Roger Groman v. Nolan's Auction Service LLC

STATE OF MICHIGAN
COURT OF APPEALS
ROGER GROMAN, UNPUBLISHED
May 8, 2018
Plaintiff-Appellant,
v No. 334895
Lapeer Circuit Court
NOLAN’S AUCTION SERVICE, LLC, LC No. 15-048562-AV
Defendant-Appellee.
Before: BORRELLO, P.J., and SAWYER and JANSEN, JJ.
PER CURIAM.
Plaintiff, Roger Groman, appeals by leave granted the circuit court’s opinion and order
vacating the district court’s order denying motion for summary disposition made by defendant,
Nolan’s Auction Service, LLC, pursuant to MCR 2.116(C)(1) (lack of jurisdiction), to dismiss
plaintiff’s entry of a commonwealth of Kentucky (“Kentucky”) judgment, made by defendant,
Nolan’s Auction Service, and the district court’s subsequent order following a remand. Groman
v Nolan’s Auction Service, LLC, unpublished order of the Court of Appeals, entered February 21,
2017 (Docket No. 334895).
This case arises from the sale of a backhoe by a Michigan seller, defendant, and the
purchase of that backhoe by a resident of Kentucky, plaintiff, through an online sales listing.
After plaintiff was dissatisfied with the condition of the backhoe, he contacted defendant’s sales
manager, who apologized for the inconvenience and reminded plaintiff that the backhoe was sold
without any warranty. Ultimately, plaintiff filed a complaint for breach of warranty in Taylor
Circuit Court in Kentucky. Joe Nolan, a member of defendant LLC, filed an answer and motion
to dismiss for lack of jurisdiction in Kentucky, however, his filings were “pro se” on defendant’s
behalf. Defendant never retained a Kentucky attorney during the proceedings in the trial court.
Plaintiff obtained a judgment in his favor after defendant failed to respond to plaintiff’s
motion for summary judgment or appear at that motion hearing. After obtaining the judgment,
plaintiff filed notice of entry of the judgment in a Michigan district court, and defendant, through
a Michigan attorney, moved to dismiss the judgment. Following an appeal to the circuit court
after the district court denied defendant’s motion, the circuit court vacated the district court’s
order on the basis that defendant’s “pro se” filings in Kentucky were a nullity under Kentucky
law, and therefore, defendant was free to collaterally attack the jurisdiction of the trial court
because it never appeared in the trial court.
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Plaintiff contends that that the circuit court erred when it vacated the district court’s order
denying defendant’s motion to dismiss the entry of the foreign judgment because the circuit
court’s ruling that defendant’s “pro se” filings were a nullity contravenes Michigan policy and
jurisprudence as that ruling rendered defendant the beneficiary of an error of its own creation.
We disagree.
This Court reviews a trial court’s decision on a motion for summary disposition de novo.
Zaher v Miotke, 300 Mich. App. 132, 139; 832 NW2d 266 (2013). “In reviewing a motion for
summary disposition brought under MCR 2.116(C)(1), we consider the documentary evidence
submitted by the parties in a light most favorable to the nonmoving party.” Oberlies v
Searchmont Resort, Inc, 246 Mich. App. 424, 427; 633 NW2d 408 (2001) (citations omitted).
“Questions of statutory interpretation are reviewed de novo. Constitutional questions are
also reviewed de novo.” Blackburne & Brown Mtg Co v Ziomek, 264 Mich. App. 615, 620; 692
NW2d 388 (2004), citing Wayne Co v Hathcock, 471 Mich. 445, 455; 684 NW2d 765 (2004).
“Jurisdictional rulings are reviewed de novo.” Vargas v Hong Jin Crown Corp, 247 Mich. App.
