XPX Armor & Equip., Inc. v. Skylife Co.

• Decision Date: 23 July 2021
• Docket Number: No. L-20-1123,L-20-1123
• Citation: 176 N.E.3d 821
• Parties: XPX ARMOR AND EQUIPMENT, INC., Appellant v. The SKYLIFE CO., INC., Appellee
• Court: Ohio Court of Appeals

176 N.E.3d 821

XPX ARMOR AND EQUIPMENT, INC., Appellant

v.The SKYLIFE CO., INC., Appellee

No. L-20-1123

Court of Appeals of Ohio, Sixth District, Lucas County.

Decided: July 23, 2021

Gerald R. Kowalski, Toledo, and J. Peter Millon, for appellant.

Bruce W. Boerst, Jr., Toledo, and Michelle Safro, for appellees.

DECISION AND JUDGMENT

OSOWIK, J.

Introduction

{¶ 1} The appellant and judgment creditor in this case is XPX Armor and Equipment, Inc. ("XPX"). XPX obtained a default judgment from a trial court in North Carolina against The SkyLIFE Co., Inc., the appellee and judgment debtor herein. XPX sought to enforce that judgment in the Lucas County Court of Common Pleas under Ohio's Uniform Enforcement of Foreign Judgments Act, R.C. 2329.21 et seq. The common pleas court found that North Carolina judgment was not entitled to full faith and credit, in part, because it had not acquired personal jurisdiction over SkyLIFE. On that basis and as set forth below, we affirm.

Background

{¶ 2} XPX manufactures equipment for military and commercial purposes in North Carolina. On June 26, 2019, XPX filed a complaint in the Superior Court of Hoke County, North Carolina ("the Superior Court") alleging that SkyLIFE breached an oral agreement to purchase nearly 18,000 custom-made parachutes. SkyLIFE is an Ohio corporation that manufactures and supplies aerial delivery packages to government organizations involved in humanitarian aid.

{¶ 3} According to XPX's president and owner, Timothy D'Annunzio, the parties’ relationship began in August of 2016 when SkyLIFE "requested that XPX provide [it] with a manufacturing quote for cruciform parachutes." (D'Annunzio Aff. at ¶ 6). In the complaint, XPX alleges that, between May of 2017 and October of 2018, SkyLIFE "induced" XPX to "specially manufacture goods" that resulted in an "initial supply agreement." (North Carolina Complaint at ¶ 8). Based upon that agreement, XPX "began producing, offered to deliver, and sent invoices" to SkyLIFE for "specially-manufactured cargo parachutes." XPX claimed that SkyLIFE breached the initial supply agreement by refusing to accept delivery or pay for the parachutes. The alleged breach resulted in XPX filing suit—in Ohio —on November 30, 2017. (L.C.C.C.P. case No. CI0201704976).¹

{¶ 4} The North Carolina lawsuit centers around XPX's claim that, during the pendency of the Ohio case, the parties negotiated a "second supply agreement." According to XPX, between April 17, 2018 and June of 2018, the parties "engaged in protracted written and verbal negotiations regarding [the] sale of already-complete specially-manufactured cargo parachutes and related harnesses and D-rings that had been produced in accordance with the Initial Supply Agreement." (North Carolina Complaint at ¶ 14). Pursuant to the second supply agreement, XPX shipped "approximately 17,959" of those items to SkyLIFE, but SkyLIFE "failed and refused to tender payment" for them. As a result, XPX claims that it "incurred substantial losses through payment [to] its suppliers and creditors * * * in addition to the loss of potential profit." (North Carolina Complaint at ¶ 11). The North Carolina case seeks to enforce the second supply agreement.

{¶ 5} On October 28, 2019, the court in North Carolina Superior Court entered a default judgment in favor of XPX and awarded it $932,333.67 in damages, plus pre and post-judgment interest.

{¶ 6} XPX sought to enforce the North Carolina judgment in Ohio by filing a foreign judgment and creditor's affidavit in the Lucas County Court of Common Pleas on December 5, 2019. SkyLIFE moved to vacate the foreign judgment, arguing that it was void and therefore unenforceable. The trial court agreed. It found that the superior court did not have personal jurisdiction over SkyLIFE and also that service of the complaint and summons had "failed." XPX appealed and raises eight assignments of error for our review:

Assignment of Error No. 1: The trial court erred, exceeded its authority, and misapplied the law in its July 1, 2020 Opinion and Order ("Opinion") (submitted herewith as Attachment A to the Appendix) in this foreign judgment enforcement action when it collaterally attacked, and reversed issues which were already decided by the North Carolina court of original jurisdiction in is judgment in favor of Appellant/Judgment Creditor, XPX Armor and Equipment, Inc. ("XPX"), a North Carolina company (see October 28, 2019 North Carolina judgment, filed as an Exhibit to XPS's Notice of Filing Foreign Judgment and submitted herewith as Attachment B to the Appendix).

