Fraser v. Littlejohn

• Decision Date: 05 December 1989
• Docket Number: No. 8926SC112,8926SC112
• Court: North Carolina Court of Appeals
• Parties: Hilton B. FRASER v. L. Glenn LITTLEJOHN.

Page 230

386 S.E.2d 230

96 N.C.App. 377

Hilton B. FRASER v. L. Glenn LITTLEJOHN.

No. 8926SC112.

Court of Appeals of North Carolina.

Dec. 5, 1989.

Weinstein & Sturges by L. Holmes Eleazer, Jr., Allan W. Singer and Thomas L. Odom, Jr., Charlotte, for plaintiff-appellee.

Winfred R. Ervin, Jr., Charlotte, for defendant-appellant.

ARNOLD, Judge.

Appellant asks us to find error in the Superior Court's denial of his motion to set aside the default judgment entered against him on the basis that the lower court lacked personal jurisdiction. The contentions in this case revolve around two theories under which jurisdiction might be asserted over the appellant: (1) the Full Faith and Credit Clause of the United States Constitution, by the enforcement of a valid in personam judgment of one state in the courts of another; and (2) by jurisdiction in personam acquired under N.C.G.S. § 1-75.4(1)(d) and N.C.G.S. § 1-75.8(5) based on appellant's systematic and continuous contacts with North Carolina. We find both theories adequate to provide jurisdiction and affirm the trial court's Order.

1. Full Faith and Credit

Two requirements must be met to assert jurisdiction over a defendant based on the full faith and credit theory. First, plaintiff must obtain a judgment in the out-of-state court against defendant, rendering him a "debtor" in the eyes of the North Carolina courts. Second, the North Carolina courts must examine whether the first state's decree or judgment is entitled to full faith and credit in this state. See Holt v. Holt, 41 N.C.App. 344, 255 S.E.2d 407 (1979).

In Holt our Court discussed this theory of obtaining personal jurisdiction. We noted that in Shaffer v. Heitner, 433 U.S. 186, 210, 97 S.Ct. 2569, 2583, 53 L.Ed.2d 683, 702 (1977), the United States Supreme Court stated:

Moreover, we know of nothing to justify the assumption that a debtor can avoid paying his obligations by removing his property to a State in which his creditor cannot obtain personal jurisdiction over him. The Full Faith and Credit Clause, after all, makes the valid in personam judgment of one State enforceable in all other States.

The Supreme Court added in a footnote:

Once it has been determined by a court of competent jurisdiction that the defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt as an original matter.

Shaffer, 433 U.S. at 210, n. 36, 97 S.Ct. at 2583, 53 L.Ed.2d at 702.

In Holt, this Court ruled the trial court lacked personal jurisdiction over defendant because defendant was only an "obligor," not a debtor, of plaintiff. We stated:

To proceed under this principle [jurisdiction under the full faith and credit clause], we think it would be essential for plaintiff to first obtain a judgment in the Missouri courts that defendant is in arrears for a sum certain on the ordered payments. From that subsequent judgment, North Carolina courts could then take proper notice that defendant is a "debtor" of plaintiff and the action would lie under this theory.

Holt, 41 N.C.App. at 347, 255 S.E.2d at 409.

We believe the facts in the present case come within the scenario outlined in Shaffer and Holt. Appellee's Judgment of Default here was based on jurisdiction obtained through the three valid money judgments secured against appellant in Florida in 1976. Whether or not North Carolina had jurisdiction to determine the existence of the debt as an original matter is immaterial. Appellee must only show that he obtained a judgment against appellant in Florida.

Under the second step of this analysis, the Court must determine whether the Florida judgment is entitled to full faith and credit in North Carolina. See Holt, 41 N.C.App. at 347, 255 S.E.2d at 409. The rule here requires North Carolina to enforce a judgment rendered in another state if the judgment is valid under the laws of that state. Florida National Bank v. Satterfield, 90 N.C.App. 105, 367 S.E.2d 358 (1988); U.S. Const., Art. IV, Section 1.

A collateral attack may be waged against a foreign judgment 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. Satterfield, at 107, 367 S.E.2d at 360. None of these grounds was asserted here by Littlejohn against the Florida judgments. Appellant did not object to the trial court's finding of fact that appellee's Florida judgments were valid. Appellant has never contested the Florida court's assertion of subject matter or personal jurisdiction in those actions, nor has he alleged fraud concerning them. Public policy concerns, we believe, encourage us to enforce a creditor's claim obtained against a debtor in a sister state. Under this full faith and credit theory for determining personal jurisdiction, we find no error with the lower court's Order dismissing appellant's motions.

