Wells Fargo Bank National Association v. Mark A. Searcy ( 2024 )

10/18/2024
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
September 18, 2024 Session
WELLS FARGO BANK NATIONAL ASSOCIATION v. MARK A.
SEARCY
Appeal from the Chancery Court for Sevier County
No. 23-3-058 James H. Ripley, Chancellor
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No. E2024-00238-COA-R3-CV
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A bank obtained a money judgment in South Carolina in 2010. The judgment debtor
moved to North Carolina, and the bank domesticated the South Carolina judgment in North
Carolina, a state that treats enrolled judgments as new North Carolina judgments. The
judgment debtor moved to Tennessee, and in 2023, the bank filed a petition to enroll the
North Carolina judgment in Tennessee. The judgment debtor objected, arguing that the
original South Carolina judgment had expired. The bank responded that it was not seeking
to enroll the South Carolina judgment, but instead the North Carolina judgment. The trial
court enrolled the North Carolina judgment. The judgment debtor appeals. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
JEFFREY USMAN, J., delivered the opinion of the court, in which JOHN W. MCCLARTY
and KRISTI M. DAVIS, JJ., joined.
E. Richards Brabham, III, and Jeffrey M. Cranford, Knoxville, Tennessee, for the
appellant, Mark A. Searcy.
Erno D. Lindner, Chattanooga, Tennessee, for the appellee, Wells Fargo Bank National
Association.
OPINION
I.
In 2010, Wells Fargo1 obtained a monetary judgment against Mark Searcy in South
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The original judgment was obtained by Wachovia Bank National Association, which later merged
with Wells Fargo. The parties do not dispute that Wells Fargo is the proper party.
Carolina. Mr. Searcy apparently, subsequently, moved to North Carolina. Wells Fargo
successfully domesticated its South Carolina judgment in North Carolina. On November
10, 2014, a North Carolina court granted a motion to enforce the judgment. At some later
point, Mr. Searcy apparently moved to Tennessee.
On March 10, 2023, Wells Fargo filed an action to enroll the North Carolina
judgment in Tennessee. Mr. Searcy objected to the enrollment in Tennessee, filing a
motion to dismiss. Mr. Searcy argued that because the original judgment, the South
Carolina judgment, was only enforceable for 10 years under South Carolina law, Wells
Fargo should not be permitted to enroll the judgment in Tennessee since that time had
passed. In response, Wells Fargo argued that it was not attempting to enroll the South
Carolina judgment; rather, Wells Fargo indicated that it was seeking to enroll the North
Carolina judgment. Further, Wells Fargo explained that North Carolina treats a
domesticated judgment as a new judgment with its own new 10-year enforcement period,
making the enrollment action timely. Mr. Searcy did not dispute Wells Fargo’s
characterization of North Carolina law but insisted that North Carolina law was irrelevant
because the original judgment was issued in South Carolina. After a hearing, the trial court
denied Mr. Searcy’s motion to dismiss and enrolled the North Carolina judgment in
Tennessee. Mr. Searcy appealed, arguing that the trial court erred in denying his motion
to dismiss and enrolling the North Carolina judgment.
II.
The question of whether to grant full faith and credit to a foreign judgment is a
question of law that we review de novo. Cap. Partners Network OT, Inc. v. TNG
Contractors, LLC, 622 S.W.3d 227, 231 (Tenn. Ct. App. 2020) (citing Guseinov v. Synergy
Ventures, Inc., 467 S.W.3d 920, 924 (Tenn. Ct. App. 2014)). Similarly, we review a trial
court’s legal conclusions related to its decision to grant or deny a motion to dismiss de
novo. Webb v. Nashville Area Habitat for Human., Inc., 346 S.W.3d 422, 426 (Tenn.
2011).
III.
