Pearl Equipment, LLC v. Cartwright Construction Co. ( 2010 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
ASSIGNED ON BRIEFS MAY 7, 2009
PEARL EQUIPMENT, LLC v. CARTWRIGHT CONSTRUCTION CO.
Direct Appeal from the Chancery Court for Montgomery County
No. FD-07-16 Laurence M. McMillan, Jr., Chancellor
No. M2008-01109-COA-R3-CV - Filed September 2, 2010
This appeal involves a judgment creditor’s attempt to enforce a foreign judgment entered by
a Mississippi court against a Tennessee corporation. The Tennessee corporation moved to
dismiss, contending that service of process was improper in the Mississippi action. The trial
court found that the Tennessee corporation was not properly served, and it dismissed the
petition. The judgment creditor appeals. We reverse and remand for further proceedings.
Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Reversed
and Remanded
A LAN E. H IGHERS, P.J., W.S., delivered the opinion of the Court, in which D AVID R. F ARMER,
J., and H OLLY M. K IRBY, J., joined.
Marshall T. Cook, Susan R. High-McAuley, Hendersonville, Tennessee, Douglas C. Noble,
W. Brett Harvey, Jackson, Mississippi, for the appellant, Pearl Equipment, LLC
No Appearance on Behalf of the appellee, Cartwright Construction Co.
OPINION 1
I. F ACTS & P ROCEDURAL H ISTORY
Pearl Equipment, LLC (“Plaintiff”) obtained a default judgment against Cartwright
Construction Company (“Defendant”) in the Circuit Court of Jefferson Davis County,
Mississippi. Defendant is a corporation located in Clarksville, Tennessee. Plaintiff had
attempted service of process on Defendant by certified mail.
Plaintiff then filed a petition in the Chancery Court of Montgomery County,
Tennessee, seeking to enroll and enforce the foreign judgment. Defendant filed a “Motion
to Dismiss Registration of Foreign Judgment and Stay Enforcement,” contending that the
Mississippi judgment was void because Plaintiff had not served its registered agent for
service of process. Defendant submitted the affidavit of its registered agent for service of
process, Corey Cartwright, who stated that he was not served with the summons and
complaint in the Mississippi action, and that he “was not aware of a lawsuit being filed in
order to have an opportunity to be heard and make a defense before judgment was entered.”
He also stated that the signature on the certified mail receipt relied upon by Plaintiff
“appear[ed] to be from a former employee of Cartwright Construction, Inc. who was
terminated, and who was neither an officer [n]or managing agent of said company.” He
further stated that he was never made aware of the summons being received by said
employee. Mr. Cartwright stated that he had never authorized the former employee to accept
service of process on his behalf or on behalf of Defendant, and that Defendant did not
authorize the employee to accept service of process either.
Plaintiff filed a response, claiming that service was proper pursuant to the Mississippi
Rules of Civil Procedure. Plaintiff attached the proof of service and the certified mail
receipt, which indicated that the summons was sent by certified mail and addressed to Corey
Cartwright at a Clarksville, Tennessee address.
Following a hearing, the trial court found that service of process was improper based
upon the undisputed evidence that the individual who signed the certified mail receipt was
not the Defendant’s registered agent for service of process, nor had he been given authority
to accept service of process on behalf of the corporate defendant or on behalf of the
1
This appeal was submitted on brief May 7, 2009. The case involves Mississippi law and an
interpretation of the Mississippi Rules of Civil Procedure. Because the question we were asked to decide
was pending before the Supreme Court of Mississippi, we entered an order holding this appeal in abeyance
on October 2, 2009, pending the Mississippi Supreme Court’s decision. The Mississippi Supreme Court
issued its decision on August 19, 2010.
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registered agent. Therefore, the court concluded that the Mississippi judgment was void and
not entitled to enforcement under Tennessee law. Plaintiff timely filed a notice of appeal.
II. I SSUES P RESENTED
Plaintiff presents the following issues, as we perceive them, for review:
1. Whether the trial court erred in finding that service of process was not properly
obtained under the Mississippi Rules of Civil Procedure;
2. Whether the trial court should have stayed or dismissed Defendant’s motion to
dismiss in order to allow a Mississippi court to rule on whether service of process was
proper by means of a Rule 60 motion.
