Howard Johnson, Inc. v. Mabra Holyfield ( 2009 )

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
Submitted On Briefs April 23, 2009 Session
HOWARD JOHNSON, INC. v. MABRA HOLYFIELD, ET AL.
Direct Appeal from the Circuit Court for Shelby County
No. CT-001752-05 James F. Russell, Judge
No. W2008-02405-COA-R3-CV - Filed May 14, 2009
This appeal arises out of the enrollment of a foreign judgment issued by the New Jersey District
Court against defendants residing in Tennessee. Appellants contend that the New Jersey District
Court lacked personal jurisdiction over them and that the trial court, therefore, erred by enrolling the
judgment against them. Finding that Appellants consented to jurisdiction in the New Jersey District
Court, we affirm.
Tenn. R. App. P. 3 Appeal as of right; Judgment of the Circuit Court Affirmed; and
Remanded
DAVID R. FARMER , J., delivered the opinion of the court, in which ALAN E. HIGHERS, P.J., W.S., and
HOLLY M. KIRBY , J., joined.
Scottie O. Wilkes, Memphis, Tennessee, for the appellants, Mabra Holyfield and Frank Banks.
Ben J. Scott, Memphis, Tennessee, for the appellee, Howard Johnson, Inc.
OPINION
Background/Procedural History
The facts in this case are undisputed. Appellee Howard Johnson, International (“Howard
Johnson”) filed a breach of contract suit against Mabra Holyfield and Frank J. Banks (together
“Appellants”) in the United States District Court for the District of New Jersey (“District Court”).
Appellants hired counsel who appeared on their behalf and filed an answer with the District Court
in New Jersey. In their answer, Defendants admitted, among other things, that the District Court had
personal jurisdiction over them.1 Their answer also asserted a cross-claim. Howard Johnson filed
1
Appellants claim in their brief that they asserted the defense of lack of personal jurisdiction in their Answer
in the New Jersey District Court. In their pleadings in the current action, however, they admit that they did not contest
the United States District Court’s exercise of in personam jurisdiction in the New Jersey action, but they assert that
(continued...)
a motion for summary judgment. The District Court granted the motion for summary judgment on
July 12, 2004, entering judgment against Appellants and awarding Howard Johnson $395,139.72
in damages and $27,244.44 for attorney fees and costs. Appellants have not appealed the New
Jersey judgment.
On March 31, 2005, Howard Johnson filed a Complaint against Appellants in the Shelby
County Circuit Court seeking to enroll the New Jersey judgment in Tennessee pursuant to the
Uniform Enforcement of Judgments Act. Appellants filed its Answer on May 19, 2005. Howard
Johnson subsequently amended its Complaint on November 1, 2005. When Appellants failed to file
a responsive pleading, Howard Johnson moved for a default judgment on February 28, 2006, and
the trial court entered an Order enrolling the New Jersey judgment. Subsequently, Appellants moved
to set aside the Default Judgment for excusable neglect. The trial court permitted Appellants to
answer Howard Johnson’s Request for Admissions. In their Answer, Appellants admitted the
following: 1) that the judgment was entered against then in the New Jersey Action on July 12, 2004;
2) that Appellants’ counsel appeared on Appellants’ behalf in the New Jersey Action; 3) that
Appellants filed an answer in the New Jersey Action; and 4) that Appellants did not contest the
United States District Court’s exercise of in personam jurisdiction in the New Jersey Action. On
February 20, 2008, Howard Johnson moved for summary judgment, and on September 25, 2008, the
trial court granted summary judgment entering an order to enroll the New Jersey judgment in
Tennessee. Appellants filed a timely notice of appeal on October 22, 2008.
Issues
Appellants raise the following two issues on appeal:
I. Whether the trial court should have conducted an evidentiary hearing on
Appellant[s’] claim of lack of personal jurisdiction.
