Sentinel Acceptance, v. Hudson Auto Sales & Leasing

• Decision Date: 20 March 2001
• Citation: 45 S.W.3d 464
• Parties: (Mo.App. S.D. 2001) Sentinel Acceptance, Ltd., L.P., Appellant v. Hodson Auto Sales & Leasing, Inc., and Janet L. Hodson, Respondents. WD58605 0
• Court: Missouri Court of Appeals

45 S.W.3d 464 (Mo.App. S.D. 2001)

Sentinel Acceptance, Ltd., L.P., Appellant v. Hodson Auto Sales & Leasing, Inc., and Janet L. Hodson, Respondents.

WD58605

Missouri Court of Appeals Western District

03/20/2001

Appeal From: Circuit Court of Clay County, Hon. David W. Russell

Counsel for Appellant: David J. Weimer

Counsel for Respondent: Alan B. Gallas

Opinion Summary: Sentinel Acceptance, Ltd., L.P., appeals the trial court's judgment quashing the registration of its California judgment against Janet R. Hodson. On appeal, Sentinel argues that the trial court quashed the registration of its judgment on an improper ground.

REVERSED AND REMANDED.

Division One holds: The trial court erred in quashing registration of the California judgment on the basis of surprise under Rule 74.06(b). Under the Full Faith and Credit Clause of the United States Constitution, Missouri is obligated to give full faith and credit to a judgment of a sister state unless the judgment is void for lack of personal or subject matter jurisdiction, or the judgment was obtained by fraud. The Supreme Court of Missouri has not recognized any of the grounds listed in Rule 74.06(b) as a basis for refusing to register foreign judgments.

Moreover, while Ms. Hodson originally pled a claim that the California judgment was void for lack of personal jurisdiction, that claim was abandoned at the hearing when Ms. Hodson proceeded only on her claim of surprise. Therefore, this court will not address that issue on appeal. Even if Ms. Hodson had not abandoned the claim, the issue of whether the California court had personal jurisdiction over Ms. Hodson was adjudicated in the California proceeding. Thus, the only avenue available to Ms. Hodson to relitigate that issue in Missouri is if the trial court found the issue was not fully and fairly litigated in California. Since Ms. Hodson failed to meet her burden of proving that the issue was not fully and fairly litigated in California, this court will not address it on appeal.

Patricia Breckenridge, Judge

Sentinel Acceptance, Ltd., L.P., appeals the trial court's judgment quashing the registration of its California judgment against Janet R. Hodson. On appeal, Sentinel argues that the trial court quashed the registration of its judgment on an improper ground. This court finds that the trial court's basis for quashing registration of the California judgment was improper, and Ms. Hodson failed to litigate a proper basis for quashing registration of the judgment. Therefore, the judgment of the trial court is reversed, and the cause is remanded to the trial court to enter a judgment registering the California judgment in Missouri.

Factual and Procedural Background

On March 8, 1999, the Superior Court for the State of California, County of San Diego, entered a judgment confirming an arbitration award in the amount of $16,052.11 in favor of Sentinel and against Hodson Auto Sales & Leasing, Inc., and Ms. Hodson, who was president of Hodson Auto Sales.¹ In June 1999, the attorney for Sentinel filed an affidavit for registration of the California judgment in the Circuit Court of Clay County, Missouri. On April 6, 2000, Sentinel requested that a garnishment order be issued against Hodson Auto Sales and Ms. Hodson to satisfy the judgment.

Ms. Hodson's bank notified Ms. Hodson of the garnishment order on April 14, 2000. On April 20, 2000, Ms. Hodson filed a motion to quash registration of the foreign judgment, executions, and garnishments. Ms. Hodson alleged in her motion that the California judgment was not entitled to full faith and credit because the California court lacked personal jurisdiction over her, and she received no notice of the California proceedings. Ms. Hodson also argued that the registration was not in compliance with Rule 74.14, and that venue was improper in Clay County. Ms. Hodson later filed a motion for relief from the California judgment in which she argued that the registration of the California judgment should be set aside under Rule 74.06(b)(1) on the basis of surprise. Specifically, Ms. Hodson alleged that the arbitration and confirmation proceedings in California were a "complete and total surprise" to her, as was the registration of the California judgment in Clay County. Alternatively, Ms. Hodson argued that the judgment should be set aside under Rule 74.06(b)(1) on the basis of excusable neglect, because her California counsel abandoned her.

