Genujolok Beteiligungs GmbH v. Zorn

• Court: Superior Court of Maine
• Decided: June 5, 2007
• Docket: CUMcv-06-183
• Status: Unpublished

Opinion

STATE OF MAINE SUPERIOR COURT CUMBERLAND, SS. Civil Action -;Docket ... No. CV-06-183

GENUJOLOK Beteiligungs ) GmbH (fonnerly known as ) Lombardkasse AG), ) Plaintiff ) ) v. ) ORDER ) Manfred Zorn ) Defendant )

Before the court is defendant Manfred Zorn's motion for a plenary hearing

on the issue of whether a judgment rendered against him by the courts of Gennany

should be enforced. That motion was originally filed in April 2006. However,

after that motion was fully briefed, the clerk's office reported that both parties had

requested that the court withhold any decision on the motion while settlement was

explored. In late January 2007, the parties advised the court that settlement

discussions had failed.

The initial question is whether, under the Unifonn Enforcement of Foreign

Judgment Act, 14 M.R.S. §§ 8001-08 (the "Enforcement Act"), and the Unifonn

Foreign Money-Judgment Recognition Act, 14 M.R.S. §§ 8501-09 ("Recognition

Act"), a plenary hearing is required. Although it is unclear exactly what Zorn means by a "plenary" hearing, I he is seeking to contest whether the German

judgment against him is entitled to recognition under the Recognition Act.

Specifically, the Recognition Act lists three conditions under which a foreign

judgment will be declared to be "not conclusive" and seven additional conditions

under which foreign judgments "need not be recognized." 14 M.R.S. § 8505.

Zorn argues that a number of these conditions exist here.

At the outset, although no specific procedure is set forth in the Recognition

Act for raising objections to the recognition of a foreign judgment, the court finds

such a procedure to be implicit in the Recognition and the Enforcement Acts.

The Enforcement Act applies to "any judgment, decree, or order of a court

of the United States or of any other court which is entitled to full faith and credit in

this State." 14 M.R.S.A. § 8002. The language regarding judgments entitled to

"full faith and credit in this State" makes clear that the Enforcement Act is

primarily concerned with the procedure for enforcing judgments from other states.

By its terms, however, the Enforcement Act is not limited by its terms to enforcing

judgments of other states. Rather, the Enforcement Act applies to any judgment

entitled to "full faith and credit in this State." Any such judgment may be enforced

1 To the extent that Zorn is seeking to raise arguments that the German judgment should not be recognized under 14 M.R.S. § 8505, he is entitled to a hearing on those arguments. However, he is not entitled to an evidentiary hearing unless he raises contentions that cannot be resolved in the absence of such a hearing. Moreover, Zorn's right to a hearing also does not require oral argument. See M. R. Civ. P. 7(b)(7) (motion may be decided without oral argument); Southern Maine Properties Co., Inc. v. Johnson, 1999 ME 37, ~~ 6-8,724 A.2d 1255, 1257.

2 in Maine under an expedited procedure where the foreign judgment is registered

with the clerk of the court and then treated "in the same manner as a judgment of [a

court] of this State." 14 M.R.S.A. § 8003. Once notice has been provided to a

judgment debtor and a thirty-day waiting period has expired, a foreign judgment

may be executed upon. 14 M.R.S.A. § 8004.

Although similar in name, the Recognition Act serves a very different

function than the Enforcement Act. The Recognition Act applies on its face to any

"foreign judgment." 14 M.R.S.A. § 8503. A "foreign judgment" for purposes of

the Recognition Act is "any judgment of a foreign state," and "foreign state" is

defined to include "any governmental unit other than the United States." 14

M.R.S.A. § 8502 (emphasis added). Under the Recognition Act, any foreign

judgment complying with the specifications of that act "is conclusive between the

parties to the extent that it grants or denies recovery of a sum of money ... [and]

enforceable in the same manner as the judgment of a sister state that is entitled to

full faith and credit." 14 M.R.S.A. § 8504. Therefore, the Recognition Act is

designed to determine whether the judgment rendered by a foreign country is

entitled to recognition. If so, that judgment may be enforced (under the

Enforcement Act) in the same manner as if it were the judgment of a sister state.

