When a plaintiff successfully sues a defendant in one state and obtains a judgment, if the defendant lacks any assets in that state which the plaintiff can attach, garnish or foreclose upon, the plaintiff may choose to get that judgment domesticated in the state in which the defendant does maintain property or reachable assets. Domestication of a judgment, as one 2008 case from New Mexico and a recent case in New York illustrate, is not automatically granted. In each of these two very different cases, a problem with the manner in which the judgment was obtained prevents the domestication.
Back in 1999, a plaintiff in the case of Miller v. Morrison, No. 27,317 (Ct.App. N.M. 2008) sued a defendant whom the plaintiff claimed failed to honor a settlement agreement. The defendant failed to pay the plaintiff proceeds from a sale of real estate which he had agreed to tender to the plaintiff in such eventuality. The suit was not served on the defendant himself. Rather someone else accepted service of the lawsuit. The defendant never appeared to defend himself in court. Nor did he file an Answer although an attorney representing him did ask the counsel for plaintiff for additional time to make such a response. Eventually, the plaintiff secured a default judgment from the court in Texas on the ground that the defendant failed to respond to the Complaint although he had knowledge the case was pending.
The Plaintiff then proceeded to domesticate the judgment in the state of New Mexico where the defendant ostensibly possessed assets. But the Court of Appeals of New Mexico ruled that the judgment could not be domesticated. It noted that, “Because “foreign judgments cannot be collaterally attacked on the merits after the foreign judgment is filed, the grounds for reopening or vacating are limited to lack of jurisdiction, fraud in the procurement, lack of due process, or other grounds making a judgment invalid or unenforceable.” The Court of Appeals decided that the Texas court did not have jurisdiction over the defendant as he never made a formal entry of appearance in the case. Accordingly, since the judgment was invalid for lack of jurisdiction, the New Mexico appellate court would not domesticate it.
Much more recently, a group of villagers in Ecuador who had won a $9.7 billion judgment against Chevron Oil in a court in that country sought to have the judgment enforced against Chevron in the state of New York, one of the places where the oil company has offices. The New York federal district judge determined that it could not domesticate the judgment because it was procured by fraud. Chevron proved the Ecuadorian judge in the case received promises of payment in the event of a favorable ruling.
These two judgments, one from another state and the other from a different country, each contained fatal defects which prohibited judges in other jurisdictions from recognizing their validity. In the first case, the failure of the Texas court to technically follow its own state’s law concerning proper service of lawsuits on defendants barred the domestication. Despite the fact the judgment came from another state, the New Mexico court refused to afford full faith and credit to the order due to its defect. In the case originating from Ecuador, the court’s own internal corruption rendered the judgment too suspect to enforce.
The attorneys at Giddens & Gatton Law, P.C. represent individuals in personal injury suits, business litigation and in cases of elderly and health care law in New Mexico. The firm represents businesses and individuals in post-judgment collection matters. Giddens & Gatton Law, P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico. Call the office at (505) 633-6298 to set up an appointment or visit the firm’s website at giddenslaw.com.