Opinion
FSTCV196043665S
01-21-2020
Realty Management Group, LLC v. William D. Hayes
UNPUBLISHED OPINION
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Krumeich, Edward T., J.
MEMORANDUM OF DECISION
KRUMEICH, J.
Plaintiff Realty Management Group, LLC ("Realty") has moved for summary judgment in lieu of complaint to enforce a default judgment in its favor against defendant William D. Hayes ("Hayes") entered by the District Court of the State of Colorado, County of San Miguel (the "Colorado Court"). Defendant has objected to this motion on the ground that there are genuine issues of material fact concerning whether the Colorado Court had personal jurisdiction over him at the time the default judgment entered. For the reasons stated below, the motion is granted.
The Standards for Deciding a Motion for Summary Judgment
"The standards ... [for] review of a ... motion for summary judgment are well established. Practice Book [§ 17-49] provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law ... In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party ... The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law ... and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact ... A material fact ... [is] a fact which will make a difference in the result of the case ..." DiPietro v. Farmington Sports Arena, LLC, 306 Conn. 107, 115-16 (2012), quoting H.O.R.S.E. of Connecticut, Inc. v. Washington, 258 Conn. 553, 558-60 (2001) (citations omitted).
"In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ... As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent ..." Zielinski v. Kotsoris, 279 Conn. 312, 318 (2006).
Once the movant for summary judgment has satisfied the initial burden of showing the absence of a material issue of fact, the burden shifts to the opponent to establish that there is a genuine issue of material fact: "it is then ‘incumbent upon the party opposing summary judgment to establish a factual predicate from which it can be determined, as a matter of law, that a genuine issue of material fact exists.’" Iacurci v. Sax, 313 Conn. 786, 799 (2014), quoting Connell v. Colwell, 214 Conn. 242, 251 (1990).
The Colorado Judgment is Entitled to Full Faith and Credit
In this action Realty seeks to enforce the Colorado judgment against Hayes in the amount of $257,951.69, together with interest, fees and costs, for a total due as of May 30, 2019 of $280,048.67, pursuant to C.G.S. § 52-607. "Under appropriate circumstances, General Statutes § 52-607 authorizes a foreign judgment creditor to seek the enforcement of a judgment in this state even if that judgment was entered by default in the foreign state." Regents of the University of California v. Golf Marketing, LLC, 92 Conn.App. 378, 379 (2005).
The judgment continues to accrue interest at the rate of 21% per annum, the rate stated in the promissory note guaranteed by Hayes.
A foreign judgment registered in this State is presumed to enjoy "full faith and credit" under the United States Constitution:
Only in a select few situations may courts set aside their obligation to afford full faith and credit to final judgments of foreign courts. In particular, a debtor who seeks to challenge the validity of a foreign judgment that has been registered properly in this state may do so only by raising "[c]onstitutionally permissible defenses ... that destroy the full faith and credit obligation owed to a foreign judgment ..." ... Such defenses include lack of personal jurisdiction or lack of due process ...
"[T]he judgment of another state must be presumed valid, and the burden of proving a lack of jurisdiction rests heavily upon the assailant ... Furthermore, the party attacking the judgment bears the burden of proof regardless of whether the judgment at issue was rendered after a full trial on the merits or after an ex parte proceeding."Business Alliance Capital Corp. v. Fusilier, 88 Conn.App. 731, 736-37 (2005), quoting Nastro v. D’Onofrio, 76 Conn.App. 814, 823 (2003) and Packer Plastics, Inc. v. Laundon, 214 Conn. 52, 57, 570 A.2d 687 (1990).
In Business Alliance the Appellate Court held "[t]o determine whether a foreign court lacked jurisdiction, we look to the law of the foreign state." 88 Conn.App. at 737. Thus, the Court will look to the law of Colorado to determine whether the Colorado Court properly exercised long-arm jurisdiction over Hayes, a Connecticut resident.
