To schedule a confidential consultation, call (732) 572-0500
Kenneth Vercammen & Associates, P.C. 2053 Woodbridge Avenue - Edison, NJ 08817

Friday, April 1, 2011

Docketing of a Judgment in New Jersey Courts Based on Another States Judgment

New Jersey's version of the UEFJA is this state's selected mechanism "for discharging its Full Faith and Credit obligations" under U.S. Const. art. IV, § 1. Singh v. Sidana, 387 N.J. Super. 380, 382 (App. Div. 2006), certif. denied, 189 N.J. 428 (2007). As we held in Sonntag Reporting Serv. Ltd. v. Ciccarelli, 374 N.J. Super. 533, 540 (App. Div. 2005), "[t]he focus of the UEFJ is the enforcement of judgments." The statute was designed "merely as a facilitating device and was not intended to alter any substantive rights of the parties in an action for enforcement of a foreign judgment." Id. at 539. Therefore, "merit or substantive defenses," which could have been raised in the foreign state, must be raised in that state's proceedings and cannot be used to collaterally attack the domesticated New Jersey judgment. Id. at 540.

However, the Constitutional requirements of the Full Faith and Credit Clause are predicated upon the judgment debtor having been accorded due process in the forum state. Id. at 538. A denial of due process occurs "when 'the rendering state 1) lacked personal jurisdiction over the judgment debtor, 2) lacked subject matter jurisdiction, [or] 3) failed to provide the judgment debtor adequate notice and an opportunity to be heard.'" Ibid. (quoting Choi v. Kim, 50 F.3d 244, 248 (3d Cir. 1995)). Thus, the judgment debtor may raise "due process defenses" in any enforcement action in New Jersey under the UEFJA. Sonntag, supra, 374 N.J. Super. at 540. This is consistent with our jurisprudence that pre-dates the 1997 passage of the UEFJA. See James v. Francesco, 61 N.J. 480, 485 (1972) (Full Faith and Credit Clause only applies to foreign judgment grounded upon proper jurisdiction over the debtor).

N.J.S.A. 2A:49A-26 defines a "foreign judgment" as "any judgment, decree, or order of a court of the United States or of any other court which is entitled to full faith and credit in this State." (Emphasis added). Defendant argues since Maine's judgments were obtained without the required personal jurisdiction over SeKap, they are not entitled to full faith and credit in New Jersey, and, hence, are not foreign judgments for purposes of N.J.S.A. 2A:49A-29(a) or (b). We reject this circular argument.

No reported New Jersey case has considered the stay provisions contained in N.J.S.A. 2A:49A-29. However, a number of other jurisdictions have considered the equivalent statutory language found in their versions of the UEFJA in circumstances similar to those presented here. Almost uniformly, these other jurisdictions have required the judgment debtor to post adequate security in order to stay execution of any judgment domesticated in those states.

In Jackson v. Alexander, 706 So.2d 364, 365 (Fla. App. 1998), the Florida appellate court interpreted that state's version of the UEFJA which specifically provided for a stay of enforcement of a domesticated foreign judgment in two circumstances:

(1) If, within 30 days after the date the foreign judgment is recorded, the judgment debtor files an action contesting the jurisdiction of the court which entered the foreign judgment or the validity of the foreign judgment and records a lis pendens directed toward the foreign judgment, the court shall stay enforcement of the foreign judgment and the judgment lien upon the filing of the action by the judgment debtor.

(2) If the judgment debtor shows . . . any ground upon which enforcement of a judgment of any . . . court of this state would be stayed, the court shall stay enforcement of the foreign judgment for an appropriate period, upon requiring the same security for satisfaction of the judgment which is required in this state.

[Fla. Stat. § 55.509(1) and (2).]

Thus, under subsection (1), the judgment debtor could specifically attack the forum state's lack of jurisdiction. Nevertheless, despite the omission of any security requirement in subsection (1), the Florida court, reading the statute in pari materia, concluded the debtor was required to post a bond before the action challenging jurisdiction and staying execution could proceed. Ibid.; accord Expedia Inc. v. McKenney's Inc., 611 So.2d 98, 100 (Fla. App. 1992) (interplay of two subsections of Fla. Stat. §55.509 requires posting of security before stay of alleged invalid foreign judgment); SCG Travel v. Westminster Financial, 583 So.2d 723, 726 (Fla. App.), app. dismissed, 591 So.2d 185 (Fla. 1991).

In Segal v. Segal, 823 A.2d 1208 (Conn. 2003), the debtor sought a stay of enforcement of a domesticated Nevada judgment pending final decision of his appeal in Nevada. Id. at 1209. He argued that a judgment under appeal was not a judgment entitled to full faith and credit under the Constitution and, thus, not a "foreign judgment" under the UEFJA. Id. at 1213-14. The lower court agreed, and determined that the Nevada judgment was not enforceable as a final judgment entitled to full faith and credit until the appeal was decided. Id. at 1210. The Connecticut Supreme Court rejected this argument and concluded that without posting adequate security, the debtor was not entitled to stay enforcement of the domesticated judgment. It reasoned that any other interpretation of the statute would nullify the express provisions of the UEFJA which required the posting of adequate security pending direct appeal. Id. at 1214.

In Ex Parte Lyon Financial Servs., Inc., 775 So.2d 181 (Ala. 2000), the Alabama Supreme Court reversed the trial court's stay of enforcement of a Minnesota judgment against an Alabama debtor. Id. at 182. The debtor sought the stay based upon a third-party claim, initially brought in Minnesota, but dismissed by that court. Ibid. The debtor argued that it should be allowed to continue its litigation against the third-party in Alabama, and that all enforcement actions based upon the domesticated Minnesota judgment should be stayed pending the resolution of its suit. Ibid. Interpreting Alabama's version of N.J.S.A. 2A:49A-29(b), the court concluded that the debtor was not entitled to the stay because 1) the third-party claim would not properly result in a stay under Alabama law and 2) the debtor had not posted the required security. Id. at 184. Accord Hinkle, Cox, Eaton, Coffield & Hensley v. The Cadle Co., 676 N.E.2d 1256, 1257 (Ohio App.) (holding debtor must post security to obtain a stay under Ohio's equivalent of N.J.S.A. 2A:49A-29(b)), discretionary appeal not allowed, 673 N.E.2d 143 (Ohio 1996).

In Dependable Ins. Co. v. Automobile Warranty Corp., 797 P.2d 1308 (Colo. App. 1990), the court interpreted Colorado's stay provisions which are identical to N.J.S.A. 2A:49A-29. Id. at 1309-10. In that case, defendant debtor filed a direct appeal of the Florida judgment in Florida and then sought a stay of execution on its assets in Colorado based upon the domesticated Colorado judgment. Id. at 1309. Noting the "important purpose of a supersedeas bond" is "to protect the non-appealing party's rights during an appeal," the court concluded that despite the pending direct appeal in Florida, the debtor was required to post a bond to secure a stay of execution in Colorado. Id. at 1310. Otherwise, the statute's "purpose would be negated." Ibid. It then considered the debtor's second argument under Colorado's equivalent to N.J.S.A. 2A:49A-29(b). Ibid. The court concluded that since Colorado law required the posting of security to obtain a stay, defendant's failure to post security required denial of the stay. Ibid. But see Pickwick Intern. v. Tomato Music Co., Ltd., 462 N.Y.S.2d 781, 784 (Sup. Ct. Spec. Term 1983) (holding under New York's equivalent of N.J.S.A. 2A:49A-29(b), court may, in its discretion, stay execution without posting of security because New York law permitted a stay under such circumstances).

No comments: