The Full Faith and Credit Clause of the United States Constitution (Article IV, Section 1) requires that states uphold as valid judgments properly entered in the courts of a sister state. Thus, valid judgments of a court in one state can be enforced in other states. However, in a recent case, this longstanding principle was questioned by a defendant against whom a default judgment had been entered in North Carolina.

The Court in Cadlerock Joint Venture, L.P. v. Simms was faced with the issue of whether a default judgment entered against Simms in North Carolina could be recognized in New York, even where the New York court did not have personal jurisdiction over the defendant.

In 2007, the defendant, Simms, was sued in North Carolina. When he failed to appear in the action, a default judgment in excess of $668,000 was entered against him. In 2016, the plaintiff sought to renew the judgment against Simms, which was only valid for 10 years, unless renewed. In granting the renewal request, the Court in North Carolina confirmed Simms had been properly served, that he had failed to appear in the action and that the principal amount of the judgment remained outstanding.

The plaintiff, thereafter, commenced an action to enforce the North Carolina judgment in New York by filing a motion for summary judgment in lieu of complaint pursuant to New York Civil Practice Law & Rules (CPLR) 3213. Simms cross-moved to dismiss the action on the grounds that the New York court lacked personal jurisdiction over him. He submitted an affidavit asserting he never lived or transacted business in New York, owned no real or personal property there, and was a North Carolina resident. Personal jurisdiction refers to the power of the Court to exercise authority over the parties. Simms argued that he didn’t have sufficient contact with New York to allow the New York court to enforce a judgment against him. The lower Court agreed with Simms and dismissed the action. The plaintiff appealed.

In deciding the case, the New York Appellate Division, Second Department, first noted that the concept of giving full faith and credit to judgments validly entered in other states was essential to the system of jurisprudence in the United States. Further, the U.S. Constitution “requires each State to recognize and give effect to valid judgments rendered by the courts of its sister States.” Here, the plaintiff properly filed a motion for summary judgment in lieu of complaint, which is one of the ways a default judgment entered in a sister state can be enforced in New York.

The Court went on to state that the only way a judgment rendered in a sister state would not be entitled to full faith and credit was if the court in North Carolina lacked jurisdiction over the defendant at the time the judgment was entered. Although Simms established that he had no contacts with New York, he never disputed the jurisdiction of the North Carolina court or claimed he was denied due process in North Carolina. Accordingly, the Appellate Division found that even though the New York Court may lack personal jurisdiction over Simms, the “Full Faith and Credit Clause . . . makes the valid in personam judgment of one State enforceable in all other States” and reversed the decision below.

The lesson here is that if you are ever served with judicial process, even for a matter in another state, you need to immediately consult with an attorney to protect your legal interests.

If you have questions regarding a litigation in which you have been named a party, please contact one of our litigation attorneys.