278, 282; 636 NW2d 291 (2001), citing Jeffrey v Rapid American Corp, 448 Mich. 178, 184; 529
NW2d 644 (1995). “A plaintiff bears the burden of establishing jurisdiction over a
defendant; however, the plaintiff need only make a prima facie showing of jurisdiction to defeat
a motion for summary disposition.” Oberlies, 246 Mich. App. at 427, citing Jeffrey, 448 Mich. at
184.
The Uniform Enforcement of Foreign Judgment Acts (UEFJA), MCL 691.1171 et seq.,
pertains to the enforcement of foreign judgments. “A ‘foreign judgment’ is ‘any judgment . . . of
a court of the United States or of any other court that is entitled to full faith and credit in this
state.’ ” Blackburne, 264 Mich. App. at 620, quoting MCL 691.1172. The UEFJA provides, in
relevant part:
The clerk shall treat the foreign judgment in the same manner as a judgment of
the circuit court, the district court, or a municipal court of this state. A judgment
filed under this act has the same effect and is subject to the same procedures,
defenses, and proceedings for reopening, vacating, or staying as a judgment of the
circuit court, the district court, or a municipal court of this state and may be
enforced or satisfied in like manner. [MCL 691.1173.]
The Full Faith and Credit Clause of the United States Constitution provides: “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.” US Const, art IV, § 1.
“The purpose of the Full Faith and Credit Clause is to prevent the litigation of issues in one state
that have already been decided in another.” Hare v Starr Commonwealth Corp, 291 Mich. App.
206, 216; 813 NW2d 752 (2011) (quotation marks and citation omitted). “The Full Faith and
Credit Clause requires that a foreign judgment be given the same effect that it has in the state of
its rendition.” Blackburne, 264 Mich. App. at 620 (quotation marks and citation omitted).
“Although the Full Faith and Credit Clause requires recognition of the judgments of sister
states, ‘collateral attack may be made in the courts of this [s]tate by showing that the judgment
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sought to be enforced was void for want of jurisdiction in the court which issued it.’ ” Id.,
quoting Delph v Smith, 354 Mich. 12, 16; 91 NW2d 854 (1958) (citation omitted) (alteration in
original). Or in other words, as explained by this Court:
The United States Constitution does not compel Michigan courts to give a foreign
judgment full faith and credit when the jurisdiction of the foreign court has been
successfully attacked. Thus, to be enforceable under the UEFJA, the foreign
judgment must have been entered by a court with jurisdiction over the parties and
the subject matter. [Blackburne, 264 Mich. App. at 621 (citation omitted).]
The United States Supreme Court “has long recognized that ‘[t]he principles of res
judicata apply to questions of jurisdiction as well as to other issues.’ ” Underwriters Nat’l
Assurance Co v North Carolina Life & Accident & Health Ins Guaranty Ass’n, 455 U.S. 691, 706;
102 S. Ct. 1357; 71 L. Ed. 2d 558 (1982), quoting American Surety Co v Baldwin, 287 U.S. 156,
166; 53 S. Ct. 98; 77 L. Ed. 231 (1932) (alteration in original). Generally, “a state court’s final
judgment determining its own jurisdiction ordinarily qualifies for full faith and credit, so long as
the jurisdictional issue was fully and fairly litigated in the court that rendered the judgment.”
Marshall v Marshall, 547 U.S. 293, 314; 126 S. Ct. 1735; 164 L. Ed. 2d 480 (2006), citing Durfee v
Duke, 375 U.S. 106, 111, 115; 84 S. Ct. 242; 11 L. Ed. 2d 186 (1963).
