Guseinov v. Synergy Ventures, Inc.

• Decision Date: 21 October 2014
• Docket Number: No. M2014-00213-COA-R3-CV,M2014-00213-COA-R3-CV
• Citation: 467 S.W.3d 920
• Parties: Gary GUSEINOV v. SYNERGY VENTURES, INC, et al.
• Court: Tennessee Court of Appeals

467 S.W.3d 920

Gary GUSEINOV

v.SYNERGY VENTURES, INC, et al.

No. M2014-00213-COA-R3-CV

Court of Appeals of Tennessee.

Sept. 17, 2014 Session.

Oct. 21, 2014.

John A. Beam, III, Andrew Cameron, Desireé J.C. Goff, Nashville, Tennessee, for the appellant, Stan Burns.

Jay S. Bowen and Lauren Kilgore, Nashville, Tennessee, for the appellee, Gary Guseinov.

OPINION

J. STEVEN STAFFORD, P.J., W.S., delivered the opinion of the Court, in which JOHN W. McCLARTY, J. and BRANDON O. GIBSON, J., joined.

This case involves the enrollment of a foreign judgment in Tennessee. The trial court granted summary judgment in favor of plaintiff, effectively enrolling the foreign judgment pursuant to the Full Faith and Credit Clause of the United States Constitution and Tennessee's Uniform Foreign Judgment Enforcement Act. On appeal, the defendant argues that the grant of summary judgment was improper because he allegedly satisfied the foreign judgment. He further argues that the trial court denied him due process when it declined to conduct an evidentiary hearing. We hold that satisfaction is not a defense to the enrollment of a foreign judgment pursuant to the Full Faith and Credit Clause of the United States Constitution or Tennessee's Uniform Foreign Judgment Enforcement Act. Further, we discern no due process violation from the trial court's decision not to conduct an evidentiary hearing. The judgment of the trial court is affirmed.

California Proceedings

In 2005, Gary Guseinov (“Appellee”) obtained an arbitration award against Synergy Ventures, Inc. (“Synergy Ventures”) and Stan Burns (“Appellant”).¹ On December 7, 2005, the Superior Court of California in Los Angeles entered a judgment jointly and severally against Synergy and Mr. Burns, enforcing the arbitration award (“the California judgment”). The amount of the judgment against Synergy Ventures and Mr. Burns was $5,223,980.09. Since September 16, 2005, the California judgment has been accruing interest at the rate of ten percent per year and will continue to accrue interest until satisfied in full. Mr. Burns appealed the arbitration award in the California Court of Appeals. The California Court of Appeals affirmed the judgment on December 15, 2006. See Guseinov v. Burns, 145 Cal.App.4th 944, 51 Cal.Rptr.3d 903 (2006). On April 13, 2006, the California court entered an amended judgment reflecting the accrued prejudgment interest of $299,126.53 in favor of Mr. Guseinov.²

Tennessee Proceedings

On October 24, 2006, Plaintiff/Appellee Mr. Guseinov filed an action in Tennessee to enroll the California judgment against Synergy Ventures³ and Mr. Burns. On November 27, 2006, Mr. Burns filed an answer and several counterclaims. His counterclaims allege that he had satisfied the judgment by the transfer of shares in Synergy Ventures to Mr. Guseinov, providing that:

Defendant Burns conveyed to Plaintiff Guseinov all of Mr. Burns's stock ownership in Synergy Ventures, Inc. Additionally, in satisfaction of the Judgments which are the subject of this action, Plaintiff Guseinov claimed a lien on Synergy Ventures, Inc.'s software, data and computer hardware which Guseinov has repossessed and appropriated to his own use.

The record on appeal indicates that, after arbitration, Mr. Burns allegedly continued to work for Synergy Ventures and “actually built the company up.” Further, in August 2006, Mr. Burns alleges that he transferred 2,975,579 shares of Synergy Ventures stock, which included 100 percent of his interest in Synergy Ventures, to Mr. Guseinov. According to Mr. Burns, the parties agreed that the shares were valued at $2.00 per share. Thus, according to Mr. Burns, he has actually over-satisfied the $5,223,980.09 judgment because the value of the shares he transferred was $5,951,158.00. In his pleadings, Mr. Burns further alleges that Mr. Guseinov committed waste by failing to marshal the assets of Synergy Ventures in a commercially reasonable manner as required by Article 9 of the Uniform Commercial Codes in both California and Tennessee. Mr. Guseinov's alleged waste of Synergy Ventures' assets is not an issue in this appeal.

