Marlin Leasing Corporation v. Associated Credit Service Inc. ( 2013 )

FILED
MARCH 26, 2013
In the Office of the Clerk of Court
WA State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
MARLIN LEASING CORPORATION, ) No. 30554-6-111
)
Respondent, )
)
~ ) UNPUBLISHED OPINION
)
ASSOCIATED CREDIT SERVICE, INC., )
)
Appellant. )
KULIK, J. Associated Credit Service, Inc. appeals the denial of its motion to
vacate a Philadelphia municipal court judgment, contending the trial court erred in
concluding that the foreign municipal court had jurisdiction over the dispute.
Specifically, it argues that the municipal court lacked subject matter jurisdiction because
it is not part of the Pennsylvania state court system and lacked personal jurisdiction
because service by mail was improper. The trial court did not err in concluding that the
Philadelphia municipal court is a state court and that it had jurisdiction over Associated
Credit based on the plain language of the lease between Associated Credit and Marlin
Leasing. The lease specified that any law suit would be brought in the state of
Pennsylvania, under Pennsylvania law. Associated Credit also agreed to submit to the
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jurisdiction of the Pennsylvania state court. Finally, Associated Credit received notice of
the law suit and chose to ignore it. We affirm the trial court and award attorney fees to
Marlin Leasing.
FACTS
Associated Credit Service, Inc., a Washington corporation, signed a 60-month
equipment lease with "JB II Funding, Inc." in July 2004. The lease was later assigned to
Marlin Leasing Corporation and stated in relevant part:
This lease shall be governed by the laws of the Commonwealth of
Pennsylvania. You agree that any suit under this Lease shall be brought in
state or federal court in Pennsylvania, and you irrevocably consent and
submit to the jurisdiction of such courts. Each party waives any right to a
jury trial.
Clerk's Papers (CP) at 13.
As the lease approached its end date, Associated Credit stopped its payments on
the lease because it believed that Marlin Leasing had made unauthorized insurance
deductions of $2,263.20 and failed to credit Associated Credit with an advance lease
payment of$1,537.02. Marlin Leasing filed suit in the Pennsylvania Municipal Small
Claims Court in 2009 and the court mailed notice of the suit to Associated Credit.
Associated Credit accepted service by mail, but decided not to appear in Pennsylvania to
defend the suit. Marlin Leasing then obtained a default judgment of $2,682.72 in
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September 2009.
Marlin Leasing filed a Notice of Registration of Foreign Judgment on
September 19, 2011. Associated Credit moved to vacate the foreign judgment, arguing
the Philadelphia municipal court lacked subject matter jurisdiction because it was not a
federal or state court and that the court also lacked personal jurisdiction because service
by mail was improper.
Marlin Leasing responded that the Philadelphia municipal court was part of the
state court system and submitted a page from the state court's website that stated, "The
First Judicial District (FJD) of Pennsylvania is composed of the three courts which make
up the Philadelphia County Court System; the Court of Common Pleas; Municipal Court;
and Traffic Court." CP at 28.
The court denied Associated Credit's motion to vacate the judgment, stating,
"based upon what I have today, I'm satisfied that the matter was ... filed in the state
court." Report of Proceedings (RP) at 13.
ANALYSIS
The issue is whether the Philadelphia municipal court lacked jurisdiction to enter
the judgment against Associated Credit. Associated Credit contends that the municipal
court is not a "state" court as contemplated by the language of the lease because the
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municipal court's jurisdiction is limited to the city of Philadelphia. Associated Credit
also argues that the municipal court lacked personal jurisdiction over it because, under
Washington law, service by mail is not a proper method of service on a Washington
corporation.
Marlin Leasing responds that Associated Credit consented to personal jurisdiction
and that the method of service was proper under Pennsylvania procedural rules. It also
points out that this court should not allow Associated Credit to frustrate justice by
claiming improper service after having acknowledged actual notice of the proceedings
and choosing not to respond to those proceedings.
Jurisdiction is a question oflaw we review de novo. Young V. Clark, 149 Wash. 2d
130, 132,65 P.3d 1192 (2003). A court only has authorization to hear and decide a case
or proceeding if it has jurisdiction over the parties and the subject matter. Absent proper
jurisdiction, a court may do nothing more than enter an order of dismissal. Deschenes V.
King County, 83 Wash. 2d 714, 716, 521 P.2d 1181 (1974), overruled in part on other
grounds by Clark County Pub. Util. Dist. No.1 V. Wilkinson, 139 Wash. 2d 840, 991 P.2d
1161 (2000).
