, the ability to operate as
semi-autonomous laboratories able to experiment and innovate in
regulating their own affairs and economies). (New Energy Co. v.
Limbach (1988) 486 U.S. 269, 273-274; Davis, at p. 337-338; Ariz.
State Legis. v. Ariz. Indep. Redistricting Comm’n (2015) 576 U.S.
787, 817 [“‘recogniz[ing] the role of the States as laboratories for
devising solutions to difficult legal problems’ [citation]”].)
In assessing whether a state law violates the dormant
Commerce Clause, courts are to ask two questions: (1) Does the
state law “discriminate[] against interstate commerce,” and if
not, (2) Does the state law nevertheless incidentally burden
interstate commerce? (Davis, supra, 553 U.S. at p. 338;
McBurney, supra, 569 U.S. at p. 235.) A state law discriminates
against interstate commerce if its purpose or “‘practical effect’” is
to discriminate against interstate commerce by giving local
interests or residents a leg up on out-of-state interests or
residents. (Maine v. Taylor (1986) 477 U.S. 131, 138 (Maine);
Pacific Merchant, supra, 639 F.3d at p. 1178.) Such a
discriminatory state law is valid only if it “‘advances a legitimate
local purpose that cannot be adequately served by reasonable
8
nondiscriminatory alternatives.’” (Or. Waste Sys., Inc. v. Dep’t of
Envtl. Quality (1994) 511 U.S. 93, 100-101 (Oregon Waste).) A
state law that “‘regulates evenhandedly’” but nevertheless has
“‘“incidental effects” on interstate commerce’” is valid as long as
its burden on interstate commerce is not “‘clearly excessive in
relation to [its] putative local benefits.’” (Oregon Waste, at p. 99;
Pike v. Bruce Church (1970) 397 U.S. 137, 142.)
B. The Bendix case
State laws that toll the statute of limitations on civil
actions for out-of-state defendants (but not in-state defendants)
are not uncommon. The leading case examining whether they
run afoul of the dormant Commerce Clause is Bendix, supra, 486
U.S. 888.
Bendix examined an Ohio law that tolled the statute of
limitations for any person or corporation not “present” in the
state. (Bendix, supra, 486 U.S. at p. 889.) In that case, a
Delaware corporation sued an Illinois corporation in Ohio and
sought to avoid the applicable four-year statute of limitations by
invoking the Ohio tolling law on the ground that the Illinois
corporation was not present in Ohio because it had not appointed
an agent for service of process in Ohio. (Id. at pp. 889-890.) As a
threshold matter, Bendix held that review under the dormant
Commerce Clause is warranted if a state “denies ordinary legal
defenses or like privileges to out-of-state persons or corporations
engaged in commerce.” (Id. at p. 893.) This threshold was
satisfied because Ohio’s statute denied the Illinois corporation
the right to rely on the statute of limitations defense due to its
out-of-state status.
“[C]hoos[ing]” to treat the Ohio law as a nondiscriminatory
state law that incidentally burdened interstate commerce, Bendix
9
examined (1) “[t]he burden the tolling statute places on interstate
commerce,” and (2) the state’s “putative interests” supporting the
law. (Bendix, supra, 486 U.S. at pp. 891-892.) Bendix found that
the tolling law placed a “significant” burden on interstate
commerce because it “forces” an out-of-state “corporation to
choose between exposure to the general jurisdiction of Ohio
courts” (by effectively becoming an Ohio resident by designating
an agent for service of process), on the one hand, and “forfeiture
of the limitations defense[ and] remaining subject to suit in Ohio
in perpetuity” (by remaining out of state), on the other hand. (Id.
at p. 893.) At the same time, Ohio’s putative interest in the
tolling law was weak: The law was meant to “protect[]” Ohio
“residents from corporations who become liable for acts done
within the State but later withdraw from the jurisdiction,” but
this interest was not appreciably advanced by the tolling law
because a very similar protection was already provided by Ohio’s
“long-arm statute,” which “would have permitted service” on the
Illinois corporation “throughout the period of limitations.” (Id. at
p. 894.) Bendix consequently held that “the burden imposed on
interstate commerce by the tolling statute exceed[ed] any local
interest that the State might advance.” (Id. at p. 891.)
C. Analytical framework
In light of the general law governing the dormant
Commerce Clause, and the specific application of that law to
tolling statutes aimed at out-of-state defendants in Bendix,
analyzing whether section 351 violates that clause is a three-step
process. First, the court must determine whether the
defendant—here, Dubin—was engaged in interstate commerce.