Assignment of Error No. 2: The trial court erred, exceeded its authority, and misapplied the law in its Opinion by improperly expanding the scope of Judgment Debtor/Appellee The SkyLIFE Co., Inc.’s ("SkyLIFE") Civ.R. 60 Motion to Void and Vacate Foreign Judgment (" Civ.R. 60(B) Motion") and granting such Civ.R. 60(B) Motion, despite acknowledging that the foreign judgment is not subject to attack as voidable under Civ.R. 60(B).

Assignment of Error No. 3: The trial court erred, exceeded its authority, and misapplied the law in its Opinion by reversing and collaterally attacking the North Carolina court's proper exercise of jurisdiction over SkyLIFE in the North Carolina lawsuit, including by reversing, collaterally attacking, finding void, and vacating the North Carolina court's judgment.

Assignment of Error No. 4: The trial court erred, exceeded its authority, and misapplied the law in its Opinion when it found that the North Carolina judgment is void and vacated for lack of personal jurisdiction, where the North Carolina court properly exercised personal jurisdiction over SkyLIFE under North Carolina's long-arm statute and general and specific jurisdiction under the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution.

Assignment of Error No. 5: The trial court erred and contradicted the evidentiary record and term of the parties’ two separate agreements to XPX's prejudice by treating the parties’ written First Agreement entered in 2017 (Exhibit A to SkyLIFE's 60(B) Motion), which is the subject of a different lawsuit pending before the Ohio trial court and on appeal before this Court, and the parties’ separate oral Second Agreement entered in 2018, which was the subject of the North Carolina lawsuit and this foreign judgment enforcement action, as one and the same, and further erred by relying on the First Agreement as a basis for the trial court's finding in its Opinion.

Assignment of Error No. 6: The trial court erred, exceeded its authority, and misapplied the law in its Opinion by reversing and collaterally attacking the North Carolina court's determination by that SkyLIFE was properly served under North Carolina law. (See Appendix, Attachment B)

Assignment of Error No. 7: the trial court erred, exceeded its authority, and misapplied the law in its Opinion when it granted SkyLIFE's Civ.R. 60(B) Motion and found the North Carolina judgment void and vacated based on ineffectual service, where SkyLIFE's registered statutory agent was properly served with the summons and complaint and other filings in the North Carolina lawsuit with applicable North Carolina law.

Assignment of Error No. 8: The trial court erred, exceeded its authority, and misapplied the law in its Opinion when it imposed heightened, unfair, and prejudicial service obligations on XPX beyond what it required under North Carolina's rules and precedent, and by creating new exceptions to North Carolina's service rules and precedent which impose heightened, unfair, and prejudicial service obligations on XPX.

Law and Analysis

{¶ 7} Generally, judgments from a sister state are entitled to full faith and credit in Ohio. U.S.C.A. Const. Art. 4, Section 1. Litsinger Sign Co. v. Am. Sign Co., 11 Ohio St.2d 1, 4, 227 N.E.2d 609 (1967) ; Digitalbiz Corp. v. Friedman-Swift Assoc., Inc. , 1st Dist., 2013-Ohio-666, 989 N.E.2d 119, ¶ 9. The Full Faith and Credit Clause does not mean that a judgment issued by one state that is filed in a second state becomes a merit decision by the courts of the second state. Bradley v. Holivay, 183 Ohio App.3d 596, 2009-Ohio-3895, 918 N.E.2d 166, ¶ 5 (8th Dist.). Rather, when applied to judicial determinations, full faith and credit means that a valid judgment issued in one state must be recognized, without examining the underlying merits of the action, by all other states. Id.

{¶ 8} Ohio's version of the uniform enforcement of foreign judgments act is set forth in R.C. 2329.021 et seq. A " ‘foreign judgment’ means any judgment, decree, or order of a court of the United States, or of any court of another state, that is entitled to full faith and credit in this state." R.C. 2329.021.

{¶ 9} A foreign judgment may be authenticated, or domesticated, in Ohio by filing it in the court of common pleas. R.C. 2329.022 provides,

A copy of any foreign judgment authenticated in accordance with section 1738 of Title 28 of the United States Code, 62 Stat. 947 (1948), may be filed with the clerk of any court of common pleas. The clerk shall treat the foreign judgment in the same manner as a judgment of a court of common pleas. A foreign judgment filed pursuant to this section 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 common pleas and may be enforced or satisfied in the same manner as a judgment of a court of common pleas.

{¶ 10} Full faith and credit may be denied to a judgment of a sister state where that judgment is void. Appel v. Berger, 149 Ohio App.3d 486, 2002-Ohio-4853, 778 N.E.2d 59, ¶ 40 (10th Dist.). In other words, "a judgment from a sister state is subject to collateral attack in Ohio if there was no subject-matter or personal jurisdiction to render the judgment under the sister state's internal law or if the assertion of jurisdiction over the defendant violated the Due Process Clause." (Citation omitted.) Digitalbiz at ¶ 9. E...