A court may inquire as to the jurisdiction of the court that issued a judgment, but “[t]hat
jurisdictional inquiry, however, is a limited one.” VL v EL, ___ US ___, ___; 136 S. Ct. 1017,
1020; 194 L. Ed. 2d 92 (2016). “ ‘[I]f the judgment on its face appears to be a record of a court of
general jurisdiction, such jurisdiction over the cause and the parties is to be presumed unless
disproved by extrinsic evidence, or by the record itself.” Id. at ___; 136 S. Ct. at 1020; quoting
Milliken v Meyer, 311 U.S. 457, 462; 61 S. Ct. 339; 85 L. Ed. 278 (1940) (quotation marks and
citation omitted; alteration in original). This Court applies the applicable jurisdictional law of
the state that entered the judgment when conducting this jurisdictional inquiry. See Poindexter v
Poindexter, 234 Mich. App. 316, 319; 594 NW2d 76 (1999) (applying Mississippi law to
determine whether Mississippi court had jurisdiction over the defendant to enter a child support
judgment against him).
It is undisputed that defendant received notice of plaintiff’s complaint, that its “Member”
Joe Nolan subsequently filed a “pro se” motion on defendant’s behalf seeking to dismiss
plaintiff’s complaint due to a lack of personal jurisdiction in the trial court, and that, in
defendant’s “pro se” answer to plaintiff’s initial complaint, defendant raised the trial court’s lack
of jurisdiction as an affirmative defense. However, a hearing on defendant’s motion to dismiss
was not held, presumably because defendant failed to comply with Ky R Civ P 6.04(1):
defendant did not include a notice for a hearing with its motion. Similarly, defendant’s “pro se”
filings should have been rejected because, under Kentucky law, a corporate officer or managerial
employee of a business entity may only appear on behalf of a business entity in small claims
court. Pizza Pub of Burnside v Com, Dept of ABC, 416 S.W.3d 780, 787 (Ky App, 2013)
(citations omitted). No party contends that plaintiff’s complaint was filed in a small claims
court; in fact, the trial court’s register of actions demonstrates that plaintiff filed his complaint in
a circuit court.
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Regardless, an attorney never filed an appearance on defendant’s behalf, and defendant
subsequently submitted a “pro se” answer to plaintiff’s amended complaint and “pro se”
responses to plaintiff’s request for admissions. Ultimately, plaintiff filed a motion for summary
judgment, and after a motion hearing where no individual appeared on defendant’s behalf, the
trial court entered a judgment in plaintiff’s favor. While plaintiff has produced an affidavit from
one of its trial attorneys that a Kentucky attorney appeared on defendant’s behalf during the
hearing on defendant’s motion for summary judgment, the transcript of the motion hearing, and
the register of actions, which does not indicate [that] any attorney filed an appearance on
defendant’s behalf, rebut that claim. And while defendant’s responses to plaintiff’s request for
admissions stated that defendant’s responses were made through its appellate counsel, there is
nothing in the record indicating that defendant’s appellate counsel filed an appearance in the
proceeding, was licensed to practice law in Kentucky, or moved to practice pro hac vice in
Kentucky.
After plaintiff entered the Kentucky judgment in the district court, defendant moved to
dismiss the judgment based on the trial court’s lack of personal jurisdiction, but the district court
ultimately denied defendant’s motion because it determined that the issue of jurisdiction had
been fully and fairly litigated in the trial court. After a circuitous appeal to the circuit court,
which included an interstitial remand to the district court wherein the district court reaffirmed its
initial ruling, the circuit court vacated the orders of the district court because the circuit court
ruled that defendant’s “pro se” filings in Kentucky were a nullity, and therefore, the issue of
jurisdiction was never decided by the trial court. Specifically, the circuit court relied on Smith v
Bear, Inc, 419 S.W.3d 49, 54-55 (Ky App, 2013), where the Court of Appeals of Kentucky
ordered the reversal of a trial court’s grant of summary judgment against a corporate defendant
because it had improperly been represented “pro se” in the lower court by its nonattorney
shareholder and codefendant. Moreover, it is notable that neither party addressed Smith in their
circuit court appellate briefs.
Under Kentucky law, “[j]urisdiction over the person of a defendant can be acquired by
the service of process upon him or by his voluntary appearance and submission. As a general
rule, any person sui juris may enter an appearance and confer jurisdiction over his person upon
the court.” Hudson v Manning, 250 Ky 760; 63 S.W.2d 943, 945 (1933) (citations omitted).