Section 1 of Article IV of the United States 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. And the Congress may by general laws prescribe the Manner in which
such Acts, Records, and Proceedings shall be proved, and the Effect thereof.” As
interpreted by the United States Supreme Court, how demanding the requirements of the
Full Faith and Credit Clause are vary between judgments (judicial proceedings) and laws
(public acts). See, e.g., Baker by Thomas v. Gen. Motors Corp., 522 U.S. 222, 232 (1998)
(“Our precedent differentiates the credit owed to laws (legislative measures and common
law) and to judgments.”); Emily J. Sack, Domestic Violence Across State Lines: The Full
Faith and Credit Clause, Congressional Power, and Interstate Enforcement of Protection
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Orders, 98 Nw. U. L. Rev. 827, 864 (2004) (noting that “the [United States] Supreme
Court has consistently treated ‘public acts’ or laws differently than ‘judicial proceedings’
or judgments in its full faith and credit jurisprudence”); see also Franchise Tax Bd. of Cal.
v. Hyatt, 538 U.S. 488, 494 (2003) (“Whereas the full faith and credit command ‘is
exacting’ with respect to ‘[a] final judgment . . .,’’ it is less demanding with respect to
choice of laws.” (quoting Baker v. Gen. Motors Corp., 522 U.S. 222, 233 (1998))), aff’d
on other grounds, Franchise Tax Bd. of Cal. v. Hyatt, 578 U.S. 171 (2016), aff’d on other
grounds, Franchise Tax Bd. of Cal. v. Hyatt, 587 U.S. 230 (2019). .
Addressing the Full Faith and Credit Clause as to its more stringent application for
judgments, the United States Supreme Court observed the following:
With respect to judgments, “the full faith and credit obligation is
exacting.” “A final judgment in one State, if rendered by a court with
adjudicatory authority over the subject matter and persons governed by the
judgment, qualifies for recognition throughout the land.” A State may not
disregard the judgment of a sister State because it disagrees with the
reasoning underlying the judgment or deems it to be wrong on the merits.
On the contrary, “the full faith and credit clause of the Constitution precludes
any inquiry into the merits of the cause of action, the logic or consistency of
the decision, or the validity of the legal principles on which the judgment is
based.”
V.L. v. E.L., 577 U.S. 404, 407 (2016) (internal citations omitted) (first quoting Baker, 522
U.S. at 233, then quoting Milliken v. Meyer, 311 U.S. 457, 462 (1940)).) “As one means
of fulfilling this obligation, Tennessee enacted the Uniform Enforcement of Foreign
Judgments Act (“UEFJA”). Tennessee Code Annotated sections 26-6-101 to -109.” New
v. Dumitrache, 604 S.W.3d 1, 18 (Tenn. 2020).
In their briefing, both parties advance the law of another jurisdiction as dispositive
in determining whether the chancery court properly enrolled the judgment. Mr. Searcy
argues for South Carolina law while Wells Fargo argues for North Carolina law.
At the epicenter of Mr. Searcy’s argument is a South Carolina Statute, which states:
Executions may issue upon final judgments or decrees at any time within ten
years from the date of the original entry thereof and shall have active energy
during such period, without any renewal or renewals thereof, and this
whether any return may or may not have been made during such period on
such executions.
S.C. Code Ann. § 15-39-30. The South Carolina Supreme Court interpreted this language
to be restrictive, explaining that the legislature intended for the passing of 10 years, without
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any ability to extend, to “completely destroy any right of action” upon such judgment.
Gordon v. Lancaster, 823 S.E.2d 173, 176 (S.C. 2018) (citing Hardee v. Lynch, 46 S.E.2d
179, 183 (S.C. 1948)). In South Carolina, a judgment lien becomes “utterly
extinguish[ed]” after 10 years, even if a suit to enforce such judgment is brought within 10
years. Id. (quoting Garrison v. Owens, 189 S.E.2d 31, 33 (S.C. 1972). Under Mr. Searcy’s
understanding, because the foreign judgment that Wells Fargo sought to enroll derived
originally from South Carolina, and not North Carolina, the right to enforce the original
judgment expired in 2020 and could not be renewed. Mr. Searcy contends that allowing
North Carolina to extend the enforcement window for the South Carolina judgment was
renewing the judgment beyond that which South Carolina would have originally allowed,
thus giving the judgment greater effect than it would have had in South Carolina.
Therefore, he argues that it was an error for the Sevier County Chancery Court to enroll
the judgment.