II. Whether the New Jersey Court had personal jurisdiction over Appellant[s].
Appellee Howard Johnson asserts only the following issue on appeal:
Pursuant to Tenn. Code Ann. § 27-1-122, whether Howard Johnson International,
Inc. is entitled to recover costs, expenses and attorneys’ fees incurred as a result of
this frivolous appeal?
Standard of Review
1
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counsel should have attacked and never advised them of this option.
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The parties’ first dispute is the applicable standard of review. We perceive Appellants’ first
argument to be that the trial court should have held an evidentiary hearing because summary
judgment was not a proper basis for enrolling a foreign judgment. On the other hand, Howard
Johnson asserts that we should review the trial court’s decision for an abuse of discretion because
Appellants challenge enrollment of the foreign judgment pursuant to Tennessee Rule of Civil
Procedure 60.02.2
We disagree, however, with both parties’ characterization of the standard of review. The trial
court enrolled the foreign judgment because it granted summary judgment. This Court has
previously explained that a person seeking to domesticate a foreign judgment may do so using
summary judgment so long as there are no disputes of material fact and the parties are entitled to
judgment as a matter of law. Biogen Distribs., Inc. v. Tanner, 842 S.W.2d 253, 255 (Tenn. Ct. App.
1992); see also W & T, Inc. v. Ham, No. M2006-01617-COA-R3-CV, 2009 WL 225256, at *2
(Tenn. Ct. App. Jan. 29, 2009) (no perm. app. filed). We acknowledge that foreign judgments may
be attacked using the grounds and procedures found in Tenn. R Civ. P. 60.02. Id. at 256. This does
not, however, require us to review the trial court’s decision for an abuse of discretion.3 See Hart v.
Tourte, 10 S.W.3d 263, 267 (Tenn. Ct. App. 1999).
We review the trial court’s decision in this case, as we do any other motion for summary
judgment, de novo with no presumption of correctness. Martin v. Norfolk S. Ry. Co., 271 S.W.3d
76, 84 (Tenn. 2008). It is ultimately the moving party’s burden to persuade the court that there are
no genuine issues of material fact and that it is entitled to judgment as a matter of law. Id. (citing
Byrd v. Hall, 847 S.W.2d 208, 215 (Tenn. 1993)). The moving party may meet this burden by
producing evidence or referring to the nonmoving party’s previously submitted evidence that either
(1) affirmatively negates an essential element of the nonmoving party’s claim, or (2) shows that the
nonmoving party cannot prove an essential element of the claim at trial. Id. (citing Hannan v. Alltell
2
Rule 60.02 provides that a party may be relieved from a final judgment, order, or proceeding for various
reasons including mistake, inadvertence, surprise, excusable neglect, fraud, misrepresentation, and for a void judgment.
Tenn. R. Civ. P. 60.02. We review a trial court’s decision to grant or deny a Rule 60.02 motion for an abuse of
discretion. Hart v. Tourte, 10 S.W.3d 263, 269 (Tenn. Ct. App. 1999).
3
We have recently explained the difference between Rule 60's applicability to a Tennessee judgment and a
foreign judgment:
In Tennessee, Rule 60 of the Tennessee Rules of Civil Procedure provides the grounds available for
setting aside a judgment. 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.
W & T, Inc. v. Ham, No. M2006-01617-COA-R3-CV, 2009 WL 225256, at *2 (Tenn. Ct. App. Jan. 29, 2009) (no perm.
app. filed) (internal citations omitted).
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Publ’g Co., 270 S.W.3d 1, 5 (Tenn. 2008)). If the moving party sustains its burden, the nonmoving
party must produce evidence of specific facts that establish that genuine issues of a material fact
exist. Id. (citing Byrd, 847 S.W.2d at 215). “A disputed fact is material if it must be decided in
order to resolve the substantive claim or defense at which the motion is directed.” Id. (quoting Byrd
847 S.W.2d at 215). In considering a motion for summary judgment, we review the evidence in a
light most favorable to the nonmoving party and draw all reasonable inferences in favor of the
nonmoving party. Id.
