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Blume Law Firm v. Jason E. Pierce: CIVIL PROCEEDURE - Full Faith & Credit & foreign judgments; waiver & fraud questions

STATE OF MINNESOTA
IN COURT OF APPEALS
A06-2311
Blume Law Firm PC,
an Arizona professional corporation,
Respondent,
vs.
Jason E. Pierce, et al.,
Defendants,
Raymond R. Pierce, et al.,
Appellants.
Filed December 4, 2007
Reversed and remanded
Lansing, Judge
Hennepin County District Court
File No. 27-CV-05-18631
Frederick R. Kopplin, Kopplin Law Offices, P.A., 5038 34th Avenue South,
Minneapolis, MN 55417-1542; and
Lee R. Johnson, Johnson & Greenberg, PLLP, 600 South Highway 169, Suite 1025, St.
Louis Park, MN 55426 (for appellants)
Considered and decided by Peterson, Presiding Judge; Lansing, Judge; and
Klaphake, Judge.
2
S Y L L A B U S
I. When personal jurisdiction has been waived, the Full Faith and Credit Clause
does not permit challenges to foreign judgments on the basis that the foreign court lacked
personal jurisdiction.
II. If a foreign judgment has been obtained through fraud, the Full Faith and
Credit Clause does not require Minnesota courts to enforce the judgment.
O P I N I O N
LANSING, Judge
The district court denied Raymond and Linda Pierces motion to vacate an
Arizona judgment docketed in Minnesota under the Uniform Enforcement of Foreign
Judgments Act. We conclude that the district court properly rejected the Pierces
jurisdictional argument. But because the record indicates that the Arizona judgment may
have been obtained through fraud, we reverse and remand.
F A C T S
Raymond and Linda Pierce are Minnesota residents who occasionally visit their
son who resides in Arizona. During one of their visits, Raymond Pierce purchased a
motorcycle. The motorcycles title lists Raymond Pierce with an Arizona address.
In 2004 the Pierces son obtained legal services from the Blume Law Firm. The
son pledged the motorcycle as security for the firms legal fees. The Pierces apparently
had no contact with the law firm or connection to the security agreement until after the
Blume Law Firm sued.
3
In June 2005 the Blume Law Firm sued the son and the Pierces in Arizona
superior court for unpaid legal fees. The complaint raised four counts. The first three
counts relate to legal fees owed to the law firm. The fourth count involves the title to the
motorcycle. The Pierces submitted an answer in which they denied that the Arizona
court had jurisdiction over them. The Blume Law Firm then brought a summaryjudgment
motion and submitted an affidavit claiming that both the son and Raymond
Pierce had agreed to be responsible for the attorneys fees and had signed a promissory
note and security agreement. The Pierces failed to respond to the summary-judgment
motion.
The Arizona court granted the law firms motion and awarded the law firm
,000 in damages and ,500 in legal fees. The district court order provided that the
law firm could apply for transfer of title to the motorcycle. The Pierces did not appeal.
The Blume Law Firm docketed the judgment in Minnesota under the Uniform
Enforcement of Foreign Judgments Act. The Pierces then obtained counsel and moved to
vacate the docketing of the judgment in Minnesota, arguing primarily that Arizona did
not have jurisdiction. Their son also brought a pro se motion to vacate the Arizona
judgment. After the Arizona court denied the sons motion, the Minnesota district court
similarly denied the motion to vacate. The district court reasoned that the jurisdictional
issue had been raised in Arizona and could not be relitigated in Minnesota. The Pierces
now appeal.
4
I S S U E S
I. Can the Pierces raise their personal-jurisdiction challenge in Minnesota after
raising the issue in an Arizona court and then failing to pursue the issue or to
appeal the adverse decision?
II. Can the Arizona judgment be set aside under the fraud exception to the general
requirements of the Full Faith and Credit Clause?
A N A L Y S I S
The Uniform Enforcement of Foreign Judgments Act provides that judgments
from other states are subject to the same procedures, defenses and proceedings for
reopening, vacating, or staying as a judgment of a district court or the Supreme Court of
this state, and may be enforced or satisfied in like manner. Minn. Stat. 548.27 (2006).
But our power to vacate foreign judgments is limited by the Full Faith and Credit Clause.
United Bank of Skyline, N.A. v. Fales, 405 N.W.2d 416, 417-18 (Minn. 1987).
The federal constitution provides that Full Faith and Credit shall be given in each
State to the public Acts, Records, and judicial Proceedings of every other State. U.S.
