MOUNTAIN CITY HARDWOODS FLOORING, INC v. ERMA ROJAS

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0922-07T30922-07T3

MOUNTAIN CITY HARDWOODS

FLOORING, INC.,

Plaintiff-Respondent,

v.

ERMA ROJAS, d/b/a A.A. ALLIANCE,

Defendant-Appellant.

_________________________________________________

 

 
Submitted September 24, 2008 - Decided

Amended Opinion - Decided

Before Judges A. A. Rodr guez and Payne.

On appeal from Superior Court of New Jersey,

Law Division, Monmouth County, DJ-186955-05.

Manna & Bonello, attorneys for appellant

(John L. Bonello, on the brief).

Kathleen R. Wall, attorney for respondent.

PER CURIAM

Defendant, Erma Rojas, d/b/a A.A. Alliance, appeals from the denial of her motion to vacate a default judgment in the amount of $36,583.40 initially entered by the Law Court of Johnson County at Mountain City, Tennessee and domesticated in New Jersey pursuant to the Uniform Enforcement of Foreign Judgments Act (UEFJA), N.J.S.A. 2A:49-25 to -33. On appeal Rojas argues, as she argued unsuccessfully in the trial court, that the Tennessee court lacked personal jurisdiction over her and A.A. Alliance, and as a result, the Tennessee judgment should not be recognized by New Jersey's courts. We disagree and affirm.

The facts of the matter follow. Mountain City Hardwoods Flooring, Inc. is a flooring supplier with its principal place of business in Tennessee. Rojas, the principal of A.A. Alliance, sells flooring to various persons and entities from her place of business in Asbury Park, New Jersey. As the result of a sales call by Mountain City salesperson John Hess upon Rojas in Asbury Park in or around February 2002, Rojas became a customer of Mountain City, purchasing hardwood flooring from Mountain City on at least twenty-seven occasions between February 4, 2002 and October 17, 2002. Rojas has stated in a certification that all orders were placed through Hess. A certification submitted on behalf of Mountain City by Credit Manager Joseph Savery states that after the first sales call by Hess upon Rojas in New Jersey, "John Hess called Erma Rojas from Pennsylvania and Mountain City, Tennessee." As the result of purchases by Rojas, stock hardwood flooring was shipped by truck from Tennessee to Asbury Park and Neptune, New Jersey. Additionally, invoices, generated in Tennessee, were mailed to New Jersey, and payments in the form of checks, credit card transactions or wire transfers were made by Rojas to Mountain City at its Tennessee location. Because Rojas was slow in making payments, additional correspondence and telephone calls between the parties regarding those payments also occurred. However, Rojas never traveled to Tennessee, and she had no physical contact with that state.

According to Mountain City, Rojas failed to pay an invoice in the amount of $34,190.10 for Load # 639, shipped on September 11, 2002 and delivered to New Jersey on the following day. Mountain City instituted a collection action in Tennessee, and on July 6, 2004, a default judgment in the amount of $36,583.40 was entered by a judge of the Law Court of Johnson County at Mountain City, Tennessee. On July 21, 2005, Mountain City docketed the Tennessee judgment in Mercer County, New Jersey, providing notice of its action to Rojas. On September 13, 2005, Rojas and A.A. Alliance moved before the Superior Court to vacate the foreign judgment pursuant to Rule 4:50-1 on the grounds of lack of in personam jurisdiction and prior payment of the amount allegedly due. The matter was at some point transferred to Monmouth County, and a hearing was scheduled in that County for February 3, 2006. Any order resulting from that motion has been lost. However, it appears that the determination was, in some manner, adverse to the position of Rojas and A.A. Alliance.

While Rojas and A.A. Alliance were mounting their attack on the judgment, collection efforts continued. Mountain City served an information subpoena upon Rojas and, when she failed to respond, it obtained an order to enforce litigant's rights, which was served on Rojas on or about December 9, 2005. Thereafter, Mountain City levied on an account maintained by Rojas or A.A. Alliance with the Bank of America, obtaining a turn-over order on December 16, 2005, which was served on the parties and the bank on August 24, 2006 after the motion to vacate the judgment had been resolved. It appears that $26,992.84 was turned over to Mountain City as a result.

On May 4, 2007, Rojas and A.A. Alliance moved for an order "to vacate the Foreign Default Judgment; to Stay the Execution; and for Reconsideration of the Court's Prior Decision." The motion was heard on September 7, 2007 and denied on the ground that jurisdiction in Tennessee existed because, by placing orders for flooring by fax or telephone, directed to Tennessee, A.A. Alliance purposely availed itself of the privilege of conducting business in Tennessee. This appeal followed.

