Hupp v. Accessory Distributors, Inc.

• Decision Date: 04 May 1984
• Citation: 193 N.J.Super. 701,475 A.2d 679
• Parties: Keith HUPP, Plaintiff-Respondent, v. ACCESSORY DISTRIBUTORS, INC., a New York corporation, Defendant-Third Party Plaintiff-Appellant, v. ARAI HELMET, LTD., Third Party Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 701

193 N.J.Super. 701

475 A.2d 679

Keith HUPP, Plaintiff-Respondent, v. ACCESSORY DISTRIBUTORS, INC., a New York corporation, Defendant-Third Party Plaintiff-Appellant, v. ARAI HELMET, LTD., Third Party Defendant-Respondent.

Superior Court of New Jersey,

Appellate Division.

Argued April 16, 1984.

Decided May 4, 1984.

Arthur N. Chagaris, Hackensack, for defendant-third party plaintiff-appellant (Chagaris & Safro, Hackensack, attorneys).

Dennis M. Toft, Roseland, plaintiff-respondent Keith Hupp (Wolff & Samson, Roseland, attorneys; Douglas P. Black, Roseland, on the brief).

Wayne D. Greenfeder, Livingston, for third party defendant-respondent Arai Helmet, Ltd. (Schwartz & Andolino, Livingston, attorneys).

Before Judges ARD, MORTON I. GREENBERG and TRAUTWEIN.

The opinion of the court was delivered by

MORTON I. GREENBERG, J.A.D.

Defendant Accessory Distributors, Inc. (ADI) appeals from an order for summary judgment in favor of plaintiff Keith Hupp in an action on a Hawaii judgment and an order dismissing its third party complaint against Arai Helmet, Ltd. The issues involved in this matter relate to the validity of the Hawaii judgment and Arai Helmet's liability to ADI for contribution and indemnification.

In 1967 ADI, a New York corporation with its principal place of business in New Jersey, at the request of Arai Hirotake Shoten Company, Ltd. (Arai Hirotake), a Japanese manufacturer of motorcycle helmets, processed documents for Arai Hirotake to ship 508 motorcycle helmets from Japan to a purchaser in Hawaii. ADI obtained payment, from which it retained a commission, for Arai Hirotake for the helmets. ADI has never conducted any other business related to Hawaii. Further ADI has never been authorized to do business, paid taxes, had an office or address, had a salesperson or agent or solicited business in Hawaii.

At some time prior to March 20, 1973 plaintiff purchased from a friend a used motorcycle helmet manufactured by Arai Hirotake. On March 20, 1973 plaintiff while riding his motorcycle and wearing this helmet was struck by a vehicle driven by Charles Hassard. The impact hurled plaintiff through the air at which time the helmet flew off. Plaintiff landed on his head suffering serious injuries.

On May 17, 1973 plaintiff filed a complaint in the Circuit Court of the First Circuit, State of Hawaii, seeking damages for his injuries from Arai Hirotake, ADI and other parties not germane to this appeal. ADI was served by service on the Hawaii Department of Regulatory Agencies and by mail at its New Jersey office. ADI sent the summons and complaint to its attorney in New York City who forwarded them to an insurance carrier ADI perceived to be responsible for its defense. As a consequence of a dispute between ADI and the carrier, no defense was entered and on March 18, 1974 default was entered against ADI. A default had previously been entered against Arai Hirotake which did not appear to defend this action.

On March 22, 1974 ADI filed a motion to set aside the default asserting its failure to answer the complaint was due to inadvertence or excusable neglect caused by the confusion surrounding its insurance coverage. ADI further maintained that the Hawaii court did not have jurisdiction over it and on the merits it was not liable to plaintiff. A certification in support of its motion set forth what ADI conceived to be a complete factual basis for its contention that it was not subject to the jurisdiction of the Hawaii court. By order dated May 29, 1974 the trial court without giving reasons or making findings of fact denied the motion to vacate. ADI appealed this order to the Intermediate Court of Appeals of Hawaii which affirmed the trial court on this point. See Hupp v. Accessory Distributors, Inc., 1 Hawaii App. 174, 616 P.2d 233 (1980). The appellate court predicated its decision on a finding that ADI's neglect to defend was inexcusable and thus the trial judge did not abuse his discretion in failing to set aside the default. It made no finding that the Hawaii courts had jurisdiction over ADI. The Supreme Court of Hawaii denied certiorari. Following the completion of the appeals from ADI's efforts to vacate the default, a proof hearing was held in the Hawaii Circuit Court to ascertain plaintiff's damages. ADI but not Arai Hirotake participated at this hearing. On June 24, 1981 the court issued an order holding ADI and Arai Hirotake jointly and severally liable for $617,410.19 plus costs and post-judgment interest.