If not, then section 351 does not satisfy Bendix’s threshold
requirement that the state law “den[y]” an “ordinary legal
10
defense[] or like privilege[]” to an “out-of-state person[] or
corporation[] engaged in commerce.” (Bendix, supra, 486 U.S. at
p. 893, italics added.) Second, and if Dubin was engaged in
interstate commerce, then the court must determine whether
section 351 discriminates against interstate commerce—either by
purpose or in practical effect. (Davis, supra, 553 U.S. at p. 338;
Maine, supra, 477 U.S. at p. 138.) Third, and if Dubin was
engaged in interstate commerce but section 351 does not
discriminate against interstate commerce, then the court must
determine whether the burdens that tolling under section 351
places on interstate commerce are “‘clearly excessive’” in relation
to the statute’s “‘putative local benefits.’” (Oregon Waste, supra,
511 U.S. at p. 99; Bendix, at pp. 891-892.)
II. Analysis
A. Was Dubin engaged in interstate commerce?
In setting forth its threshold requirement that the out-of-
state defendant be “engaged in [interstate] commerce,” Bendix
did not specify whether the defendant had to be so engaged at the
time of the underlying transaction giving rise to the lawsuit or,
instead, at some point thereafter. (Bendix, supra, 486 U.S. at p.
893.) Most of the cases examining section 351 have looked solely
to whether the out-of-state defendant was engaged in interstate
commerce at the time of the underlying transaction. (E.g., Dan
Clark Family Limited Partnership v. Miramontes (2011) 193
Cal. App. 4th 219, 232 (Dan Clark) [examining whether
underlying transaction sought to be tolled was an “interstate
commercial transaction”]; Abramson v. Brownstein (9th Cir.
1990) 897 F.2d 389, 392 [same]; cf. Kohan, supra, 204 Cal.App.3d
at p. 924 [same, but concluding that transaction occurring in Iran
did not involve interstate commerce]; Pratali, supra, 4
11
Cal.App.4th at p. 643 [same, but concluding that a “single
amicable loan” transaction between two California residents did
not involve interstate commerce]; Mounts v. Uyeda (1991) 227
Cal. App. 3d 111, 122 [same, but concluding that underlying
automobile altercation involving two California residents as
private parties did not involve interstate commerce].) We need
not decide whether the time of the underlying transaction should
be the sole focus because it is undisputed in this case that Dubin
was involved in interstate commerce both at the time he
embezzled money from Arrow (which is what gave rise to the
stipulated judgment in this case) and currently, in his interstate
and international accounting, bookkeeping and tax practice.
Thus, the answer to this first question is “yes.”
B. Does section 351 discriminate against interstate
commerce in purpose or practical effect?
Section 351 does not discriminate against interstate
commerce by treating local interests or residents more favorably
than out-of-state interests or residents. (Maine, supra, 477 U.S.
at 138.) Section 351 is not facially discriminatory because it
“makes no distinction between residents and nonresidents for
purposes of tolling.” (Pratali, supra, 4 Cal.App.4th at p. 641; Dan
Clark, supra, 193 Cal.App.4th at p. 232, fn.9.) Section 351 also
does not have a discriminatory purpose because, as originally
enacted in 1872, its purpose was to stop the statute of limitations
from running against out-of-state defendants who were otherwise
not amenable to service of process (Dew v. Appleberry (1979) 23
Cal. 3d 630, 634 (Dew)), and not for some broader economic
protectionist purpose. And section 351 does not have the
“practical effect” of treating local interests or residents more
favorably. Section 351’s tolling provisions may be invoked by
plaintiffs regardless of their residency, and it applies against
12
defendants regardless of their residency or at what point in time
they left the State of California. Although, as a practical matter,
section 351 will by definition be applied only against entities who
are out of state during the period of tolling, this reality does not
equate to a discriminatory effect because the statute nevertheless
“regulate[s] evenhandedly . . . without regard to whether the
[parties to the lawsuit or the underlying transaction giving rise to
the lawsuit came] from outside the State.” (CTS Corp. v.
Dynamics Corp. of Am. (1987) 481 U.S. 69, 88; Minn. v. Clover
Leaf Creamery Co. (1981) 449 U.S. 456, 471-472; accord, Garber,
supra, 888 F.3d at p. 843 [so holding, as to a similar tolling
statute].)
Thus, the answer to this second question is “no.”
C. Does section 351 place burdens on interstate
commerce that are clearly excessive in relation to its
putative local benefits?
