Summit Interests Inc. D/B/A Colorado Backcountry Rentals, plaintiff-appellee/cross-appellant v. Steven J. Mescher, defendant-appellant/cross-appellee. ( 2014 )

IN THE COURT OF APPEALS OF IOWA
No. 14-0099
Filed October 29, 2014
SUMMIT INTERESTS INC. d/b/a
COLORADO BACKCOUNTRY RENTALS,
Plaintiff-Appellee/Cross-Appellant,
vs.
STEVEN J. MESCHER,
Defendant-Appellant/Cross-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Linn County, Ian K. Thornhill,
Judge.
Steven Mescher appeals the denial of his petition to vacate or modify an
application to register a foreign judgment. AFFIRMED ON APPEAL; AFFIRMED
ON CROSS-APPEAL.
Peter C. Riley of Tom Riley Law Firm, P.L.C., Cedar Rapids, for appellant/
cross-appellee.
Jase H. Jensen of Howes Law Firm, P.C., Cedar Rapids, for appellee/
cross-appellant.
Considered by Danilson, C.J., and Vogel and Bower, JJ.
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BOWER, J.
Steven Mescher appeals the district court’s dismissal of his motion to
vacate or modify a judgment and for a stay of the application to register a foreign
judgment filed by Summit Interests (d/b/a Colorado Backcountry Rentals).
Mescher claims the Colorado judgment should not be given full faith and credit
as he did not have an adequate opportunity to be heard, and the requirement of
a filing fee in order to file his answer violated his due process rights. He also
claims the court erred in entering a judgment for an amount in excess of the
amount claimed in the initial complaint served on Mescher. Summit cross-
appeals, claiming Mescher’s claims are precluded from consideration, he
received adequate notice, waived his right to respond, and the trial court did not
err in entering a judgment in excess of the amount in the original complaint. We
find Mescher’s claims are precluded by the judgment entered in Colorado and
affirm the district court’s ruling.
I. BACKGROUND FACTS AND PROCEEDINGS
On July 11, 2012, Steven Mescher, a resident of Iowa, rented several all-
terrain vehicles (ATVs) from Summit Interests (Summit), while on a trip in
Colorado. The parties executed a rental agreement, which required Mescher to
pay any loss or damage to the rented ATVs. Mescher provided his credit card
number and authorized Summit to charge him for repair costs. Subsequently,
one of the ATVs rented to Mescher was damaged. Summit unsuccessfully
attempted to charge Mescher’s credit card for the damages. On July 24, 2012,
Summit filed a complaint in the county court for Summit County, Colorado,
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claiming breach of contract and unjust enrichment. Summit sought an award of
actual damages.
On August 8, 2012, Summit filed an ex parte motion to substitute service
on Mescher. After filing the original complaint, Summit made several attempts to
serve Mescher including hiring a process server in Iowa. The process server
made six attempts to serve Mescher at the Iowa address he provided on the
rental agreement. The process server noted Mescher’s home appeared to be
under construction and uninhabited. Summit also noted it had corresponded with
Mescher by email before it filed the complaint. Summit cited Colorado Rule of
Evidence 304(e), which provides for substituted service when personal service is
impossible. Under rule 304(e), if the court determines a party has diligently
attempted to personally serve the other party, the court may provide for
substituted service by mail.
On August 9, the Summit County court granted Summit’s motion and
issued a summons stating a judgment would be entered against Mescher if he
did not file an answer by August 31. The summons also listed the requirement of
a filing fee to be paid when the answer was filed. That same day, Summit
emailed and mailed a copy of the summons to Mescher advising him of the
potential default.
On August 30, Mescher’s attorney emailed Summit informing them
Mescher did not intend to file an answer. Summit filed a motion for default
judgment on September 6. A default judgment was entered against Mescher on
September 11 for $4167.29. An amended and final judgment was entered on
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December 6 for $5260.53, with an annual interest rate of eighteen percent until
the judgment was paid in full.
On July 3, 2013, Summit filed an application to register a foreign judgment
in Linn County seeking $6857.42. Mescher responded by filing a motion to
vacate or modify the judgment and for a stay. Mescher claimed he did not have
a reasonable opportunity to defend against the claim on which the judgment was
entered. Specifically, he claimed Summit provided inadequate notice, and the
requirement of a filing fee in order to file an answer deprived him of the
opportunity to defend the claim. Summit filed a resistance and argued Mescher
was precluded from claiming inadequate notice because the proper venue was
the Summit County, Colorado court.
The Linn County court entered an order on Mescher’s petition finding he
had an opportunity to be heard in the Colorado proceedings. The court noted:
“Defendant took no action to contest the complaint filed against him in the
Colorado court proceedings, despite the fact that he had notice of the claims
stated against him by the Plaintiff and received specific instructions in the
summons as to how to proceed if he disagreed with the allegations included in
the complaint.” The court upheld the Colorado judgment.
