Fleet Capital Leasing—Technology Finance v. Seal Jet of the Carolinas, Inc.

594 S.E.2d 538, 358 S.C. 240, 2004 S.C. App. LEXIS 69
CourtCourt of Appeals of South Carolina
DecidedMarch 15, 2004
DocketNo. 3761
StatusPublished
Cited by1 cases

This text of 594 S.E.2d 538 (Fleet Capital Leasing—Technology Finance v. Seal Jet of the Carolinas, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fleet Capital Leasing—Technology Finance v. Seal Jet of the Carolinas, Inc., 594 S.E.2d 538, 358 S.C. 240, 2004 S.C. App. LEXIS 69 (S.C. Ct. App. 2004).

Opinion

HOWARD, J.:

Fleet Capital Leasing — Technology Finance (“Fleet”) sought to enforce a Michigan default judgment against Seal Jet of the Carolinas, Inc. (“Seal Jet”) pursuant to the Uniform Enforcement of Foreign Judgments Act, South Carolina Code Annotated section 15-35-900-960 (Supp.2002). Seal Jet defended, asserting the default judgment was void because the Michigan court did not have personal jurisdiction over it. The circuit court found Seal Jet made a general appearance in the Michigan case, and thus, the Michigan court had personal jurisdiction. Furthermore, the circuit court entered the judgment of $18,345.97, plus interest, against Seal Jet. Seal Jet appeals, arguing the circuit court erred by holding res judicata precluded Seal Jet from raising the issue of personal jurisdiction as a defense to the South Carolina proceeding. We reverse and remand.

FACTUAL/PROCEDURAL BACKGROUND

Fleet brought suit in Michigan against Seal Jet, alleging it was formerly known as American High Performance Seals, Inc. (“American”), and was liable for breach of various leases signed by American. The complaint alleged the leases were subject to Michigan law.

Daniel Hughes, President of Seal Jet, was served with the summons and complaint. Hughes responded to the suit by writing a letter to the Michigan -District Court denying Seal Jet was a party to the leases and asking for a jury trial.

The Michigan court viewed this letter as Seal Jet’s answer to the lawsuit. Fleet moved to strike the answer, arguing a corporation can only appear through a licensed attorney. [242]*242Fleet asserted the answer was therefore void and should be stricken.

The Michigan District Court granted Fleet’s motion, striking Hughes’ letter. Further, because this meant Seal Jet had not answered the complaint, the Michigan court entered a default judgment against Seal Jet.

Fleet then submitted its Notice of Filing of Foreign Judgment to the South Carolina circuit court to enroll the Michigan judgment in South Carolina pursuant to the Uniform Enforcement of Foreign Judgments Act. Seal Jet filed a motion for relief from the judgment. Seal Jet asserted that the Michigan court did not have personal jurisdiction over Seal Jet and that Seal Jet and American were separate entities. Seal Jet also contested the merits of the underlying suit.

The circuit court ruled Seal Jet could not contest the merits of the Michigan action because to do so would be an impermissible collateral attack in violation of the Full Faith and Credit clause of the United States Constitution. U.S. Const, art. IV, § 1. Relying upon this court’s opinion in Colonial Pacific Leasing Corp. v. Taylor, 326 S.C. 529, 484 S.E.2d 595 (Ct.App.1997), the circuit court concluded Seal Jet had made a general appearance in Michigan by means of Hughes’ letters 1 and was precluded by principles of res judicata from arguing the Michigan court did not have personal jurisdiction. The court entered judgment against Seal Jet in the amount of $18,345.97 plus interest. Seal Jet appeals.

LAW/ANALYSIS

Seal Jet argues the circuit court erred by holding res judicata precluded Seal Jet from raising the issue of personal jurisdiction as a defense in the South Carolina proceeding. We agree and remand.

The Full Faith and Credit Clause of the United States Constitution requires the courts of one state give “such force [243]*243and effect to a foreign judgment as the judgment would receive in its own state.” Taylor, 326 S.C. at 532, 484 S.E.2d at 597; see U.S. Const. art. IV, § 1 (“Full Faith and Credit shall be given in each State to the public acts, records, and judicial proceedings of every other State.”). However, “[t]he Full Faith and Credit Clause does not prevent the litigation of personal jurisdiction in an action to enforce a foreign judgment” if the party did not make a general appearance in the foreign jurisdiction. Taylor, 326 S.C. at 532-33, 484 S.E.2d at 596-97 (“Only a defendant who ‘remains aloof by not making an appearance and has a default judgment entered against him may contest the issue of personal jurisdiction in a later proceeding.”); see Alladin Plastics, Inc. v. Wintenna, Inc., 301 S.C. 90, 92, 390 S.E.2d 370, 371 (Ct.App.1990) (“[A] court is bound to enforce the judgment of a court in another state only if the court in the other state had jurisdiction to render the judgment.”); see also Taylor, 326 S.C. at 533, 484 S.E.2d at 597 (“ ‘A defendant who appears [in the foreign jurisdiction] to litigate the merits without properly preserving an objection to personal jurisdiction waives the right to raise the objection in the initial proceeding and is bound by the resulting judgment.’ ” (quoting Charles A. Wright, Arthur R. Miller, Edward H. Cooper, Federal Practice and Procedure § 4430 (1981))).

In determining whether a party made a general appearance in the foreign jurisdiction, the laws of the state that rendered the judgment must be applied. Loyd & Ring’s Wholesale Nursery, Inc. v. Long & Woodley Landscaping and Garden Center, Inc., 315 S.C. 88, 91, 431 S.E.2d 632, 634 (Ct.App.1993) (“The validity and effect of a foreign judgment must be determined by the laws of the state that rendered the judgment.”). Therefore, we look to Michigan law to resolve the issue of whether Hughes’ letter served as a general appearance by the corporation, Seal Jet.

In Michigan, any action on the part of a defendant that recognizes the pending proceedings, with the exception of objecting to the courts jurisdiction, will [normally] constitute a general appearance. Penny v. ABA Pharm. Co., 203 Mich. App. 178, 511 N.W.2d 896, 897 (Mich.Ct.App.1993); see Ragnone v. Wirsing, 141 Mich.App. 263, 367 N.W.2d 369, 370 (1985) (Two requirements must be met to render an act adequate to support the inference that there is an appearance: [244]*244(1) knowledge of the pending proceedings and (2) an intention to appear, (quoting Rhodes v. Rhodes, 3 Mich.App. 396, 142 N.W.2d 508, 511 (1966))); Deeb v. Berri, 118 Mich.App. 556, 325 N.W.2d 493, 496 (1982) (This Court has held that appear as it is used in default proceedings should be taken in its generic sense as any act of a party acknowledging jurisdiction of a court or involdng court action on his behalf, (quoting Rhodes, 142 N.W.2d at 510)). Thus, as an initial matter, we note a letter sent to the Michigan District Court that denies liability and asks for a jury trial is one means of making a general appearance in Michigan.

Our inquiry then becomes whether, under Michigan law, a corporation makes a general appearance when its president sends such a letter to the court.

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Bluebook (online)
594 S.E.2d 538, 358 S.C. 240, 2004 S.C. App. LEXIS 69, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fleet-capital-leasingtechnology-finance-v-seal-jet-of-the-carolinas-inc-scctapp-2004.