Like the state tolling law at issue in Bendix, section 351
places a “significant” burden on interstate commerce because it
“force[s] defendants . . . to choose between remaining in [or
returning to] California until the limitations period expire[s], or
[remaining outside of California but] forfeiting the limitations
defense and [thereby] remaining ‘subject to suit in California in
perpetuity.’” (Dan Clark, supra, 193 Cal.App.4th at p. 233;
Heritage, supra, 160 Cal.App.4th at p. 764; Abramson, supra, 897
F.2d at p. 392 [for these reasons, “[s]ection 351 imposes a
significant burden”].) This significantly burdens interstate
commerce if the defendant who is forced to make this choice has
“travel[ed]” out of state to “facilitat[e] . . . interstate commerce”
because, in that situation, section 351 creates the incentive for
the out-of-state defendant—and his commercial activity—to
remain in state rather than out of state. (Filet Menu, Inc. v.
13
Cheng (1999) 71 Cal. App. 4th 1276, 1283-1284 (Filet Menu);
Heritage, at p. 760.)4 This is certainly the case here, where
Dubin has set up an entire new interstate—and international—
business in Nevada.
And like the putative state interest underlying the Ohio
tolling law in Bendix, the putative state interest advanced by
section 351 is weak. Like the law at issue in Bendix, section 351
was initially designed to prevent defendants who left the state—
and thereby became beyond the reach of process—from escaping
liability altogether. (Dew, supra, 23 Cal.3d at pp. 636-637.) Like
the law at issue in Bendix, the advent of long-arm statutes and
their validity as a matter of due process (see Int’l Shoe Co. v.
Wash. (1945) 326 U.S. 310, 316) mean that out-of-state
defendants are now subject to process, such that section 351’s
original function is largely a quaint relic of the bygone era. To be
4 Because this incentive itself creates a significant burden on
interstate commerce, we need not decide whether the disincentive
that section 351 places on any “travel across state lines”—
whether or not commerce-related—also constitutes a significant
burden. The California courts appear to be split on this point.
(Compare Filet Menu, at pp. 1283-1284 [section 351 burdens
interstate commerce only when the out-of-state “travel [is] for the
facilitation of interstate commerce”] with Heritage, at p. 764
[suggesting that “creating disincentives to travel across state
lines . . . limits the exercise of the right to freedom of
movement”].) Although courts have generally concluded that
section 351 does not violate the federal right to interstate travel
(Dew, supra, 23 Cal.3d at pp. 636-637), this conclusion appears to
be analytically distinct from whether the incentives section 351
creates regarding whether to travel to conduct one’s business
significantly burden interstate commerce under the federal
dormant Commerce Clause.
14
sure, section 351 is not entirely purposeless these days: By
tolling the statute of limitations for out-of-state defendants,
section 351 “ease[s] the burden—however small—of locating and
serving out-of-state defendants” by stopping the clock. (Dew, at
pp. 636-637; Pratali, supra, 4 Cal.App.4th at pp. 641-642.)
Although this residual function may be sufficiently rational to
withstand equal protection scrutiny (Dew, at pp. 636-637), Bendix
and all of the cases applying Bendix to section 351 make clear
that this function is too weak to justify the “excessive burden”
that section 351 otherwise places on interstate commerce.
(Heritage, supra, 160 Cal.App.4th at p. 763 [“‘“[T]he state’s
interest in aiding its residents’ efforts to litigate against non-
resident defendants d[oes] not justify denying non-residents the
protections of the statute of limitations, particularly when long-
arm service of process [is] available[]” [citation]’”]; Dan Clark,
supra, 193 Cal.App.4th at pp. 233-234 [same]; Filet Menu, supra,
71 Cal.App.4th at p. 1283 [same]; Abramson, supra, 897 F.2d at
p. 393 [“Because th[e state’s interest] did not support the
corresponding burden created by the Ohio tolling statute in
Bendix, it also cannot support the burden created by [section]
351”].)
Thus, the answer to the third question is “yes,” and section
351 violates the dormant Commerce Clause as applied to a
defendant who moved out of state to operate a business engaged
in interstate commerce.
II. Arrow’s Arguments
Arrow proffers three main reasons why the analysis set
forth above is incorrect: (1) that analysis is out of step with the
Sixth Circuit’s recent decision in Garber, supra, 888 F.3d 839, (2)
that analysis is different—and comes out in Arrow’s favor—when
15
section 351 is used to toll an action to enforce a judgment, and (3)
section 351 still serves a rational purpose.
