Obtaining a judgment in a case is one thing, but knowing what to do with that judgment is equally important. Knowing what to do with a judgment can make the difference between satisfying that judgment with assets or having a worthless paper judgment.
In Cadlerock Joint Venture, L.P. v. Simms, New York’s Appellate Division, Second Department recently clarified a key point for anyone attempting to enforce a judgment across state lines, concluding that to domesticate a judgment in New York State, you do not need personal jurisdiction over the debtor in New York to enforce a valid judgment from another state.
Cadlerock held a $668K default judgment from North Carolina against Simms. Simms lived in North Carolina, had no property or business in New York, and argued that without personal jurisdiction, the court could not enforce the judgment in New York. The trial court agreed and dismissed the case.
On appeal, the Second Department reversed, relying on the Full Faith and Credit Clause of the United States Constitution. Once a valid judgment is entered in another state and the issuing court had jurisdiction, New York’s role in recognizing it is largely ministerial. The court does not get to revisit the merits or require that the debtor have contacts with New York.
The decision is good news for judgment enforcement. If you have a valid out-of-state judgment, you can domesticate it in New York even if the debtor has zero contacts here. However, if the debtor has no assets in New York, domestication of the judgment does not produce them. Nonetheless, the decision builds reciprocity with its other sister states. New York’s willingness to honor other states’ judgments encourages other states to honor New York judgments when roles are reversed.
In short, the Second Department reinforced that the key jurisdictional question is with the state that issued the judgment, not with the state where you seek to enforce it.
Gerber Ciano Kelly Brady LLP has a robust commercial practice, with lawyers skilled in answering your questions and helping you when you have a judgment to enforce in New York. Please feel free to contact Thomas Bona or Matthew Lerner.
Thomas Bona, Partner tbona@gerberciano.com
Matthew Lerner, Partner mlerner@gerberciano.com