On December 16, 1981 plaintiff filed a complaint in the Superior Court of New Jersey, Law Division, against ADI seeking to enforce the default judgment entered in Hawaii. This New Jersey action has led to this appeal. ADI answered asserting that the Hawaii court did not have personal jurisdiction over it and thus the court's judgment was not entitled to full faith and credit. ADI filed a third party complaint for contribution and indemnification against Arai Helmet, Ltd. ¹ which it claimed was the successor in interest to Arai Hirotake. In its answer to this complaint Arai Helmet denied it was a successor in interest to Arai Hirotake. Thereafter Arai Helmet moved for summary judgment to dismiss the third party complaint. ADI opposed this motion arguing that Arai Helmet's motion was not ripe for decision since discovery might indicate that Arai Helmet is part of the integrated economic network of Arai Hirotake. The trial court denied Arai Helmet's motion for summary judgment.

ADI subsequently moved to amend its third party complaint to add Arai Hirotake as a third party defendant but in an order not appealed this motion was denied. ADI then filed an independent action for contribution and indemnification against Arai Hirotake. As far as we are aware this case is still pending in the trial court and in any event is not before us.

On November 24, 1982 plaintiff amended its Superior Court complaint by adding Arai Helmet as a direct defendant. Arai Helmet filed an answer to this amended complaint asserting that the Hawaii judgment was unenforceable against it because it was not the successor in interest to Arai Hirotake, the Hawaii court did not have jurisdiction over Arai Helmet or Arai Hirotake, Arai Hirotake had not been properly served in Hawaii and no judgment had ever been entered against Arai Helmet in Hawaii.

Plaintiff and ADI moved for summary judgment. ADI presented evidence tending to prove that the helmet which plaintiff had been wearing at the time of the accident was not in the group processed by ADI in 1967 but rather was shipped later from Japan. ADI also filed a certification indicating that except for the 1967 shipment it had no connections with Hawaii justifying that state's exercise of jurisdiction over it.

On July 25, 1983 the judge decided these motions in a letter opinion. While we find his opinion ambiguous he seems to have reasoned as follows. If plaintiff's action is related to ADI's conduct in Hawaii then even one contact of ADI in Hawaii would be sufficient to uphold jurisdiction and consequently the default judgment. See Helicopteros Nacionales de Colombia, S.A. v. Hall, --- U.S. 408, ----, 104 S.Ct. 1868, 1871, 80 L.Ed.2d 404 (1984). Since the Hawaii default judgment was predicated on plaintiff's helmet being one of those in the 1967 shipment, the judgment against ADI establishing liability is binding on the parties. Thus the judge stated that the New Jersey court was "... precluded from exploring the allegations made by defendant ADI that the helmet worn by plaintiff was not in the group of over 500 helmets shipped from the manufacturer through ADI and placed in the stream of commerce in Hawaii." Consequently the judgment had to be enforced in New Jersey. On September 30, 1983 the judge signed an order entering a judgment in New Jersey based on the Hawaii judgment.

On August 9, 1983 Arai Helmet moved for summary judgment dismissing plaintiff's complaint as to it and ADI's third party complaint. It urged that plaintiff had not properly served Arai Hirotake and thus even if Arai Helmet were successor in interest to Arai Hirotake the Hawaii default judgment could not be enforced against it.

On October 21, 1983 the judge in an oral opinion granted Arai Helmet's motion for summary judgment. He seems to have found that Arai Helmet and Arai Hirotake are two separate corporations so that a judgment against one is not enforceable against the other. Furthermore, he determined that there was defective service of process on Arai Hirotake in the Hawaii litigation. Thus the Hawaii judgment could not be enforced in New Jersey. On November 4, 1983 the judge signed an order dismissing the action as to Arai Helmet. ADI has appealed from the orders of September 30, 1983 and November 4, 1983.

On this appeal ADI contends that the New Jersey courts are not precluded from determining whether the Hawaii court had jurisdiction, the Hawaii court did not have jurisdiction over it and summary judgment should not have been granted Arai Helmet as it is an integral part of Arai Hirotake. Plaintiff contends the trial court properly held it was precluded from considering whether his helmet was distributed by ADI and that in any event the Hawaii court had jurisdiction. Arai Helmet contends that Arai Hirotake was not properly served in Hawaii and thus the judgment against Arai Hirotake is invalid. It further asserts it is not liable for judgment against Arai Hirotake as the companies are separate. ²

A judgment properly entered in accordance with local procedure is entitled to full faith and credit in any other state provided that the judgment is not entered in violation of due process of law. Thus a judgment to be valid must be founded upon adequate jurisdiction over the parties and the subject matter. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 564, 62 L.Ed.2d 490, 497 (1980); James v. Francesco, 61 N.J. 480, 485, 295 A.2d 633 (1972). If a...