Louis Dreyfus Commodities Suisse SA v. Financial Software Systems, Inc. , 99 A.3d 79 ( 2014 )

J.A13032/14
2014 Pa. Super. 163
LOUIS DREYFUS COMMODITIES :
SUISSE SA, : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
v. :
:
FINANCIAL SOFTWARE SYSTEMS, INC. :
: No. 2816 EDA 2013
Appellee :
Appeal from the Order Entered August 30, 2013
In the Court of Common Pleas of Montgomery County
Civil Division No(s).: 2013-03678
BEFORE: ALLEN, MUNDY, and FITZGERALD,* JJ.
OPINION BY FITZGERALD, J.: FILED JULY 29, 2014
order entered in the Montgomery County Court of Common Pleas granting
vacate the judgment entered in Pennsylvania in favor of Appellant and
dissolve the garnishment against National Penn Bank. We hold that a party
cannot enforce a foreign nation money judgment in Pennsylvania unless that
judgment has been recognized as valid pursuant to the Uniform Foreign
-
22009. Accordingly, we affirm.
*
Former Justice specially assigned to the Superior Court.
J. A13032/14
The factual and procedural history, as recounted by the trial court, is
as follows:
This is an action to enforce a foreign judgment commenced
in this jurisdiction on February 20, 2013, with the filing of
a praecipe to file and index a foreign judgment.[1] The
1
in relevant part, as follows:
TO THE PROTHONOTARY OF MONTGOMERY COUNTY:
Pursuant to the Uniform Enforcement of Foreign
Judgment Act, 42 Pa.C.S. § 4306, kindly enter judgment in
favor of Plaintiff, Louis Dreyfus Commodities Suisse SA,
and against Defendant, Financial Software Systems, Inc.,
in the amount of $717,893.15, plus $43,839.97
(£28,302.11) in costs, for a total amount of $761,733.12,
in accordance with the attached certified copies, duly
authenticated by apostille pursuant to the Hague
Convention of 5 October 1961, of the docket entries and
judgment originally entered on January 18, 2013 in Claim
No. 2MA40117
Division, Manchester District Registry, Mercantile Court in
Manchester, United Kingdom, and index the judgment
against the Defendant.
(unpaginate
production of documents in aid of execution, provide, in relevant part:
WHEREAS, on February 20, 2013, in accordance with
the Uniform Enforcement of Foreign Judgments Act, 42
Pa.C.S. § 4306, Louis Dreyfus submitted to the Court of
Common Pleas of Montgomery County, Pennsylvania a
Praecipe to File and Index Foreign Judgment, along with a
duly certified and authenticated copy of the January 18,
2013 judgment;
cution, 2/20/13, at 2; Req. for Prod. of
Doc. in Aid of Execution, 2/20/13, at 2.
-2-
J. A13032/14
praecipe averred that [Appellant] obtained a judgment in
the amount of $717,733.12 for a breach of contract
Bench Division, Manchester District Registry, Mercantile
Court in Manchester, UK on January 18, 2013. This
praecipe also requested costs in the amount of $43,839.97
for a total judgment of $761,733.12. The parties began
their contractual relationship when they entered into a
Spectrum Software License and Maintenance Agreement
on October 11, 1996. This Agreement was amended by
further documentation between the parties in 1999 and
2012.
A writ of execution was filed on March 8, 2013. The
certificate of service filed on February 20, 2013, averred
execution [was] served upon National Penn Bank, where
Appellee maintained its operating account, as garnishee,
on March 12, 2013, by the Sheriff of Montgomery County.
Appellee filed a petition to strike judgment and vacate
execution on the grounds that Appellant failed to properly
serve it pursuant to the terms of the Hague Convention on
the Service Abroad of Judicial and Extra Judicial
Documents, that this court lacked personal jurisdiction,
and that the judgment was also unenforceable pursuant to
the Uniform Enforcement of Foreign Judgments Act
judgment against National Penn Bank on March 26, 2013.
On March 27, 2013, Appellee filed a petition to stay
execution of the garnishee judgment. Testimony was
taken . . . on April 5, 2013 . . . . After status conferences
with the parties throughout the summer of 2013, the [trial
court] entered an amended order on September 10, 2013,
striking and vacating the judgment. Appellant filed a
motion for reconsideration on September 27, 2013. Before
this court had the opportunity to act upon this motion,
Appellant filed the instant appeal . . . on September 30,
2013.[2]
Trial Ct. Op., 12/6/13, at 1-2 (capitalization and footnote omitted).
2
Both Appellant and the trial court have complied with Pa.R.A.P. 1925.
