Remington Investments, Inc. v. Ronald S. Obenauf and Ardeth Obenauf

REMINGTON INVESTMENTS, )
INC., )
)
Plaintiff/Appellee, )
)
Appeal No. FILED
01-A-01-9809-CH-00512
v. ) April 7, 1999
) Rutherford Chancery
RONALD S. OBENAUF and ) No. 97CV-107 Cecil Crowson, Jr.
ARDETH OBENAUF, ) Appellate Court Clerk
)
Defendants/Appellants. )
)
COURT OF APPEALS OF TENNESSEE
APPEAL FROM THE CHANCERY COURT FOR
RUTHERFORD COUNTY
AT MURFREESBORO, TENNESSEE
THE HONORABLE ROBERT E. CORLEW, III, CHANCELLOR
W. MITCHELL CONE
DAVID P. CAÑAS
Williams & Prochaska, P.C.
401 Church Street, Suite 2600
Nashville, Tennessee 37219
ALIX COULTER CROSS
Harwell Howard Hyne
Gabbert & Manner, P.C.
1800 First American Center
315 Deaderick Street
Nashville, Tennessee 37238
ATTORNEY FOR DEFENDANT/APPELLANT
AFFIRMED AND REMANDED
WILLIAM B. CAIN, JUDGE
OPINION
This is an appeal from a grant of summary judgment by the trial court
domesticating a Connecticut judgment under Tennessee Code Annotated section
26-6-101 et seq. against both defendants.
I. The Connecticut Action
In September 1990, Connecticut Savings Bank brought suit in the
Superior Court of the Judicial District of New Haven, Connecticut against
Ronald S. Obenauf and Ardeth H. Obenauf on a promissory note in the amount
of $34,000, executed by Ronald S. Obenauf and dated March 27, 1990. Plaintiff
alleged that it was the current holder of the promissory note and that Ronald S.
Obenauf had failed to make monthly payments in accordance therewith. The
bank demanded judgment of the amount of the promissory note together with
interest and costs. The bank further sought fees and expenses, including
reasonable attorney fees, asserting that plaintiff had been harmed by the failure
of the defendant to make payment on the promissory note.
A second count of the complaint adopted by reference the allegations
of count one and further alleged that on January 25, 1990, Ronald S. Obenauf
had transferred property at 52 Maple Avenue West, Haddam, Connecticut, to the
defendant Ardeth H. Obenauf for one dollar. The bank alleged that the
conveyance was fraudulent and was without substantial consideration and
rendered Ronald S. Obenauf unable to pay his existing debts. This count further
asserted that defendant Ardeth H. Obenauf had participated in this fraudulent
transfer and that plaintiff had been damaged by the fraudulent conveyance.
The complaint then prayed for relief as follows:
"1. Damages
2. That the conveyance from Ronald S. Obenauf to Ardeth H.
Obenauf be set aside and declared null and void as to the plaintiff.
3. Attorney's fees, costs and expenses.
4. Such other relief as the Court deems appropriate."
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On January 10, 1991, Connecticut attorney, Brian E. Kaligian,
addressed a letter to Ronald Cohen, Esquire, attorney for Connecticut Savings
Bank, with copies thereof to Ronald and Ardeth Obenauf. This letter read:
I have finally been able to reach my clients, the Obenauf's
with regard to your suit on the $40,000.00 Promissory Note.
In response to my inquiries regarding this matter, my clients
have provided me with a copy of the $34,000.00 Commercial
Promissory Note marked "PAID" by the Bank. I enclose this
copy for your review. I expect that you will be filing a
Withdrawal of this action and I will look forward to
receiving a copy of the Withdrawal at your convenience.
If you have any questions or comments regarding this matter,
please do not hesitate to contact me.
On July 15, 1991, Brian E. Kaligian executed an appearance document
to make him attorney of record for the defendants Ronald S. Obenauf and Ardeth
H. Obenauf.
On August 6, 1991, Ann Hamilton Maher filed a "demand for
disclosure of defense" pursuant to Connecticut Practice Book paragraph 236
against both defendants. Copies of these pleadings were served on Brian E.
Kaligian, Esquire, attorney for the defendants.
Apparently receiving no answer, counsel for plaintiff filed a motion for
default judgment pursuant to Connecticut Practice Book section 236 for the
failure of the defendants to disclose a defense within the time allowed by law.