However, a defendant does not make a general appearance or otherwise consent to jurisdiction
when he or she raises the lack of personal jurisdiction of the trial court in his or her answer to a
complaint and then reasserts that claim in subsequent motions. Cornett v Smith, 446 S.W.2d 641,
642 (Ky 1969).
In Smith, the Court of Appeals of Kentucky reversed the trial court’s grant of summary
judgment against the corporate defendant that had been represented by a nonattorney
codefendant because a corporation is an “artificial person” that may not “be represented in court
through a nonprofessional officer or employee.” Smith, 419 S.W.3d at 54 (citation omitted).
Additionally, the Court of Appeals of Kentucky also ordered a remand to the trial court, and it
explained that, “if upon remand” the defendant “again fail[ed] to obtain legal counsel to appear,
answer, and defend the claim filed against it by [the plaintiff], the derelict and defunct
corporation would be subject to default proceedings.” Id. at 55. Therefore, the Court of Appeals
of Kentucky did not merely order a remand on the issue of summary judgment, but rather, it
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apparently wiped away all of the trial court proceedings involving the defendant hitherto, going
so far as to permit the defendant file a new answer to the plaintiff’s complaint.
Therefore, under Kentucky law, defendant, an “artificial person,” may not be represented
in court through a nonprofessional officer or employee. See Smith, 419 S.W.3d at 54 (citation
omitted). Accordingly, defendant never truly “appeared” in Kentucky to raise any issue or
submit any filings. As the issue of jurisdiction was never raised, nor fully and fairly litigated in
Kentucky, defendant is free to raise a collateral attack on the judgment on jurisdictional grounds.
See Marshall, 547 U.S. at 314.
Nonetheless, plaintiff contends that the circuit court’s ruling that defendant’s “pro se”
filings were a nullity contravenes Michigan policy and jurisprudence because that ruling
rendered defendant the beneficiary of an error that it created. Plaintiff’s contention has no merit.
Generally, “A party is not allowed to assign as error on appeal something which his or
her own counsel deemed proper at trial since to do so would permit the party to harbor error as
an appellate parachute.” Marshall Lasser, PC v George, 252 Mich. App. 104, 109; 651 NW2d
158 (2002) (quotation marks and citation omitted). “A party cannot escape the requirements of
full faith and credit and res judicata by asserting its own failure to raise matters clearly within the
scope of a prior proceeding.” Underwriters, 455 U.S. at 710 (citation omitted).
Plaintiff’s contention suffers two fatal defects. First, the relevant inquiry here is whether,
under Kentucky law, the issue of jurisdiction had either been waived or fully and fairly litigated.
And as discussed above, under Smith, defendant failed to appear entirely in the trial court by way
of its improper “pro se” representation. Second, plaintiff appears to conflate the impact of the
actions of Nolan, a natural person, with defendant, an artificial person that is a creature of statute.
While Nolan attempted to act on defendant’s behalf in Kentucky, Nolan had no power to
undertake such actions in a legal proceeding for defendant under Kentucky law.
Regardless of the foregoing, we conclude that the record before us is insufficient to
address defendant’s contention that the trial court lacked jurisdiction over it necessarily on the
merits. Rather, the lack of res judicata with regard to a jurisdictional determination has merely
opened the door for a jurisdictional inquiry before plaintiff’s judgment is deemed enforceable.
At this point in time, no court has determined whether the trial court had personal jurisdiction
over defendant. Therefore, we agree with the circuit court that remand to the district court is
necessary for the purpose of conducting a full jurisdictional inquiry.
Affirmed, and remanded for entry of an order granting defendant’s motion to dismiss.
We do not retain jurisdiction.
/s/ Stephen L. Borrello
/s/ David H. Sawyer
/s/ Kathleen Jansen
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