Defendant contends that under Colorado law the Colorado Court should not have exercised long-arm jurisdiction over Hayes because the record at the time was based solely on conclusory allegations as to personal jurisdiction in the complaint that did not satisfy the prima facie standard for exercise of longarm jurisdiction required by Colorado precedent citing Keefe v. Kirschenbaum & Kirschenbaum, P.C., 40 P.3d 1267, 1272 (Colo. 2002), Gognat v. Ellsworth, 224 P.3d 1039, 1052 (Colo.App. 2009) and Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995) (applying Colo. law). Defendant also cited Colorado law that the mere existence of a contractual relationship with a non-resident does not establish the necessary minimum contacts to confer personal jurisdiction over such a defendant. See e.g., New Frontier Media, Inc. v. Freeman, 85 P.3d 611, 614 (Colo.App. 2003); Greenway Nutrients, Inc. v. Blackburn, 33 F.Supp.3d 1224, 1238 (D.Colo. 2014) (applying Colo. law).
In Align Corp. Ltd. v. Boustred, 421 P.3d 163, 167 (2017), the Colorado Supreme Court explained when it is proper for a Colorado court to exercise personal jurisdiction over a non-resident defendant:
For a Colorado court to exercise jurisdiction over a non-resident defendant, the court must comply with Colorado’s long-arm statute and constitutional due process ... Colorado’s long-arm statute [§ 13-1-124, C.R.S.] confers "the maximum jurisdiction permitted by the due process clauses of the United States and Colorado constitutions." ... Therefore, we engage in a constitutional due process analysis to determine whether a Colorado court may exercise jurisdiction over a non-resident defendant. ...
The due process clauses of the United States and Colorado constitutions operate to limit a state’s exercise of personal jurisdiction over non-resident defendants ... Specifically, due process requires that a nonresident corporate defendant have "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ... ‘The quantity and nature of the minimum contacts required depends on whether the plaintiff alleges specific or general jurisdiction.’" ... Here, because no party asserts that [defendant] is subject to general jurisdiction, we discuss only specific jurisdiction.
Specific jurisdiction is properly exercised where the injuries triggering litigation arise out of and are related to "activities that are significant and purposefully directed by the defendant at residents of the forum." ... To determine whether the defendant has sufficient minimum contacts, we consider "(1) whether the defendant purposefully availed himself of the privilege of conducting business in the forum state, and (2), whether the litigation ‘arises out of’ the defendant’s forum-related contacts." ... The "purposeful availment" requirement precludes personal jurisdiction resulting from random, fortuitous, or attenuated contacts ... The ‘arising out of’ requirement mandates that "the actions of the defendant giving rise to the litigation must have created a ‘substantial connection’ with the forum state." ...
Once it is established that a defendant has the requisite minimum contacts, these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with "fair play and substantial justice ... These ‘fairness factors’ include the burden on the defendant, the forum state’s interest in adjudicating the dispute, the plaintiff’s interest in obtaining convenient and effective relief, the interstate judicial system’s interest in obtaining the most efficient resolution of controversies, and/or the shared interest of the several states in furthering fundamental substantive social policies." (Citations omitted).
Defendant argues that in ruling on this motion for summary judgment this Court is limited to the record before the Colorado Court when it rendered judgment. This Court does not agree. In the seminal case of Packer Plastics the Supreme Court articulated the burden imposed upon defendant seeking to avoid enforcement of a foreign judgment:
As a matter of federal law, the full faith and credit clause requires a state court to accord to the judgment of another state the same credit, validity and effect as the state that rendered the judgment would give it ... This rule includes the proposition that lack of jurisdiction renders a foreign judgment void ... A party can therefore defend against the enforcement of a foreign judgment on the ground that the court that rendered the judgment lacked personal jurisdiction, unless the jurisdictional issue was fully litigated before the rendering court or the defending party waived the right to litigate the issue ...
The United States Supreme Court has consistently held, however, that the judgment of another state must be presumed valid, and the burden of proving a lack of jurisdiction "rests heavily upon the assailant." ... Furthermore, the party attacking the judgment bears the burden of proof regardless of whether the judgment at issue was rendered after a full trial on the merits or after an ex parte proceeding ... Accordingly, we conclude that the trial court did not err in placing the burden of proving lack of personal jurisdiction on the defendant and in ruling that the defendant’s failure to present any evidence in support of his challenge to the Kansas court’s jurisdiction entitled the plaintiff to judgment in its favor. 214 Conn. at 56-57 (citations omitted).