Motion for default judgment was granted on October 18, 1991.
Judgment was entered against both defendants on December 18, 1991
in the amount of $41,175.75, together with costs in the amount of $629.50. No
post judgment motions were filed and no appeal was perfected in the appellate
courts of Connecticut.
Subsequently the Connecticut Savings Bank went into FDIC
receivership.
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II. The Tennessee Domestication
In September 1995, FDIC assigned without recourse to Remington
Investments, Inc. the Connecticut judgment against the defendants Obenauf.
On January 28, 1997, pursuant to Tennessee Code Annotated section
26-6-101 et seq., Remington Investments, Inc. filed a petition to domesticate the
Connecticut judgment against both Ronald S. Obenauf and Ardeth H. Obenauf.
This petition, in proper statutory form, was met by a motion to stay
enforcement and to vacate the Connecticut judgment filed on behalf of the
defendant Ardeth Obenauf.
Mrs. Obenauf claims that the Connecticut judgment is void because:
1. The Connecticut court did not have personal jurisdiction over her;
2. The jurisdiction of the Connecticut court over her was limited to
the value of real property located in the State of Connecticut;
3. That the only remedy available to the bank against her was to void
the alleged fraudulent transfer of property, and
4. That the judgment against her was void for lack of notice.
Ronald Obenauf filed a similar motion to stay enforcement and vacate
the judgment claiming only that the original promissory note had been marked
by Connecticut Savings Bank as paid in full, thus extinguishing his liability to
the bank.
These motions by the defendants were filed pursuant to Tennessee
Code Annotated section 26-6-104(c) and Rules 61 and 62 of the Tennessee Rules
of Civil Procedure. On August 21, 1998, the trial court entered its summary
judgment against both defendants based on a Memorandum of Opinion filed
August 5, 1998.
Only defendant Ardeth Obenauf has appealed from the trial court
judgment.
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III. Full Faith and Credit
The single issue presented on appeal by Ardeth Obenauf is: "Did the
trial court err when it held that a Connecticut judgment for money damages
against Ardeth Obenauf was valid and enforceable in Tennessee even though the
judgment awards damages that were not available under the only claim pleaded
against her?"
Compliance with the procedures set forth in Tennessee Code Annotated
section 26-6-101 et seq. is not disputed. Generally, Tennessee is required by Art.
IV § 1 of the Constitution of the United States to give full faith and credit to this
Connecticut judgment. Abernathy v. Chambers, 482 S.W.2d 129 (Tenn.1972).
It is further settled:
Foreign judgments are ordinarily entitled to full faith
and credit in Tennessee's courts. However, Tenn.Code Ann.
§ 26-6-104(c) states that they are subject to the same
defenses and may be vacated or reopened on the same
grounds and procedures used to vacate or reopen Tennessee
judgments. Thus, the grounds and procedures for vacating or
reopening foreign judgments are those contained in
Tenn.R.Civ.P. 60.02.
Tenn.R.Civ.P. 60.02(3) states that a final judgment may
be set aside if it is void. Therefore, not surprisingly, the two
most common circumstances when courts will refuse to give
full faith and credit to a foreign judgment are when the court
entering the foreign judgment had no personal or subject
matter jurisdiction, Topham v. L.L.B. Corp., 493 S.W.2d 461,
462 (Tenn.1973); Benham v. Fisher, 650 S.W.2d 759, 760
(Tenn.Ct.App.1983), and when enforcing the judgment
would be contrary to Tennessee's public policy. In re Riggs,
612 S.W.2d 461, 465 (Tenn.Ct.App.1980), cert. denied, 450
U.S. 921, 101 S. Ct. 1370, 67 L. Ed. 2d 349 (1981).
Biogen Distribs., Inc. v. Tanner, 842 S.W.2d 253, 256 (Tenn.1992).
Tennessee and Connecticut follow the same rule that such a foreign
judgment is presumed valid and the burden rests heavily upon the party assailing
the judgment. Dement v. Kitts, 777 S.W.2d 33, 36 (Tenn.App.1989); Biogen
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Distribs., Inc. v. Tanner, 842 S.W.2d 253, 256 (Tenn.App.1992); Packer
Plastics, Inc. v. Laundon, 570 A.2d 687 (Conn.1990).
