September 16, 2019

September 16, 2019

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Man Barely Hangs on to His Home (For Now), After Being Hit With $12.5 M Personal Judgement for Alleged TCPA Violation

As some of you may recall, Gene Kalsky, CEO of Gen-Kal Pipe & Steel Corporation, was hit with a crippling $12.5 million personal judgment after sending a fax in violation of the TCPA to a company in Pope County, Arkansas. On top of the crushing legal award, a court then issued an order granting Plaintiff’s motion to levy and sell Kalsky’s home in Cape May County, New Jersey. However, Kalsky appealed the order and the New Jersey Court of Appeals has now reversed and remanded.

To provide some background, the controversy stems from a judgment entered by a trial court in Pope County, Arkansas. In that case, Plaintiff filed a class action against Gen-Kal and Kalsky, alleging that Gen-Kal sent a blast fax in violation of the TCPA. Plaintiff further alleged that Kalsky was personally liable under a piercing the corporate veil theory. After the court certified the class action, Plaintiff served notices to admit on Gen-Kal and Kalsky, to which they did not respond. The court granted summary judgment in favor of Plaintiff and entered judgment jointly against the Defendants in the amount of $12.5 million on grounds that the failure of Kalsky and Gen-Kal to respond had the same effect as an admission to sending the unsolicited faxes to 25,000 phone numbers.

After the judgment was entered, Plaintiff domesticated the judgment in New Jersey by filing it with the Clerk of the Superior Court. Plaintiff then caused a writ of execution to be issued, directing the Sheriff of Cape May County to execute against Kalsky’s personal home in satisfaction of the judgment and filed a motion to levy and sell the property. The court granted plaintiff’s motion.

On December 17, 2018, Defendants appealed the order directing sale of the property, and raised the following points for review: (1) the court failed to consider and resolve valid due process objections to the Arkansas judgment; (2) in the alternative, proceedings should have been held in abeyance pending resolution of Gene Kalsky’s challenges to the validity of the judgment; (3) the decision is unclear, ambiguous, and fails to comply with relevant procedural requirements. At its core, the appeal focused on whether Arkansas had personal jurisdiction over Defendants such that the Arkansas judgment should be given comity in New Jersey.

The appellate court reversed and remanded the trial court’s decision and held that the trial court failed to properly consider Defendants’ objections to the personal jurisdiction of the Arkansas court before affording full faith and credit to the Arkansas judgment. In support of its holding, the court noted that the United States Constitution requires that “Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial proceedings of every other State.” However, New Jersey courts will not give full faith and credit to a judgment where the court of the sister state lacked jurisdiction or where there was a denial of due process. Here, the trial court did not address whether the Arkansas court had personal jurisdiction over either Kalsky or Gen-Kal and thereby failed to ensure that the Arkansas judgment was “issued by a court of competent jurisdiction in possession of valid personal jurisdiction over the defendants.” As such, the court vacated the trial court’s order granting Plaintiff’s motion to levy and sell Kalsky’s property.

While Kalsky’s home survives (for now), this case demonstrates the far-reaching consequences that the TCPA has on not only legitimate American businesses but also its potential to impact the lives of business owners and executives. The TCPA, adopted in 1991, was a bipartisan effort to tackle a specific problem – the barrage of telemarketing calls to people’s homes. However, the TCPA has been expanded exponentially since its inception, opening the floodgates for frivolous lawsuits against business and individuals alike. Its effects are being felt in ways that were presumably never intended by the drafters of the statute. And, as Mr. Kalsky’s story demonstrates, the disproportionate nature of the damages under the TCPA can threaten a person’s livelihood and their home.

Copyright © 2019 Womble Bond Dickinson (US) LLP All Rights Reserved.

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About this Author

Susan Nikdel, Womble, litigation attorney
Associate

Susan represents clients in commercial and financial services litigation, particularly Telephone Consumer Protection Act (TCPA) cases. She is part of a team that has handled more than 600 TCPA cases, including more than 50 national class actions.

Prior to beginning her legal career, Susan served as a Judicial Extern for the Honorable Theodor C. Albert in the U.S. Bankruptcy Court, Central District of California.  She is a Certified Mediator.

Susan is fluent in Farsi/Persian and conversational in Spanish.

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