Cash Register Sales & Services of Houston, Inc. v. Copelco Capital, Inc.

Citations: 62 S.W.3d 278; 2001 Tex. App. LEXIS 7834; 2001 WL 1475057Docket: 01-99-01167-CV

Court: Court of Appeals of Texas; November 21, 2001; Texas; State Appellate Court

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The Court of Appeals of Texas addressed the validity of a collateral attack on the enforcement of a foreign judgment from New Jersey, where the appellant, Cash Register Sales and Services of Houston, Inc. (CRS), contested the jurisdiction of the New Jersey court based on the argument that the individual who signed the contract lacked authority. The trial court rejected this argument, leading to an affirmation of its decision. 

On May 27, 1999, a New Jersey trial court issued a default judgment in favor of Copelco Capital, Inc., awarding $3,557.28 in debt and $131.15 in costs against CRS. Copelco subsequently filed for domestication of this judgment in Texas, to which CRS responded with a motion to vacate, supported by affidavits from its president and bookkeeper. The trial court denied this motion and also denied CRS's motion for reconsideration.

Under the "full faith and credit" clause of the U.S. Constitution, Texas is required to treat the New Jersey judgment as it would its own, establishing a prima facie case for enforcement once Copelco filed an authenticated copy. The burden then shifted to CRS to demonstrate why the judgment should not be enforced, which required clear and convincing evidence to overcome the presumption of validity. The document further clarified that any defense against the enforcement of a foreign judgment constitutes a collateral attack.

In a collateral attack on a judgment from another state, defenses related to the merits of the original case cannot be raised. A judgment debtor may contest the jurisdiction of the sister state based on inadequate service of process or a lack of minimum contacts that would violate due process. CRS challenges the New Jersey judgment on the basis of insufficient minimum contacts, asserting it is a Texas corporation with no presence or business activities in New Jersey, and has never engaged in transactions or maintained accounts there. CRS's affidavit details its lack of connections, including no travel, advertising, or tax payments to New Jersey. Although a bookkeeper signed a rental agreement related to the case, CRS argues that this does not establish agency or authority, claiming her signature was a result of fraudulent inducement by the Minolta agent. Consequently, CRS contends that it had no meaningful contact with New Jersey, making it burdensome to defend itself there, and thus, New Jersey lacked personal jurisdiction over it.

New Jersey lacks personal jurisdiction over CRS, rendering any judgment against CRS by a New Jersey court unenforceable and requiring it to be vacated. Copelco contends that: 1) Minimum contacts with New Jersey are not necessary because the contractual provision in which CRS consented to New Jersey jurisdiction is valid under Texas, New Jersey, and federal law; 2) Even if minimum contacts were required, they exist; and 3) Any defenses, such as lack of authority of the signatory or fraudulent inducement, must have been raised in the New Jersey lawsuit and are now untimely.

A collateral attack on a sister state's judgment, under the full faith and credit clause, can succeed only if the rendering court lacked jurisdiction over the person, subject matter, or the judgment itself, or lacked the capacity to act. The enforcement of a sister state's judgment cannot relitigate the original case's merits. Evidence was presented showing that CRS consented to New Jersey's jurisdiction in a contract with Copelco, the assignee of Minolta, though CRS argues the contract is invalid due to an unauthorized signature. However, CRS's objections pertain to the case's merits rather than jurisdiction. CRS did not provide sufficient evidence to challenge the validity of the New Jersey judgment, leading to the trial court's correct denial of CRS's motion to vacate the judgment, which is affirmed.

Justice Nuchia dissents, asserting that a contractual forum selection clause alone does not establish minimum contacts, referencing precedent that indicates personal jurisdiction can be waived and that the reasonableness of such clauses is critical. A similar New Jersey case declined to enforce a New York judgment due to potential fraud in the contract with the forum selection clause.

The New Jersey court's jurisdiction over Cash Register Sales and Services of Houston, Inc. (CRS) was solely based on a forum selection clause in a lease agreement with Minolta Business Systems. Affidavits from Smith and Domicolo demonstrated a lack of minimum contacts between CRS and New Jersey, aside from the lease agreement. It was asserted that the forum selection clause was not reasonably negotiated. Copelco Capital, Inc. did not dispute CRS's claims regarding the absence of minimum contacts or the representations made by Minolta during the lease execution. The trial court's denial of CRS's motion to vacate the New Jersey judgment was deemed incorrect. The summary indicates that CRS received proper service under New Jersey’s long-arm statute and did not contest the service specifics. Domicolo's affidavit claimed she lacked authority to sign on CRS's behalf. The lease agreement specified it was a finance lease under UCC Article 2A and included clauses on assignment rights and consent to jurisdiction in New Jersey, allowing for service of process via certified mail. Overall, the court should reverse the trial court's decision and grant CRS's motion to vacate the judgment.