Generally, a judgment rendered in another state, if valid, is entitled to recognition
in the courts of another state under the full faith and credit clause. In re Estate o/Stein,
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78 Wash. App. 251, 261, 896 P.2d 740 (1995). However, '" [a] judgment rendered without
judicial jurisdiction ... will not be recognized or enforced in other states.'" City of
Yakima v. Aubrey, 85 Wn. App. 199,203,931 P.2d 927 (1997) (quoting RESTATEMENT
(SECOND) OF CONFLICT OF LAWS § 104 (1971)).
Service of process is a prerequisite to obtaining jurisdiction, and judgment entered
without jurisdiction is void. Allstate Ins. CO. V. Khani, 75 Wn. App. 317,324, 877 P.2d
724 (1994) (quoting In re Marriage ofMarkow ski, 50 Wn. App. 633,635-36,749 P.2d
754 (1988)). But a party waives the claim oflack of personal jurisdiction by
"consent[ing], expressly or impliedly, to the court's exercising jurisdiction." In re
Marriage ofSteele, 90 Wn. App. 992,997-98, 957 P.2d 247 (1998).
A party may consent to personal jurisdiction by written agreement, particularly in
the commercial context:
[B]ecause the personal jurisdiction requirement is a waivable right, there
are a "variety of legal arrangements" by which a litigant may give "express
or implied consent to the personal jurisdiction of the court." For example,
particularly in the commercial context, parties frequently stipulate in
advance to submit their controversies for resolution within a particular
jurisdiction. Where such forum-selection provisions have been obtained
through "freely negotiated" agreements and are not "unreasonable and
unjust," their enforcement does not offend due process.
Kysar v. Lambert, 76 Wash. App. 470, 484, 887 P .2d 431 ( 1995) (quoting Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985)).
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In Kysar, Division Two of this court held that consent to venue in a particular court
constitutes implied consent to personal jurisdiction in that court, noting that consent to
venue would be meaningless if personal jurisdiction was lacking. Kysar, 76 Wn. App. at
486 (quoting Penn. House, Inc. V. Barrett, 760 F. Supp. 439, 448 (M.D. Pa. 1991».
As already noted, the parties' lease agreement explicitly placed venue in the
"state or federal court in Pennsylvania," and further stated that the parties
"irrevocably consent[ ed]" to the jurisdiction of such court. CP at 13. Thus, by
explicit agreement, Associated Credit consented to the personal jurisdiction of the
Pennsylvania state courts. As such, it waived any claim of lack of personal
jurisdiction.
The only remaining issue then is whether the Philadelphia municipal court
constitutes a Pennsylvania "state" court. The evidence provided by Marlin Leasing
establishes that the Pennsylvania state court system encompasses its municipal courts. A
page from the website of the Unified Judicial System of Pennsylvania states that the
Pennsylvania court system is structured like a pyramid with the municipal courts at its
base. The Philadelphia municipal court is identified as one of the "Minor Courts," which
are described as the "grass roots" level of the Pennsylvania state court system. Resp't's
Br., Attach. B. Thus, when Associated Credit consented to venue in a "state court" of
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Pennsylvania that consent was valid to give personal jurisdiction for the lawsuit filed in
the Philadelphia municipal court.
"[T]he exercise ofjurisdiction must not offend traditional notions of fair play and
substantial justice in light of the quality, nature, and extent of the defendant's activity in
the state; the relative convenience of the parties; the benefits and protection of the laws
afforded the respective parties; and the basic equities of the situation." Raymond v.
Robinson, 104 Wash. App. 627, 641, 15 P.3d 697 (2001).
Here, Associated Credit signed a lease with a foreign corporation and agreed that
any lawsuits under the lease would be brought in the state of Pennsylvania. When
Associated Credit stopped paying on the lease, it reasonably should have anticipated
being hailed into a Pennsylvania court to defend an alleged breach of the lease. Thus, a
conclusion that the Philadelphia municipal court has jurisdiction over Associated Credit
does not offend traditional notions of fairness and justice.
The trial court did not err in concluding that the Philadelphia municipal court was
a Pennsylvania "state" court with jurisdiction over Associated Credit.
Attorney Fees. Marlin Leasing asks for attorney fees under RCW 4.84.030 and
RAP 18.1. RCW 4.84.030 provides that where a contractual provision provides attorney
fees, the prevailing party shall be awarded reasonable attorney fees to defend the
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provisions of the contract.
Here, the contract states: "If you do not pay us as agreed ... you agree that we may
... sue you for all past due payments and other charges and all payments due in the future
to the end of the Lease Term, plus our legal and collection costs." CP at 13.
Because we affirm the trial court's decision, Marlin Leasing is entitled to fees and
costs against Associated Credit.
A majority of the panel has determined this opinion will not be printed in the
Washington Appellate Reports, but it will be filed for public record pursuant to
RCW 2.06.040.
Kulik, .
WE CONCUR:
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