In the

United States Court of Appeals

For the Seventh Circuit ____________________

Nos. 12-2706 & 13-2045

SUSAN GOLDMAN,

Trustee of Goldman Living Trust 

U/A/D December 19, 2000,

Plaintiff-Appellee,

v.

JAMES R. GAGNARD and

MICHELLE GAGNARD,

Defendants-Appellees.

____________________

Appeals from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 1:11-cv-08843 — John W. Darrah, Judge.

____________________

ARGUED FEBRUARY 18, 2014 — DECIDED JUNE 27, 2014

____________________

Before ROVNER, WILLIAMS, and TINDER, Circuit Judges.

TINDER, Circuit Judge. This case comes to us with a byzantine procedural history, with a certain Jarndyce v. Jarndyce, 

Dickensian flavor. The litigation has spanned ten years and 

involves numerous parties, as well as several interlinked 

proceedings in different tribunals. But the main question 
2 Nos. 12-2706 & 13-2045

underlying the appeal is clear: can a party wait indefinitely 

to try to correct an error by a tribunal, or is it required to do 

so in a timely manner? We draw upon common-sense principles of waiver and estoppel to conclude that the Defendant-Appellants are long past the logical point at which they 

could have moved to correct the alleged error by a California 

state court in interpreting the arbitral award. 

I

Defendant-Appellants James and Michelle Gagnard built 

a house in Los Altos, California, then sold the home to Plaintiff-Appellee Susan Goldman in January of 2004. What could

have been a simple transaction actually spawned five separate judicial proceedings over ten years, owing to water 

leaks that sprang in the house and patio, causing extensive 

property damage. Over the past ten years, Goldman has 

sued the Gagnards and the cast of characters involved with 

the construction and sale of the house in varying permutations and in different tribunals. The course of these proceedings is important to the disposition of this case, so we summarize them at some length.

1. Contractors’ action in California state court

Goldman first filed a civil action in California state court 

against the general contractor and subcontractors who built 

the property for the Gagnards. During the contractors’ action, Goldman discovered that the Gagnards had knowledge 

of the water leak problems prior to the 2004 sale. Goldman 

elected not to bring the claims against the Gagnards in this 

action because of the arbitration clause governing the sales 

contract (more on that soon). Instead, Goldman settled her 

suit with the contractors for approximately $1.9 million in 
Nos. 12-2706 & 13-2045 3

early 2008, then brought an arbitration proceeding against 

the Gagnards before the Judicial Arbitration and Mediation 

Service in April 2008. 

2. Arbitration between Gagnards and Goldman

The parties’ real estate contract provided an arbitration 

clause stating that “[a]ny dispute arising out of this transaction shall be decided by neutral binding arbitration” and 

that “the decision of the arbitrator is final and binding on all 

parties to the arbitration agreement.” The arbitration was 

tried before a retired federal judge, who ruled that the 

Gagnards owed Goldman damages of $611,875, along with

$475,307 in attorneys’ fees, as well as $90,178 in costs. The 

Gagnards argued that the Gagnards’ obligation to Goldman 

should be offset by Goldman’s settlement award from the 

contractors, but the arbitrator denied this argument, asserting that he could not do so because he did not have the contractors before him. Specifically, he stated:

This, however, is not the forum to determine the 

proper allocation of the $1.9 million settlement. The 

contractor and subs are not before the Arbitrator. It is 

up to Respondents to take the proper legal action in 

the proper forum to obtain relief in this regard. 

3. Gagnard-initiated California state action (the Campi

litigation)

On March 28, 2010, the Gagnards filed a civil action in 

California state court (referred to also as the “Santa Clara 

court”) against the real estate brokers who had represented 

Goldman and the Gagnards in the purchase and sale of the 

property, as well as some of the contractors. Goldman intervened as a plaintiff in that action, seeking to recover the dif-
4 Nos. 12-2706 & 13-2045

ference between the actual cost of repairing the home and 

the damages she had been awarded to date. The Gagnards 

filed an amended complaint naming Goldman as a defendant, and sought declaratory judgment as to whether they 

were entitled to an allocation or offset of Goldman’s arbitration award to reflect the general contractor’s and subcontractors’ payments to her. Goldman filed a demurrer as to the 

setoff claim. (“Under California practice, a general demurrer 

to a complaint is the equivalent of a motion to dismiss under 

Fed. R. Civ. P. 12(b) in federal practice.” Garner v. UICI, 508 

F.3d 559, 563 n.5 (9th Cir. 2007).) On October 18, 2011, the

Santa Clara court sustained Goldman’s demurrer without 

leave to amend (or in federal parlance, with prejudice); it 

found that the arbitrator’s statement on the setoff issue was a 

final and binding decision as to the offset question, and 

thereby denied the Gagnards’ requested setoff. Curiously, 

the Gagnards did not appeal this decision. The docket shows 

that the Campi case was closed almost two years later, on 

June 27, 2013, after a conditional settlement.