Evidentiary Hearing
We first address Appellants’ argument that the trial court should have afforded them an
evidentiary hearing on the issue of personal jurisdiction. Appellants rely on this Court’s decision
in Hart v. Tourte for the proposition that a defendant who is attacking the enrollment of a foreign
judgment under Tenn. R. Civ. P. 60.02 should be allowed an opportunity to contest the judgment’s
validity in an evidentiary hearing. In Hart, the plaintiff filed a petition to register a California
judgment in Tennessee. Hart v. Tourte, 10 S.W.3d 263, 266 (Tenn. Ct. App. 1999). The defendant
filed a motion for relief from the California judgment pursuant to Tennessee Rule of Civil Procedure
60.02. Id. We remanded the defendant’s Rule 60.02 motion for an evidentiary hearing. Id. at 270.
In that case, however, the trial court both denied the defendant’s Rule 60.02 motion without hearing
evidence and actually granted summary judgment to the plaintiff. Id. at 266. In Hart, we first found
that the trial court improperly granted plaintiff’s motion for summary judgment because the
defendant raised a genuine issue of material fact whether he was properly served process in the
original California proceeding. Id. at 268. Then addressing the trial court’s decision to deny
plaintiff’s Rule 60.02 motion for relief from judgment, we found that the defendant should be
afforded an opportunity to attack enrollment of the judgment at an evidentiary hearing. Id. at 269.
We expressly limited the defendant’s basis for attacking the California judgment to those defenses
that survived the plaintiff’s motion for summary judgment.4 Id. Hart, therefore, stands for the
proposition that when enrolling a foreign judgment, a defendant is not entitled to an evidentiary
hearing on those undisputed material facts which were properly addressed in a motion for summary
judgment. See id. In this case, Appellants may only be entitled to an evidentiary hearing if we find
that the trial court did not properly grant Howard Johnson’s motion for summary judgment. We
address this argument forthwith.
Personal Jurisdiction
4
In Hart, we stated:
[Defendant] is entitled to challenge the renewed California judgment on the basis that the California
court lacked in personam jurisdiction over him when it rendered its original judgment- the judgment
whose renewal led to the filing of the instant action. However, he is not entitled to attack the renewed
judgment on the ground that he was not properly served in the renewal proceeding because, as we
have previously indicated, the trial court was correct in granting summary judgment as to this part of
[Defendant’s] Rule 60.02 motion since the undisputed facts show that he was served in the renewal
proceeding in full compliance with California law.
Hart v. Tourte, 10 S.W.3d 263, 269 (Tenn. Ct. App. 1999).
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In Tennessee courts, foreign judgments are generally entitled to full faith and credit. Biogen
Distribs., Inc. v. Tanner, 842 S.W.2d 253, 256 (Tenn. Ct. App. 1992). Foreign judgments are treated
in the same manner as the judgment of a court of record of this state. Tenn. Code. Ann. § 26-6-
104(b). Thus, a foreign judgment may be vacated or re-opened for those grounds stated in Tennessee
Rule of Civil Procedure 60.02 for relief from judgments or orders. Biogen Distribs, 842 S.W.2d at
256. 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. Id. This rule does not, however,
“permit a litigant to slumber on her claims and then belatedly attempt to relitigate issues long since
laid to rest.” W & T, Inc. v. Ham, No. M2006-01617-COA-R3-CV, 2009 WL 225256, at * 3 (Tenn.