A. Garber
In 2018, the Sixth Circuit held that the Ohio tolling law
found to violate the dormant Commerce Clause in Bendix did not
run afoul of it as applied to an Ohio resident who moved out of
state to retire before being sued. (Garber, supra, 888 F.3d at pp.
840, 844-845.) Like Bendix, Garber recognized that Ohio’s tolling
law put defendants to a choice—stay in Ohio and run down the
statute of limitations clock, or move away and remain subject to
suit indefinitely. (Garber, at p. 844.) But Garber viewed this
forced choice as being no different from a myriad of other state
laws that “provide benefits to residents that the residents put in
jeopardy if they move” out of state. (Ibid.) What is more, Garber
regarded such state laws—that is, laws aimed at “attract[ing]
and retain[ing] residents through policy choices”—as being “a
healthy byproduct of the laboratories of democracy in our
federalism-based system of government, not a sign of
unconstitutional protectionism.” (Ibid.) For support, Garber
drew upon McBurney, supra, 569 U.S. 221. McBurney held that a
Virginia law that made all public records “‘open to inspection and
copying’” to Virginia residents (but not to nonresidents) did not
violate the dormant Commerce Clause because it “merely
provide[d] a service to local citizens that would not otherwise be
available at all”; because Virginia itself had “created” the
“‘market’ for public documents in Virginia,” McBurney held, its
law restricting access to in-state residents did not “‘interfere[]
with the natural functioning of the interstate market.’”
(McBurney, at pp. 223, 235, italics added.) Garber read
McBurney as declaring that there is no dormant Commerce
16
Clause defect with state laws that “discourage[] [in-state
residents] from moving to other States because they would lose” a
benefit. (Garber, at p. 844.) Garber went on to assume that the
Ohio tolling law might violate the dormant Commerce Clause if
the defendant had introduced “proof of real burdens” imposed by
the law (id. at p. 845), but found that the defendant in that case
had not done so. Garber distinguished Bendix on the ground that
the tolling law, when applied to a defendant who had once been a
resident of Ohio, “merely creates a benefit for residents of Ohio.”
(Id. at p. 846.)
Were the slate blank, we may well agree with Garber’s
analysis. But the slate is anything but blank.
As Arrow itself recognizes, Garber is inconsistent with how
the California courts have applied the dormant Commerce Clause
to section 351. If, as Garber suggests, tolling laws are valid when
applied to in-state residents who move out of state, then
Heritage—which also involved a defendant who moved out of
state but concluded that section 351 was constitutionally
invalid—was wrongly decided. (Heritage, supra, 160 Cal.App.4th
at pp. 757-758.) What is more, subsequent cases have cited
Heritage with approval. (E.g., Dan Clark, supra, 193 Cal.App.4th
at pp. 230, 233.) “Where out-of-state authority is at odds with
California law, it lacks even persuasive value,” particularly when
that authority is a lone voice in the woods. (Lucent Technologies,
Inc. v. Board of Equalization (2015) 241 Cal. App. 4th 19, 35,
citing Fairbanks v. Superior Court (2009) 46 Cal. 4th 56, 63; cf.
Etcheverry v. Tri-Ag Service, Inc. (2000) 22 Cal. 4th 316, 321
[noting that the decisions of lower federal courts “on a federal
question” are particularly persuasive where they are “‘both
numerous and consistent’”].)
17
What is more, Garber appears to be in tension—if not
downright inconsistent—with Bendix itself. As explained above,
Bendix concluded that the very same Ohio tolling law imposed a
“significant” burden on interstate commerce by “forc[ing]” a
defendant who is out of the state after a lawsuit is filed “to choose
between” moving back to Ohio (in order to run down the statute
of limitations clock) or to remain out of state (and thus remain
subject to suit “in perpetuity” and thereby lose the statute of
limitations defense). (Bendix, supra, 486 U.S. at p. 893.) That
choice—and its resulting burden on interstate commerce by
providing an incentive for the commerce-engaged defendant to re-
locate to Ohio—remains the same whether or not that defendant
started out as an Ohio resident. Garber’s attempt to distinguish
Bendix on this ground is, for that reason, unpersuasive. Further,
Garber’s chief rationale appears to conflate two separate strands
of dormant Commerce Clause analysis. Garber analogizes the
Ohio tolling law to state laws that deny benefits to residents who
leave a state and finds them constitutionally valid because such
laws are “not a sign of unconstitutional protectionism” (Garber,
supra, 888 F.3d at p. 844), but the dormant Commerce Clause
inquiries into a discriminatory purpose on the one hand, and into
an excessive burden on interstate commerce on the other, are
distinct. (Davis, supra, 553 U.S. at pp. 338-339.) Garber’s
conclusion that the Ohio tolling law, as a state law denying
benefits to residents who move away, has no discriminatory
purpose does not undermine Bendix’s wholly independent holding
that the very same law imposes an unconstitutionally excessive
burden on interstate commerce. Nor does McBurney cast any
doubt (or, for that matter, any shade) on Bendix because, as
McBurney itself acknowledged, it involved a public records access
18
law that created a wholly new market but limited access to that
market, whereas the tolling law at issue in Bendix created an
excessive burden on the already existing interstate commerce
marketplace.