4. The FAA case in California federal district court 

While the Campi decision on the setoff issue was still 

pending, Goldman filed suit in California federal district 

court under the Federal Arbitration Act, seeking confirmation of her arbitral award against the Gagnards. The

Gagnards moved for a stay of this confirmation proceeding 

until the Santa Clara court decided the setoff claim. The 

court allowed the stay. But once the setoff issue was decided 

against the Gagnards, the California federal district court

ordered the Gagnards to withdraw the stay motion or explain why it was not moot. The Gagnards withdrew the stay

request without setting forth any theory of why the motion 
Nos. 12-2706 & 13-2045 5

was not moot, and Goldman promptly submitted a proposed form of judgment. On October 27, 2011, the district 

court entered an order confirming the award, finding that 

the Gagnards had not alleged any grounds under the FAA to 

vacate, modify, or correct the Arbitration Award and that 

the court itself had found none. The district court also allowed Goldman to recover prejudgment interest, pursuant 

to California law.

5. The registration proceeding in Illinois federal district court

Finally, in December of 2011, Goldman commenced a

registration proceeding against the Gagnards in Illinois federal district court to register her arbitral award, then based 

on the registered judgment, sought citations to discover and 

collect assets. The Gagnards moved to dismiss the citations, 

and the motion was denied by the district court. The 

Gagnards then moved for reconsideration, and Goldman 

filed for turnover of certain liquid assets in the Gagnards’ 

possession. The district court issued a written opinion denying the reconsideration motions and granting the turnover 

order. The Gagnards appealed those orders to us.

After filing that appeal, the Gagnards paid the sum of 

$1.3 million to Goldman in satisfaction of the judgment. 

Goldman accepted the payment, and refunded to the 

Gagnards the money she had collected in excess of the 

judgment balance. The Gagnards then moved for a dismissal 

of the citations, and for the court to grant them leave to file a 

counterclaim against Goldman. The district court held a 

hearing on December 6, 2012, and granted Goldman’s oral 

motion to discharge all pending citations. The district court 
6 Nos. 12-2706 & 13-2045

also gave the Gagnards leave to file a counterclaim against 

Goldman.

On January 3, 2013, the Gagnards filed a “countercomplaint,” which contained three claims of relief against 

Goldman for unjust enrichment. The claims were, respectively:

(1) Goldman was unjustly enriched by a $15,000 

payment obtained from a third party as a result of 

one of her citations, in excess of the judgment balance,

(2) $611,875 of the Gagnards’ payment to Goldman 

was unjust enrichment because it duplicated 

Goldman’s prior recovery from the subcontractors 

for the same damages, and

(3) The California federal district court lacked subject 

matter jurisdiction to modify the Arbitration 

Award to include prejudgment interest.

Goldman moved to dismiss the counter-complaint for failure 

to state a claim. The district court dismissed the countercomplaint with prejudice. The Gagnards filed a timely appeal.

II

The Gagnards frame this appeal as an attempt to finally 

get the setoff issue litigated in a substantive way. But it is 

perplexing why they waited so long to have the issue litigated. “Although waiver is a flexible concept with no definite 

and rigid meaning,” it is “basically an equitable principle 

used by courts to avoid harsh results when a party has conducted itself in a way as to make those results unfair.” Shear-
Nos. 12-2706 & 13-2045 7

son Hayden Stone, Inc. v. Leach, 583 F.2d 367, 370 (7th Cir. 

1978). Our doctrine on waiver acknowledges that a right 

may be “taken away from its holder as a penalty for failure 

to assert it in a clear and timely manner.” United States v. 

Johnson, 223 F.3d 665, 669 (7th Cir. 2000).

