PITTS v. FINK (2010)

In this appeal challenging the enforcement of an Alabama default judgment in South Carolina, Chad Fink (Fink) asserts the circuit court erred in denying his motion for relief from judgment, arguing the judgment was void for lack of personal jurisdiction. We affirm.¹

FACTS/PROCEDURAL HISTORY

This action to domesticate an Alabama default judgment stems from a dispute over funds loaned by Patricia and Robert Pitts (Mr. and Mrs. Pitts) to Fink, Charles Hobbs, and Barton Pitts pursuant to a loan agreement. The $455,000 loan was in furtherance of the business interests of Roundabout Plantation, LLC, which was operated by Fink, Hobbs, and Pitts for the purpose of developing a golf course and subdivision in Houston County, Alabama. In addition to Fink, Hobbs and Pitts were also named as defendants in the action on the loan.

The loan agreement, which was prepared by the borrowers, bore the caption, “State of Alabama, Houston County,” and contained a choice of law provision stating, “[t]he parties hereto agree that this agreement shall be construed and enforced according to the laws of the State of Alabama.” The agreement further provided that each of the members of Roundabout Plantation agreed and acknowledged they would be jointly and severally liable for the payment of all sums advanced and all sums which may become due under the terms and conditions of the agreement. A provision for the payment of attorney's fees, in the event the lender would have to employ the services of an attorney to collect any sums due under the agreement, was also included.

When Mr. and Mrs. Pitts were not repaid under the terms of the loan agreement, they initiated the underlying action in Houston County, Alabama. Despite signing the return of service, Fink did not file a response, and a judgment by default was entered against him for the sum of $795,940.78, plus interest and costs.

Thereafter, in an effort to enforce the Alabama default judgment in South Carolina, Mr. and Mrs. Pitts filed the judgment in Darlington County, South Carolina. Fink responded by filing a motion for relief from judgment pursuant to Rule 60(b)(4), SCRCP, and section 15-35-940 of the South Carolina Code (2005), asserting the Alabama judgment was void for lack of personal jurisdiction.

During the discovery that ensued, Mr. and Mrs. Pitts learned that Fink went to Alabama approximately a dozen times to monitor the progress of the golf course. Fink testified in his deposition that the loan proceeds were used for the construction and development of the golf course. Fink further testified that although he did not remember executing the loan agreement, his signature appeared on the document. He also conceded that the signature on the return of service to the summons and complaint appeared to be his own.

Following a hearing on the matter, the circuit court issued an order denying the motion for relief from judgment. The order further directed that the Alabama default judgment be entered in South Carolina in accordance with the notice of filing of foreign judgment by Mr. and Mrs. Pitts. Fink did not file a motion to alter or amend. This appeal followed.

STANDARD OF REVIEW

“An action to enforce a foreign judgment is an action at law.” Minorplanet Sys. USA Ltd. v. Am. Aire, Inc., 368 S.C. 146, 149, 628 S.E.2d 43, 44 (2006). In an action at law, tried by a judge without a jury, we accept the findings of the trial court if there is any evidence to support them. Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976).

LAW/ANALYSIS

This case challenges the domestication of an Alabama default judgment due to an alleged lack of personal jurisdiction; thus, we are not called upon to review the merits of the underlying claim. Pursuant to South Carolina's version of the Uniform Enforcement of Foreign Judgments Act (UEFJA), a judgment debtor is permitted to file a motion for relief from judgment or a notice of defense to a foreign judgment on any ground for which relief from a judgment of this state is allowed. S.C.Code Ann. § 15-35-940(A) (2005); cf. Law Firm of Paul Erickson, P.A., 383 S.C. 497, 505, 681 S.E.2d 575, 579-80 (2009) (striking a portion of section 15-35-940(b) as unconstitutional but severable from the remainder of the statute). Applying the appropriate constitutional and due process considerations, we affirm.

Under article IV, section 1 of the United States Constitution, “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. In accordance with this provision, every state is required to give to a judgment at least the res judicata effect which the judgment would be accorded in the state where rendered. Hospitality Mgmt. Assocs., Inc. v. Shell Oil Co., 356 S.C. 644, 653, 591 S.E.2d 611, 616 (2004) (quoting Durfee v. Duke, 375 U.S. 106, 109 (1963)) (internal quotations omitted). However, “[a] judgment of a court without jurisdiction of the person or of the subject matter is not entitled to recognition or enforcement in another state, or to the full faith and credit provided for in the federal Constitution.” Fin. Fed. Credit Inc. v. Brown, 384 S.C. 555, 562-63, 683 S.E.2d 486, 490 (2009) (quoting 50 C.J.S. Judgments § 986 (1997)). Where the court of the issuing state has fully and fairly litigated and finally decided the question of jurisdiction, further inquiry into the jurisdiction of the issuing court is precluded. Durfee, 375 U.S. at 111. Otherwise, “before a court is bound by the judgment rendered in another State, it may inquire into the jurisdictional basis of the foreign court's decree.” Underwriters Nat'l Assurance Co. v. N.C. Life & Accident & Health Ins. Guar. Ass'n, 455 U.S. 691, 705 (1982). Similarly, under the UEFJA, a judgment debtor may seek relief from a judgment due to a lack of personal jurisdiction. PYA/Monarch, Inc. v. Sowell's Meats & Servs., Inc., 327 S.C. 469, 473, 486 S.E.2d 766, 768 (Ct.App.1997).