For the following reasons, we reverse the decision of the chancery court and remand for
further proceedings.
III. S TANDARD OF R EVIEW
Whether to grant full faith and credit to a foreign judgment is a question of law, which
we review de novo with no presumption of correctness. First State Bank of Holly Springs,
Mississippi v. Wyssbrod, 124 S.W.3d 566, 573-74 (Tenn. Ct. App. 2003).
IV. D ISCUSSION
“Foreign judgments are ordinarily entitled to full faith and credit in Tennessee’s
courts.” Biogen Distributors, Inc. v. Tanner, 842 S.W.2d 253, 256 (Tenn. Ct. App. 1992).
However, in a limited number of circumstances, a foreign judgment may be denied full faith
and credit. Hart v. Tourte, 10 S.W.3d 263, 269 (Tenn. Ct. App. 1999) (citing Benham v.
Fisher, 650 S.W.2d 759, 760 (Tenn. Ct. App. 1983)). Under the Uniform Enforcement of
Foreign Judgments Act,
(a) A copy of any foreign judgment authenticated in accordance with the acts
of congress or the statutes of this state may be filed in the office of the clerk
of any circuit or chancery court of this state.
(b) The clerk shall treat the foreign judgment in the same manner as a
judgment of a court of record of this state.
(c) 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 a court of record of this state and may be enforced or satisfied in
like manner.
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Tenn. Code Ann. § 26-6-104. Thus, an enrolled foreign judgment, treated in the same
manner as a judgment of a court of record of this state, and subject to the same defenses, may
be attacked on the grounds found in Tennessee Rule of Civil Procedure 60.02.2 Howard
Johnson, Inc. v. Holyfield, No. W2008-02405-COA-R3-CV, 2009 WL 1349197, at *2
(Tenn. Ct. App. May 14, 2009); Wyssbrod, 124 S.W.3d at 573; Hart, 10 S.W.3d at 269.
“Because Rule 60.02(3) permits a court to set aside a judgment if that judgment is void,
Tennessee courts will commonly refuse to give full faith and credit to a foreign judgment
where the court entering the foreign judgment had no personal jurisdiction.” Howard
Johnson, 2009 WL 1349197, at *3. If the court rendering the judgment lacked personal
jurisdiction over the parties, the judgment is void and not entitled to full faith and credit in
this state. Tareco Props., Inc. v. Morriss, No. M2002-02950-COA-R3-CV, 2004 WL
2636705, at *9 (Tenn. Ct. App. Nov. 18, 2004).
“The duty of the courts of this state is to give such effect to a foreign judgment as
would the courts of the jurisdiction where the judgment was entered.” Tareco Props., 2004
WL 2636705, at *10 (citing Graybar Elec. Co. v. New Amsterdam Cas. Co., 211 S.W.2d 903,
904-05 (Tenn. 1948); Biogen Distributors, 842 S.W.2d at 256; Four Seasons Gardening &
Landscaping, Inc. v. Crouch, 688 S.W.2d 439, 442 (Tenn. Ct. App. 1984)). As such, when
a foreign judgment is attacked here, “‘the focus should be on what effect the attack would
have in the forum that rendered the judgment.’” Id. (quoting Bailey v. Sneed, 49 S.W.3d 327,
330 (Tenn. Ct. App. 2001)). When the rendering court’s jurisdiction over the parties is
attacked, we must look to the law of the jurisdiction where the judgment was entered. Id.A party seeking to challenge a foreign court’s jurisdiction must demonstrate that the foreign
court did not acquire jurisdiction under the law of the state where the judgment was obtained.
Biogen Distributors, Inc., 842 S.W.2d at 256 (citing Four Seasons Gardening, 688 S.W.2d
at 442). Thus, we look to Mississippi law in order to determine whether the Circuit Court
2
As the Court explained in W & T, Inc. v. Ham, No. M2006-01617-COA-R3-CV, 2009 WL
225256, at *2 (Tenn. Ct. App. Jan. 29, 2009) (citations omitted):
It has consistently been held that the grounds to set aside a judgment under Rule 60 are the
same defenses to enforcement of a foreign judgment under Tenn. Code Ann. § 26-6-104(c).