Const. art. IV, 1. Because of the Full Faith and Credit Clause, Minnesota must, in
general, recognize and enforce final judgments from other states. Matson v. Matson, 333
N.W.2d 862, 868 (Minn. 1983); see also Minn. Stat. 548.26-.33 (2006) (establishing
procedure for enforcing judgments from other states). The central issue in this case is
whether the Full Faith and Credit Clause requires Minnesota courts to enforce the
Arizona judgment. This involves a question of law, which we review de novo. See
Brown-Wilbert, Inc. v. Copeland Buhl & Co., P.L.L.P., 732 N.W.2d 209, 215 (Minn.
2007) (noting that questions of law are reviewed de novo).
5
I
The Pierces primary argument is that Minnesota courts should disregard the
Arizona judgment because the Arizona court did not have jurisdiction. A judgment is not
entitled to full faith and credit if the original forum did not have jurisdiction. Pennoyer v.
Neff, 95 U.S. 714, 729 (1877).
But the Full Faith and Credit Clause forbids relitigation of jurisdictional issues in
two situations. First, if the jurisdictional question has been fully and fairly litigated in
the original forum, the second state is bound by the original determination. Durfee v.
Duke, 375 U.S. 106, 111, 84 S. Ct. 242, 245 (1963). Second, personal jurisdiction
unlike subject-matter jurisdictioncan be waived. Ins. Corp. of Ireland, Ltd. v.
Compagnie des Bauxites de Guinee, 456 U.S. 694, 702-04, 102 S. Ct. 2099, 2104-05
(1982). If the parties submitted to the jurisdiction of the original forum, the parties
cannot subsequently challenge personal jurisdiction. See Chicago Life Ins. Co. v. Cherry,
244 U.S. 25, 29-30, 37 S. Ct. 492, 493 (1917) (discussing waiver of personal
jurisdiction).
Even if we assume that the personal-jurisdiction issue was not fully and fairly
litigated in Arizona, we conclude that the Pierces waived their right to challenge personal
jurisdiction.
A party can submit to a courts jurisdiction through express or implied consent.
Ins. Corp. of Ireland, 456 U.S. at 703, 102 S. Ct. at 2105. The submission to jurisdiction
need not be voluntary. Id. at 704-05, 102 S. Ct. at 2105. A party can waive personal
jurisdiction by failing to raise it. Minn. R. Civ. P. 12.08(a). But other actions can
6
constitute a waiver as well. Natl Homes Corp. v. Totem Mobile Home Sales, Inc., 682
P.2d 439, 443 (Ariz. Ct. App. 1984), review denied (Ariz. May 22, 1984). The law of the
forum determines whether an action constitutes a waiver of personal jurisdiction. See
Cherry, 244 U.S. at 29-30, 37 S. Ct. at 493 (explaining that what acts of the defendant
shall be deemed a submission to [a courts] power is a matter upon which states may
differ). Under Arizona law, a jurisdictional defense is waived if a party raises the
defense but fails to obtain a timely ruling on the defense. Natl Homes Corp., 682 P.2d at
443.
In this case, the Pierces asserted the jurisdictional defense in their answer. But
they then failed to pursue the defense. They did not obtain a ruling on the issue before
the Arizona trial court and they did not appeal the Arizona courts decision. When the
Pierces answered the Arizona complaint, they were obligated to pursue their argument in
the Arizona court. Because they failed to do so, the Pierces submitted to Arizona
jurisdiction and waived their jurisdictional defense.
Although we conclude that the Pierces actions waived their right to challenge
personal jurisdiction, we recognize that their jurisdictional arguments have considerable
merit. When multiple claims are raised, personal jurisdiction must be established for
each claim. Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 274-75 & n.5 (5th Cir.
2006). Specific personal jurisdiction exists only if the litigation arises out of the
defendants contacts with the forum. Burger King Corp. v. Rudzewicz, 471 U.S. 462,
472, 105 S. Ct. 2174, 2181-82 (1985). The dispute over the title to the motorcycle
which was purchased in Arizona and titled in Arizonapresumably arises out of the
7
Pierces activities in Arizona. But the dispute over their sons attorneys fees appears to
have little connection to the Pierces activities in Arizona. The attorney for the Blume
Law Firm alleged that [a] valid promissory note and security agreement was entered into
by Jason Pierce and Raymond Pierce providing for the payment of a principal sum of
,000.00 that sum being secured by a motorcycle. But the record contains no
promissory note signed by either Raymond or Linda Pierce for any payment to the Blume
Law Firm and it does contain a promissory note for attorneys fees signed by their son,
Jason Pierce. The record contains no evidence supporting the allegation that the Pierces
agreed to pay their sons attorneys fees. Thus, the Blume Law Firms other three claims
do not appear to arise out of the Pierces activities in Arizona.