Turning to the instant case, since the issue of personal jurisdiction in Alabama was neither fully litigated nor finally decided, we undertake the jurisdictional inquiry suggested in Underwriters Nat'l Assurance Co. See id. When determining the validity and effect of a foreign judgment based on lack of personal jurisdiction, courts look to the law of the state that rendered the judgment. Fin. Fed. Credit Inc., 384 S.C. at 566-67, 683 S.E.2d at 492. Thus, to ascertain whether the Alabama court properly exercised jurisdiction over Fink, we must consult Alabama law regarding personal jurisdiction.

Alabama's long-arm rule authorizes the assertion of personal jurisdiction to the limits of due process under the federal and state constitutions. Leithead v. Banyan Corp., 926 So.2d 1025, 1030 (Ala.2005) (noting Alabama's long-arm “statute,” which is actually Rule 4.2, Ala. R. Civ. P., extends to the limits of due process). Alabama courts have interpreted the due process rights guaranteed under the Alabama Constitution to be coextensive with the due process rights guaranteed by the United States Constitution. Elliott v. Van Kleef, 830 So.2d 726, 730 (Ala.2002). Courts employ a two-pronged test for due process. First, the defendant must have certain minimum contacts with the forum state. Id. at 730-31 (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Second, the exercise of jurisdiction over the defendant must not offend “traditional notions of fair play and substantial justice.” Int'l Shoe Co., 326 U.S. at 316. Under the minimum contacts prong, the defendant's contacts with the forum state must be such that the defendant had “fair warning” that its activities might subject it to personal jurisdiction in the state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). Further, “the minimum contacts test ․ is not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite affiliating circumstances are present.” Kulko v. Sup.Ct. of Cal., 436 U.S. 84, 92 (1978) (internal quotation omitted).

In addressing the level and character of a party's minimum contacts, the Supreme Court of Alabama has noted “[t]wo types of contacts can form a basis for personal jurisdiction: general contacts and specific contacts.” Ex Parte Phase III Constr., Inc., 723 So.2d 1263, 1266 (Ala.1998). “General contacts, which give rise to general personal jurisdiction, consist of the defendant's contacts with the forum state that are unrelated to the cause of action and that are both ‘continuous and systematic.’ “ Id. (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 9 (1984)). “Specific contacts, which give rise to specific jurisdiction, consist of the defendant's contacts with the forum state that are related to the cause of action.” Id. “Although the related contacts [for specific jurisdiction] need not be continuous and systematic, they must rise to such a level as to cause the defendant to anticipate being haled into court in the forum state.” Id.

Here, there is insufficient evidence indicating that Fink engaged in such “continuous and systematic” activities in Alabama so as to confer general jurisdiction. See Elliott, 830 So.2d at 730. Therefore, we consider Fink's contacts in the context of specific jurisdiction to determine whether his contacts were of such a nature that Fink could have reasonably anticipated defending an action in Alabama. For specific jurisdiction, there must exist a clear, firm nexus between the acts of the defendant and the allegations forming the basis of the complaint. Duke v. Young, 496 So.2d 37, 39 (Ala .1986). Furthermore, “[t]he substantial connection between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State.” Asahi Metal Indus. Co. v. Sup.Ct. of Cal., 480 U.S. 102, 112 (1987) (internal quotation omitted). “This purposeful availment requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts, or of the unilateral activity of another party or a third person.” Burger King, 471 U.S. at 475 (internal quotations omitted) (internal citations omitted).

Applying the appropriate considerations under Alabama's long-arm rule and federal due process, we find Fink's connections suffice to meet the requirements of specific personal jurisdiction in Alabama. Initially, we note the loan agreement involved a “subdivision and golf course in Houston County, Alabama,” and as evidenced by the agreement, the loan was made “for use in the construction and development of the subdivision and golf course” located in Alabama. The loan agreement provided that Fink was a one-third owner of the Alabama development and also indicated that Fink was jointly and severally liable for the payment of all sums advanced and due under the agreement.