Counsel representing both Ronald and Ardeth Obenauf made a general
appearance for them in the Connecticut trial court. This general appearance by
counsel is not disputed by the Appellant. Tennessee and Connecticut follow the
same rule that a general appearance represents a waiver by the party to personal
jurisdiction, venue and other procedural defects unless objection is made in a
timely manner. Dixie Savings Stores, Inc. v. Turner, 767 S.W.2d 408, 410
(Tenn.App.1988); Johnson v. Zoning Board of Appeals of Town of Branford, 347
A.2d 53 (Conn.1974); In re Adrien C., 519 At.2d 1241 (Conn.App.Ct.1987).
Thus, the record in Tennessee clearly shows that the Superior Court of
the Judicial District of New Haven, Connecticut had personal jurisdiction over
both Ronald and Ardeth Obenauf. Both had ample opportunity to defend the suit
in Connecticut. Both had ample opportunity to appeal the adverse Connecticut
judgment. Both declined to do so and the time for appeal expired under
Connecticut law. The main complaint by Ardeth Obenauf on this appeal is that
the judgment in Connecticut is void as being beyond the scope of the
Connecticut pleadings. This objection was never raised in the Connecticut court
and even if properly asserted in Connecticut is of dubious validity. The
Connecticut complaint seeks "damages" against both parties without limiting
such relief to the first count of the complaint. The Connecticut complaint has a
prayer for general relief applicable to both counts of the complaint, not just the
first count. The scope of relief allowable under such prayers is a matter that
addresses itself to the Connecticut court and the failure of Ardeth Obenauf to
litigate this issue in Connecticut, following a general appearance in the case, is
clearly a waiver of the issue. She is in much the same position as were the
defendants in Coastcom, Inc. v. Cruzen, 981 S.W.2d 179 (Tenn.App.1998),
which is controlling in this appeal. In Coastcom, Inc., judgments were entered
in Florida and domesticated in the Chancery Court of Williamson County. In
sustaining the res judicata effect of the Florida judgments, the Court of Appeals
through Judge Farmer held:
Foreign judgments are entitled to full faith and credit.
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U.S. Const. art. IV, § 1. Once 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.
T.C.A. § 26-6-104(c). Therefore, the grounds and
procedures for vacating or reopening foreign judgments are
those contained in Rule 60.02 T.R.C.P. Biogen Distribs., Inc.
v. Tanner, 842 S.W.2d 253, 256 (Tenn.App.1992). Parties
seeking to undermine the validity of a foreign judgment must
meet a "stern and heavy" burden to demonstrate that the
foreign judgment should not be enforced in Tennessee.
Dement v. Kitts, 777 S.W.2d 33, 36 (Tenn.App.1989). The
factual issues underlying the foreign judgment may not be
the basis of an inquiry to deny the foreign judgment full faith
and credit. Benham v. Fisher, 650 S.W.2d 759
(Tenn.App.1983). We are of the opinion that each of the
arguments submitted on appeal either was or could have
properly been presented as a defense to the actions in the
Florida court.
Coastcom, Inc. v. Cruzen, 981 S.W.2d 179, 181 (Tenn.App.1998).
Post judgment facts submitted to this court after oral argument establish
that a motion addressed to the Connecticut trial court in the underlying action has
been denied by that court on the basis that Crepeau v. Gronager, 675 A.2d 1361
(Conn.App.1996) established a change in Connecticut law after the 1990
judgment in the underlying Connecticut case rather than reiterating previously
existing common law in Connecticut. Even if this basis for denying relief by the
Connecticut court is in error it is entitled to full faith and credit in Tennessee.
Four Seasons Gardening & Landscaping v. Crouch, 688 S.W.2d 439, 445
(Tenn.App.1984).
Summary judgment in this case was appropriate. Biogen Distribs., Inc.
v. Tanner, 842 S.W.2d 253 (Tenn.App.1992); Coastcom, Inc. v. Cruzen, 981
S.W.2d 179 (Tenn.App.1998).
The judgment of the trial court is affirmed and the case is remanded to
the trial court for execution on the judgment.
Costs in this cause are assessed against Ardeth Obenauf.
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________________________________________
WILLIAM B. CAIN, JUDGE
CONCUR:
__________________________________
BEN H. CANTRELL, P.J., M.S.
__________________________________
PATRICIA J. COTTRELL, JUDGE
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