Judgments Entered by Confession are Enforceable in New Jersey
In a reported decision issued June 19, 2015, Ewing Oil, Inc. v. John T. Burnett, Inc., the Appellate Division rejected a challenge to enforcement in New Jersey of a judgment entered by confession in Maryland and held that such judgments must be enforced by New Jersey courts pursuant to the Full Faith and Credit clause of the United States Constitution. While judgments by confession are generally disfavored in New Jersey, if a judgment is properly entered in a state which authorizes such judgments, the judgment creditor may register and enforce the judgment in New Jersey.
The plaintiff, Ewing Oil Co., Inc., entered into a commercial supply agreement (“CSA”) with John T. Burnett, Inc. (“JTB, Inc.”) to supply gasoline and other petroleum products to JTB, Inc. The obligations of JTB, Inc. under the CSA were guaranteed by John T. Burnett, Henry A. Jackson, and C & H Tire Service, Inc. The Guaranty contained provisions whereby the Guarantors consented to the entry of judgment against them in Maryland. JTB, Inc. breached the CSA. Plaintiff obtained a judgment against JTB, Inc. and the Guarantors in Maryland on December 6, 2011. The judgment was served on the defendants. The Maryland judgment was recorded in New Jersey on July 24, 2012. John T. Burnett died on August 13, 2012. His executrix moved to vacate the foreign judgment pursuant to Rule 4:50-1(d), challenging its validity and enforceability.
The trial court denied the motion, finding that the Maryland judgment was entered in accordance with Maryland procedure and law, that Burnett had a fair opportunity to challenge the validity of the judgment in Maryland, after its entry, but failed to timely do so and, in light of the Full Faith and Credit clause, New Jersey’s recognition of the foreign judgment would not violate due process.
On appeal, the estate sought to argue that the absence of pre-judgment notice violates basic due process, that Burnett’s right to pre-judgment notice was not voluntarily, intelligently, and knowingly waived, and that New Jersey was the only forum with jurisdiction to determine compliance with due process requirements and the enforceability of the confession of judgment clause. The Appellate Division rejected these arguments and held that the judgment must be enforced in New Jersey.
The court discussed the Full Faith and Credit Clause of the United States Constitution and stated that “any judgment properly executed in a foreign state, which complies with the requirements of the due process clause is entitled to full faith and credit in New Jersey.” A foreign judgment is not entitled to full faith and credit in New Jersey if the forum state lacked personal or subject matter jurisdiction or if a defendant was denied adequate notice and a reasonable opportunity to be heard. Maryland law does provide an opportunity whereby the defendant can challenge the entry of the judgment after it is entered. Any such challenge must be brought within 60 days of service.
The court rejected the assertion that Burnett’s waiver of pre-judgment notice was not voluntary. The Guaranty was clearly written and the waiver provisions were boldly identified. Maryland law places the burden on the defendant when moving to vacate the judgment to show that the agreement was not knowingly and voluntarily entered into.
The court also rejected the estate’s due process challenge. The court held that the procedure for challenging the judgment in Maryland within 60 days of its entry did not violate due process. The court held that any substantive defenses to the judgment could and should have been presented in Maryland.
This opinion is in line with earlier opinions in which judgment debtors unsuccessfully sought to challenge enforcement of foreign judgments in New Jersey by arguing that the underlying claim was contrary to the public policy of New Jersey. As long as the forum court possesses personal jurisdiction over the defendant and the judgment is not entered in violation of due process, the judgment will be enforceable in New Jersey even though the underlying claim could not have been successfully asserted in a New Jersey court.