It should be noted, however, that a Tennessee court does not have jurisdiction to set aside
a foreign judgment. There is a distinction between setting aside a domestic judgment under
Rule 60 and refusing to enforce a foreign judgment under the Act. Rule 60 provides the
grounds under the Act whereby a foreign judgment will not be enforced in Tennessee but
not the grounds to set aside a foreign judgment.
“‘A court of one state has no authority to modify, vacate, or annul the judgment or decree of a court of
another state or country, and determination by a court that a judgment or decree of a court of another state
was rendered without jurisdiction does not have the effect of vacating such judgment or decree in the latter
state.’” Givens v. Givens, 212 S.W.2d 377, 378 (Tenn. 1948) (quoting 21 C.J.S. Courts § 552, at p. 858).
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of Jefferson Davis County had jurisdiction over Defendant.
“In order for a court to enter a default judgment, the court must have had jurisdiction
and proper service of process.” Franklin Collection Serv., Inc. v. Stewart, 863 So.2d 925,
929 (Miss. 2003) (citing McCain v. Dauzat, 791 So.2d 839, 842 (Miss. 2001)). Mississippi
Rule of Civil Procedure 4 provides, in relevant part:
(c) Service
....
(5) Service by Certified Mail on Person Outside State. In addition to
service by any other method provided by this rule, a summons may be
served on a person outside this state by sending a copy of the summons
and of the complaint to the person to be served by certified mail, return
receipt requested. Where the defendant is a natural person, the envelope
containing the summons and complaint shall be marked "restricted
delivery." Service by this method shall be deemed complete as of the
date of delivery as evidenced by the return receipt or by the returned
envelope marked "Refused."
(d) Summons and Complaint: Person to Be Served. The summons and
complaint shall be served together. Service by sheriff or process server shall
be made as follows:
....
(4) Upon a domestic or foreign corporation or upon a partnership or
other unincorporated association which is subject to suit under a
common name, by delivering a copy of the summons and of the
complaint to an officer, a managing or general agent, or to any other
agent authorized by appointment or by law to receive service of
process.
Thus, subsection (c)(5), governing service by certified mail on persons outside the state,
requires “sending a copy of the summons and of the complaint to the person to be served by
certified mail, return receipt requested.” Subsection (d)(4), however, provides that service
by sheriff or process server shall be made upon a corporation “by delivering a copy of the
summons and of the complaint to an officer, a managing or general agent, or to any other
agent authorized by appointment or by law to receive service of process.” In this case,
Defendant contended that the two subsections should be read together to require that service
by certified mail be made upon a corporation’s officer or authorized agent. The trial court
agreed and found that service was improper because it was undisputed that the former
employee who signed the return receipt was neither an officer nor an authorized agent.
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After Plaintiff appealed to this Court, the Court of Appeals of Mississippi issued an
opinion in which it interpreted Rule 4 as the trial court did in this case, holding that the two
subsections “must be read jointly.” Flagstar Bank, FSB v. Danos, No.
2007-CA-00418-COA, 2008 WL 5064953, at *8 (Miss. Ct. App. Dec. 2, 2008) (en banc)
reh’g denied (Mar. 31, 2009). Thus, the Court held that “If service is attempted by certified
mail upon a corporation under Rule 4(c)(5), but is delivered to a person not designated to
receive process under Rule 4(d)(4), then the process fails.” Id. However, four judges
dissented, concluding that “for service to have been complete and effective under Rule
4(c)(5), all that was required was for the letter to have been sent by certified mail, return
receipt requested, [and] addressed to [the defendant]’s registered agent for service of
process.” Id. at *11 (Irving, J., dissenting). The Supreme Court of Mississippi granted the
appellant’s Petition for Writ of Certiorari in Flagstar Bank on June 11, 2009. On October
2, 2009, we entered an order holding the proceedings in the instant appeal in abeyance
pending the Mississippi Supreme Court’s resolution of the issue in Flagstar Bank. The
Mississippi Supreme Court released its opinion in Flagstar Bank on August 19, 2010.