The Gagnards are correct that they were entitled to raise 

the setoff issue. However, as the arbitrator noted when the 

issue was presented the very first time, “it [was] up to [the 

Gagnards] to take proper legal action in the proper legal forum to obtain relief in this regard.” And the time to obtain 

such relief was not unlimited: they were required to do so 

promptly, or risk waiving or forfeiting the issue, especially 

because the many related proceedings were interlinked. (The 

interlinked nature of the proceedings is relevant because, as 

we have reasoned in enforcing equitable principles like collateral estoppel, we find it important to “promote[] judicial 

efficiency and prevent[] inconsistent decisions” in multiple 

litigations involving the same parties. Donald v. Polk Cnty., 

836 F.2d 376, 381 (7th Cir. 1988).) And indeed, we endeavor 

to “promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses 

disappeared... . [T]he right to be free of stale claims in time 

comes to prevail over the right to prosecute them.” Order of 

R.R. Telegraphers v. Ry. Express Agency, 321 U.S. 342, 348–49 

(1944). So it was up to the Gagnards to direct the course of 

legal dominoes, by pressing the issue in a timely manner before the various tribunals involved.

It appears that the filing of the Campi case was the first 

step in getting this question adjudicated. Many of the parties 

were before one tribunal, including the Gagnards, Goldman, 
8 Nos. 12-2706 & 13-2045

and at least the general contractor, who was party to the contractors’ settlement. And the Gagnards put the setoff issue 

squarely before the Santa Clara court. They also requested 

that the California federal district court wait to confirm the 

arbitral award until the Santa Clara court decided the setoff 

issue, acknowledging that the Santa Clara court’s decision 

on the matter would ripple into the related proceedings. So 

far, so good. Then the California state court considered the 

setoff argument and, according to the Gagnards, misapprehended the implication of the arbitrator’s decision. 

We are puzzled by the Gagnards’s inaction in the aftermath of the Santa Clara court’s decision. California civil procedure does not explicitly provide for appeals from orders 

sustaining a demurrer, because such orders do not constitute 

a final judgment. See Cal. Civ. Pro. § 904.1. And ultimately, 

the Campi litigation would rage on for almost two full years 

after that decision, resulting in a partial settlement, not presenting an opportunity for appellate review after the final 

judgment. But if the Campi court’s misapprehension was as 

grave as the Gagnards claim, and since the California federal 

court was waiting to adopt the California state court’s conclusion on this matter, the Gagnards could have petitioned 

for a writ of mandate. See Cal. Civ. Proc. § 1086 (providing 

the availability of a writ of mandate for “all cases where 

there is not a plain, speedy, and adequate remedy”); Kurwa 

v. Kislinger, 309 P.3d 838, 844 (Cal. 2013) (“Where unusual 

circumstances justify it, review of interlocutory judgments 

may be obtained by petition for writ of mandate ... .”). The 

Gagnards could also have tried to litigate the issue substantively in the California federal district court. The federal district court offered such an opportunity in ordering that the 

Gagnards explain why their stay motion was not moot, else 
Nos. 12-2706 & 13-2045 9

withdraw it. By not filing paper before the California district 

court explaining why the setoff motion had been wrongly 

decided by the Santa Clara court, the Gagnards intentionally 

relinquished a clear opportunity to preserve this issue for 

further review. This decision constituted waiver. United 

States v. Olano, 507 U.S. 725, 733 (1993) (waiver is the “intentional relinquishment or abandonment of a known right”) 

(internal quotation marks omitted). Having squandered this 

opportunity, as well as whatever opportunity existed in the 

Santa Clara court, the Gagnards cannot now claim that the 

lack of substantive litigation on the setoff issue was a fate 

that was pushed upon them. It was the foreseeable result of 

their own inaction. 

And having failed to act in a timely manner, the 

Gagnards cannot now try to litigate this issue in the federal 

district court in Illinois—a tribunal entrusted not with sifting 

through the substantive arguments, but simply with enforcing the judgment entered by the entities that invested significant resources and time in determining which parties owed 

what to whom. The purpose of 28 U.S.C. § 1963 is to “assist[]

judgment creators by making it possible for them to pursue 

the property of a debtor in satisfaction of a judgment by the 

ordinary process of levying execution in any district where 

the judgment is registered.” Juneau v. Couvillion, 148 F.R.D. 

