Case Title: State v. Murchison

Citation: 

Docket Number: 232PA13

State: north-carolina

Court: North Carolina Supreme Court

Date: 2014-06-12T00:00:00Z

Document:
NO. COA12-783 
NORTH CAROLINA COURT OF APPEALS 
Filed: 15 January 2013 
 
 
DOCRX, INC., 
 
Plaintiff-Appellant, 
 
 
 
 
v. 
 
Stanly County 
No. 11 CVS 000911 
EMI SERVICES OF NC, LLC, 
Defendant-Appellee. 
 
 
 
 
Appeal by Plaintiff from order entered 6 February 2012 by 
Judge W. David Lee in Superior Court, Stanly County.  Heard in 
the Court of Appeals 27 November 2012. 
 
Henson & Talley, LLP, by Karen Strom Talley and Perry C. 
Henson, Jr., for Plaintiff-Appellant. 
 
Chapman Law Group, PLC, by Avery S. Chapman; and Jackson & 
McGee, LLP, by Sam McGee and Gary W. Jackson, for 
Defendant-Appellee. 
 
 
McGEE, Judge. 
 
 
DOCRX, Inc. (Plaintiff) appeals from an order denying its 
motion to enforce a foreign judgment pursuant to the Uniform 
Enforcement of Foreign Judgments Act, N.C. Gen. Stat. §§ 1C-1701 
to -1708.  For the reasons below, we vacate the order and remand 
for further proceedings. 
The undisputed facts are that Plaintiff filed a Request To 
File Foreign Judgment in Superior Court in Stanly County on 2 
-2- 
August 2011.  Plaintiff presented a certified copy of a default 
judgment order (the Alabama judgment) entered against EMI 
Services of North Carolina, LLC (Defendant) in the amount of 
$453,683.14, on 1 April 2011 in the Circuit Court of Mobile 
County, Alabama.  Defendant filed a Motion For Relief From And 
Notice Of Defense To Foreign Judgment on 25 August 2011.  
Defendant argued, inter alia, that the Alabama judgment was 
obtained by extrinsic fraud.  Plaintiff filed a motion to 
dismiss Defendant's defense of extrinsic fraud pursuant to N.C. 
Gen. Stat. § 1A-1, Rule 12(b)(6).  Plaintiff also filed a Motion 
To Enforce Foreign Judgment As A North Carolina Judgment on 2 
December 2011.  Defendant filed an Amended Motion For Relief 
From And Notice Of Defense To Foreign Judgment on 17 January 
2012, and altered its motion by adding a request for relief from 
the judgment based on fraud, pursuant to N.C. Gen. Stat. § 1A-1, 
Rule 60(b).  The trial court heard the matter on 30 January 
2012, and entered an order on 6 February 2012 denying 
Plaintiff's motion to enforce the Alabama judgment as a judgment 
of the State of North Carolina.  Plaintiff appeals. 
On appeal, Plaintiff raises the issue of whether the trial 
court erred in denying Plaintiff's motion to enforce the Alabama 
judgment as a judgment of North Carolina.  In its order, the 
trial court first determined that the affidavits and exhibits 
-3- 
submitted by Defendant supported Defendant's argument that 
Plaintiff obtained the Alabama judgment as a result of fraud.  
The trial court then determined that N.C. Gen. Stat. § 1C-
1703(c) entitled Defendant to raise against enforcement of the 
Alabama judgment "'the same defenses as a judgment of this 
State[.]'"  The trial court then stated that relief under N.C. 
Gen. Stat. § 1A-1, Rule 60(b) was available if the trial court 
determined 
that 
"there 
was 
"fraud 
(whether 
heretofore 
denominated intrinsic or extrinsic), misrepresentation, or other 
misconduct of an adverse party."  Finally the trial court 
concluded that: 
This [c]ourt concludes that in accordance 
with NCRCP 60(b)(3) the intrinsic fraud, 
misrepresentation 
and 
misconduct 
of . . . [P]laintiff 
in 
obtaining 
the 
underlying 
Alabama 
judgment 
precludes 
enforcement of the Alabama judgment as a 
judgment of this State. 
 
