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McKesson Corp. v. Hackensack Medical Imaging

January 21, 2009

MCKESSON CORP., D/B/A MCKESSON SPECIALTY DISTRIBUTION SERVICES, PLAINTIFF-APPELLANT,
v.
HACKENSACK MEDICAL IMAGING, D/B/A LIFESCAN DIAGNOSTIC IMAGING, DEFENDANT-RESPONDENT.



On certification to the Superior Court, Appellate Division.

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

This appeal involves the commonplace conflict that arises when a sister state, in the exercise of its long-arm jurisdiction, enters a default judgment against a citizen of this State, and the judgment holder seeks to enforce that default judgment in our courts.

Plaintiff, McKesson Corp., advertises itself as the "largest pharmaceutical distributor in North America" and "the nation's leading health care [information technology] company." It operates throug h various locations in the United States, including in the State of Texas. In contrast, defendant is a professional corporation organized under the laws of the State of New Jersey and maintains its principal place of business in Hackensack. It provides radiology and imaging services such as X-rays and MRIs to patients and physicians exclusively at its principal place of business.

Starting in July 2005 and on nine separate occasions through February 2006, defendant ordered from plaintiff two different types of contrast agents for use in defendant's imaging practice. These purchases totaled $20,795 and, in order to make them, defendant placed its orders either via telephone or other electronic media, with plaintiff in Texas. Further, each invoice specifically provided that payment was to be made to plaintiff in Texas. Also, on December 6, 2005, defendant completed and submitted to plaintiff in Texas a form of credit application. Finally, on February 15, 2006, defendant issued two sequentially numbered checks, each in the amount of $2,450, made payable to plaintiff, and mailed those checks to Texas. Both checks were drawn on accounts that did not contain enough funds to cover the checks written; they were marked "non-sufficient funds," dishonored, and returned unpaid.

On March 31, 2006, plaintiff filed an action against defendant in the District Court of Dallas County, Texas. Although service of process was effected on defendant in New Jersey, defendant did not appear in the Texas court. Instead, defendant's counsel wrote to the Clerk of the District Court in Texas, asserting that "[i]n light of the fact that [defendant] does not conduct business in the State of Texas and is not subject to the jurisdiction of the Texas Courts[,] it is respectfully requested that this case be dismissed for lack of jurisdiction." Defendant never formally moved for the relief it requested by letter.

At plaintiff's request, on August 31, 2006, the Texas court entered a default judgment in plaintiff's favor and against defendant. On October 10, 2006, plaintiff moved in the Law Division for registration of its Texas judgment pursuant to the Uniform Enforcement of Foreign Judgments Act, N.J.S.A. 2A:49A-25 to -33. Plaintiff sought entry of judgment in the amount of $26,062.35, which included the principal amount of the foreign judgment, plus awarded attorneys' fees and post-judgment interest.

Defendant moved for an order staying the enforcement of the foreign judgment. In a certification submitted in support of the application, defendant claimed it "had absolutely no presence in or minimal contacts with the [S]tate of Texas which would support any type of personal jurisdiction over [defendant] for the purposes of the lawsuit that was initiated in the State of Texas." The trial court denied defendant's motion to stay enforcement of the Texas judgment. It explained that New Jersey courts are compelled to give full faith and credit to the Texas judgment. The court suggested that if defendant wished to contest jurisdiction, it should have done so in the Texas court.

In an unpublished opinion, the Appellate Division reversed and remanded for the entry of an order staying enforcement of the Texas judgment "due to the lack of valid personal jurisdiction of the Texas court over [defendant]." The panel explained that a New Jersey court is obliged to recognize a foreign money judgment "unless the defendant demonstrates that the foreign jurisdiction lacked personal jurisdiction of defendant." The Appellate Division noted that in order to subject a defendant to a judgment in another forum in which he is not present, the defendant must have certain "minimum contacts" with the forum "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Because it deemed defendant a "passive buyer" of plaintiff's products, the Appellate Division concluded that there were insufficient minimum contacts with Texas to justify the exercise of its long-arm jurisdiction against defendant. It, therefore, reversed and remanded.

This Court granted plaintiff's petition for certification. 195 N.J. 518 (2008).

HELD: Texas had personal jurisdiction to enter the default judgment against defendant, and that judgment is enforceable in New Jersey.

1. The Full Faith and Credit Clause of the U.S. Constitution requires that full faith and credit be given in each state to the public acts, records, and judicial proceedings of every other state. The judgment for which full faith and credit is sought must itself be valid, that is, it must be issued by a court of competent jurisdiction in possession of valid personal jurisdiction over the defendant. A state court may exercise personal jurisdiction over a nonresident defendant only so long as there exist "minimum contacts" between the defendant and the forum state. The defendant's contacts with the forum state must be such that maintenance of the suit does not offend traditional notions of fair play and substantial justice. (pp. 13-16)

2. Texas, like New Jersey, has adopted a two-part standard to ensure that its exercise of personal jurisdiction over nonresident defendants complies with due process requirements: the nonresident defendant must purposefully do some act or consummate some transaction in the forum state; and, the assumption of jurisdiction by the forum state must not offend traditional notions of fair play and substantial justice. Also, the Texas Legislature has codified portions of its long-arm jurisdiction jurisprudence, providing that, "[i]n addition to other acts that may constitute doing business, a nonresident does business in this state if the nonresident . . . contracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part in this state." (pp. 16-18)

3. Standing alone, the commonplace purchase of goods from an out-of-state vendor is insufficient to establish the requisite minimum contacts needed to invoke long-arm jurisdiction consistent with due process. However, unlike the casual or occasional purchaser of out-of-state products, defendant's minimum contacts with Texas are many and varied. The record discloses that defendant entered into what was intended to be a long-term commercial relationship with plaintiff; placed nine separate orders with plaintiff in Texas; sent a credit application to plaintiff in Texas; and sent two checks -- both of which were later dishonored -- to plaintiff in Texas as purported payment for the products defendant purchased from plaintiff. The Court has no hesitation in concluding that, in these circumstances, plaintiff has established that defendant had sufficient minimum contacts to justify the exercise of personal jurisdiction by the Texas court. In addition, the Court concludes that neither traditional notions of fair play nor substantial justice would be offended by subjecting defendant to the jurisdiction of Texas's courts. (pp. 18-21)

The judgment of the Appellate Division is REVERSED and the judgment of the Law Division denying defendant's motion to stay execution on a foreign judgment is reinstated.

CHIEF JUSTICE RABNER and JUSTICES LONG, LaVECCHIA, ALBIN, WALLACE and HOENS join in JUSTICE RIVERA-SOTO's opinion.

The opinion of the court was delivered by: Justice Rivera-soto

Argued December 2, 2008

This appeal involves the commonplace conflict that arises when a sister state, in the exercise of its long-arm jurisdiction, enters a default judgment against a citizen of this State, and the judgment holder seeks to enforce that default judgment in our courts. The trial court determined that the sister state had proper long-arm jurisdiction over the New Jersey defendant and, therefore, the sister state's judgment was entitled to full faith and credit in New Jersey. The Appellate Division, however, reversed, concluding that the transactions between the New Jersey defendant and the foreign jurisdiction were insufficient to satisfy the minimum contacts constitutionally required for the exercise of long-arm jurisdiction.

We conclude that, on the whole, the contacts presented in this case between the New Jersey defendant and the sister state that issued the foreign judgment were sufficient to meet the minimum contacts test necessary for the constitutional exercise of judicial power against a non-resident defendant. We therefore reverse the judgment of the Appellate Division and reinstate the judgment ...


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