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State of Maine v. SeKap

April 17, 2007


On appeal from the Superior Court of New Jersey, Law Division, Mercer County, DJ-076048-05 and DJ-076049-05.

The opinion of the court was delivered by: Messano, J.S.C. (temporarily assigned).



Argued January 24, 2007

Before Judges Wefing, Parker and Messano.

In this appeal, we are required to interpret provisions of New Jersey's version of the Uniform Enforcement of Foreign Judgments Act (the UEFJA), N.J.S.A. 2A:49A-25 to -33, and in particular, N.J.S.A. 2A:49A-29 which sets forth the procedure to stay execution of a foreign judgment domesticated in New Jersey. Defendant, SeKap, S.A. Greek Cooperative Cigarette Manufacturing Company, S.A. (SeKap), appeals the motion judge's orders vacating a stay of execution previously entered in its favor, and denying its cross-motion for summary judgment. We affirm the judge's decision, but remand the matter for further proceedings consistent with our opinion.


In August, 2002, the state of Maine filed suit in Maine seeking to compel SeKap to deposit $312,945.38 into an escrow account. SeKap did not join in the 1998 national Master Settlement Agreement (MSA) wherein a number of states settled litigation against numerous cigarette manufacturers. After the settlement was reached, several states, including Maine, adopted model legislation which compelled non-settling cigarette manufacturers to establish escrow accounts in those various states and deposit monies in the accounts based upon the volume of cigarette sales in that particular state. These escrow accounts were designed to offset any competitive advantages non-settling manufacturers might otherwise gain by not participating in the MSA, and the monies in the escrow accounts were to be used to satisfy any judgments or settlements each state might obtain against the non-settling manufacturers. Maine's version of the model escrow statue is codified at 22 M.R.S.A. § 1580-I. Those manufacturers that do not establish and fund the mandatory escrow accounts are subject to monetary penalties pursuant to the statute.

Maine's complaint alleged that SeKap had not established or funded the required escrow account for its cigarette sales in Maine under the brand names, "Marathon" or "GR," during 2001. The complaint sought judgment requiring SeKap to post the required amount, as well as a statutory penalty in the amount of $938,836.14. Maine alleged it had personal jurisdiction over SeKap because the company "transact[ed] business within . . . Maine by supplying tobacco products, either directly or through a distributor . . . within . . . Maine, to consumers within . . . Maine."

Maine served its complaint through the Hague Convention and SeKap does not challenge the sufficiency of service. When SeKap failed to answer or appear, Maine successfully moved for default. In September, 2003, the Maine court entered judgment against SeKap for $1,251,781.50 and enjoined the sales of its cigarettes in Maine. This procedure was repeated with the filing of a second complaint in Maine in July, 2003 seeking additional monies and penalties for SeKap's alleged 2002 tobacco sales. Once again, SeKap failed to appear, and a second judgment was entered against it in December, 2004, in the amount of $1,128,646.50 along with similar injunctive relief.

Utilizing the procedure set forth in N.J.S.A. 2A:49A-27 and -28, Maine applied to the Superior Court in New Jersey and docketed the two foreign judgments in March, 2005. In April, the New Jersey court entered writs of execution for both judgments which were served upon Wachovia Bank in Morristown.*fn1

In May, SeKap moved via an order to show cause to temporarily restrain any execution on the account, to vacate the writs of execution and to vacate the docketed judgments, alleging Maine lacked personal jurisdiction over it. The motion judge granted the order to show cause, entered temporary restraints and set the matter down for a further hearing.

After a hearing held on July 1, 2005, a second motion judge denied Maine's request to dissolve the temporary restraints, and entered an order that provided Defendant shall have sixty days in which to seek relief from judgment in Maine pursuant to N.J.S.A. 2A:49A-29(a) and (b). Upon proof of compliance with section (a) and the posting of security to satisfy the judgment, enforcement shall be stayed. Otherwise, enforcement shall take effect on September 6, 2005. Thereafter, plaintiff may move before the court to dissolve the restraints.

Sekap did not file an appeal in Maine, nor post security, within the sixty day period.

In December, Maine moved to dissolve the restraints; SeKap cross-moved for summary judgment seeking to vacate the writs of execution and the docketed New Jersey judgments. In support of its cross-motion, SeKap argued that it need not post any security in order to stay execution of the writs and challenge the New Jersey judgment because the Maine judgment was void for lack of personal jurisdiction. It supplied the certification of its Director, Yiannis Bitos, that contained the following facts: SeKap was organized as a Greek co-operative under Greek law; it has no offices, branches, employees or agents in any state in the United States; it does not maintain an agent for service of process in the United States; it owns no property in, has no assets in, and has never contracted with anyone in Maine; no officer, agent or director of SeKap has physically been present in Maine; and, SeKap has never solicited or advertised its products in Maine. The certification explained that SeKap contracted with a Cypriot corporation, Denova, Serives, Ltd. (Denova), for the distribution of tobacco products in North America. SeKap has no control or ownership interests in Denova, nor does it control the marketing, pricing or sales of its products in the United States. Lastly, Bitos certified that SeKap did not "dictate, require or request that [its] product be sold in Maine."

On February 6, 2006, a third judge heard the motion and cross-motion. He noted that SeKap had not complied with the prior order of the court since it had not filed an appeal in Maine challenging jurisdiction. He further found that defendant had not complied with N.J.S.A. 2A:49A-29(a) or (b) which "sets forth the applicable procedures for appealing the enforcement of ...

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