-3-
J. A13032/14
Appellant has raised the following five issues on appeal:
Does § 22006(3) of the [Recognition Act], bar a party from
challenging a judgment issued against it by a court in
England for lack of personal jurisdiction, when the party
attempting to challenge the judgment agreed to submit to
the exclusive jurisdiction of the courts of England in a
forum selection clause contained in a valid, binding
contract with the party seeking to enforce the judgment?
Does the [Enforcement Act], which is the sole procedural
mechanism for enforcing any non-Pennsylvania judgment,
including a foreign-nation judgment, apply to proceedings
in which a party seeks to enforce a judgment issued by a
court in England?
Does the [Enforcement Act] require a party to initiate
separate, preliminary proceedings for recognition of a
foreign-nation judgment before the party is permitted to
enforce that judgment?
Does the Hague Convention on the Service Abroad of
Judicial and Extrajudicial Documents in Civil and
Commercial Matters require a party to effect service
through the Central Authority of the country of
destination?
Does personal service, delivered in-hand to the Vice
President, Director and Shareholder of a corporation at its
corporate headquarters constitute effective service in this
case under the Hague Convention on the Service Abroad of
Judicial and Extrajudicial Documents in Civil and
Commercial Matters, and satisfy the requirements of
federal and/or state law?
At its core, this case involves the interplay between the Recognition
arguments on appeal, we address the manner by which Appellant sought
recognition and enforcement of the English court judgment in its favor. To
-4-
J. A13032/14
this end, we note th application of a statute raises a question
of law. As with all questions of law, the appellate standard of review is de
novo Olympus Corp. v.
Canady judgment is void on its
Flynn v. Casa
Di Bertacchi Corp., 674 A.2d 1099, 1105 (Pa. Super. 1996). Furthermore,
we may affirm the decision of the trial court on any valid basis appearing of
record. Tosi v. Kizis, 85 A.3d 585, 589 (Pa. Super. 2014).
Pursuant to the Recognition Act, a foreign government is defined as
other than the United States, or any state . . .
thereof
sum of money, other than a judgment for taxes, a fine or other penalty, or a
Id. Foreign money judgments
same manner as the judgment[s] of another state which [are] entitled to full
The Enforcement Act provides, in relevant part,
(b) Filing and status of foreign judgments. A copy of
any foreign judgment including the docket entries
incidental thereto authenticated in accordance with act of
Congress or this title may be filed in the office of the clerk
-5-
J. A13032/14
of any court of common pleas of this Commonwealth. The
clerk shall treat the foreign judgment in the same manner
as a judgment of any court of common pleas of this
Commonwealth. A judgment so filed shall be a lien as of
the date of filing and shall have the same effect and be
subject to the same procedures, defenses and proceedings
for reopening, vacating, or staying as a judgment of any
court of common pleas of this Commonwealth and may be
enforced or satisfied in like manner.
* * *
(f) Definition.
means any judgment, decree, or order of a court of the
United States or of any other court requiring the payment
of money which is entitled to full faith and credit in this
Commonwealth.
42 Pa.C.S. §§ 4306(b), (f) (emphasis added).
Recognition of a judgment entered in one state by a sister state is
mandated by the full faith and credit clause of the U.S. Constitution and the
Full Faith and Credit Act. U.S. Const. art. IV, § 1; 28 U.S.C. § 1738.
However, recognizing a judgment entered in a foreign nation is controlled by
a separate and distinct legal principle comity. The United States Supreme
Court pronounced
[n]o law has any effect, of its own force, beyond the limits
of the sovereignty from which its authority is derived. The
extent to which the law of one nation, as put in force
within its territory, whether by executive order, by
legislative act, or by judicial decree, shall be allowed to
operate within the dominion of another nation, depends
upon what our greatest jurists have been content to call
often criticised, no satisfactory substitute has been
suggested.
-6-
J. A13032/14
within its territory to the legislative, executive or judicial
acts of another nation, having due regard both to
international duty and convenience, and to the rights of its
own citizens, or of other persons who are under the
protection of its laws.
Hilton v. Guyot, 159 U.S. 113, 163-64, 16 S. Ct. 139, 143, 40 L. Ed. 95,
the Full Faith and Credit Clause of the United
States Constitution . . . does not extend to judgmen
Hilkmann v. Hilkmann, 579 Pa. 563, 573, 858 A.2d 58, 65 (2004).
sister states, which are entitled to full faith and credit, and those of foreign
courts, Somportex Ltd. v.
Phila. Chewing Gum Corp., 453 F.2d 435, 440 (3d. Cir. 1971).3 Thus, the
money judgments entered in the courts of foreign nations.