Wells Fargo responds noting that it did not file a petition to enroll the South Carolina
judgment, but rather, the North Carolina judgment. Citing Nielson v. Schmoke, 863 S.E.2d
652 (N.C. Ct. App. 2021), among other authorities, Wells Fargo notes that under North
Carolina law it is clear that when a foreign judgment is properly enrolled under North
Carolina’s version of the Uniform Enforcement of Foreign Judgments Act (UEFJA) it
becomes a “new North Carolina judgment.” See Nielson, 863 S.E.2d at 659. Under North
Carolina law, the new judgment has a new 10-year enforcement period provided by North
Carolina General Statute sections 1-234 and 1-306. Id. Under Wells Fargo’s
understanding, it sought to enroll the new North Carolina judgment, and, accordingly, the
South Carolina limitations are immaterial.
Mr. Searcy does not dispute Wells Fargo’s understanding of North Carolina law,
and Wells Fargo does not dispute Mr. Searcy’s understanding of South Carolina law. Both
parties insist that the law of the jurisdiction that they each advance is determinative,
respectively the original judgment jurisdiction (South Carolina) for Mr. Searcy and the new
judgment jurisdiction (North Carolina) for Wells Fargo. Both in their briefs and during
oral argument, the parties’ argumentation is decidedly lean on its exploration of Tennessee
law. In response to questioning at oral argument, both parties candidly agreed that this is
as a result of a dearth of Tennessee law addressing this issue.2
2
Judge’s Question: Counsel, there is a very interesting discussion in the briefing in
this case. South Carolina law provides this. North Carolina provides this. There seems to
be a little bit of a gap in terms of how Tennessee law addresses these subject matters. Is
Tennessee law essentially silent on these issues? Are we in entirely new territory here with
this case?
Counsel for Mr. Searcy: I believe that it is. I have not found any cases in
Tennessee that address this specific issue. I mean obviously there are choice of law issues
in other matters, but in this case, I have not found a case that determines which law. . . .
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The issue set forth in Mr. Searcy’s statement of the issues is as follows: “The Trial
Court’s Judgment Denying Defendant/Appellant Mark Searcy’s Objection and Motion to
Dismiss the Filing of the Plaintiff/Appellee’s Foreign Judgment and the Trial Court’s
Enrollment of Said Judgment was not Supported by Material Evidence and was Contrary
to the Applicable Law.” While the parties’ briefing on appeal repeatedly addresses
enforcement, the actual argumentation is more precisely ultimately aimed at the question
of enrollment rather than stating a post-enrollment challenge to the enforcement of an
enrolled judgment. The chancery court’s order provided for enrollment of the order not its
enforcement, and it is that order that is being appealed. Therefore, the scope of our review
in this appeal is quite narrow. We have not been tasked with addressing whether Wells
Fargo can enforce its judgment against Mr. Searcy post-enrollment, and we do not opine
herein on that question. The issue before this court is limited to whether the judgment was
properly enrolled.
Though closely related, enrollment and enforcement of a foreign judgment are not
synonymous. Regarding foreign judgments, the Tennessee Supreme Court has indicated
that there are “two distinct steps: (1) enrollment and (2) enforcement.” New, 604 S.W.3d
at 18; see also Cadlerock, LLC v. Weber, No. E2010-02137-COA-R3-CV, 2011 WL
2569751, at *3 (Tenn. Ct. App. June 30, 2011) (crediting a party’s view that “domesticating
a foreign judgment is a two-step process that includes enrollment and enforcement” based
on Baumann v. Williams, No. M2006-000962-COA-R3-CV, 2007 WL 3375365, at *2
(Tenn. Ct. App. Nov. 13, 2007)); Restatement (Second) of Conflict of Laws, ch. 5, topic 2,
intro. cmt. (Am. Law. Inst. 1971) (“A foreign judgment is enforced when, in addition to
being recognized, a party is given the affirmative relief to which the judgment entitles him.