The enumeration in the Recognition Act of various grounds upon which a

judgment of a foreign country may be denied recognition, 14 M.R.S. § 8505,

3 strongly implies that some procedure must be available to a judgment debtor to

present arguments for nonrecognition. Moreover, the Enforcement Act provides

that notice of the filing of a foreign judgment must be made to the last known

address of the judgment debtor and that no execution or other process shall serve

until thirty days after the judgment is filed. 14 M.R.S. § 8004. This is plainly

intended to allow the judgment debtor to apply to the court for any appropriate

relief, such as an order "reopening, vacating, or staying" the judgment. 14 M.R.S.

§ 8003. The court, therefore, interprets the Recognition and Enforcement Acts as

allowing a judgment debtor to raise any arguments that would justify

nonrecognition by filing a motion contesting recognition, exactly as Zorn has done

in this case. In reaching this result, the court is mindful of its obligation to

interpret statutes in a manner that satisfies constitutional requirements. E.g.,

Rideout v. Riendeau, 2000 ME 198, ,-r 14, 761 A.2d 291,297-98.

Accordingly, the court is not inclined to follow Texas decisions holding the

Recognition Act invalid in the absence of an express statutory procedure for

challenging whether a foreign judgment is entitled to recognition. So long as a

judgment debtor has been given an opportunity to raise arguments for

4 nonrecognition - as Zorn has in this instant case - there is no constitutional

infirmity. 2

Remaining to be addressed are the specific arguments against recognition

that Zorn has raised in this case.

1. Lack of Personal Jurisdiction

Zorn contends that the judgment against him cannot be given effect because

the German court did not have jurisdiction over him. See 14 M.R.S. § 8505(1)(B).

The claim against Zorn is based on a notarized recognition of debt which

was subsequently reduced to judgment in the Frankfurt am Main Regional Court.

A translation of the notarized recognition of debt is contained in the record and

provides in Section B.IX:

It is agreed that the place of jurisdiction for all disputes ansmg in connection with or as a result of this document or disputes relating to its termination or validity shall be Frankfurt am Main.

Muller Affidavit, Exhibit A.

Pursuant to 14 M.R.S. § 8506(1)(C), a foreign judgment will not be refused

recognition for lack of personal jurisdiction if "the defendant prior to the

commencement of the proceedings had agreed to submit to the jurisdiction of the

2 Thus, so long as there is an opportunity to object to recognition, the court agrees with the decision of the Seventh Circuit in Society of Lloyd's v. Ashenden, 233 F.3d 473, 481 (7th Cir. 2000) (Posner, J.) that there does not need to be a separate recognition proceeding before enforcement proceedings are commenced.

5 foreign court with respect to the subject matter involved." In his reply

memorandum, Zorn does not dispute that Exhibit A to the Muller Affidavit is a

valid translation of the notarized recognition of debt. Zorn's argument under

section 8505(1)(B), therefore, must be rejected.

In the alternative, it appears that Zorn also cannot contest jurisdiction

because he voluntarily appeared by counsel in the German proceeding and raised

issues beyond contesting jurisdiction. See 14 M.R.S. § 8506(1)(B). This is

apparent from the May 10, 2004, judgment of the Frankfurt Am Main Regional

Court which appears (with certified translation) in the record. 3

2. Due Process

Zorn's second contention is that the judgment against him is not entitled to

recognition because he was denied due process by the German courts. See 14

M.R.S. § 8505(1)(A). In making this argument, however, Zorn misconstrues

section 8505(1 )(A). That section provides that a foreign judgment is not

conclusive if rendered:

under a system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law.

3 In addition, it appears from the record that the debt here arises from defendant's activities as a freelance broker on the Frankfurt Securities Exchange prior to 1995. May 10, 2004 judgment at page 2. This indicates that the original debt arose out of transactions that occurred in Germany - a basis for long­ arm jurisdiction compatible with due process.