With respect to recognition of foreign nation money judgments,
Matusevitch v. Telnikoff, 877 F. Supp. 1 (D.D.C. 1995), , 159 F.3d
636 (D.C. Cir. May 5, 1998) (per curiam), is instructive. In Matusevitch,
the plaintiff brought an action seeking to preclude enforcement of a libel
judgment entered by an English court. The Matusevitch court concluded
3
Although decisions of the federal courts are not binding on this Court, we
may adopt their reasoning if we find them persuasive. NASDAQ OMX
PHLX, Inc. v. PennMont Secs., 52 A.3d 296, 303 (Pa. Super. 2012).
-7-
J. A13032/14
that it must first ascertain whether the judgment is recognizable under
4
ty can
enforce a judgment from a foreign country in the United States, the moving
party must have the foreign judgment recognized by the state in which he
Id. at 2 (emphases added). The
Matusevitch court further noted -country judgment
initial
recognition Id. at 3 (emphasis added). Accordingly, in that case, the
court found that
the defendant filed the foreign-country judgment with the
Clerk of the Circuit Court of Montgomery County,
Maryland. The defendant, however, never attempted to
get that judgment recognized before filing, as required by
statute. Consequently, the court determines that the
defendant currently holds an unrecognized foreign-country
judgment from the State of Maryland. The defendant must
obtain recognition of this judgment in order to enforce it.
Id.5
4
Md. Code Ann., Cts. & Jud. Proc. §§ 10-701 to 10-709 (West 1989).
5
Although the Matusevitch court concluded that the defendant failed to
obtain
Ultimately, the court granted the motion for summary judgment, finding that
the judgment would not be recognized where it was entered under libel
standards that would be repugnant to the policies of Maryland and of the
Amendment rights. Matusevitch, 877 F. Supp. at 6.
-8-
J. A13032/14
Pennsylvania parties seeking federal court recognition and
enforcement of foreign nation judgments have consistently sought such
recourse under the auspices of the Recognition Act. In ERBE
Elektromedizin GMBH v. Canady, 545 F. Supp. 2d 491 (W.D. Pa. 2008)
ERBE
from an English court. Id. at 493. Then, invoking the Recognition Act,
ERBE filed a complaint in the Western District of Pennsylvania seeking
recognition of the judgment against Canady. Id.
recognized the judgment against Canady. Id. at 498.
Similarly, in Novae Corporate Underwriting Ltd. v. Atlantic Mut.
Ins. Co. Novae
District Court for the Eastern District of Pennsylvania considered the
Enforcement Act and the Recognition Act for the purposes of recognition and
enforcement of a foreign-nation judgment in Pennsylvania. Id. at 494. The
Novae court considered the express language of the Enforcement Act,
Section 4306(f) and the holding in Hilkmann, supra. Id. at 496. It
concluded that the statutory language and case law is clear that the
Enforcement Act only applies to sister-state judgments and not to judgments
-9-
J. A13032/14
obtained in foreign countries.6 Id. at 495-96; see also Somportex, 453
F.2d at 440.
Last, we acknowledge the holding of the Court of Appeals of Michigan
in Electrolines, Inc. v. Prudential Assurance Co., 677 N.W.2d 874 (Mich.
versions of the Enforcement Act and the Recognition Act as follows:
Key to our resolution of this appeal is the understanding
that a foreign country money judgment cannot be enforced
until it has been recognized and that the [Recognition Act]
is not an enforcement act. The [Recognition Act] only
serves the purpose of providing a court with a means to
recognize a foreign money judgment. The [Recognition
Act] does not establish the procedure to file or enforce a
foreign judgment. Rather, the act provides that once a
foreign judgment is recognized, it is to be enforced in the
Id. at 882 (citations omitted).
As the foregoing cases illustrate, courts have consistently held that the
Enforcement Act is applicable only to judgments of our sister states entitled
to full faith and credit under the U.S. Constitution. Hilkmann, 579 Pa. at
573, 858 A.2d at 65; see Novae, 556 F. Supp. 2d at 495-96. Accordingly,
6
In addition, we note that in a non-precedential decision,
v. Mullin, 96 Fed. Appx. 100 (3d Cir. 2004), the United States Court of
Appeals for the Third Circuit affirmed an order granting summary judgment
ed a judgment against Mullin
in the United Kingdom. Id.
against Mullin in the United States District Court for the Eastern District of
Pennsylvania seeking recognition and enforcement of the English judgment
pursuant to the Recognition Act. Id. at 102-03.
- 10 -
J. A13032/14
because foreign nation judgments are not entitled to full faith and credit,
Hilkmann, 579 Pa. at 573, 858 A.2d at 65, but rather are subject to the
principles of comity, Somportex, 453 F.2d at 440, a foreign nation
judgment cannot be enforced in the Commonwealth pursuant to the
Enforcement Act unless it is recognized as valid pursuant to the Recognition
Act. See Matusevitch, 877 F. Supp. at 3; see also Novae, 556 F. Supp.