Furthermore, the loan agreement bore the caption “Houston County, Alabama,” and contained a choice of law provision indicating the agreement was to be construed and enforced under the laws of the state of Alabama. In Corporate Waste Alternatives, Inc. v. McLane Cumberland, Inc., 896 So.2d 410 (Ala.2004), the Supreme Court of Alabama was presented with the issue of personal jurisdiction in a dispute concerning a contract that contained a choice of law provision designating the law of Alabama as the governing law. There, in contemplation of the ramifications of the choice of law provision, the court noted, “the provision in the contract stating that the contract would be governed by Alabama law should have further alerted [the nonresident defendant] that it might reasonably anticipate being haled into court in [Alabama].” Corporate Waste Alternatives, Inc., 896 So.2d at 414 (citing Elliott, 830 So.2d at 730) (internal quotations omitted). While we recognize that a choice of law provision standing alone would be insufficient to confer jurisdiction, it is certainly relevant under the facts of this case. See Burger King, 471 U.S. at 482 (stating that a choice of law provision is relevant but “such a provision standing alone would be insufficient to confer jurisdiction”).

With specific regard to minimum contacts, Fink's deposition testimony is also instructive. In particular, Fink's testimony confirmed that the loan proceeds were used for the construction and development of Roundabout Plantation. He further testified that he traveled to Alabama on at least twelve occasions over the course of two years to monitor the progress of the development. He also attended the grand opening of the development. While he stated he did not remember executing the loan agreement, he conceded it was his signature that appeared to be on the document. Fink's actions in traveling to Alabama for the purpose of monitoring the progress of the development demonstrate a nexus between his position as part owner of Roundabout Plantation and his responsibilities under the loan agreement. Moreover, Fink's actions in furtherance of his obligations as a part-owner of Roundabout Plantation were purposely directed toward the forum state so as to establish a substantial connection to Alabama. Most notably, these contacts were not the result of the unilateral activity of another person or a third party. Based on these actions, we conclude Fink's contacts with the state of Alabama reasonably suggest Fink should have anticipated being haled into court in Alabama.

Having determined the requisite minimum contacts have been established, we now turn to whether the assertion of personal jurisdiction comports with “traditional notions of fair play and substantial justice.” See Int'l Shoe, 326 U.S. at 316. In addressing this prong, we must consider the contacts in light of other factors, such as the burden on the defendant of litigating in the forum state, as well as the forum state's interest in adjudicating the dispute. Elliott, 830 So.2d at 731. Initially, we note Fink has not argued on appeal that litigation in Alabama would be unfair or burdensome; thus, consideration of this argument is not preserved for review. See Hiller Invs. Inc. v. Insultech Group, Inc., 957 So.2d 1111, 1119 (Ala.2006) (holding the court need not analyze whether subjecting the nonresident defendant to Alabama's jurisdiction would violate the traditional notions of fair play and substantial justice where the nonresident defendant has not argued those issues on appeal).

Nonetheless, were we to reach this issue, we note that Fink submitted to the jurisdiction of Alabama in two other foreclosure suits pertaining to Roundabout Plantation. Specifically, Fink was involved in litigation against Frizzell Construction Company concerning breach of a promissory note; he also was involved in a similar action by Peoples Community Bank in 2002. Both actions were maintained in Alabama, and Fink did not plead lack of personal jurisdiction in either case. Notwithstanding, Fink's numerous contacts with Alabama relative to Roundabout Plantation in conjunction with his visits to monitor the progress of the development indicate the burden of defending an action in Alabama does not rise to the level of being inconsistent with traditional notions of fair play and substantial justice. See also World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 293 (noting that “modern transportation and communication have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity.” (quoting McGee v. Int'l Life Ins. Co., 355 U.S. 220, 222-23 (1957))).

CONCLUSION

In sum, we find, for purposes of personal jurisdiction, Fink maintained sufficient minimum contacts to satisfy Alabama's long-arm rule and federal due process. Consequently, the enforcement of the Alabama default judgment against Fink in South Carolina was proper.²

Based upon the foregoing, the order of the circuit court is AFFIRMED.

FOOTNOTES

1.  We decide this case without oral argument pursuant to Rule 215, SCACR.

2.  Fink also appeals the amount of attorney's fees awarded in the judgment. Although raised at the hearing, we find this issue is not preserved as it was neither ruled upon by the circuit court nor raised by way of a post-trial motion to alter or amend. See Elam v. S.C. Dep't. of Transp., 361 S.C. 9, 24, 602 S.E.2d 772, 780 (2004) (“A party must file [a Rule 59(e) ] motion when an issue or argument has been raised, but not ruled on, in order to preserve it for appellate review.”) (emphasis in original). Even if we were to find the amount of fees awarded troubling, the matter is not properly before us for review.

PIEPER, J.

FEW, C.J., and THOMAS, J., concur.