The appellate courts of our State have not yet addressed 
the nature of the relationship between the Full Faith and Credit 
Clause and N.C. Gen. Stat. § 1A-1, Rule 60(b).  Traditionally, 
foreign judgments have been subject to attacks on limited 
grounds:  
North Carolina may set aside another state's 
judgment, but only where it is shown that 
the court lacked jurisdiction, or that the 
judgment was procured through fraud. Thomas 
v. Frosty Morn Meats, Inc., 266 N.C. 523, 
146 S.E.2d 397 (1966).  The type of fraud 
-4- 
which must be alleged in order to attack a 
foreign judgment is extrinsic fraud.  Horn 
v. Edwards, 215 N.C. 622, 3 S.E.2d 1 (1939). 
The general rule is that 
 
[e]quity 
will 
not 
interfere 
in 
an 
independent action to relieve against a 
judgment on the ground of fraud unless 
the fraud complained of is extrinsic 
and collateral to the proceeding, and 
not intrinsic merely—that is, arising 
within 
the 
proceeding 
itself 
and 
concerning 
some 
matter 
necessarily 
under the consideration of the court 
upon the merits.  
 
Id. at 624, 3 S.E.2d at 2. (Citations 
omitted). (Emphasis added). 
 
Hewett v. Zegarzewski, 90 N.C. App. 443, 446, 368 S.E.2d 877, 
878 (1988) (emphasis added).  Our Courts have continued to 
recite this general concept.  See First-Citizens Bank & Tr. Co. 
v. Four Oaks Bank & Tr. Co., 156 N.C. App. 378, 380, 576 S.E.2d 
722, 724 (2003) ("However, to make a successful attack upon a 
foreign judgment on the basis of fraud, it is necessary that 
extrinsic fraud be alleged." (citations and quotation marks 
omitted)).  In Florida National Bank v. Satterfield, 90 N.C. 
App. 105, 107, 367 S.E.2d 358, 360 (1988), this Court observed 
that "[t]he Full Faith and Credit Clause of the United States 
Constitution requires North Carolina to enforce a judgment 
rendered in another state, if the judgment is valid under the 
laws of that state."  Id.  We further stated in Florida National 
Bank that: "A foreign judgment may be collaterally attacked only 
-5- 
on the grounds that it was obtained without jurisdiction; that 
fraud was involved in the judgment's procurement; or that its 
enforcement would be against public policy."  Id.  We also 
stated that "[a]lthough extrinsic fraud is a defense to an 
action to recover on a foreign judgment, intrinsic fraud is 
not."  Id. 
However, 
our 
General 
Assembly 
enacted 
the 
Uniform 
Enforcement of Foreign Judgments Act (UEFJA) in 1989.  See N.C. 
Gen. Stat. § 1C-1701 et seq.  Under UEFJA, foreign judgment 
debtors 
may file a motion for relief from, or notice 
of defense to, the foreign judgment on the 
grounds that the foreign judgment has been 
appealed 
from, 
or 
enforcement 
has 
been 
stayed by, the court which rendered it, or 
on any other ground for which relief from a 
judgment of this State would be allowed. 
 
N.C. Gen. Stat. § 1C-1705(a) (2011).  Likewise, N.C. Gen. Stat. 
§ 1C-1703(c) (2011) states that "[a] judgment so filed has the 
same effect and is subject to the same defenses as a judgment of 
this State and shall be enforced or satisfied in like manner[.]"  
Defendant contends this statute entitles a foreign judgment 
defendant to utilize any defense applicable to an in-state 
judgment.  As discussed above, in the present case, the trial 
court agreed and it utilized Rule 60(b) to set aside the Alabama 
judgment; indeed, such an interpretation is warranted from the 
-6- 
plain 
language 
of 
the 
statute. 
 
