Miserandino v. Resort Properties, Inc.

Decision Date01 September 1995
Docket NumberNo. 93,93
Citation691 A.2d 208,345 Md. 43
Parties, 65 USLW 2554 Gerard P. MISERANDINO and Karen L. Miserandino, v. RESORT PROPERTIES, INC. et al. ,
CourtMaryland Court of Appeals

Benjamin Lipsitz, Baltimore, for petitioner.

Andrew R. Polott (Dwayne L. Garrett, Michael R. Cogan, Poppleton, Garrett & Polott, P.C., on brief), Bethesda, for respondent.

Argued before ELDRIDGE, RODOWSKY, CHASANOW, KARWACKI, BELL and RAKER, JJ., and JOHN F. McAULIFFE, Judge (retired), Specially Assigned.

JOHN F. McAULIFFE, Judge, Specially Assigned.

This case involves a constitutional attack by judgment debtors against a judgment entered against them by a state trial court in Virginia. The collateral attack on the judgment was made in the Circuit Court for Carroll County, Maryland, where the judgment creditor sought to enforce the judgment. The defendants challenge the basis for the exercise of long-arm personal jurisdiction by the Virginia court, as well as the constitutional sufficiency of the Virginia statutory scheme for the giving of notice to nonresidents proceeded against under that Commonwealth's long-arm jurisdiction statute.

I. FACTS

Pursuant to the Uniform Enforcement of Foreign Judgments Act, Sections 11-801 to 807 of the Courts and Judicial Proceedings Article, Md. code (1957, 1989 Repl. Vol., 1992 Cum. Supp.), Resort Properties, Inc. (Resort), filed a judgment against Gerard and Karen Miserandino, (defendants) in the Circuit Court for Carroll County on June 3, 1993. The notice of filing of judgment, mailed by a court clerk to the defendants, simply informed them that a judgment of $4,211.82 against them had been filed by Resort. Thereafter, the defendants filed a motion to strike the entry of the foreign judgment. From their inspection of the court's file, the defendants knew that the judgment was obtained in Warren County, Virginia and that Resort was the assignee of North Fork Shenandoah Vacations, Inc.

In the motion, the defendants alleged by affidavit made on personal knowledge that they were not served with process, had no notice, and did not appear in the Virginia action. They alleged further, that:

Defendants were not subject to the jurisdiction of said Virginia Court in said action, nor was either of them.... Said foreign judgment is invalid, null, void and of no effect since said Virginia Court lacked in personam jurisdiction over defendants, or either of them, in the action in which that judgment was entered.

Specifically, the motion alleged that neither of the defendants resides in Virginia, neither is domiciled in Virginia, neither is employed in Virginia, carries on any regular business, occupation, or vocation in Virginia, or maintains a principal place of business in Virginia. Finally, they alleged:

Defendants do not have sufficient contacts with Virginia to confer in personam jurisdiction over them, or either of them, upon the Virginia court in which said foreign judgment was entered.

In an accompanying memorandum, the defendants argued that they did not have sufficient contacts with Virginia to "satisfy traditional notions of fair play and substantial justice," quoting Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1877).

In opposition, Resort stated: "The underlying transaction was based upon the defendants having an interest in and possessing real property in Virginia, and the transaction in and of itself constituted transacting business by the defendants in Virginia." Resort also averred, "Defendants executed a loan application in July, 1988, in Virginia for an interest in real property which was located in Virginia, thereby confessing fees and jurisdiction over both defendants in the State of Virginia."

At the hearing of defendants' motion, Resort's attorney informed the court that he had a loan application, club membership contract, and deed in his file, and that he was willing to provide the court with copies. The court interrupted and there ensued an exchange between the judge and the defendants' attorney, Mr. Lipsitz, as follows:

THE COURT: Well ... I'm not sure Mr. Lipsitz has any problem with the fact that there was property purchased, or a loan made, or a contract made in West (sic) Virginia....

MR. LIPSITZ: Well, I'm not pressing that point today, your Honor....

I raise the issue because, frankly, until this morning, I had no idea what the claim was. You can't--from the record ... you really can't tell what the claim is.... If my people, in fact, own property in Virginia, and if this transaction involved that--is involved in this case, I probably would not prevail on the in personam jurisdiction point. Nevertheless, the service point is the critical point..... I'm willing to accept my brother's statement as to what he says is in his file ...

