Florida Nat. Bank v. Satterfield, 873SC1049

• Decision Date: 03 May 1988
• Docket Number: No. 873SC1049,873SC1049
• Citation: 90 N.C.App. 105,367 S.E.2d 358
• Court: North Carolina Court of Appeals
• Parties: FLORIDA NATIONAL BANK, f/k/a Royal Trust Bank, N.A. v. G. Howard SATTERFIELD, Jr.

Page 358

367 S.E.2d 358

90 N.C.App. 105

FLORIDA NATIONAL BANK, f/k/a Royal Trust Bank, N.A. v. G. Howard SATTERFIELD, Jr.

No. 873SC1049.

Court of Appeals of North Carolina.

May 3, 1988.

Smith, Debnam, Hibbert & Pahl by Cindy G. Oliver and Bettie K. Sousa, Raleigh, for plaintiff-appellee.

Connor, Bunn, Rogerson & Woodard by David M. Connor and I. Joe Ivey, Wilson, for defendant-appellant.

EAGLES, Judge.

The Full Faith and Credit Clause of the United States Constitution requires North Carolina to enforce a judgment rendered in another state, if the judgment is valid under the laws of that state. Boyles v. Boyles, 308 N.C. 488, 302 S.E.2d 790 (1983); U.S. Const., Art. IV, section 1. A foreign judgment may be collaterally attacked only on the grounds that it was obtained without jurisdiction; that fraud was involved in the judgment's procurement; or that its enforcement would be against public policy. Fungaroli v. Fungaroli, 53 N.C.App. 270, 280 S.E.2d 787 (1981). Defendant's attack on the validity of the Florida judgment is based solely on the grounds of fraud. He contends that the materials before the trial court show that there is a genuine issue of material fact regarding whether the judgment was procured by fraud. We disagree.

Although extrinsic fraud is a defense to an action to recover on a foreign judgment, intrinsic fraud is not. Courtney v. Courtney, 40 N.C.App. 291, 253 S.E.2d 2 (1979). "Extrinsic fraud" is fraud which occurs in the procurement of the judgment; intrinsic fraud arises in the proceeding itself and concerns some matter necessarily under the consideration of the foreign court in deciding the merits. Scott v. Cooperative Exchange, 274 N.C. 179, 161 S.E.2d 473 (1968); J.I.C. Electric, Inc. v. Murphy, 81 N.C.App. 658, 344 S.E.2d 835 (1986); Truitt v. Truitt, (Fla. 5th Dist.Ct.App.) 383 So.2d 276 (1980). Where a party has had proper notice of the foreign action and the alleged fraud did not prevent his full participation in the action, any fraud is intrinsic. Stokley v. Stokley, 30 N.C.App. 351, 227 S.E.2d 131 (1976).

The only questions of fact which defendant's affidavits arguably raise concern intrinsic fraud. Those affidavits tend to show that the other shareholder of Leisure Development, Inc. of Greenville, Mr. James D. Carter, obtained the loan from plaintiff through Mr. Joseph Cimilluca, one of plaintiff's commercial loan officers. The affidavits also claim that Cimilluca did not disburse the loan's proceeds to the corporation's account, and, instead, deposited the money in the account of a Colorado corporation named Leisure Development, Inc. When defendant received notice of the action in Florida, he contacted Carter, who told him that the loan had been paid and that he (Carter) had hired an attorney, Timothy H. Kenney, to represent the corporation and defendant. The affidavits also show that a transfer of over $17,000 was made from the corporation's account in another bank to a trust account belonging to Mr. Kenney. A disbursement of the same amount from that account was made to the law firm representing plaintiff in the Florida action, apparently in partial settlement of certain other claims of plaintiff against Carter. Carter had several other outstanding loans with plaintiff in his individual name.

Defendant contends that the materials submitted to the trial court create a genuine issue of material fact regarding whether Cimilluca, acting as an agent for plaintiff, fraudulently procured the guaranty of the loan and otherwise acted to defraud defendant. Defendant argues that Kenney was also representing Carter's interests in the Florida action and that Kenney had a conflict of interest which deprived defendant of a full opportunity to present the merits of his case. Even assuming, however, that the record establishes an issue of fact regarding those contentions, none of them involve extrinsic fraud.

Whether Cimilluca made misrepresentations to defendant, which are imputable to plaintiff, is a question which defendant was required to have raised in the Florida courts. Similarly, questions regarding Kenney's alleged conflicts of interest and the adequacy of his representation may not be used now to collaterally attack the judgment. Allegations that the defendant's attorney in the foreign state had a conflict of interest and failed to protect his interests are claims of intrinsic fraud and must be directly attacked in that state. See J.I.C. Electric, Inc. v. Murphy, supra; G.S. 1A-1, Rule 60(b)(3); Fla.Stat.Ann., R.C.P. Rule 1.540(b)(3) (West 1985). Plaintiff presented our trial court with a copy of a final judgment issued in the State of Florida. Defendant failed to present a forecast of evidence establishing a genuine issue of material fact regarding the judgment's validity. Accordingly, the trial court properly granted plaintiff's motion for summary judgment.

Defendant's last arguments relate to the trial court's granting his motion to amend while, at the same time, granting plaintiff's motion for summary judgment. Defendant contends that granting his motion to amend created a new issue by raising an...