There 
remain, 
however, 
constitutional implications that must be determined. 
As stated above, our Courts have not yet addressed the 
interplay between N.C.G.S. § 1C-1705, N.C.G.S. § 1A-1, Rule 
60(b), and the United States Constitution.  However, case law 
from other jurisdictions has addressed this issue involving 
similar statutes.  For example, the appellate courts of Utah 
have concluded that "the remedies available under Rule 59 and 60 
are limited by the Full Faith and Credit Clause of the United 
States Constitution when a foreign judgment is at issue."  
Bankler v. Bankler, 963 P.2d 797, 799-800 (Utah App. 1998).  In 
Bankler, the Utah Court of Appeals noted that: 
"[n]either Rule 60(b) nor our Utah Foreign 
Judgment Act allows our Utah courts to 
reopen, 
reexamine, 
or 
alter 
a 
foreign 
judgment duly filed in this state, absent a 
showing of fraud or the lack of jurisdiction 
or due process in the rendering state. Only 
these defenses may be raised to destroy the 
full faith and credit owed to the foreign 
judgment sought to be enforced under the 
Foreign Judgments [sic] Act." 
 
Id. at 799 (citation omitted).   
Likewise, the Supreme Court of Montana addressed this issue 
in Carr v. Bett, 970 P.2d 1017 (Mont. 1998), holding that: "We 
disagree with [the proposition that] . . . . a foreign judgment 
duly filed in Montana can be subjected to the same defenses and 
proceedings for reopening or vacating as a domestic judgment, 
-7- 
and remain consistent with full faith and credit."  Id. at 1024.  
The Montana court held that "the only defenses that may be 
raised to destroy the full faith and credit obligation owed to a 
final judgment are those defenses directed at the validity of 
the foreign judgment."  Id.  Finally, the Montana court 
determined that: 
certain defenses such as lack of personal or 
subject matter jurisdiction of the rendering 
court, fraud in the procurement of the 
judgment, lack of due process, satisfaction, 
or other grounds that make the judgment 
invalid or unenforceable may be raised by a 
party seeking to reopen or vacate a foreign 
judgment filed in Montana. These defenses 
have been recognized by other states that 
have held that the language similar to that 
found in § 25-9-503, MCA, does not allow the 
merits of a foreign judgment to be reopened 
or reexamined by the state where it is 
recorded.   
 