2. In Personam Jurisdiction

We also find the Court had personal jurisdiction over appellant under the second theory asserted. Appellant's continuous and systematic contacts with North Carolina between 1983 and 1988 satisfy the statutory and constitutional requirements necessary to find personal jurisdiction in this case. On the facts before us, this theory adequately permitted the trial court to assert personal jurisdiction over Littlejohn regardless of whether Fraser previously had obtained judgments against appellant in another state.

To determine whether a defendant is subject to in personam jurisdiction, two familiar requirements must be met. First, the Court must decide whether a North Carolina jurisdictional statute allows it to entertain the action against defendant. Second, the Court must determine whether the exercise of jurisdiction is consistent with due process. Marion v. Long, 72 N.C.App. 585, 325 S.E.2d 300, appeal dismissed and rev. denied, 313 N.C. 604, 330 S.E.2d 612 (1985).

Appellee has asserted statutory jurisdiction over Littlejohn under N.C.G.S. § 1-75.4, the North Carolina "long-arm" statute and N.C.G.S. § 1-75.8(5), the in rem and quasi in rem statute. N.C.G.S. § 1-75.4(1)(d) provides in part that a court has personal jurisdiction in the following circumstance:

(1) Local Presence or Status.--In any action, whether the claim arises within or without this State, in which a claim is asserted against a party who when service of process is made upon such party:

* * * * * *

d. Is engaged in substantial activity within this State, whether such activity is wholly interstate, intrastate, or otherwise.

N.C.G.S. § 1-75.8(5) provides that jurisdiction in rem or quasi in rem may be invoked "[i]n any other action in which in rem or quasi in rem jurisdiction may be constitutionally exercised."

Both of these sections are liberally construed by our courts to find personal jurisdiction over nonresident defendants to the full extent allowed by the due process standards of the Fourteenth Amendment. Brookshire v. Brookshire, 89 N.C.App. 48, 365 S.E.2d 307 (1988); DeArmon v. B. Mears Corp., 67 N.C.App. 640, 314 S.E.2d 124 (1984); Marion, 72 N.C.App. 585, 325 S.E.2d 300; Kaplan School Supply Corp. v. Henry Wurst, Inc., 56 N.C.App. 567, 289 S.E.2d 607, rev. denied, 306 N.C. 385, 294 S.E.2d 209 (1982); see Canterbury v. Hardwood Imports, 48 N.C.App. 90, 268 S.E.2d 868 (1980); Balcon, Inc. v. Sadler, 36 N.C.App. 322, 244 S.E.2d 164 (1978); Holt, 41 N.C.App. 344, 255 S.E.2d 407; Pope v. Pope, 38 N.C.App. 328, 248 S.E.2d 260 (1978).

As in the case before us, even if a defendant is not present within the territory of the forum, constitutional due process requirements may still be met if defendant maintained certain "minimum contacts" with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Solar Basic Industries v. Electric Membership Corp., 70 N.C.App. 737, 321 S.E.2d 28 (1984). The minimum contacts test has been extended to actions in rem as well as in personam. Shaffer, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683. Also, to be subject to personal jurisdiction, defendant must take some purposeful action within the forum state that invokes for defendant the benefits and protections of the forum state's laws. Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), applied in Chadbourn, Inc. v. Katz, 285 N.C. 700, 208 S.E.2d 676 (1974). This activity by defendant must be connected to the forum state in such a way that defendant could reasonably anticipate being brought into court there. World-Wide Volkswagon Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); J.M. Thompson Co. v. Doral Mfg. Co., 72 N.C.App. 419, 324 S.E.2d 909,rev. denied, 313 N.C. 602, 330 S.E.2d 611 (1985).

Minimum contacts are not determined by applying a mechanical formula; rather, each case is judged on its particular facts considering the traditional notions of fair play and justice. Ciba-Geigy Corp. v. Barnett, 76 N.C.App. 605, 334 S.E.2d 91 (1985). The factors to be considered are: (1) the quantity of the contacts, (2) the nature and quality of the contacts, (3) the source and connection of the cause of action to the contacts, (4) the interest of the forum state, and (5) convenience. Marion, 72 N.C.App. at 585, 325 S.E.2d at 302.

When the State exercises personal jurisdiction in a suit arising out of or related to defendant's contacts with the forum, it is said the State is exercising "specific jurisdiction" over the defendant. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404, 411 (1984). More importantly for this case, the State also may exercise "general jurisdiction" over defendant; that is, jurisdiction may be...