In Maltas v. Maltas, 298 Conn. 354, 365-67, 370-71 & n.9 (2010), the Supreme Court opined that when facts are disputed jurisdiction is to be determined in a "trial-like hearing." The Maltas Court distinguished between the burden of proof on plaintiff to present a prima facie case for summary judgment, the burden on defendant to oppose such motion and to show issues of fact exist and the defendant’s burden of persuasion at trial to overcome the presumption of validity and to establish lack of jurisdiction of the foreign court over the judgment debtor. Ultimately, the assailant of a foreign judgment presumed to be valid must prove by a preponderance of the evidence facts that demonstrate the foreign court lacked jurisdiction over him. Id. at 364 nn.10-11. However, at the summary judgment stage there is no presumption that the judgment was jurisdictionally proper. See Ahmad, 2012 WL 753801 *4. The initial burden is on the movant for summary judgment to show the absence of a genuine issue of fact to be tried and his entitlement to judgment as a matter of law; only when the movant has shown a prima facie case is it incumbent on the non-movant to present evidence that there are genuine issues of material fact:
"In seeking summary judgment it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all material facts, which, under applicable principles of substantive law, entitle him to judgment as a matter of law." ... Because the burden of proof is on the movant, "the trial court must view the evidence in the light most favorable to the nonmoving party." ...
"In ruling on a motion for summary judgment, the court’s function is not to decide issues of material fact, but rather to determine whether any such issues exist." ... Because "[I]itigants have a constitutional right to have factual issues resolved by the jury" ... "motion[s] for summary judgment [are] designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried." ... The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact. ...
Of course, "[o]nce the moving party has met its burden [of production] ... the opposing party [to survive summary judgment] must present evidence that demonstrates the existence of some disputed factual issue." "When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, [however] the nonmoving party has no obligation to submit documents establishing the existence of such an issue." 298 Conn. at 365-66 (citations omitted).
In Maltas the Supreme Court held the plaintiff judgment creditor was not entitled to summary judgment because he failed to make out a prima facie case and present evidence to eliminate any factual dispute that the Alaskan court had properly exercised personal jurisdiction over defendant judgment debtor under the law of Alaska, 298 Conn. at 367. Without a prima facie case by plaintiff in Maltas the burden had not shifted to defendant to produce evidence to show that an issue of fact existed. Id. On this motion plaintiff has satisfied its initial burden of showing prima facie it is entitled to summary judgment because there are no genuine issue of material fact concerning the enforceability of the Colorado judgment. See Zielinski, 279 Conn. at 318. Plaintiff has submitted evidence that the Colorado case arose from a $9.5 million loan in connection with a condominium development in Colorado guaranteed by Hayes. Plaintiff initially submitted an affidavit from Colorado counsel that averred that a deficiency judgment in favor of plaintiff and against Hayes had been issued by the Colorado Court; a certified copy of the judgment registered in this State was appended as an exhibit to the affidavit. Counsel declared that defendant was properly served in the underlying action and that the judgment has not been stayed, appealed, modified or satisfied. In a supplemental affidavit plaintiff’s Colorado counsel authenticated the complaint and exhibits appended to Hayes’ affidavit submitted in opposition to this motion. Plaintiff also submitted affidavits from lenders, and plaintiff’s asset manager relating to the underlying transaction that appended copies of transaction documents. The evidence submitted shows that defendant had minimum contacts with Colorado, purposely availed himself of the privilege of conducting business in the state and the litigation arose out of his forum-related conduct such that he could reasonably expect to be haled before the courts of that state and therefore was subject to long-arm personal jurisdiction under Colorado law consistent with constitutional due process. See Align, 421 P.3d at 167. See also Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1193 (Colo. 2005).
The parties agree defendant was properly served with process in the Colorado action.
The 2007 loan which resulted in the deficiency judgment was the latest restructuring of loans on the project and was modified in 2012 and 2015. Hayes became a "co-borrower" in 2012. There were also other related transactions involving Hayes. The history of these transactions confirms that Hayes has had a substantial and longstanding relationship with Colorado in connection with the subject loan and related transactions since at least 2005.
In Panos Investment Co. v. District Court, 662 P.2d 180, 183 (1983), the Colorado Supreme Court upheld long-arm jurisdiction over non-resident guarantors of a promissory note payable in Colorado:
It is only realistic to assume that the guarantees in those cases were important inducements to the extension of credit to a third party and that the guarantor knew it. The creditor seeks assurances that the debt will be paid in accordance with its terms, including place of payment. When the primary obligor defaults, it is unreasonable and inconsistent with fair play to expect the creditor to pursue the guarantor in a different forum to enforce the guarantor’s agreement to underwrite the primary obligor’s promise that the money will be paid in the forum state.