Over six years later,⁴ on July 26, 2013, Mr. Guseinov filed a motion for summary judgment seeking enrollment of his California judgment in Tennessee on the basis that no material facts were in dispute. Mr. Guseinov argued that, although Mr. Burns claims to have satisfied the California judgment, the record from the California court indicates that the judgment is outstanding. According to Mr. Guseinov, “In the eyes of the California judgment, the judgment has not been satisfied ... Moreover, it was undisputed that the judgment was outstanding in California and that Mr. Burns did not raise one of the proper defenses to the [F]ull [F]aith and [C]redit [C]lause of the [United States] Constitution.” In his response, Mr. Burns argued that a dispute of material fact—namely, whether he had satisfied the California judgment—precluded summary judgment. He also requested that the trial court conduct an evidentiary hearing on the issue of satisfaction.

The trial court granted Mr. Guseinov's motion for summary judgment, effectively enrolling the judgment in Tennessee. The trial court found that it could only decline to afford full faith and credit to foreign judgments in three circumstances: (i) when there was a lack of jurisdiction, (ii) where there was fraud, (iii) where it would otherwise violate public policy. The trial court stated:

[Mr. Burns] has provided no authority to the Court that demonstrates that the issues [Mr. Burns] raises, in response to the Motion for Summary Judgment, are appropriately before and should be considered by Tennessee courts. Absent any such authority that this Court has jurisdiction to grant the relief [Mr. Burns] seeks merely because he raises an affirmative defense, the Court finds the Motion for Summary Judgment is well taken and should be granted.

Mr. Burns filed a Motion to Alter or Amend on November 15, 2013 asking the trial court to reconsider its ruling in favor of Mr. Guseinov on his motion for summary judgment. In Mr. Burns's motion, he argued that there are at least three-and not only three-ways a court can decline to afford a foreign judgment full faith and credit, as discussed above. According to Mr. Burns, in addition to those three circumstances, post-judgment satisfaction can also be raised as a defense or counterclaim in Tennessee to the enrollment of a foreign judgment. The trial court disagreed and denied Mr. Burns's Motion to Alter or Amend, stating that it was “not persuaded that ... [Rule 60.02(4) ] may also prevent the enforcement of a foreign judgment.”⁵ The trial court also found that it did not have the jurisdiction to hear Appellant's affirmative defense of satisfaction, and that the defense must be heard by the California court.⁶ Mr. Burns timely filed this appeal.

Issues ⁷

Mr. Burns presents two issues for review by this Court:

1. Whether the trial court erred in granting summary judgment in favor of Appellee, allowing enrollment of the foreign judgment, by finding as a matter of law that Tennessee does not recognize satisfaction of the foreign judgment as a defense to enrollment under Article IV, Section 1 of the United States Constitution (“Full Faith and Credit Clause”).

2. Whether the trial court erred in declining jurisdiction to hear Appellant's counterclaim that the California judgment was satisfied prior to Appellee seeking enrollment of the California judgment in Tennessee in violation of Appellant's due process rights under Amendment XIV, Section 1 of the United States Constitution.

Standard of Review

A trial court's decision of whether to grant or deny a motion for summary judgment is a question of law. Bain v. Wells, 936 S.W.2d 618, 622 (Tenn.1997). Our review is therefore de novo with no presumption of correctness afforded to the trial court's determination. Id. Rule 56.04 of the Tennessee Rules of Civil Procedure provides that summary judgment may be granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” 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.” Byrd v. Hall, 847 S.W.2d 208, 215 (Tenn.1993). In evaluating the trial court's decision to grant summary judgment, we review the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in the nonmoving party's favor. Mooney v. Sneed, 30 S.W.3d 304, 305–06 (Tenn.2000) ; Byrd, 847 S.W.2d at 210–11.

Moreover, whether to grant full faith and credit to a foreign judgment is a question of law, and therefore, we review the decision de novo upon the record with no presumption or correctness for the trial court's conclusions of law. Minor Miracle Prods., LLC v. Starkey, No. M2011–00072–COA–R3–CV, 2012 WL 112593, at *4 (Tenn.Ct.App. Jan. 12, 2012) ; W & T, Inc. v. Ham, No. M2006–01617–COA–R3–CV, 2009 WL 225256, at *3 (Tenn.Ct.App. Jan. 29, 2009).

Analysis

Full Faith and Credit

The Full Faith and Credit Clause of the United States Constitution provides: “Full Faith and Credit shall be given in each state to the public Acts, Records, and judicial Proceedings of every other State.” U.S. Const. art. IV, § 1. It is well settled that the Full Faith and Credit Clause of the United States Constitution requires the judgment of a state court, having both personal and subject matter jurisdiction, be given the “same credit, validity and effect in the courts of every other state and that such judgment be equally conclusive upon the merits in the courts of the enforcing states.”

Mirage Casino Hotel v. J. Roger Pearsall, No. 02A01–9608–CV–00198, 1997 WL 275589, at *3 (Tenn.Ct.App. May 27, 1997). The Full Faith and Credit Clause manifests an important federal policy,...