Recognition of a judgment is a condition precedent to its enforcement.”). Addressing the
process, this court has observed that “[t]he two-step process consists of enrollment first
and then enforcement.” Guseinov, 467 S.W.3d at 925–26. Writing for the court in
Baumann v. Williams, then-Judge Koch explained the connection between enrollment and
enforcement as follows:
While the Uniform Enforcement of Foreign Judgments Act creates a
Judge’s Question: I want to ask you the same question I asked opposing counsel
which is again I thought the briefing was very interesting in terms of South Carolina law,
North Carolina law, but again sort of a paucity of how Tennessee has viewed these type of
questions. Do you agree with opposing counsel that there is largely silence in Tennessee
in terms of how Tennessee has tackled -- not how North Carolina and I understand the fight
South Carolina should apply, North Carolina should apply, not how Tennessee -- but in
terms of how Tennessee law has attacked choice of law questions. Is it fair to say it that at
the very least it is thin?
Counsel for Wells Fargo: It is very thin.
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registration process that leads to enforcement, thereby tightly binding
registration and enforcement, it does not eliminate the two-step nature of the
process. In this vein, Tennessee courts have repeatedly recognized that
enrolled or registered judgments remain subject to attack. This court has
recently observed that “[o]nce a foreign judgment has been enrolled, it has
the same effect and is subject to the same procedures, defenses, and
proceedings for reopening, vacating, or staying as a judgment of a court of
record in Tennessee and may be enforced or satisfied in a like manner.” First
State Bank of Holly Springs, Miss. v. Wyssbrod, 124 S.W.3d 566, 573 (Tenn.
Ct. App. 2003).
Baumann, 2007 WL 3375365, at *2 (footnotes omitted). Given this framework, “[a]
decision to enroll a foreign judgment does not equate into a determination that the judgment
is enforceable.” Cadlerock, LLC, 2011 WL 2569751, at *3; Baumann, 2007 WL 3375365,
at *2 (“Permitting the enrollment of . . . [a] judgment is not a determination that it is
enforceable.”).
The Tennessee Supreme Court has observed that “[t]he requirements for enrollment
are straightforward.” New, 604 S.W.3d at 18. The state high court explained the process
as follows:
Enrollment requires filing “[a] copy of any foreign judgment authenticated in
accordance with the acts of [C]ongress or the statutes of this state . . . in the
office of the clerk of any circuit or chancery court of this state.” [Tenn. Code
Ann.] § 26-6-104(a). “The clerk shall treat the foreign judgment in the same
manner as a judgment of a court of record of this state.” Id. § 26-6-104(b).
“A judgment so filed has the same effect and is subject to the same procedures,
defenses and proceedings for reopening, vacating, or staying as a judgment of
a court of record of this state and may be enforced or satisfied in like manner.”
Id. § 26-6-104(c).
New, 604 S.W.3d at 19.
Tennessee courts have recognized limitations on enrollment of judgments from
sister states based upon a lack of personal or subject matter jurisdiction and based upon
fraud.3 Capital Partners Network OT, Inc., 622 S.W.3d at 232; Guseinov, 467 S.W.3d at
3
Tennessee courts have also noted public policy as a limitation on full faith and credit for
judgments from sister state courts. Addressing the Full Faith and Credit Clause, the United States Supreme
Court stated in Baker by Thomas v. General Motors Corporation that “[a] court may be guided by the forum
State’s ‘public policy’ in determining the law applicable to a controversy. But our decisions support no
roving ‘public policy exception’ to the full faith and credit due judgments.” Baker by Thomas, 522 U.S. at
233. State courts have noted this decision’s impact on public policy as an exception to affording full faith
and credit to a judgment of a sister state court. See, e.g., Ledoux-Nottingham v. Downs, 210 So. 3d 1217,
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925; Trustmark Nat. Bank v. Miller, 209 S.W.3d 54, 57 (Tenn. Ct. App. 2006). An
enrollment of a judgment reflects that the judgment has been “properly authenticated as a
valid judgment from a sister state.” Cadlerock, LLC, 2012 WL 6101425, at *3 (“Once
enrolled, a foreign judgment remains ‘subject to attack’ because enrollment of a judgment
merely ‘reflects a conclusion that the document has been properly authenticated as a valid
judgment from a sister state.’”); Baumann, 2007 WL 3375365, at *2 (“Permitting the
enrollment of the . . . judgment is not a determination that it is enforceable . . . . Rather, the
decision to allow enrollment reflects a conclusion that the document has been properly
authenticated as a valid judgment from a sister state.”); see also Guseinov, 467 S.W.3d at
926–27. “A party who seeks to prevent the enrollment of a foreign judgment in Tennessee
carries a ‘stern and heavy’ burden.” Guseinov, 467 S.W.3d at 925; see also, e.g., Mr.