Ct. App. Jan. 29, 2009) (no perm. app. filed) (quoting Thompson v. Firemen’s Fund Ins. Co., 798
S.W.2d 235, 238 (Tenn. 1990)). And, “this power ‘is not to be used to relieve a party from free,
calculated and deliberate choices it has made.’” Id. (quoting Federated Ins. Co. v. Lethcoe, 18
S.W.3d 621, 625 (Tenn. 2000)). A foreign judgment is presumed valid so a party challenging the
foreign judgment based upon lack of personal jurisdiction bears a heavy burden. Hart v. Tourte, 10
S.W.3d 263, 269 (Tenn. Ct. App. 1999). In addition, issues of fact underlying a foreign judgment
may not form the basis for attacking the validity of a foreign judgment. Id.
Appellants argue that the trial court erred by entering the New Jersey judgment when New
Jersey had no personal jurisdiction over them. At trial, Appellants contended that there were four
material facts in dispute: 1) The State of New Jersey lacked personal jurisdiction over the
Defendants, 2) The judgment was based on misrepresentation of facts, 3) the judgment was obtained
inadvertently and by surprise, and 4) “Defendants states in their answers [sic] Plaintiff’s request for
admission of facts that the judgment result [sic] of fraud and misconduct on behalf of Howard
Johnson.”5 Appellants failed, however, to produce an affidavit to support their fraud and
misrepresentation claims. Appellants are Tennessee residents that allege that they have no contacts
with the State of New Jersey. Appellants claim they have no minimal contacts with New Jersey and
it would, therefore, offend traditional notions of fair play and substantial justice to exercise
jurisdiction over them. Focusing on the forum selection clause found in the parties’ contract,
Appellants then argue that the parties’ contract did not subject them to personal jurisdiction in New
Jersey because New Jersey was an inconvenient place for trial.6
5
Appellants only appeal whether the New Jersey District Court had personal jurisdiction. We also note that
personal jurisdiction is a question of law, not a question of fact. Woodruff v. Anastasia Intern, Inc., No. E2007-00874-
COA-R3-CV, 2007 WL 4439677, at *3 (Tenn. Ct. App. Dec. 19, 2007). Although Appellants allege that it is a disputed
fact whether the State of New Jersey had personal jurisdiction over the Defendant, they do not dispute that Appellants
hired counsel who appeared on their behalf and filed an answer but failed to assert lack of personal jurisdiction as a
defense. The parties litigated the action on the merits and the District Court entered summ ary judgment against
Appellants.
6
The Tennessee Supreme Court has explained that forum selection clauses are generally enforced unless
(1) the plaintiff cannot secure effective relief in the other state, for reasons other than delay in
bringing the action; (2) or the other state would be a substantially less convenient place for the trial
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Because an inquiry into personal jurisdiction is a two-part question, courts will generally first
consider whether the forum state chose to exercise jurisdiction over a particular defendant by looking
at that state’s long-arm statute. If the state statute requirements are met, a court will then determine
whether exercising jurisdiction over that particular defendant satisfies the due process clause. A
federal district court may assert personal jurisdiction over the nonresident of a state in which that
court sits to the extent authorized by the law of that state. Provident Nat’l Bank v. Cal. Fed. Sav.
& Loan Ass’n, 819 F.2d 434, 437 (3d Cir. 1987). As with Tennessee law, New Jersey construes its
long-arm statute7 to extend personal jurisdiction to the outer limits permitted by due process. Avdel
Corp. v. Mecure, 277 A.2d 208, 209 (N.J. 1971); J. I. Case Corp. v. Williams, 832 S.W.2d 530, 531
(Tenn. 1992). It is only necessary, therefore, for us to inquire whether New Jersey’s exercise of
personal jurisdiction over Appellants violates the due process clause.
Our central inquiry, therefore, is whether New Jersey’s exercise of personal jurisdiction
comports with the due process clause. The Due Process Clause protects an individual’s interest in
not being haled into court in a state where the individual has had little or no contact. Ins. Corp. of
Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703–04 (1982). Appellants argue
that the forum selection clause in the parties’ contract did not give New Jersey personal jurisdiction
over them because New Jersey was such an inconvenient place for trial that it deprived Appellants
of their day in court. By focusing their argument on the forum selection clause, Appellants overlook
the fact that their actions in the New Jersey District Court gave the court personal jurisdiction over
them.