To require a guarantor to defend in the courts of the state where the guaranteed obligation is payable is fully consistent with "traditional notions of fair play and substantial justice."
A review of the complaint in the Colorado action, and exhibits thereto, reveal that at the time it rendered judgment the Colorado Court had before it allegations and evidence that the $9.5 million loan secured by a deed of trust on Colorado property arose from a Colorado construction project, was the latest in a series of loan agreements with Colorado lenders in which Hayes was a guarantor and as of 2012 a "co-borrower," the loan was payable in Colorado, secured by Colorado collateral, the co-borrower was in Colorado and the note was assigned to plaintiff located in Colorado. These were not the type of conclusory allegations of transaction of business in the forum state found wanting in Cognat, 224 P.3d at 1052 and Wenz, 55 F.3d at 1509. Nor was Hayes’ conduct directed to Colorado simply entering into a contract with a Colorado party as in New Frontier, 85 P.3d at 614 (two letters sent to Colorado), or Greenway Nutrients, 33 F.Supp.3d at 1238 (nondisclosure agreement), but rather Hayes was guarantor and later co-borrower on a loan whose promissory note provides for Colorado jurisdiction to fund a Colorado project in which Hayes was an interested party.
The supplemental submission of exhibits make it even clearer that these related transactions, and Hayes’ involvement, had a strong connection to Colorado over a considerable period of time since at least 2005.
Hayes did not expressly agree to be subject to Colorado jurisdiction.
These facts would have sufficed to make a prima facie case under Colorado law if defendant had appeared and moved to dismiss the Colorado action. See Align, 421 P.3d at 171; Panos, 662 P.2d at 183. Hayes apparently decided not to challenge jurisdiction in the Colorado Court, but to default and wait to challenge jurisdiction until plaintiff sought to enforce the judgment here. When a defendant defaults by failure to appear in the original forum and judgment enters on the default there is usually no record to establish jurisdiction other than allegations in the complaint; determination of whether personal jurisdiction was properly exercised over defendant is done when there is a proceeding to enforce the judgment in another forum and the issue is squarely presented. There is no good reason to restrict review of jurisdictional facts to the limited record before the Court when it entered the default judgment. Compare Keefe, 40 P.3d at 1272 ("[a] prima facie showing of threshold jurisdiction may be determined from allegations set forth in the complaint as well as from evidence introduced in any hearing conducted on the matter and is sufficient") (Colo. law) and Maltas, 296 Conn. at 363 n.9 (evidentiary hearing on disputed jurisdictional facts). Although the allegations in the complaint and exhibits thereto would have sufficed for a finding of jurisdiction by the Colorado Court, the evidence submitted in support of the motion before this Court further establishes that the Colorado Court had jurisdiction to enter the default judgment against Hayes.
"A plaintiff makes a prima facie showing when he or she raises a reasonable inference, whether in the complaint or in other documentary evidence, that the court has jurisdiction over the defendant ... ‘Documentary evidence consists of the allegations in the complaint, as well as affidavits and any other evidence submitted by the parties.’ ‘[T]he allegations in the complaint must be accepted as true to the extent that they are not contradicted by the defendant’s competent evidence, and where the parties’ competent evidence presents conflicting facts, these discrepancies must be resolved in the plaintiff’s favor.’ ... Thus, where a plaintiff has alleged sufficient facts to support a reasonable inference that a defendant engaged in conduct meeting the threshold personal jurisdiction standard, the plaintiff has made a sufficient showing to withstand a motion to dismiss.’" Align, 421 P.3d at 171 (citations omitted).
Once plaintiff made its prima facie case on this motion the burden then shifted to defendant to show by evidential proof there are genuine issues of material fact concerning the enforceability of the foreign judgment. See Connell, 214 Conn. at 246.
Hayes failed to demonstrate that the Colorado Court improperly exercised personal jurisdiction over him in the underlying action by submission of evidence that tended to prove that he did not have minimum contacts with Colorado sufficient to subject him to longarm jurisdiction in the underlying action under Colorado law and to satisfy constitutional due process. Hayes declined the Court’s invitation to file supplemental briefing and affidavits in response to plaintiff’s submissions in support of the motion.
The motion for summary judgment is granted. Plaintiff shall submit an affidavit and proposed judgment stating the total amount due as of this date and the method of calculation by January 28, 2020. Any objection thereto shall be filed by February 4, 2020.