2d at 495-96; ERBE, 545 F. Supp. 2d at 498. A contrary holding would
contradict prior decisions highlighting the discrete purposes served by the
Recognition Act and the Enforcement Act. Moreover, we note that Appellant
has not cited to any authority that would permit us to reach a different
conclusion.7
Furthermore, invoking the appropriate statute is critical. Hilkmann,
579 Pa. at 579, 858 A.2d at 68. In Hilkmann, an Israeli court awarded the
plaintiff guardianship of her mentally handicapped adult son. Id. at 567,
858 A.2d at 61. Subsequently, the plaintiff filed in the Allegheny County
8
7
Although not pertinent to our disposition, we note that at oral argument
this Court asked the parties whether Appellant was required to move for
recognition of the judgment prior to enforcement. Appellant opined that
invocation of the Enforcement Act was sufficient to implicitly invoke the
Recognition Act. In support of this novel proposition, Appellant cited no
authority.
8
Apparently, that the order was in the nature of guardianship instead of
custody was lost in the translation of the order from Hebrew to English.
Hilkmann, 579 Pa. at 567-68, 858 A.2d at 61.
- 11 -
J. A13032/14
Id. She attached to the petition a copy of the foreign guardianship
judgment and averred that under Section 5365 of the Uniform Child Custody
Jurisdiction Act, 23 Pa.C.S. §§ 5341 5366
guardianship decree was entitled to the same effect as a custody order
rendered in Pennsylvania. Id.
concluding that the relevant law required that comity be afforded to the
Israeli order. Id. at 569, 858 A.2d at 62. On appeal, the Superior Court
Pennsylvania and Israeli procedure would allow any foreign citizen to enforce
a guardianship decree and commensurate finding of incompetence,
regardless of th Id. at 571, 858 A.2d at
Court affirmed, holding that while principles of comity control the recognition
of foreign nation judgments, the Israeli guardianship judgment would not be
afforded comity in Pennsylvania because the plaintiff failed to follow the
proper procedural steps for seeking recognition and enforcement of the
foreign judgment.9 Id. at 579, 858 A.2d at 68-69.
9
Specifically, the Hilkmann Court noted that the plaintiff did not seek the
-territorial extension or transfer of her
entry of a guardianship order, which include safeguards such as affording
specific notice to a putative ward, and instead mistakenly filed her petition
under the UCCJA, which does not apply to adults.
- 12 -
J. A13032/14
In the instant matter, Appellant filed a praecipe to file and index a
foreign judgment on February 20, 2013. In the praecipe, and the discovery
requests filed in support thereof, Appellant cited the Enforcement Act as the
judgment against Appellee. However, as aptly noted by Appellee in its
does not provide authority to enforce a UK judgment against a Pennsylvania
to Strike J. and Vacate Execution, 3/19/13, at 6-7
(unpaginated).
The trial court agreed with Appellee that
[t]he proper statute for the matter sub judice is the
[Recognition Act] not the [Enforcement Act]. While the
[Enforcement Act] also respects the constitutional principle
of applying full faith and credit of foreign nation judgments
as foreign state judgments, this statute also instructs that
the international judgment must first be recognized by the
state in which the judgment is filed before being enforced.
Trial Ct. Op. at 6-7.
Our review of the record reveals that Appellant did not invoke the
Vacate Execution, 3/20/13, at 9. In its answer, Appellant stated, without
to the [Enforcement Act], which is the sole and exclusive procedural
- 13 -
J. A13032/14
mechanism for enforcement in a Pennsylvania court of a judgment issued in
Id.
the trial court and Appellee that Appellant improperly sought enforcement of
the English
Enforcement Act.
praecipe to enter judgment against Appellee was fatally flawed. By invoking
the Enforcement Act rather than the Recognition Act, Appellant failed to
framework within which the effect of the
See Hilkmann, 579 Pa. at 579,
858 A.2d at 68. Furthermore, just like the defendant in Matusevitch,
See Matusevitch, 877
F. Supp. at 3. Instead, Appellant improperly sought recognition and
enforcement of the foreign money judgment by invoking an inapplicable
statute. Cf. Hilkmann, 579 Pa. at 579, 858 A.2d 68-69. Consequently,
the trial court was without authority to enter the foreign money judgment
and it was, therefore, void on its face. See Flynn, 674 A.2d at 1105.
Accord
to strike and vacate judgment in favor of Appellant and dissolve the
- 14 -
J. A13032/14
garnishment against National Penn Bank, albeit on other grounds. 10 See
Tosi, 85 A.3d at 589.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/29/2014
10
We echo the sentiment articulated by our Supreme Court in Hilkmann
considerations and does no
substantive [claims]. Nothing here prevents [Appellant] from prospectively
Hilkmann,
597 Pa. at 580, 858 A.2d at 69.
- 15 -