6 (emphasis added.) See Society ojLloyd's v. Ashenden, 233 F.3d at 476-78. Thus,

rather than embark on an inquiry as to whether Zorn was afforded due process

under the specific circumstances of this case, the statute requires an inquiry into

whether the German system of justice generally provides impartial tribunals and

procedures compatible with the requirements of due process. Id.

This inquiry must be answered in the affirmative. Although not identical

with the Anglo American system of justice, "German's legal system clearly

follows procedures that ensure that litigants will receive treatment that satisfies

American notions of due process." Turner Entertainment Co. v. Degeto Film

GmbH, 25 F.3d 1512, 1520 (lIth Cir. 1994). Accord, Dresdner Bank AG v.

Haque, 161 F.Supp.2d 259,263 n.7 (S.D.N.Y. 2001).4

To the extent relevant, the record before the court does not support Zorn's

contention that he was denied due process. Specifically, the record demonstrates

that Zorn entered into a "notarized recognition of debt" which under German law

has certain similarities to a stipulation for the entry of judgment. According to the

German court's findings, although Zorn was not represented by an attorney when

the deed recognizing his debt was signed, it was clear from correspondence

submitted to the court that Zorn "had been represented and advised by an attorney

4 Moreover, the court agrees with Judge Posner's analysis in Society of Lloyd's that the question of whether the German legal system provides impartial tribunal and procedures comparative with due process is not an issue of fact which requires the submission of evidence. 233 F .3d at 477.

7 prior to signing the notary's deed." May 10,2004 judgment of Frankfurt Am Main

Regional Court at page 7.

When Genujolok (then Lombardkasse AG) sought to obtain a German

judgment based on the deed recognizing Zorn's debt, Zorn was permitted to

oppose the entry of judgment on the ground that the debt was beyond his financial

ability to pay and on the ground that he had not been represented by an attorney.

May 10, 2004 judgment at page 3. The German court considered and rej ected

those claims, as well as arguments by Zorn that the case was not properly brought

in the Frankfurt am Main Regional Court and that Zorn's obligation was

contingent on his recovery in another law suit. Id. at pages 4-5, 7. In addition, the

German court also accepted Zorn's contention that he had paid DM 358,576.46

and deducted that amount from the amount owed to Genujolok in the judgment.

Id. at page 2.

3. Existence of Judgment

Zorn argues that the ruling entered by the German courts is not a "judgment"

entitled to recognition under the Recognition Act. It appears that original notarized

recognition of debt would not have qualified as a judgment even though, under

German law, such deeds may be judicially enforced. Lombardkasse therefore

initiated judicial action in Germany to reduce the notarized recognition of debt to a

8 judgment. A judgment was in fact rendered by the Frankfurt am Main Regional

Court on May 10, 2004, and that judgment was affirmed on appeal by the

Frankfurt am Main Highest Regional Court on May 25, 2005. As noted above, the

May 10, 2004, judgment was only entered after consideration of various arguments

offered by Zorn, and that judgment also deducted the DM 358,576.46 that had

been repaid by Zorn.

The May 10, 2004 judgment filed in this court, bearing the seal of the

Frankfurt am Main Regional Court, plainly qualifies as a foreign judgment under

the Recognition Act. See 14 M.R.S. § 8502(2):

"Foreign judgment" means any judgment of a foreign state granting or denying recovery of a sum of money, other than a judgment for taxes, a fine or other penalty or a judgment for support in matrimonial or family matters.

4. Reciprocity

Zorn's final argument IS that the German judgment should not be

recognized under 14 M.R.S. § 8505(2)(G), which grants the court discretion not to

recognize a foreign judgment if

[t]he foreign court rendering the judgment would not recogmze a comparable judgment of this state. According to Zorn, Germany has a similar reciprocity requirement. He

argues that this leads to the following conundrum:

9 One cannot conclude that a German court would recognize a comparable judgment from Maine without first knowing that Maine would recognize a comparable judgment from Germany, but one cannot know whether Maine would recognize a comparable judgment from Germany without knowing whether Germany would recognize a comparable judgment from Maine. Defendant's Motion for Plenary Hearing, filed April 21, 2006, at 9. In other

words, Zorn argues that the existence of both the Recognition Act's reciprocity

criterion and Germany's corresponding reciprocity criterion leads the court into a

hall of mirrors which does not permit recognition.