We recently held in State of Maine v. SeKap, S.A. Greek Coop. Cigarette Mfg. Co., S.A., 392 N.J. Super. 227 (App. Div. 2007), in the context of an attack on a judgment domesticated in New Jersey pursuant to the UEFJA,

the Constitutional requirements of the Full Faith and Credit Clause are predicated upon the judgment debtor having been accorded due process in the forum state. [Sonntag Reporting Serv. Ltd. v. Ciccarelli, 374 N.J. Super. 533,] 538 [(App. Div. 2005)]. A denial of due process occurs "when 'the rendering state 1) lacked personal jurisdiction over the judgment debtor, 2) lacked subject matter jurisdiction, [or] 3) failed to provide the judgment debtor adequate notice and an opportunity to be heard.'" Ibid. (quoting Choi v. Kim, 50 F.3d 244, 248 (3d Cir. 1995)).

[Maine v. SeKap, supra, 392 N.J. Super. at 235.]

As a consequence, we find that the due process defense of lack of in personam jurisdiction has been properly presented in this New Jersey matter as grounds for voiding the judgment.

"[D]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95, 102 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S. Ct. 339, 342, 85 L. Ed. 278, 283 (1940)). Because Rojas had no "continuous and systematic" contacts with Tennessee, principles of general jurisdiction are inapplicable to this case. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S. Ct. 1868, 1873, 80 L. Ed. 2d 404, 412 (1984). Rather, if jurisdiction is to be found, it must be based upon specific jurisdiction. In such case, the jurisdictional inquiry must focus on "the relationship among the defendant, the forum, and the litigation." Shaffer v. Heitner, 433 U.S. 186, 204, 97 S. Ct. 2569, 2579, 53 L. Ed. 2d 683, 698 (1977). Pursuant to that analysis, the "minimum contacts" requirement can be deemed satisfied only if the contacts resulted from defendant's purposeful conduct and not plaintiff's unilateral activities. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98, 100 S. Ct. 559, 567-68, 62 L. Ed. 2d 490, 501-02 (1980).

In the present case, any breach of contract by Rojas or A.A. Alliance undoubtedly caused injury to Mountain City in Tennessee. However, the United States Supreme Court has observed in a minimum contacts context:

Although it has been argued that foreseeability of causing injury in another State should be sufficient to establish such contacts there when policy considerations so require, the Court has consistently held that this kind of foreseeability is not a "sufficient benchmark" for exercising personal jurisdiction. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. at 295, 100 S. Ct. at 566, [62 L. Ed. 2d at 500]. Instead, "the foreseeability that is critical to due process analysis . . . is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." Id. at 297, 100 S. Ct. at 567, [62 L. Ed. 2d at 501].

[Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S. Ct. 2174, 2183, 85 L. Ed. 2d 528, 542 (1985) (footnote omitted).]

Further, the Court has held that "[t]he unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State." Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1239-40, 2 L. Ed. 2d 1283, 1298 (1958). "The application of that rule will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Ibid. By adopting this requirement, courts can ensure that a defendant "will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts." Burger King, supra, 471 U.S. at 475, 105 S. Ct. at 2183, 85 L. Ed. 2d at 542.

It is clear that jurisdiction cannot be avoided merely by demonstrating a lack of physical presence in the forum state. Id. at 476, 105 S. Ct. at 2184, 85 L. Ed. 2d at 543. However, the Supreme Court has also held that "[i]f the question is whether an individual's contract with an out-of-state party alone can automatically establish sufficient minimum contacts in the other party's home forum, we believe the answer clearly is that it cannot." Id. at 478, 105 S. Ct. at 2185, 85 L. Ed. 2d at 545.

[W]e have emphasized the need for a "highly realistic" approach that recognizes that a "contract" is "ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction." [Hoopeston Canning Co. v. Cullen, 318 U.S. 313,] 316-317[, 63 S. Ct. 602, 604-605, 87 L. Ed. 777, 7881-82 (1943)]. It is these factors prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing that must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum.

[Burger King, supra, 471 U.S. at 478-79, 105 S. Ct. at 2185, 85 L. Ed. 2d at 545.]

In the present case, the transactions between Rojas and Mountain City can be simply described. They originated as the result of a solicitation by a Mountain City salesman in New Jersey and continued through further placement of individual orders with that salesman by telephone or other informal means. No contract negotiations took place. The products sold were stock items; none were made to order. The only communications between the parties appear to have concerned the placement of orders and payment.