Id. at 1024-25.  The Colorado Court of Appeals has held 
similarly.  See Craven v. Southern Farm Bureau Cas. Ins., 117 
P.3d 11, 14 (Colo.App. 2004) ("Postjudgment relief available 
from foreign judgments under C.R.C.P. 60(b) is limited to the 
following grounds: (1) the judgment is based upon extrinsic 
fraud; (2) the judgment is void; or (3) the judgment has been 
satisfied, released, or discharged, or a prior judgment upon 
which it is based has been reversed or otherwise vacated, or it 
is no longer equitable that the judgment should have prospective 
application.").  
-8- 
In opposition, Defendant cites two Third Circuit Court of 
Appeals cases in his discussion of Federal Rule of Civil 
Procedure 60(b), and argues that any distinction between 
intrinsic and extrinsic fraud is "meaningless."  In Averbach v. 
Rival Mfg. Co., 809 F.2d 1016 (3rd Cir. 1987), the Third Circuit 
Court of Appeals discussed, but did not rule on, the "'most 
unfortunate'" distinction between extrinsic and intrinsic fraud 
when considering relief from a judgment.  Defendant also cites 
Publicker v. Shallcross, 106 F.2d 949 (3rd Cir. 1939), and argues 
that "the distinction between types of fraud under Rule 60(b) is 
chimerical and not easily ascertainable."  However, we first 
note that decisions of the Court of Appeals for the Third 
Circuit are not binding on our Court when interpreting the laws 
of our State.  Further, the cases on which Defendant relies 
appear to criticize the distinction between intrinsic and 
extrinsic fraud in similar circumstances, but they do not 
abolish such distinction. 
We find the reasoning of the Utah, Montana and Colorado 
appellate courts persuasive, and hold that in North Carolina, 
"the remedies available under Rule . . . 60 are limited by the 
Full Faith and Credit Clause of the United States Constitution 
when a foreign judgment is at issue."  Bankler, 963 P.2d at 799-
800.  We hold that postjudgment relief from foreign judgments 
-9- 
under N.C.G.S. § 1A-1, Rule 60(b) is limited to the following 
grounds: "(1) the judgment is based upon extrinsic fraud; (2) 
the judgment is void; or (3) the judgment has been satisfied, 
released, or discharged, or a prior judgment upon which it is 
based has been reversed or otherwise vacated, or it is no longer 
equitable 
that 
the 
judgment 
should 
have 
prospective 
application."  Craven, 117 P.3d at 14. 
In the past, this Court has, without addressing this 
framework explicitly, held in accordance with these principles.  
In Moss v. Improved B.P.O.E., 139 N.C. App. 172, 177, 532 S.E.2d 
825, 829 (2000), this Court observed: 
For a foreign judgment to be accorded full 
faith and credit in North Carolina, and 
thereby survive a Rule 60(b) motion, "the 
rendering court must . . . have respected 
the demands of due process.  That is, the 
rendering court must . . . have afforded the 
parties adequate notice and opportunity to 
be heard before full faith and credit will 
be accorded the judgment.   . . . . [I]t 
follows that when a party against whom a 
default was entered subsequently challenges 
the validity of the original proceeding on 
grounds that he did not receive adequate 
notice, the reviewing court ordinarily must 
examine the underlying facts in the record 
to determine if they support the conclusion 
that the notice given of the original 
proceeding was adequate." 
 
Id. at 177, 532 S.E.2d at 829.  Further, in Walden v. Vaughn, 
157 N.C. App. 507, 579 S.E.2d 475 (2003), this Court ruled that: 
The 
'Uniform 
Enforcement 
of 
Foreign 
-10- 
Judgments 
Act' 
(Act) 
provides 
that 
a 
judgment 
from 
another 
state, 
filed 
in 
accordance with the procedures set out in 
the Act, has the same effect and is subject 
to the same defenses as a judgment issued by 
a North Carolina court and shall be enforced 
or satisfied in a like manner.  
 
Id. at 510, 579 S.E.2d at 477 (citation omitted).  We then 
observed that "[i]n North Carolina, accord and satisfaction is a 
valid defense against a claim to enforce a judgment."  Id.  
Finally, we concluded that "the trial court did not err in 
considering defendants' defense of accord and satisfaction."  
Id.    
For the foregoing reasons, we hold in the present case 
that, while the trial court's analysis is thorough and reasoned, 
the trial court did not have the benefit of the determination 
herein that the application of Rule 60(b) to a foreign judgment 
is limited by traditional interpretations of the Full Faith and 
Credit Clause.  Plaintiff's motion to enforce the Alabama 
judgment should have been denied only if "(1) the judgment [was] 
based upon extrinsic fraud; (2) the judgment [was] void; or (3) 
the judgment [had] been satisfied, released, or discharged, or a 
prior judgment upon which it [was] based [had] been reversed or 
otherwise vacated, or it [was] no longer equitable that the 
judgment should have prospective application."  Craven, 117 P.3d 
at 14.  In the present case, the trial court denied Plaintiff's 
-11- 
motion to enforce the Alabama judgment on the grounds of 
"intrinsic fraud, misrepresentation and misconduct."  As we have 
held, these grounds are not sufficient under the Full Faith and 
Credit Clause to warrant the trial court's denial of Plaintiff's 
motion to enforce the Alabama judgment.  We therefore vacate the 
trial court's order and remand for further proceedings. 
Vacated and remanded. 
Judges HUNTER, Robert C. and ELMORE concur.