Harrah's Club v. Mijalis

Decision Date28 February 1990
Docket NumberNo. 21277-CA,21277-CA
Citation557 So.2d 1142
PartiesHARRAH'S CLUB, Plaintiff-Appellee, v. Gus MIJALIS, Defendant-Appellant. 557 So.2d 1142
CourtCourt of Appeal of Louisiana — District of US

Booth, Lockard, Politz, LeSage & D'Anna, Shreveport by Joe C. LeSage, Jr. and John R. D'Anna, for defendant-appellant.

Lowe, Stein, Hoffman & Allweiss, New Orleans by Michael R. Allweiss and Judith A. Kaufman, for plaintiff-appellee.

Before MARVIN, FRED W. JONES, Jr. and HIGHTOWER, JJ.

MARVIN, Judge.

In this action to make executory a Nevada judgment and thereby enforce a gambling debt against the appellant, who is a Louisiana resident, the primary issue is whether the judgment should be denied full faith and credit because gambling is illegal and no action would lie in Louisiana. LSA-Const. Art. 12, Sec. 6; CC Art. 2983 vs. U.S. Const. Art. 4, Sec. 1; LRS 13:4241, et seq.

Appellant's collateral issues question whether the Nevada court had personal jurisdiction over the Louisiana debtor and how a judgment debtor may raise defenses under the Louisiana Uniform Enforcement of Foreign Judgments Act, LRS 13:4241 et seq. (LUEFJA).

The primary issue is governed by the U.S. Constitution. The trial court resolved all issues against the appellant Louisiana debtor. We find no error and affirm.

FACTS

In October 1984 appellant wrote three checks on his Shreveport bank and gave them to Harrah's Club in Lake Tahoe for gambling debts. The checks were dishonored in January 1985. About a month later and after demand, the appellant made a partial payment on the debt. Two years later Harrah's filed the action against appellant in Nevada for the balance on the debt.

Harrah's certified and proved to the Nevada court that appellant had been served in four ways authorized and recognized under Nevada law: By personal service in Shreveport, by certified mail, by regular mail, and by publication. No answer or appearance was made by appellant in the Nevada action and a default judgment was rendered and signed in Nevada for the amount of the debt.

After that judgment became definitive in Nevada, Harrah's, proceeding under LUEFJA in the District Court of Caddo Parish, obtained judgment making the Nevada judgment executory in Louisiana. As required by LRS 13:4243 B, the Caddo Clerk of Court gave notice to appellant of Harrah's Louisiana action by certified mail on January 17, 1989. This notice allows the Louisiana debtor 30 days to proceed by "contradictory motion" against the foreign creditor to stay further enforcement of the judgment. See Secs. 4243C, and 4244. Harrah's also gave notice to appellant by certified and by ordinary mail about the same time.

On February 7, 1989, appellant answered, denying he was validly served with the Nevada suit and contending that the Nevada court had no personal jurisdiction over him. He also claimed the judgment was not entitled to full faith and credit in Louisiana because CC Art. 2983 prohibits the enforcement of gambling debts. With the answer, appellant reconvened for damages for malicious prosecution, and requested a jury trial.

On March 6, 1989, Harrah's moved to strike the answer and reconventional demand, alleging that proceedings under the LUEFJA are sui generis and are an alternative method of enforcing a foreign judgment under CCP Art. 2541. That article allows enforcement either by ordinary process or by LUEFJA. See discussion infra. Harrah's argued that appellant's response to its action under LUEFJA was not a "contradictory motion" or one of the responses to an action permitted by LUEFJA.

Alternatively, Harrah's filed an exception of res judicata, contending that the full faith and credit clause of the U.S. Constitution requires a state where gambling is illegal to enforce the judgment of another state even though the judgment enforces a gambling debt, citing Fauntleroy v. Lum, 210 U.S. 230, 28 S.Ct. 641, 52 L.Ed. 1039 (1908). Harrah's also filed an exception of no cause of action to appellant's reconventional demand, arguing that appellant had not alleged the essential element of malicious prosecution, that a civil proceeding was terminated in appellant's favor.

On April 4, 1989, the trial court struck appellant's answer and reconventional demand on the authority of Sec. 4244 of LUEFJA, which requires a judgment debtor, seeking to stay execution of the foreign judgment, to proceed by "contradictory motion" against the judgment creditor. This ruling by the court also granted appellant five days to file the appropriate contradictory motion.

Three days later, appellant, repeating his jurisdictional and public policy allegations, formally moved to vacate the Louisiana judgment making the Nevada judgment executory.