The jurisdictional principles that we have discussed were recently analyzed by the New Jersey Supreme Court in a case with facts that are very similar to those presented here. See McKesson Corp. v. Hackensack Medical Imaging, No. A-2-08 (January 21, 2009). In that case, McKesson Corp, a pharmaceutical distributor with locations in Texas, brought suit in the District Court of Dallas County, Texas, and obtained a default judgment in the amount of $26,062.35 against Hackensack Medical Imaging, a New Jersey professional corporation with its principal place of business in Hackensack, New Jersey, for goods sold to Hackensack Medical for which payment had not been made. Thereafter, McKesson moved in the Law Division for registration of the Texas judgment pursuant to the UEFJA.

Upon learning of the New Jersey action, Hackensack Medical sought a stay of enforcement of the judgment, claiming that its contacts with Texas were insufficient to support an assertion of in personam jurisdiction over it by the Texas court. Following a denial of the motion by the trial court and our reversal, the Supreme Court granted certification and, in its subsequent decision, it found that Hackensack Medical had sufficient contacts with Texas to support jurisdiction. The Court held:

In today's rapidly shrinking world, the purchase of goods from out-of-state vendors has become commonplace. Those instances, standing alone, are insufficient to establish the requisite minimum contacts needed to invoke long-arm jurisdiction consistent with due process. However, unlike the casual or occasional purchaser of out-of-state products, defendant's minimum contacts with Texas are many and varied. The record discloses that defendant entered into what was intended to be a long-term commercial relationship with plaintiff; placed nine separate orders with plaintiff in Texas; sent a credit application to plaintiff in Texas; and sent two checks -- both of which were later dishonored -- to plaintiff in Texas as purported payment for the products defendant purchased from plaintiff. Against that factual backdrop, and because plaintiff's cause of action arises from "contacts result[ing] from the defendant's purposeful conduct and not the unilateral activities of the plaintiff[,]" . . . we have no hesitation in concluding that, in those specific circumstances, plaintiff has established that defendant had sufficient minimum contacts to justify the exercise of personal jurisdiction by the Texas court.

[Slip op. at 19 (quoting Lebel v. Everglades Marina, Inc., 115 N.J. 317, 323 (1989).]

Addressing the second prong of the jurisdictional test, the Court found that Hackensack Medical had failed to sustain its burden of demonstrating that the exercise of jurisdiction by the courts of Texas offended traditional notions of fair play and substantial justice. Id. at 20-21. The Court stated in this regard:

Our review of this record convinces us that neither traditional notions of fair play nor of substantial justice would be offended by subjecting defendant to the jurisdiction of Texas's courts. No doubt, defendant had little difficulty reaching out -- on a repeated basis over a significant period of time -- to a Texas resident when defendant thought it to be to its own economic advantage. Defendant burnished that relationship when it transmitted to plaintiff in Texas a credit application, supplying further proof of defendant's willingness to continue to transact business in Texas. Finally, and most telling, defendant issued two checks with insufficient funds to a Texas resident. In the aggregate of those circumstances presented, we therefore conclude that subjecting defendant to the jurisdiction of Texas's courts does not offend traditional notions of fair play and substantial justice.

[Id. at 21.]

In McKesson, Hackensack Medical had purchased contrast agents from McKesson in Texas on nine occasions in the period between July 19, 2005 and February 5, 2006. In the present case, Rojas made at least twenty-seven purchases from Mountain City Hardwoods, at a far greater aggregate price than that in McKesson, over a slightly longer eight and one-half month period. Most of Rojas's orders were placed directly with her supplier in Tennessee, all payments were directed to Tennessee, and disputes regarding payment were resolved in contacts between Rojas in New Jersey and credit personnel in Tennessee. The only substantial difference between the present case and McKesson is the absence of evidence of a credit application by Rojas -- a factor utilized by the Supreme Court in McKesson as evidence of an intent that a continuing relationship exist. While that evidence is lacking here, we find the course of conduct by the parties to provide similar evidence of the existence of a continuing business relationship, terminated only as the result of nonpayment. In these circumstances, we deem the logic of McKesson to control our disposition of the present matter, and we therefore affirm the order of the trial court denying Rojas's motion to vacate the foreign default judgment and to stay execution on it.

 
Affirmed.

The opinion in this matter has been amended in light of the legal analysis contained in the Supreme Court's recent decision in McKesson Corp. v. Hackensack Medical Imaging, No. A-2-08 (January 21, 2009).

It is unclear to us whether A.A. Alliance is a corporation. If it is, then in any litigation regarding the underlying debt, it is unlikely that Rojas would have personal liability.

The account holder is not specified in the record.

Relief as the result of this turn-over has not been requested on appeal.

(continued)

(continued)

13

A-0922-07T3

December 31, 2008

February 3, 2009