Mescher filed a motion for enlargement of findings seeking a specific
ruling on the issue of payment of a filing fee as a condition to filing an answer.
He also challenged the calculation of the judgment of $6857.42, provided in the
notice of filing a foreign judgment. Summit filed a motion to dismiss and
resistance to the motion for enlargement of findings. Summit claimed Mescher’s
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motion should be dismissed because it was not timely filed, proper process and
notice was not provided to Summit, and Mescher’s arguments were precluded
because the Colorado court was the proper venue to challenge the adequacy of
notice and the filing fee requirement. Additionally, Summit notes the court should
deny Mescher’s challenge to the calculation of the judgment since he did not
make this claim in his motion to vacate or modify the judgment and stay. On
December 16, 2013, the court issued an order dismissing Mescher’s motion for
the reasons stated in Summit’s resistance. Now, Mescher appeals and Summit
cross-appeals.
II. STANDARD OF REVIEW
A proceeding to vacate judgment is on assigned errors, not de novo.
Stoner v. Kilen, 528 N.W.2d 648, 650 (Iowa Ct. App. 1995). The trial court is
vested with considerable discretion when ruling on a petition to vacate judgment,
and we will only reverse if that discretion has been abused. Soults Farm, Inc. v.
Schafer, 797 N.W.2d 92, 109 (Iowa 2011). However, we are more inclined to
find an abuse of discretion when relief has been denied than when granted. Id.
III. ANALYSIS
The Full Faith and Credit Clause of the United States Constitution
provides “Full Faith and Credit shall be given in each State to the public Acts,
Records, and judicial Proceedings of every other state.” U.S. Const. art. IV, § 1.
The Full Faith and Credit Clause requires the courts of each state to give other
states’ judgments the same preclusive effect as it has in the state in which it was
rendered, and this is true even if the judgment is obtained by default. Edward
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Rose Bldg. Co. v. Cascade Lumber Co., 621 N.W.2d 193, 194–95 (Iowa 2001).
“Under the full faith and credit clause, the preclusive effect of a judgment must be
determined by the law of the state in which it was rendered.” Nat’l Equip. Rental,
Ltd. v. Estherville Ford, Inc., 313 N.W.2d 538, 541 (Iowa 1981).
Enforcement of a foreign judgment in Iowa is governed by Iowa Code
chapter 626A (2013), which adopted the Uniform Enforcement of Foreign
Judgments Act. A foreign judgment means “a judgment, decree, or order . . . of
any other court which is entitled to full faith and credit in this state.” Iowa Code
section 626A.1.
A properly authenticated foreign judgment, filed in an Iowa district
court which would have venue if the original action was being
commenced in this state, shall be treated in the same manner as a
judgment of the district court of this state. A judgment so filed has
the same effect and is subject to the same procedures, defenses
and proceedings for reopening, vacating, or staying as a judgment
of the district court of this state and may be enforced or satisfied in
like manner.
Iowa Code § 626A.2. The purpose of chapter 626A is to give effect to foreign
judgments “without the necessity of suing on the judgment in a second action.”
Edward Rose Bldg., 621 N.W.2d at 195.
A. Adequacy of Service of Process
Mescher claims the Colorado judgment is not entitled to full faith and
credit in Iowa because the ex parte service did not give him enough time to
respond to Summit’s lawsuit. In support of his claims, he generally relies on the
Full Faith and Credit Clause of the United States Constitution, and the exceptions
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to the Clause set out in section 104 of Restatement (Second) Conflict of Laws.1
Summit responds that since Mescher did not challenge the adequacy of the
notice at the trial level, he effectively waived his right to challenge the service of
process and is now precluded from asserting this argument on appeal.
We now consider whether Mescher’s claims are precluded due to the
waiver of his right to answer in the Colorado court. Since the judgment was
originally entered in Colorado, we must evaluate these issues through the lens of
Colorado law. See id. at 194–95. Waiver is defined as the “intentional
relinquishment of a known right or privilege.” Dep’t of Health v. Donahue, 690
P.2d 243, 247 (Colo. 1984). A waiver may be explicit, as when a party orally or
in writing abandons a right or privilege, or a waiver may be implied, as when a
party engages in conduct manifesting intent to relinquish the right or privilege. Id.
