Tropic Leisure Corp. v. Hailey, COA15-1254-2

• Decision Date: 07 February 2017
• Docket Number: No. COA15-1254-2,COA15-1254-2
• Citation: 251 N.C.App. 915,796 S.E.2d 129
• Court: North Carolina Court of Appeals
• Parties: TROPIC LEISURE CORP., Magen Point, Inc. d/b/a Magens Point Resort, Plaintiffs, v. Jerry A. HAILEY, Defendant.

251 N.C.App. 915

796 S.E.2d 129

TROPIC LEISURE CORP., Magen Point, Inc. d/b/a Magens Point Resort, Plaintiffs,

v.Jerry A. HAILEY, Defendant.

No. COA15-1254-2

Court of Appeals of North Carolina.

Filed: February 7, 2017

Warren, Shackleford & Thomas, P.L.L.C., by R. Keith Shackleford, for plaintiffs-appellees.

The Armstrong Law Firm, P.A., by L. Lamar Armstrong, Jr., Smithfield and Daniel K. Keeney, for defendant-appellant.

DAVIS, Judge.

This case presents the question of whether a North Carolina court must give full faith and credit to a judgment rendered in a foreign jurisdiction under procedural rules prohibiting the defendant from being represented by counsel at trial. Jerry A. Hailey ("Defendant") appeals from an order denying his motion for relief from a foreign judgment that Tropic Leisure Corp. and Magens¹ Point, Inc., d/b/a Magens Point Resort (collectively "Plaintiffs") sought to enforce against him in North Carolina. On appeal, Defendant argues that the foreign judgment should not be enforced because it was rendered in violation of his due process rights. After careful review, we vacate the trial court's order.

Factual and Procedural Background

On 2 April 2014, Plaintiffs, who are corporations organized under the laws of the United States Virgin Islands, obtained a default judgment (the "Judgment") in the small claims division of the Virgin Islands Superior Court against Defendant, who is a resident of North Carolina, in the amount of $5,764.00 plus interest and costs. Defendant did not appeal the default judgment. On 17 February 2015, Plaintiffs filed a Notice of Filing Foreign Judgment in Wake County District Court along with a copy of the Judgment and a supporting affidavit.

Defendant filed a motion for relief from foreign judgment on 6 April 2015 in which he argued that the Judgment was not entitled to full faith and credit in North Carolina because it was obtained in violation of his constitutional rights and was against North Carolina public policy. Plaintiffs subsequently filed a motion to enforce the foreign judgment.

The parties’ motions were heard before the Honorable Debra Sasser on 30 July 2015. On 10 September 2015, the trial court entered an order denying Defendant's motion for relief and concluding that Plaintiffs were entitled to enforcement of the Judgment under the Full Faith and Credit Clause of the United States Constitution, U.S. Const. art. IV, § 1, and North Carolina's Uniform Enforcement of Foreign Judgments Act ("UEFJA"), N.C. Gen. Stat. §§ 1C–1701 et seq . Defendant filed a timely notice of appeal.

Analysis

On appeal, Defendant argues that the trial court erred in extending full faith and credit to the Judgment. This issue involves a question of law, which we review de novo . See DOCRX, Inc. v. EMI Servs. of N.C., LLC , 367 N.C. 371, 375, 758 S.E.2d 390, 393, cert. denied , ––– U.S. ––––, 135 S.Ct. 678, 190 L.Ed.2d 390 (2014) (applying de novo review to whether Full Faith and Credit Clause required North Carolina to enforce foreign judgment).

I. UEFJA

The Full Faith and Credit Clause "requires that the judgment of the court of one state must be given the same effect in a sister state that it has in the state where it was rendered."² State of New York v. Paugh , 135 N.C.App. 434, 439, 521 S.E.2d 475, 478 (1999) (citation omitted). "[B]ecause a foreign state's judgment is entitled to only the same validity and effect in a sister state as it had in the rendering state, the foreign judgment must satisfy the requisites of a valid judgment under the laws of the rendering state before it will be afforded full faith and credit." Bell Atl. Tricon Leasing Corp. v. Johnnie's Garbage Serv., Inc. , 113 N.C.App. 476, 478–79, 439 S.E.2d 221, 223, disc. review denied , 336 N.C. 314, 445 S.E.2d 392 (1994).

The UEFJA "governs the enforcement of foreign judgments that are entitled to full faith and credit in North Carolina." Lumbermans Fin., LLC v. Poccia , 228 N.C.App. 67, 70, 743 S.E.2d 677, 679 (2013) (citation and quotation marks omitted). In order to domesticate a foreign judgment under the UEFJA, a party must file a properly authenticated foreign judgment with the office of the clerk of superior court in any North Carolina county along with an affidavit attesting to the fact that the foreign judgment is both final and unsatisfied in whole or in part and setting forth the amount remaining to be paid on the judgment. See N.C. Gen. Stat. § 1C–1703(a) (2015).