558, 559 (W.D. La. 1993) (alteration in original) (internal quotation marks omitted). “It was enacted so that creditors and 

debtors would be spared the additional cost and harassment 

of further litigation which would otherwise be required by 

way of an action on the judgment in a district other than that 

where the judgment was originally obtained.” Id. (internal 

quotation marks omitted). The Illinois court did not have jurisdiction to substantively “modify or annul” the judgment 
10 Nos. 12-2706 & 13-2045

of the California federal court. Bd. of Trs., Sheet Metal Workers’ Nat’l Pension Fund v. Elite Erectors, Inc., 212 F.3d 1031, 

1034 (7th Cir. 2000) (stating that because 28 U.S.C. § 1963 allows for a judgment to be registered in multiple districts, “it 

would not make much sense to allow each of these districts 

to modify the judgment ... potentially in different ways” 

and asserting that our circuit “is among the majority that require Rule 60(b) motions to be presented to the rendering 

court”). In short, this is not the proper place or time in which 

to press the argument. 

Through the Gagnards’ failure to act, the issue has settled 

and hardened. Several opportunities to substantively litigate 

this issue existed, and the Gagnards declined to do so. We 

decline to belatedly act to correct the alleged misapprehension of the setoff issue by the Santa Clara court. 

III

The prejudgment interest issue is not a winner for the 

Gagnards, either. California law allows for awards of prejudgment interest by district courts in confirmation proceedings for arbitration awards. See Cal. Civ. Code § 3287

(providing that a party may recover prejudgment interest on 

an amount awarded when the damages are certain, and the 

right to recover those damages is vested). In fact, not only 

does California law allow it, but it seems to be an entitlement; a district court would have erred in not awarding that 

interest. See SCIE LLC v. XL Reinsurance Am., Inc., 397 F. 

App’x 348, 352 (9th Cir. 2010) (discussing a party’s entitlement to prejudgment interest on an arbitration award for 

fees and expenses under California law, and the district 

court’s error in failing to award prejudgment interest); Fidelity Fed. Bank, FSB v. Durga Ma Corp., 387 F.3d 1021, 1024 (9th 
Nos. 12-2706 & 13-2045 11

Cir. 2004) (stating that California law provides that “prejudgment interest is available from the date the arbitration 

panel renders its award”). And it is a well-established concept that “[c]ourts do not lack authority to award interest 

where an arbitration award is silent... . [The arbitrator’s] 

failure to speak on interest otherwise does not constitute a 

denial of interest on other parts of the award.” Lagstein v Certain Underwriters at Lloyd’s of London, 725 F.3d 1050, 1055 (9th 

Cir. 2010). The California district court acted permissibly in 

awarding the prejudgment interest, and the Illinois district 

court acted correctly in dismissing the Gagnards’ argument 

against the award.

IV

We decline to address the arguments regarding the turnover order substantively. “The Constitution limits our jurisdiction to live cases and controversies. A case is moot, and 

thus falls outside of the judicial power conferred in Article 

III, if the outcome will no longer settle an active dispute 

about the parties’ rights.” Aljabri v. Holder, 745 F.3d 816, 820 

(7th Cir. 2014) (citations omitted). “No matter how vehemently the parties continue to dispute the lawfulness of the 

conduct that precipitated the lawsuit, the case is moot if the 

dispute is no longer embedded in any actual controversy 

about the plaintiffs’ particular legal rights.” Already, LLC v. 

Nike, Inc., 133 S.Ct. 721, 727 (2013) (internal quotation marks 

omitted). Because the Gagnards chose to pay the entirety of 

the judgment voluntarily, there is not “any effectual relief 

whatever” we could grant to the Gagnards even if they were 

to prevail in this argument. See Church of Scientology of Cal. v. 

United States, 506 U.S. 9, 12 (1992) (“[I]f an event occurs 

while a case is pending on appeal that makes it impossible 
12 Nos. 12-2706 & 13-2045

for the court to grant any effectual relief whatever to a prevailing party, the appeal must be dismissed.”) (internal quotation marks omitted). Goldman is no longer seeking the 

turnover of Michelle Gagnard’s discovered assets, so we 

cannot order Goldman to cease pursuing those assets. Accordingly, we dismiss this portion of the appeal as moot.

V

For the reasons stated above, we AFFIRM the judgment of 

the district court, and DISMISS the appeal of the turnover order.