In this case, the record shows Summit’s attorney contacted Mescher by
email on July 20, 2012, and requested the contact information for Mescher’s
attorney. Mescher responded to the email he had given Summit’s information to
his attorney. After not hearing anything from Mescher’s attorney, Summit filed
the complaint. Summit then unsuccessfully attempted to serve Mescher on six
different occasions. After the final attempt failed, Summit received permission
from the Colorado court to serve Mescher by mail. On August 9, 2012, Summit
emailed and mailed notice of the complaint to Mescher. On August 30,
Mescher’s attorney contacted Summit and stated: “Mr. Mescher will not be filing
1
Section 104 provides: “A judgment rendered without judicial jurisdiction or without
adequate notice or adequate opportunity to be heard will not be recognized or enforced
in other states.” Restatement (Second) of Conflict of Laws § 104 (1971). Iowa has not
addressed section 104 in any of its appellate decisions.
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an answer so you will not have to travel to Breckenridge to prove up your default.
I do want to discuss a resolution to this when I am back in the office.” The record
indicates Mescher knew of Summit’s lawsuit, had adequate time to respond, and
failed to respond. The Colorado Rules of Civil Procedure require parties to raise
the defense of service of process before trial in a responsive pleading or motion,
if the defense is not raised it is deemed waived. See Colo. R. Civ. P. 12; In re
Marriage of Booker, 833 P.2d 734, 739 (Colo. 1992). In choosing not to file an
answer, Mescher waived his right to challenge the sufficiency of service of
process.
In Colorado, the doctrine of claim preclusion acts to bar a second action
on the same claims litigated in a previous proceeding. Cruz v. Benine, 984 P.2d
1173, 1176 (Colo. 1999). The doctrine requires the satisfaction of the following
four elements: “(1) finality of the first judgment, (2) identity of subject matter, (3)
identity of claims for relief, and (4) identity or privity between parties to the
actions.” A default judgment is a final judgment for the purposes of claim
preclusion. Ortega v. Bd. of Cnty. Comm’rs of Costilla Cnty., 683 P.2d 819, 821
(Colo. App. 1984). A default judgment forecloses all claims that could have been
included, but were not, in the initial action. Id.
Mescher’s petition to vacate or modify Summit’s application to register a
foreign judgment meets the four requirements of claim preclusion under Colorado
law. Mescher claim is therefore precluded.
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B. Filing Fee
Mescher argues the Colorado requirement of a filing fee to accompany an
answer violates his “due process rights.” Mescher cites the Restatement
(Second) of Conflict of Laws section 104, which mentions in comment (a): “Due
process forbids the rendition of a judgment within the United States unless the
State of rendition has judicial jurisdiction . . . and unless the parties have been
given adequate notice and adequate opportunity to be heard.” Mescher lists no
other authority to support his due process claim. We are uncertain if Mescher is
referencing the due process clause contained United States Constitution, or the
due process clauses contained in the Iowa or Colorado constitutions. As a
general rule, “we will not speculate on the arguments [appellant] might have
made and then search for legal authority and comb the record for facts to support
such arguments.” Hyler v. Garnder, 548 N.W.2d 864, 876 (Iowa 1996); see also
Iowa R. App. P. 6.903 (“Failure to cite authority in support of an issue may be
deemed waiver of that issue.”). In most cases the appellant’s “random mention
of an issue, without analysis, argument or supporting authority is insufficient to
prompt an appellate court’s consideration.” State v. Mann, 602 N.W.2d 785, 788
n.1 (Iowa 1999); Soo Line R.R. v. Iowa Dep’t of Transp., 521 N.W.2d 685, 691
(Iowa 1994). Due to Mescher’s failure to cite specific law in support of his due
process claim, we deem that issue waived.
C. Calculation of the Judgment Amount
Mescher claims he did not receive notice or an explanation of the increase
in the amount of the judgment awarded to Summit. In Summit’s complaint, it
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asked for an award of actual damages, all costs of the action including attorney
fees, pre- and post-judgment interest on any damages and losses under the
terms of the contract, and for any other relief the court deemed just and
equitable. The Colorado court, in its amended and final judgment, awarded
Summit $5260.53, plus eighteen percent annual interest until paid in full. The
court also required Mescher to “pay all costs of collecting and attempting to
collect” the judgment including attorney fees. The difference between the
Colorado judgment of $5260.53 and the judgment sum entered in Iowa,
$6857.42, was interest at eighteen percent to July 3, 2013, and the costs
associated with collecting and attempting to collect the judgment. Mescher
waived his right to object to the judgment amount by allowing a default judgment
to be entered. For the reasons we have already stated, Mescher is precluded
from objecting to the judgment amount on appeal.
IV. CONCLUSION
The district court did not err in its decision to deny Mescher’s petition to
vacate or modify Summit’s application to register a foreign judgment. The
judgment of the Colorado court must be afforded full faith and credit in the State
of Iowa.
AFFIRMED ON APPEAL; AFFIRMED ON CROSS-APPEAL