The introduction into evidence of these materials "establishes a presumption that the judgment is entitled to full faith and credit." Meyer v. Race City Classics, LLC , 235 N.C.App. 111, 114, 761 S.E.2d 196, 200, disc. review denied , 367 N.C. 796, 766 S.E.2d 624 (2014). The party seeking to defeat enforcement of the foreign judgment must "present evidence to rebut the presumption that the judgment is enforceable...." Rossi v. Spoloric , ––– N.C.App. ––––, ––––, 781 S.E.2d 648, 654 (2016). A properly filed foreign judgment "has the same effect and is subject to the same defenses as a judgment of this State and shall be enforced or satisfied in like manner[.]" N.C. Gen. Stat. § 1C–1703(c). Thus, a judgment debtor may file a motion for relief from the foreign judgment on any "ground for which relief from a judgment of this State would be allowed." N.C. Gen. Stat. § 1C–1705(a) (2015).

Our Supreme Court has held that "the defenses preserved under North Carolina's UEFJA are limited by the Full Faith and Credit Clause to those defenses which are directed to the validity and enforcement of a foreign judgment." DOCRX , 367 N.C. at 382, 758 S.E.2d at 397. In DOCRX , the Supreme Court provided the following examples of potential defenses to enforcement of a foreign judgment:

that the judgment creditor committed extrinsic fraud, that the rendering state lacked personal or subject matter jurisdiction, that the judgment has been paid, that the parties have entered into an accord and satisfaction, that the judgment debtor's property is exempt from execution, that the judgment is subject to continued modification, or that the judgment debtor's due process rights have been violated .

Id. (emphasis added).

II. Virgin Islands Court System

In the present case, Defendant argues that he was denied due process during the Virgin Islands proceeding because the rules governing small claims cases in that jurisdiction do not (1) permit parties to be represented by counsel; or (2) allow for trial by jury. An understanding of the structure of the Virgin Islands court system is necessary in order to evaluate Defendant's arguments.

Congress has created the District Court of the Virgin Islands, which possesses jurisdiction equivalent to that of a United States district court. See 48 U.S.C. § 1611 ; Edwards v. HOVENSA, LLC , 497 F.3d 355, 358 (3rd Cir. 2007). In addition, the legislature of the Virgin Islands has established (1) the Supreme Court of the Virgin Islands, a court of last resort; and (2) the Superior Court of the Virgin Islands, a trial court of local jurisdiction. V.I. Code Ann. tit. 4, § 2.

The Virgin Islands Superior Court contains a small claims division "in which the procedure shall be as informal and summary as is consistent with justice." V.I. Code Ann. tit. 4, § 111. The small claims division has jurisdiction over all civil actions where the amount in controversy does not exceed $10,000. V.I. Code Ann. tit. 4, § 112(a). In proceedings before the small claims court, "[n]either party may be represented by counsel and parties shall in all cases appear in person except for corporate parties, associations and partnerships which may appear by a personal representative." V.I. Code Ann. tit. 4, § 112(d). In addition, small claims cases are heard before a magistrate without a jury. See V.I. Super. Ct. R. 64.

In the event that a party is unsatisfied with a judgment in the small claims division, it can appeal to the Appellate Division of the Superior Court. See H & H Avionics, Inc. v. V.I. Port Auth. , 52 V.I. 458, 462–63 (2009) ; V.I. Super. Ct. R. 322.1(a). However, "[n]o additional evidence shall be taken or considered" in the Appellate Division. V.I. Super. Ct. R. 322.3(a). If a party does not agree with the decision of the Appellate Division, it may then appeal to the Supreme Court of the Virgin Islands. See V.I. Code Ann. tit. 4, § 32 ; V.I. Super. Ct. R. 322.7(b); H & H Avionics , 52 V.I. at 462–63. Parties are permitted to be represented by counsel on appeal to the Virgin Islands Supreme Court. See V.I. Sup. Ct. R. 4(d).

III. Due Process Right to Employ Counsel at Trial

In the present case, Defendant does not dispute the fact that Plaintiffs complied with the UEFJA by filing a properly authenticated copy of the Judgment and an accompanying affidavit in a North Carolina court. Accordingly, Plaintiffs are entitled to a "presumption that the judgment is entitled to full faith and credit." Meyer , 235 N.C.App. at 114, 761 S.E.2d at 200. However, Defendant argues that the Judgment is not entitled to full faith and credit because he was deprived of his right to due process by the rules of the rendering jurisdiction's small claims court, which does not allow Defendant to be represented by counsel or provide the right to a trial by jury.

The Fourteenth Amendment to the United States Constitution provides, in pertinent part, that no state may "deprive any person of life, liberty, or property, without due process of law[.]" U.S. Const. amend. XIV, § 1. Congress has applied this rule of law to the Virgin Islands through enactment of the Revised Organic Act of the Virgin Islands. See 48 U.S.C. § 1561 ("No law shall be enacted in the Virgin Islands which shall deprive any person of life, liberty, or property without due process of law...."); see also United States v. Christian , 660 F.2d 892, 899 (3d Cir. 1981) (noting that 48 U.S.C. § 1561 "expresses the congressional intention to make the federal constitution applicable to the Virgin Islands to the fullest extent possible...