THE COURT: For purposes of the hearing (inaudible).

MR. LIPSITZ: ... that's something that could be thrashed out at a trial on the merits ... maybe they're subject to jurisdiction; maybe they're not.

The court initially granted the defendants' motion to strike. Resort filed a motion to alter or amend because the court had cited the wrong statute in its order. After a second hearing, the court reversed its ruling and recorded the judgment against the defendants.

The Court of Special Appeals affirmed in an unreported opinion, and this Court granted certiorari.

II. PERSONAL JURISDICTION

Virginia, like Maryland, has interpreted its long-arm statute as an attempt to assert jurisdiction to the extent possible under the Due Process Clause of the federal Constitution. Brown v. American Broadcasting Co., Inc., 704 F.2d 1296 (4th Cir.1983). Section 8.01-328.1 of the Virginia Code (1950, 1992 Rep. Vol.) provides that:

A court may exercise personal jurisdiction over a person ... as to a cause of action arising from the person's:

1. Transacting any business in this Commonwealth;

* * * * * *

6. Having any interest in, using, or possessing real property in the Commonwealth.

We note initially that the defendants had the burden of producing evidence to attack the judgment sought to be recorded.

In Maryland, an authenticated copy of a record is prima facie evidence of jurisdiction and the judgment or decree must be presumed valid until it is declared invalid by a competent court.

Imperial Hotel v. Bell Atlantic, 91 Md.App. 266, 271-72, 603 A.2d 1371 (1992). In Brewster v. Brewster, 204 Md. 501, 105 A.2d 232 (1954), the Court considered the issue of a divorce obtained by the husband in Arkansas and another divorce obtained by the wife in Maryland. The wife argued the Arkansas divorce should not take effect until she was given an opportunity to prove it invalid. The court ruled, however, that "until [the foreign judgment] is declared to be invalid by a competent court, it must be presumed to be valid and given full faith and credit.... The burden of proof is upon the attacker." Id. at 505, 105 A.2d 232. See also Van Wagenberg v. Van Wagenberg, 241 Md. 154, 160, 215 A.2d 812 (1966). As noted, defendants offered no evidence to contradict the basis of long-arm jurisdiction asserted by Resort.

To exercise personal jurisdiction over a defendant who is not present in the forum state, "due process requires only that ... [the defendant] have certain minimum contacts with [the forum state] 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, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). "[T]he quality and quantity of contacts required to support the exercise of personal jurisdiction" depend upon the facts of each particular case. Camelback Ski Corp. v. Behning, 312 Md. 330, 338, 539 A.2d 1107 (1988), cert. denied, 488 U.S. 849, 109 S.Ct. 130, 102 L.Ed.2d 103 (1988). Ordinarily, cases involve either "general jurisdiction" where the cause of action is unrelated to the defendant's contact with the forum state, or "specific jurisdiction" where the cause of action arises out of the defendant's contacts with the forum state. Id.

Generally speaking, when the cause of action does not arise out of, or is not directly related to, the conduct of the defendant within the forum, contacts reflecting continuous or systematic... conduct will be required to sustain jurisdiction. On the other hand, when the cause of action arises out of the contacts that the defendant had with the forum, it may be entirely fair to permit the exercise of jurisdiction as to that claim.

Id. at 338-39, 539 A.2d 1107.

The defendants' allegations were insufficient to raise an actual controversy regarding the Virginia court's personal jurisdiction. If this were a "general jurisdiction" case, their assertion that they did not reside in Virginia or conduct business regularly in Virginia may have been sufficient to raise an actual controversy. See International Shoe, supra, 326 U.S. at 317, 66 S.Ct. at 158-59. This case, however, may be classified as a "specific jurisdiction" case because Resort's cause of action arises out of the defendants' contacts with Virginia, signing a contract and allegedly purchasing an interest in property in that jurisdiction. Thus, under the facts of this case, the defendants' allegations did not raise an actual controversy regarding the existence of a sufficient basis for the exercise of personal jurisdiction.

In a suit arising out of a contract signed in the forum state, the contract plus other factors provide a sufficient basis for the exercise of personal jurisdiction in the forum state. In McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), the Supreme Court ruled that a Texas insurance company was amenable to suit in California because the insured was domiciled in California and the suit arose under the insurance contract. "It is sufficient for purposes of due process that the suit was based on a contract which had substantial connection with that...

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