TRIAL COURT RULING

On May 12, 1989, the trial court dismissed appellant's last motion to vacate the judgment of enforcement. Citing Fauntleroy v. Lum, supra, the court found that the Nevada judgment was entitled to full faith and credit, notwithstanding the fact that the action would not lie initially in Louisiana under CC Art. 2983.

The court noted that the parties "more or less stipulated" that appellant was validly served with notice of the suit by several methods of service authorized under Nevada law. The Nevada long-arm statute allows a Nevada court to exercise jurisdiction over a non-resident if the cause of action arises from the non-resident's "transacting any business or negotiating any commercial paper" in Nevada. Because appellant gave or negotiated three checks to Harrah's while in Nevada, the court found that the Nevada court had personal jurisdiction.

The court's earlier ruling striking appellant's answer and dismissing his reconventional demand is also contained in the May 12, 1989 judgment which is here appealed.

FULL FAITH AND CREDIT

Under the full faith and credit clause (Art. 4, Sec. 1) of the U.S. Constitution, a Louisiana court must give the judgment of another state the same conclusive effect between the parties that the judgment would be given in the state where it was obtained, even if the underlying claim would be unenforceable in Louisiana for public policy reasons. Fauntleroy v. Lum, supra; Brown v. Brown, 377 So.2d 438 (La.App. 2d Cir.1979), affirmed, 387 So.2d 565 (La.1980), U.S. cert. denied.

In Fauntleroy the parties entered into a gambling transaction in cotton futures in Mississippi. This transaction was punishable criminally and unenforceable civilly in Mississippi. An arbitration award was rendered against the debtor in Mississippi, without the legality of the transaction being questioned. When the debtor was temporarily in Missouri, the creditor brought an action there to enforce the arbitration award and obtained a Missouri judgment against the debtor over the debtor's contention that the transaction was illegal in Mississippi.

The creditor then sought to make the Missouri judgment executory and enforceable in Mississippi. The Mississippi supreme court refused full faith and credit to the Missouri judgment, reasoning that the transaction sought to be enforced by the judgment occurred in Mississippi, contrary to that state's public policy.

The U.S. Supreme Court reversed, stating:

Whether the award would or would not have been conclusive, and whether the ruling of the Missouri court upon that matter was right or wrong, there can be no question that the judgment was conclusive in Missouri on the validity of the cause of action. ... Of course, a want of jurisdiction over either the person or the subject matter might be shown. But, as the jurisdiction of the Missouri court is not open to dispute, the judgment cannot be impeached in Mississippi even if it went upon a misapprehension of the Mississippi law. 28 S.Ct. at 643; citations omitted.

Harrah's is obviously in a stronger position factually than was the Fauntleroy creditor, because the transaction and the action to enforce it occurred in Nevada, where gambling is legal and where there could not have been a "misapprehension" of Louisiana law. The trial court correctly found Fauntleroy controlling on the full faith and credit issue.

Titus v. Wallick, 306 U.S. 282, 59 S.Ct. 557, 83 L.Ed. 653 (1939), citing Fauntleroy, said:

It is the judgment and not the cause of action which gave rise to it for which credit is claimed, and the constitutional mandate requires credit to be given to a money judgment rendered on a civil cause of action in another state, even though the forum would have been under no duty to entertain the suit on which the judgment was founded. 59 S.Ct. at 562; citations omitted.

Morris v. Jones, 329 U.S. 545, 67 S.Ct. 451, 91 L.Ed. 488 (1947), further explained:

The function of the Full Faith and Credit Clause is to resolve controversies where state policies differ. Its need might not be so greatly felt in situations where there was no clash of interests between the States. The argument of convenience in administration [of claims against an insolvent insurer that did business in more than one state] is at best only another illustration of how the enforcement of a judgment of one State in another State may run counter to the latter's policies. But the answer given by Fauntleroy v. Lum, supra, is conclusive. If full faith and credit is not given in that situation, the Clause and the statute [implementing it, 28 USC Sec. 1738, formerly Sec. 687] fail where their need is the greatest. 67 S.Ct. at 457; bracketed material added.

Other states with public policy prohibitions against gambling have given full faith and credit to judgments for gambling debts when the judgments were validly obtained and enforceable elsewhere. See, e.g., Hilton Intern. Co. v. Arace, 35 Conn.Supp. 522, 394 A.2d 739 (1977); Conquistador Hotel Corp. v. Fortino, 99 Wis.2d 16, 298 N.W.2d 236 (App.1980); M & R Investments, Co., Inc. v. Hacker, 511 So.2d 1099 (Fla.App.1987); GNLV Corp. v. Jackson, 736 S.W.2d 893 (Tex.App.1987); and Hargreaves v. Greate Bay Hotel & Casino, ...

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