Because we conclude that Garber is inconsistent with
California law and with Bendix itself, we decline to follow it.
B. Actions to enforce judgments
By its plain text, section 351’s tolling rule applies to all out-
of-state defendants, regardless of the nature of the plaintiff’s
claim against them. (§ 351.) Arrow argues that the nature of the
claim alters the dormant Commerce Clause inquiry into whether
section 351 imposes an excessive burden on interstate commerce,
at least when the plaintiff is seeking to enforce a judgment. As
noted above, section 351 imposes an excessive burden on
interstate commerce because it forces out-of-state defendants
(who are otherwise engaged in interstate commerce) to decide
between returning to California (to run down the statute of
limitations clock) or to remain outside of California (but be
subject to tolling—and hence suit—indefinitely). (Dan Clark,
supra, 193 Cal.App.4th at p. 233; Heritage, supra, 160
Cal.App.4th at p. 764; Abramson, supra, 897 F.2d at p. 392.)
Arrow argues that the out-of-state defendant’s decisional calculus
is different when the plaintiff is bringing a claim to enforce a
judgment because California law makes judgments “endlessly
and effortlessly renewable.” As a result, Arrow continues, an out-
of-state defendant in such case gains no advantage from
returning to California (because the statute of limitations clock is
irrelevant in light of the power of the plaintiff to renew the
judgment). Because section 351 in this situation creates no
19
incentive to return to California, Arrow concludes, it does not
excessively burden interstate commerce.
Arrow’s argument takes an impermissible “alternate
timeline” approach to constitutional analysis. As noted above,
Arrow is correct that judgment creditors have the statutory right
to renew their judgments if they do so within 10 years.
(§§ 683.110, 683.120.) But renewing a judgment is an
“alternative” to suing to enforce a judgment. (Pratali, supra, 4
Cal.App.4th at pp. 637-638; Kertesz, supra, 115 Cal.App.4th at p.
373.) Indeed, the decision to pursue the latter indicates a
decision not to pursue the former. More to the point, it is
undisputed that Arrow chose not to renew the judgment and to
sue to enforce the judgment. Because Arrow waited 21 years to
take any action, it is now too late for Arrow to renew its
judgment. Dubin consequently faces the same incentives under
section 351 as any other out-of-state defendant facing suit in
California: Return to California to run down the applicable
limitations period (here, 10 years in actions to enforce a
judgment), or remain out-of-state but subject to indefinite tolling
under section 351. Because the dormant Commerce Clause
analysis in this case turns on what actions Arrow actually took—
rather than what actions Arrow might have taken—the fact that
the judgment against Dubin might have been subject to infinite
renewals in an alternate timeline is irrelevant.
C. Rationality of section 351
Although our Supreme Court has upheld section 351
against equal protection challenges as continuing to serve a
legitimate and rational state objective (Dew, supra, 23 Cal.3d at
pp. 636-637; see also G.D. Searle & Co. v. Cohn (1982) 455 U.S.
404, 405-410 [upholding a similar New Jersey tolling statute on
20
equal protection grounds]), this finding says nothing about
section 351’s validity—or, more to the point, invalidity—under
the dormant Commerce Clause as applied to the facts of this case.
(Bendix, supra, 486 U.S. at pp. 893-894 [“[S]tate interests that
are legitimate for equal protection or due process purposes may
be insufficient to withstand Commerce Clause scrutiny”].)
DISPOSITION
The judgment of dismissal is affirmed. Dubin is entitled to
his costs on appeal.
CERTIFIED FOR PUBLICATION.
______________________, J.
HOFFSTADT
We concur:
_________________________, Acting P.J.
ASHMANN-GERST
_________________________, J.
CHAVEZ
21