Appliance, LLC v. Appliance Servs. of Tennessee, LLC, No. M2020-00456-COA-R3-CV,
2020 WL 7022748, at *3 (Tenn. Ct. App. Nov. 30, 2020).
From the record before us, there is no showing that the North Carolina state courts
in 2014 lacked personal jurisdiction over Mr. Searcy or subject matter jurisdiction related
to domestication of the South Carolina judgment. There is also no assertion of fraud.
Regarding a new time frame resulting from the enrollment of a foreign judgment, while
there is some inconsistency among state court decisions, “[i]t appears . . . that the
substantial weight of authority holds that the filing of a foreign judgment triggers a new
limitations period.” Czajka v. Holt Graphic Arts, Inc., 310 A.3d 1051, 1055 (D.C. 2024);
c.f. Oceanics Schs., Inc. v. Barbour, 112 S.W.3d 135, 142 (Tenn. Ct. App. 2003) (observing
in a case concerning an enrolled foreign judgment, “[i]f the action brought by the plaintiff
in the instant case is to be treated as an action on that judgment, then the plaintiff would
have had ten years from the date of entry of the domesticated judgment to bring such an
action”). We need not, however, weigh in on this question. Mr. Searcy, who bears a stern
and heavy burden in seeking to prevent enrollment, does not dispute that under North
Carolina law the 2014 order of the North Carolina state court clearly constituted a new
judgment with its own new ten-year period for enforcement. His argument is essentially
1222 (Fla. 2017) (stating that “the United States Supreme Court has made it clear that there is no public
policy exception to the full faith and credit due final judgments of a sister state”); Amerireach.com, LLC v.
Walker, 719 S.E.2d 489, 492 (Ga. 2011) (addressing a challenge to a Texas judgment in Georgia courts by
observing “there is no public policy exception to the Full Faith and Credit Clause”); In re Senior Health
Ins. Co. of Pa., 310 A.3d 26, 40–41 (Pa. 2024) (concluding that “while the Full Faith and Credit Clause
forbids a court from applying public policy considerations of its own state to avoid recognizing the
judgment of a court of a sister state, a court is not barred by this constitutional provision from following the
public policy embodied in the statutes of its own state when determining which law to apply in adjudicating
a particular controversy”). This court, noting the Baker by Thomas decision and the existence of post-Baker
by Thomas decisions of this court referencing a public policy exception, conducted a review of Tennessee
case law which “suggests an accord, in practice, with the Baker distinction between full faith and credit
with respect to judgments as opposed to laws.” Cap. Partners Network OT, Inc., 622 S.W.3d at 235. Here,
Mr. Searcy did not argue that a public policy exception should apply as a bar to the enrollment of the North
Carolina judgment.
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that this was error. If rendering a judgment by a North Carolina court in domesticating an
underlying South Carolina judgment in such a manner as to create a new judgment with a
new time period was error, that was error that needed to be addressed in the North Carolina
courts in challenging the domestication of the South Carolina judgment.
The Sevier County Chancery Court was presented with the judgment of a North
Carolina court that under North Carolina law is a new order with a new 10-year
enforcement period. The Sevier County Chancery Court properly gave that judgment full
faith and credit allowing for its enrollment. We note that our decision does not prevent
Mr. Searcy from raising any proper challenge to the enforcement of this enrolled judgment.
IV.
For these reasons, we affirm the judgment of the Chancery Court for Sevier County.
Costs of the appeal are taxed to the appellant, Mark A. Searcy, for which execution may
issue if necessary.
s/ Jeffrey Usman
JEFFREY USMAN, JUDGE
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