December 19, 2011
DIXIE FARMS TEXACO, INC. D/B/A CITYWIDE ATM, PLAINTIFF-RESPONDENT,
HILLSIDE CAR CARE, INC. D/B/A HILLSIDE CAR WASH AND 10 MINUTE OIL CHANGE,
On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. DJ-015817-11.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 30, 2011
Before Judges Graves and Harris.
This appeal arises under the Uniform Enforcement of Foreign Judgments Act (UEFJA), N.J.S.A. 2A:49A-25 to -33, and the obligations of federalism pursuant to the Full Faith and Credit Clause, U.S. Const. art. IV, § 1. Defendant Hillside Car Care, Inc. (Hillside) appeals from the denial of its motion in the Law Division to dismiss and void the default judgment obtained by plaintiff Dixie Farms Texaco, Inc. (Dixie) in Texas. We reverse.
On January 16, 2008, Baljit Singh, one of Hillside's principals, signed a two-page document entitled, "ATM Placement Agreement" (the Agreement). The contracting parties were "D.F.T., Inc., a Texas Corporation" (DFT) (designated as the Company) and "Hillside Carwash" (designated as the Merchant).*fn1
The agreement made DFT the exclusive automated teller machine (ATM) service provider at the business premises located at 1260 North Broad Street, Hillside, New Jersey.
The Agreement contained a choice of law and forum selection clause, which stated: § 6.2 This Agreement shall be construed, interpreted, and enforced in accordance with the laws of the State of Texas. The jurisdiction and venue for any legal proceeding shall be in the state and county where the Company (or its successor in interest) maintains its principal place of business or residence.
The Agreement also included the following liquidated damages provisions: § 5.4 The Merchant acknowledges and certifies that any early termination of this Agreement will subject the Company to lost revenue and costs which may be assessed by the Company (or its successor in interest) against the Merchant. The Merchant understands that the damages may not be fixed or may be difficult to fix at the time of termination of this Agreement. Therefore, it is the express intent of the Parties that the Damages the Company may assess shall be calculated as ninety (100%) percent of the Company's average monthly revenue, including other ancillary costs and Damages to the Company as may be shown, projected for the balance of this Agreement, plus costs of suit as the court may adjudge.
Finally, the Agreement granted DFT the right to recover attorneys' fees, along with all costs associated with collection, in the event of a breach: § 5.6 The prevailing Party in a suit between the Merchant and the Company shall be entitled to recover, in addition to costs, such sums as the court may adjudge reasonable for legal fees at trial or proceeding. The Merchant shall also pay for all costs of collection for sums due to the Company under this Agreement, including attorney fees, whether or not suit or legal action is commenced.
In June 2009, Dixie -- not DFT -- filed an original petition in the County Civil Court of Harris County, Texas against "Hillside Carwash, Inc. a/k/a/ Hillside Carwash, LLC." In July 2009, Singh was personally served with a copy of the original petition at Hillside's business premises.
Dixie's pleading claimed that "[i]n May of 2008, [Dixie] entered into an Agreement with Defendant concerning the exclusive placement and processing of an ATM Machine to be located on the premises of Hillside Car Wash, 1260 North Broad Street, Hillside, NJ, 07205." The pleading further asserted that the Agreement was breached when "Defendant . . . refused to allow [Dixie] to enable the ATM machine and has demanded payment from Plaintiff outside the scope of the Agreement." Accordingly, Dixie sought breach of contract damages and attorneys fees.
Hillside retained a New Jersey attorney to represent it in its dispute with Dixie. In October 2009, the attorney informed Dixie's attorney that Hillside was aware of the pending lawsuit but it would not defend the matter until Dixie attempted to enforce a Texas judgment in New Jersey. Specifically, Hillside's lawyer wrote,
We had thought we would defend this action in Texas, but the retainer is being asked by various attorneys we requested exceeded the amount of money involved in this litigation. Therefore, we decided that [if] a settlement is not reached, we would contest jurisdiction in the New Jersey courts when you would attempt to enforce any judgment you obtain in Texas.
In January 2010, Dixie discovered that its original petition incorrectly named the defendant. To correct the situation, Dixie filed a Notice of Misnomer with the Texas court, pursuant to Texas Rule of Civil Procedure 71, designating the correct name of the defendant as "Hillside Car Care, Inc. d/b/a/ Hillside Car Wash and 10 Minute Oil Change." The Notice of Misnomer was not served on Singh, Hillside, or Hillside's New Jersey attorney.
Shortly thereafter, Dixie moved for a default judgment when Hillside refused to answer the now-amended petition in Texas. On February 10, 2010, the Texas court entered a "Final Default Judgment" in favor of Dixie, awarding it "[a]ctual damages in the amount of $28,342.16" and "[r]easonable and necessary attorney's fees in the amount of $9,000.00."