Nonetheless, we conclude that the Pierces waived their jurisdictional defense.
Because of the requirements of the Full Faith and Credit Clause, they cannot relitigate the
issue in Minnesota.
II
Although the Pierces did not directly raise the argument in the district court or
directly on appeal, the documents purporting to sustain the judgment and the inability of
the Blume Law Firm attorney to provide any explanation for the contradictory documents
compel us to address the fraud exception to the general requirements of the Full Faith and
Credit Clause. We may review any . . . matter as the interest of justice may require.
Minn. R. Civ. App. P. 103.04. Review of a new issue can be appropriate when the issue
was implicit in or closely akin to the arguments below. Watson v. United Servs.
Auto. Assn, 566 N.W.2d 683, 688 (Minn. 1997). In this case, the Pierces jurisdictional
8
argument and our fraud analysis are based on the same facts. The primary difference is
that personal jurisdiction is subject to waiver but fraud is not.
A judgment obtained through fraud is not entitled to full faith and credit.
Trautman v. Standard Oil Co., 263 N.W.2d 809, 815 (Minn. 1978). In addition, even if
full faith and credit applies, we must only give the Arizona judgment the same respect
that Arizona courts would give it. State v. Schmidt, 712 N.W.2d 530, 536-37 (Minn.
2006). The forum state has at least as much leeway to disregard the judgment, to qualify
it, or to depart from it as does the State where it was rendered. New York ex rel. Halvey
v. Halvey, 330 U.S. 610, 615, 67 S. Ct. 903, 906 (1947). Under Arizona law, the
judgment against the Pierces can be set aside for fraud upon the court. Ariz. R. Civ. P.
60(c).
We believe that the Pierces argument is best interpreted as alleging that the
Blume Law Firm obtained the Arizona judgment through fraud. In an affidavit submitted
in Arizona, the attorney for the Blume Law Firm alleged that [a] valid promissory note
and security agreement was entered into by Jason Pierce and Raymond Pierce providing
for the payment of a principal sum of ,000.00 that sum being secured by a
motorcycle. The Arizona court subsequently held that Raymond and Linda Pierce were
liable for the principal sum of ,000.
The Pierces assert that Raymond Pierce never agreed to pay his sons attorneys
fees. The record supports this assertion. The promissory note and security agreement
referred to in the Blume Law Firms affidavit are contained in the record. But these
documents are only signed by the Blume Law Firms client, Jason Pierce. The record
9
contains no indication that Raymond Pierce ever agreed to pay his sons attorneys fees.
At oral argument before this court, the Blume Law Firm was unable to provide any
explanation why Raymond Pierce should be responsible for this debt. And the record
does not contain even a bare allegation that Linda Pierce has any responsibility for the
debt.
Our concern about the Arizona judgment, however, is not that it may have held the
Pierces responsible for a debt they did not incur. Under the Full Faith and Credit Clause,
we cannot question the merits of the foreign judgment. See Fauntleroy v. Lum, 210 U.S.
230, 237, 28 S. Ct. 641, 643 (1908) (stating that court must give full faith and credit to
foreign judgment even if based on mistake of law).
Instead, our concern is that the Blume Law Firm may have obtained that judgment
through an attorneys misrepresentation and overreaching. If, as it appears from the
record before this court, the Blume Law Firms conduct amounted to fraud, the Arizona
judgment would not be entitled to full faith and credit and the docketing of the judgment
should be vacated in Minnesota. Because the Pierces submitted strong evidence that the
Arizona judgment was obtained through misrepresentations by the Blume Law Firm, we
reverse the denial of the Pierces motion to vacate.
Nonetheless, the fraud issue was not directly addressed below, and we therefore
remand for further proceedings on the fraud issue. On remand, the Blume Law Firm
should be given a chance to substantiate its claim that Raymond Pierce entered into a
valid promissory note or other agreement to pay the principal sum of ,000 and to
provide a basis for why Linda Pierce could be liable. If the Blume Law Firm is unable to
10
substantiate its claim, the district court should then determine whether the law firms
conduct amounts to fraud that would justify disregarding the judgment.
D E C I S I O N
Because further proceedings are necessary to determine whether the Arizona
judgment should be disregarded on the basis of fraud, we reverse and remand.
Reversed and remanded.
 

 
 
 

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