According to the Mississippi Supreme Court, subsection (d)(4), requiring delivery to
an authorized agent, is inapplicable to the situation at hand, and only subsection (c)(5),
addressing service by mail, is at issue. Flagstar Bank, FSB v. Danos, --- So.3d ----, 2010
WL 3259803, at *4 (Miss. 2010). The Court explained:
As the Court of Appeals’ dissent pointed out, Rule 4(c)(5) is silent with
regard to whether someone other than the registered agent for service of
process for a corporation may sign for a certified letter addressed to the
registered agent. So too are the statutes. What is clear, however, from the
standpoint of the efficacy of service of process on a foreign corporation by
way of certified letter, is that the letter must be properly addressed to the
person authorized to receive process on behalf of the corporation and actually
delivered to that address.
Id. According to the Court, “[t]o hold otherwise would work an illogical burden on plaintiffs
who have no control over a corporate defendant’s internal operating procedures, such as how
mail rooms are run.” Id. at *5.
In the case before us, Defendant does not contend that the summons was not “properly
addressed to the person authorized to receive process on behalf of the corporation” or that
it was not “actually delivered to that address.” Thus, service of process was proper in
accordance with Rule 4 of the Mississippi Rules of Civil Procedure, and we reverse the trial
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court’s finding that the Mississippi judgment was void for insufficient service of process.3
We note, however, that the affidavit submitted by Defendant in this case stated that
Mr. Cartwright “was not aware of a lawsuit being filed in order to have an opportunity to be
heard and make a defense before judgment was entered.” It appears that the trial court’s
decision to dismiss Plaintiff’s petition was solely based on the issue of insufficient service
of process. While we reverse the trial court’s decision in that regard, on remand, the court
is not precluded from considering whether Defendant’s alleged lack of notice of the lawsuit
otherwise supports relief under Rule 60.02.4 As noted above, a foreign judgment may be
attacked on the grounds found in Tennessee Rule of Civil Procedure 60.02. Holyfield, 2009
WL 1349197, at *2; Wyssbrod, 124 S.W.3d at 573; Hart, 10 S.W.3d at 269.
3
Plaintiff argued on appeal that the trial court should not have ruled on the issue of service but
“should have stayed or dismissed [Defendant]’s motion to dismiss registration, thereby allowing a
Mississippi court to decide the adequacy of service by means of a Rule 60(b) motion.” Plaintiff contends
that this Court should do the same rather than deciding the issue. Plaintiff contends that the trial court was
forced to use its “best guess” as to the proper interpretation of Mississippi law regarding service of process.
There is nothing in the record to indicate that Defendant intended to file a Rule 60 motion in the
Mississippi court. Again, a foreign judgment filed in Tennessee “is subject to the same procedures, defenses
and proceedings for reopening, vacating, or staying as a judgment of a court of record of this state[.]” Tenn.
Code Ann. § 26-6-104. In Hart, 10 S.W.3d at 270, a plaintiff argued that a defendant had waived his right
to challenge a California judgment by failing to attack it in a California court. The Court rejected that
argument, stating:
In the instant case, [the plaintiff] is attempting to use a court of this state to enforce his
judgment. This is certainly appropriate under the Uniform Enforcement of Foreign
Judgments Act, T.C.A. § 26-6-101, et seq.; but, by the same token, it is likewise appropriate
that [the defendant] be afforded an opportunity to resort to the same court to pursue his
attack on the validity of the proffered judgment, under the well-established law pertaining
to relief under Rule 60.02, Tenn. R. Civ. P.
We find no merit in Plaintiff’s argument that it was improper for the trial court to determine whether service
was proper when Plaintiff sought to enroll and enforce his judgment in Tennessee. In any event, Plaintiff’s
concern about this Court employing its “best guess” as to the proper interpretation of Mississippi Rule of
Civil Procedure 4 is no longer relevant, as the Mississippi Supreme Court settled the issue in Flagstar Bank.
4
In his dissenting opinion in Flagstar Bank, Justice Dickinson recognized that “according to the
Plurality, valid service of process may be obtained on a foreign corporation, even in a case where the
undisputed facts establish that the process never reached any person authorized to receive it and no person
associated with the defendant was aware of the lawsuit.” --- So.3d ----, 2010 WL 3259803, at *12
(Dickinson, J., dissenting).
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V. C ONCLUSION
For the aforementioned reasons, we reverse the decision of the chancery court and
remand for further proceedings. Costs of this appeal are taxed to the appellee, Cartwright
Construction Co., for which execution may issue if necessary.
_________________________________
ALAN E. HIGHERS, P.J., W.S.
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