Past Appearance Gave Rise to Ongoing Jurisdiction

Friday, June 13, 2008

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Past Appearance Gave Rise to Ongoing Jurisdiction—C.A.

By STEVEN M. ELLIS, Staff Writer

California courts’ ongoing personal jurisdiction over an out-of-state defendant to renew a judgment also extends to an independent action on that judgment, the Fourth District Court of Appeal ruled yesterday.

Concluding that Orange Superior Court Judge H. Warren Siegel erred when he quashed a summons against Wayne Fiscus in an independent action to enforce a 1992 judgment, Div. Three held that Fiscus, by defending the original action, had purposefully established minimum contacts with the state that supported the continuing exercise of specific personal jurisdiction over him.

The Best Service Company filed suit against Fiscus in 1991 after he defaulted on a 1987 promissory note executed in California that Union Bank had transferred to Best.

Fiscus, then a resident of Arizona, answered the complaint, but a judgment was entered against him in San Mateo County in 1992 for $14,800.45.

Best assigned the unsatisfied judgment in 2001 to Cadle Company II, Inc., who filed an application early in 2002 with the clerk of the San Mateo Superior Court to renew the judgment pursuant to the state’s Enforcement of Judgments Law.

The law provides an alternative summary procedure for renewing judgments, under which a money judgment is enforceable for 10 years from the date it was entered so long as the judgment creditor seeking renewal files an application within that time.

Cadle served Fiscus with a notice of the renewed judgment, which he did not challenge.

However, the EJL does not limit a creditor’s right to pursue an independent action on a judgment, and in 2006, Cadle filed such an action seeking enforcement of the judgment in the Orange Superior Court.

Fiscus, arguing the court lacked personal jurisdiction, filed a motion to quash service of the summons. In support, he declared that he has been a resident of Arizona since 1987, and does not own property, conduct business, or maintain a residence in California.

Cadle did not dispute Fiscus’ factual assertions, but contended that the 1992 judgment itself gave the court personal jurisdiction. Explaining that the State of Arizona has a five-year statute of limitations for enforcement of a sister state judgment, Cadle contended that the judgment could not be domesticated and enforced in Arizona, even though it was still enforceable in California.

As a result, Cadle argued, its only recourse was to file an independent action based on the still enforceable judgment in California and obtain a new judgment that could then be domesticated and executed upon in Arizona.

Siegel, reasoning that there must be a new and current basis for asserting personal jurisdiction over a defendant when an independent action to enforce a judgment is filed, granted Fiscus’ motion.

However, on appeal, Justice Kathleen O’Leary rejected this conclusion and said that the relevant contacts to examine were those between the defendant and the state at the time of entry of the original judgment, not the defendant’s contacts at the time the independent action was filed.

Noting that California’s long-arm statute bestows on courts the broadest grant of jurisdiction consistent with due process, she concluded that there is “nothing unreasonable about subjecting Fiscus to the jurisdiction of California courts” because he “entered into a contract in California (the promissory note), that was to be performed in California (i.e., payment of the debt), which he breached when he failed to repay the debt,” and submitted to the jurisdiction of the California court when he appeared in the original action.

“A money judgment was entered against Fiscus in California, and he has failed to pay his obligations,” O’Leary wrote. “We cannot agree the passage of time between the original California litigation and the revival action, during which Fiscus has had no additional contacts with the State of California, defeats personal jurisdiction as concerns the enforcement of the 1992 judgment.

“Such a conclusion could encourage judgment debtors to evade legal obligations imposed by a judgment of this state’s courts by simply packing up their assets and leaving the jurisdiction. Under the circumstances, it is not unfair to require Fiscus to submit again to the jurisdiction of the California courts in a suit based upon the judgment previously entered on the same claim.

Presiding Justice David G. Sills and Justice Raymond J. Ikola joined O’Leary in her opinion.

The case is The Cadle Company II, Inc. v. Fiscus, G039037.