On January 11, 2011, Dixie recorded the Texas default judgment in New Jersey pursuant to the UEFJA. After receiving word of this entry, Hillside immediately filed a motion to dismiss and void the foreign judgment. At the motion hearing, Hillside conceded that it was aware of the original petition in Texas but claimed that it was never made aware of the change in the name of the defendant in that suit. Hillside contended that the substitution created a jurisdictional defect in Texas, and further argued that Dixie and DFT were not the same entity.*fn2
Furthermore, the motion court was apprised of Hillside's deliberate decision not to defend in Texas. On the same day as the motion hearing, the Law Division issued an order and a nine-page written opinion enforcing the validity of the Texas judgment in New Jersey and denying Hillside's motion to void the judgment. This appeal followed.
party who obtains a proper judgment in another state may domesticate that judgment in New Jersey pursuant to the UEFJA to facilitate its enforcement here. N.J.S.A. 2A:49A-27. Through this procedure, our State harmonizes its constitutional obligation to give full faith and credit to judgments entered in other states. Singh v. Sidana, 387 N.J. Super. 380, 382 (App. Div. 2006), certif. denied, 189 N.J. 428 (2007). Domestication of a foreign judgment, however, is not an opportunity to collaterally attack the foreign judgment, except in very limited circumstances, such as the denial of due process in the state issuing the judgment. McKesson Corp. v. Hackensack Med. Imaging, 197 N.J. 262, 275 (2009); see also State of Maine v. SeKap, S.A. Greek Co-op Cigarette Mfg. Co., 392 N.J. Super. 227, 235 (App. Div. 2007) (holding that a "judgment debtor may raise due process defenses in any enforcement action in New Jersey under the UEFJA"). A denial of due process occurs when the state that issued the judgment did not have personal jurisdiction of the judgment debtor, lacked subject matter jurisdiction, or failed to provide the judgment debtor with adequate notice to permit it to be heard. McKesson, supra, 197 N.J. at 275. Once "a court has determined that a sister state court has entered a . . . judgment following due process standards, a broader collateral attack of that judgment -- absent exceptional circumstances, such as fraud [in procurement of the judgment] -- is best made in the sister state court." Simmermon v. Dryvit Sys., Inc., 196 N.J. 316, 334 (2008).
We recognize that personal jurisdiction is a waiveable right, that is, a non-resident defendant may choose to consent to the jurisdiction of a particular court. See YA Global Invests., L.P. v. Cliff, 419 N.J. Super. 1, 8 (App. Div. 2011) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14, 105 S. Ct. 2174, 2182 n.14, 85 L. Ed. 2d 528, 540 n.14 (1985)). We also note that forum selection clauses are frequently used between commercial parties, and they do not offend due process as long as the agreement is freely negotiated and the provision is not "unreasonable and unjust." Id. at 9-10. Courts will enforce such a forum-selection clause unless it is the product of "fraud, undue influence, or overwhelming bargaining power," is unreasonable, or offends a "strong public policy." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12-15, 92 S. Ct. 1907, 1914-16, 32 L. Ed. 2d 513, 521-23 (1972).
In recognition of these standards, we embark upon an exploration of whether the Texas court had jurisdiction over Hillside. We conclude unequivocally that it did not. The only basis for Texas to obtain jurisdiction over Hillside was either (1) through its consent (which was never given, notwithstanding the writings of Hillside's attorney stating that his client would make its stand in New Jersey, not Texas*fn3 ) or (2) pursuant to § 6.2 of the Agreement, which provided for the application of Texas law and a Texas forum to resolve disputes.*fn4 Because the plaintiff in Texas -- Dixie -- was a stranger to the Agreement, and there is no evidence of a name change, no indicia of corporate identity or successorship to DFT, no assignment of the Agreement, and no other legally or factually competent basis for Dixie to bring into play the terms of the Agreement, the forum selection clause was incapable of conferring jurisdiction over Hillside to a Texas court.*fn5
Here, Dixie's problem is not the unenforceability of the Agreement's forum selection clause, but rather its lack of relevance to the dispute. From the face of the Texas original petition through these proceedings, there has been no evidence presented to demonstrate Dixie's entitlement to invoke, much less seek remedies under, the Agreement. The mere fact that its initials mirror the name of Hillside's contract partner DFT is happenstance. This is neither the elevation of form over substance, nor a penalty for what may be sloppy pleading in Texas. Instead, it simply gives effect to the UEFJA in a way that better identifies those foreign judgments that are not properly enforceable in this State.
Reversed and remanded for the entry of an order declaring that for purposes of the UEFJA, Dixie's Texas judgment is vacated and not enforceable in New Jersey.