There are two answers to this argument. The first is that the burden of proof

of showing that Germany courts would not recognize a Maine judgment is on

Zorn. See Banque Libanaise v. Khreich, 915 F.2d 1000, 1005 (5th Cir. 1990);

Alfadda v. Fenn, 966 F.Supp. 1317, 1326 (S.D.N.Y. 1997). Accepting that

Germany has a reciprocity requirement, Zorn has made no showing that the

German courts currently would not recognize a Maine judgment. 5

Second, the reciprocity criterion is discretionary, not mandatory. See, e.g.,

paragraph 3 of the comment to section 4 of the Uniform Foreign-Country Money

Judgments Recognition Act, National Conference of Governments on Uniform

State Laws (2005). Moreover, this criterion has engendered considerable criticism

5 Genujolok has submitted an affidavit from a German attorney stating that German courts have recognized and enforced judgments issued by American courts in the past. Muller Affidavit ~ 8. The court does not rely on this affidavit, but rather on the burden of proof stated above.

10 and is no longer a requirement for the recognition of foreign judgments in the

federal courts. See, e.g., Banque Libanaise v. Khreich, 915 F.2d at 1005; Tahan v.

Hodgson, 662 F.2d 862,867-68 (D.C. Cir. 1981).6

In the court's view, affording recognition here and rejecting the circular

reciprocity argument rendered by Zorn is consistent with the overall purpose of the

Recognition Act - to make it more likely that Maine judgments will be recognized

abroad by satisfying the reciprocity concerns of foreign courts. See Prefatory Note

to Uniform Foreign Country Money Judgments Recognition Act, National

Conference of Governors on Uniform State Laws (2005). Unless due process or

public policy considerations intervene, see 14 M.R.S. § 8505(2)(B), the purpose of

the Recognition Act is to provide an expeditious method for collecting money

judgments rendered by foreign courts without requiring judgment creditors to

relitigate the entire case in any jurisdiction where assets are located. Society of

Lloyds v. Ashenden, 233 F.3d at 477. Zorn has not raised any argument that the

6 Consideration of reciprocity was a feature of one of the seminal u.s. Supreme Court decisions with respect to the recognition of foreign judgments. Hilton v. Guyot, 159 U.S. 113, 210 (1895). As noted above, however, the federal courts have now departed from Hilton on this issue. Moreover, although the Law Court cited Hilton in a recent decision on the issue of whether to recognize and enforce a foreign judgment, Roy v. Buckley, 1997 ME 155,698 A.2d 497, it did not mention reciprocity. Instead, the Court cited Hilton for the proposition that the focus should be on whether the judgment was rendered by a competent court possessing jurisdiction of the case and the parties after an opportunity to defend in a proceeding conducted "according to the source of a civilized jurisprudence." 1997 ME 155, ~ 11, 698 A.2d at 501. In the Roy opinion, the Law Court also cited United States v. Boots, 80 F.3d 580, 587 (1st Cir. 1996), for the proposition that "courts will generally enforce foreign non-tax civil judgments unless due process consideration interfere." ld.

11 Gennan judgment is repugnant to Maine's public policy, and his due process

arguments are unavailing for the reasons previously discussed.

Under these circumstances, the court finds no basis to refuse recognition in

this case.

Genujolok argues that it should be entitled to proceed forthwith to enforce

its judgment. The court agrees but will allow Zorn a brief period to seek a stay

pending appeal from the Law Court.

The entry is:

Defendant's motion for plenary hearing is denied after consideration of defendant's arguments that the Gennan judgment against defendant should not be recognized. Plaintiff shall be entitled to commence enforcement proceedings ten days from the date this order is docketed unless within that time defendant has sought and obtained a stay of this order pending appeal. The clerk is directed to incorporate this order in the docket by reference pursuant to Rule 79(a).

Dated: June -.!:i.-, 2007

Thomas D. Warren Justice, Superior Court

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