At the subsequent hearing on Ms. Hodson's motions, she testified that she was the president of Hodson Auto Sales. Ms. Hodson allowed her husband, William E. Hodson, to handle the day-to-day details of running the corporation. Ms. Hodson was employed as a realtor, and maintained an office at a different location than Hodson Auto Sales.

Ms. Hodson testified that she was never personally served with any documents relating to the California arbitration or confirmation proceedings. In fact, she testified that she was completely unaware of both proceedings, despite the fact that attorneys in California entered their appearance on her behalf and filed a response to Sentinel's petition to confirm the arbitration award, which contained a supporting affidavit from Ms. Hodson's husband. Ms. Hodson testified that her husband never told her she had been named in a lawsuit in California. She claimed that she never hired the attorneys in California to represent her, nor did she have any knowledge that the attorneys had been retained to represent her. In support of her testimony, Ms. Hodson offered the affidavit of one of the California attorneys, in which he averred that his only contact regarding the proceedings in California was with Mr. Hodson and Mr. Hodson's Kansas City attorney, and that his first contact with Ms. Hodson was on April 21, 2000.

On May 9, 2000, the trial court entered a judgment sustaining Ms. Hodson's motion to quash the registration of the California judgment. The court found that Rule 74.14, which pertains to the uniform enforcement of foreign judgments, provides that once a foreign judgment is filed in Missouri, it "has the same effect and is subject to the same procedures, defenses, and proceedings for reopening, vacating, or staying" as a judgment entered in Missouri. The court then ruled that a party could obtain relief from the judgment on one of the grounds set forth in Rule 74.06(b), which was surprise.

On the issue of surprise, the court found that although the filing of the foreign judgment complied with the requirements of Rule 74.14, the underlying claim was unknown to Ms. Hodson because she was not served with process in the California confirmation proceeding, and all actions purportedly taken on her behalf and in her name in California were "wholly undertaken without her knowledge, consent or authority." Because it found that Ms. Hodson suffered a legal injury as to which she was totally free of neglect or lack of prudence, the court quashed the registration of the California judgment against her. Sentinel filed this appeal.

Standard of Review

This court will affirm the judgment in this court-tried case unless it is not supported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Although this court defers to the trial court's findings of fact, this court does not defer to the trial court's determinations of law. City of Kansas City v. Hon, 972 S.W.2d 407, 409 (Mo. App. 1998).

Surprise is Improper Ground for Refusing to Register a Foreign Judgment

In its sole point on appeal, Sentinel argues that the trial court erred in quashing registration of the California judgment because surprise is not a proper ground for refusing to give full faith and credit to a foreign judgment. To qualify for registration in Missouri, a foreign judgment must be "entitled to full faith and credit under the Full Faith and Credit Clause of the Federal Constitution, Art. 4, section 1." Campbell v. Campbell, 780 S.W.2d 89, 91 (Mo. App. 1989). The Full Faith and Credit Clause provides that, "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, section 1. Legal historians have inferred that the Constitutional Framers' purpose of including the Full Faith and Credit Clause in the Constitution was to "impose[ ] mandatory comity on the states in the hope that treating the judicial proceedings of other states with appropriate deference would lessen friction among the states in the new and fragile union." William L. Reynolds, The Iron Law of Full Faith and Credit, 53 Md. L. Rev. 412, 413 (1994) (footnotes omitted). Indeed, the United States Supreme Court "has held that the Full Faith and Credit Clause demands rigorous obedience." Id. (citing Fauntleroy v. Lum, 210 U.S. 230, 237, 28 S.Ct. 641, 643 (1908)).

There are only a few recognized exceptions to this long-standing Constitutional requirement of according full faith and credit to judgments of sister states. Relying on Shaffer v. Heitner, 433 U.S. 186, 210, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977), Pennoyer v. Neff, 95 U.S. 714, 729, 24 L.Ed. 565 (1877), and Scott v. Scott, 441 S.W.2d 330, 332 (Mo. 1969), the Missouri Supreme Court recently reiterated those exceptions. In...