The United States Supreme Court has recognized that the actions of a defendant may amount
to a legal submission to the jurisdiction of the court. Ins. Corp. of Ireland, Ltd. v. Compagnie des
Bauxites de Guinee, 456 U.S.694, 704–05 (1982). The personal jurisdiction requirement represents
an individual right that can, like other such rights, be waived. Id. at 703. It is upon this basis that
parties can contract to submit to the jurisdiction of a given court. Id. at 704. Forum selection
clauses, however, are not the only means through which a defendant can waive his right to defend
a claim in a convenient forum. Id. An individual may also submit to the jurisdiction of the court
by appearance. Id. at 703. Thus, a party consents to personal jurisdiction where it “actually litigates
the underlying merits or demonstrates a willingness to engage in extensive litigation in the forum.”
In re Texas E. Transmission Corp., 15 F.3d 1230, 1236 (3d Cir. 1994). The Federal Rules of Civil
Procedure provide that a defendant must raise a lack of personal jurisdiction defense in its first
responsive pleading. Fed. R. Civ P. 12(h); see Uffner v. La Reunion Francaise, S. A., 244 F.3d 38,
40–41 (1st Cir. 2001). Where a defendant fails to raise a lack of personal jurisdiction defense in his
6
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of the action than this state; (3) or the agreement as to the place of the action was obtained by
misrepresentation, duress, abuse of economic power, or other unconscionable mean; (4) or it would
for some other reason be unfair or unreasonable to enforce the agreement.
Dyersburg Mach. Works, Inc. v. Rentenbach Eng’g Co., 650 S.W.2d 378, 380 (Tenn. 1983).
7
New Jersey’s equivalent of a long-arm statute is Rule 4:4-4. Avdel Corp. v. Mecure, 277 A.2d 208, 209 (N.J.
1971).
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first responsive pleading, defendant has waived that defense and is deemed to have consented to
personal jurisdiction. Uffner, 244 F.3d at 40–41.
Appellants admit that they hired counsel who appeared on their behalf before the New Jersey
District Court. Their attorney filed an answer but failed to assert lack of personal jurisdiction as a
defense. Appellants acknowledge that the New Jersey District Court resolved the matter on the
merits and entered summary judgment against Appellants. Through their actions before the New
Jersey District Court, Appellants consented to the court’s personal jurisdiction over them. Having
so consented, the defendants cannot now object to enrollment of the foreign judgment on the basis
that District Court lacked personal jurisdiction. We find that the issue of personal jurisdiction was
resolved before Howard Johnson sought to enroll the judgment in Tennessee and because
Appellants’ argument against enrolling the New Jersey judgment is without merit, we affirm the
judgment of the trial court.
Attorney Fees Incurred on Appeal
On appeal, Howard Johnson argues that this Court should award it attorney fees because
Appellants’ appeal is frivolous. Tennessee Code Annotated § 27-1-122 authorizes this Court to
award damages, including attorney fees incurred by an appellee, against an appellant who brings
a frivolous appeal. Tenn. Code. Ann. § 27-1-122. A frivolous claim is “devoid of merit” or a
claim in which there is little prospect that it can ever succeed. Indus. Dev. Bd. of Tullahoma v.
Hancock, 901 S.W.2d 382, 385 (Tenn. Ct. App. 1995). Such an award is within this Court’s
sound discretion. Archer v. Archer, 907 S.W.2d 412, 419 (Tenn. Ct. App. 1995). Exercising our
discretion, we decline to find this to be a frivolous appeal.
Conclusion
For the foregoing reasons we affirm the judgment of the trial court. Costs of this appeal
are taxed to the Appellants, Mabra Holyfield and Frank J. Banks, for which execution may issue
if necessary.
___________________________________
DAVID R. FARMER, JUDGE
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