Opinion ID: 1634436
Heading Depth: 2
Heading Rank: 4

Heading: Would the Louisiana default judgment be annulled by a Louisiana Court?

Text: Points of Error C and D are discussed together as they involve similar issues and standards of review. In addition, these two points of error roughly parallel the two prongs of a test set forth by this Court to determine whether a judgment of a foreign court which had proper jurisdiction over the parties should nevertheless not be enforced. This Court noted in Reeves Royalty Co., Ltd. v. ANB Pump Truck Service, 513 So.2d 595 (Miss. 1987) that, with regard to the rule of law requiring this Court to grant full faith and credit to foreign judgments: One qualification to this rule, however, recognized by courts of all states, is that if the foreign judgment itself was obtained as a result of some false representation without which the judgment would not have been rendered, and (emphasis added) of such nature that the court of that state would relieve the judgment debtor from its effect, a court of this state may refuse to enforce it. This was the law in this state prior to adoption of the Uniform Enforcement of Judgments Act and the Act was not intended to alter this rule. (citation omitted). Reeves, 513 So.2d at 598. Thus, as this Court made clear in Reeves, Cappaert and Way must clear two hurdles in establishing that the circuit court was in error in enforcing the Louisiana judgement. First, they must show that the Louisiana judgment was obtained as a result of some false statement or misrepresentation without which the judgment would not have been rendered. Secondly, they must establish that the judgment would not be enforced upon collateral attack in a Louisiana court. With regard to the first prong of the test discussed in Reeves, Cappaert asserts that a misrepresentation occurred in the form of Walker, Bordelon partner Ashton Hardy's alleged statement to Wren Way in which, Way claims, Hardy assured Way that Walker, Bordelon would not seek to collect the debt from anyone other than David Price. As Cappaert notes in his brief, Reeves involved a similar assurance by a creditor that he would not seek to enforce the judgment against Reeves, which, Reeves claimed, led him to not defend against the lawsuit. Reeves is distinguishable, however, given that Reeves, unlike Cappaert and Way, filed an answer in said suit but failed to defend against it after allegedly receiving the assurances in question. The circuit judge in Reeves was skeptical of Reeve's claim, and the circuit judge in the present case similarly stated that he did not consider the evidence to have been clear and convincing that Hardy actually made the statements attributed to him by Way. The circuit judge in the present case noted in his ruling that: Some testimony was adduced by Way as to an agreement not to pursue the actions against the Defendants if Price signed and returned certain documents. No evidence was introduced that these documents were ever returned to Plaintiffs and these attempted arrangements took place prior to (emphasis in original ruling) the demand letters and summons with complaint. Not only did the Defendants fail to prove such extrinsic fraud by clear and convincing evidence, the evidence was clear that no such extrinsic fraud was perpetrated upon Defendants. Thus, the circuit judge did not consider Way's testimony to have established by clear and convincing evidence that such a fraud was committed in the procurement of the judgment. Moreover, the present case can be distinguished from Reeves in two additional ways. First, although this Court noted in Reeves that the trial judge had been skeptical of the testimony of Reeves regarding the assurance that the suit would not be pursued, it was emphasized that Reeve's testimony that such an assurance was made was uncontradicted and this Court accordingly reversed the circuit judge. In the present case, by contrast, Ashton Hardy denied making the assurance attributed to him by Way, testifying that he had let Way know that a suit would be filed if various documents relating to a settlement of the dispute were not returned. Secondly, as emphasized by the trial judge, the alleged assurance given to Way by Hardy occurred prior to the filing of the suit against Cappaert and Way, as opposed to after the suit was filed in Reeves. As an attorney, Way is obviously aware that a prior assurance that a suit would not be filed is not a basis for failing to file an answer to said suit once it is filed. If Cappaert and Way felt that the suit on open account was without merit and/or frivolous, then the proper course would have been to file an answer to said suit in which they asserted their defenses and filed a claim for attorneys' fees and sanctions under Rule 11 or Louisiana's equivalent thereof. Walker, Bordelon did nothing to prevent Cappaert and Way from failing to answer the complaint, and any assurances they made that they would not file suit, even if accepted as true, occurred prior to the filing of the suit. Cappaert and Way also assert that an accord and satisfaction was reached which resolved the dispute among the parties. The existence of such an accord and satisfaction is very much disputed by Walker, Bordelon, but, even assuming that such a defense exists, it constitutes an affirmative defense should have been asserted in an answer to the suit. Thus, the trial judge was correct in ruling that Cappaert and Way failed to prove a false representation without which the judgment would not have been rendered and the first part of the test set forth in Reeves is not met. Even assuming that the first part of the test were met, however, the second part of said test is not met, given that it does not appear that Cappaert and Way would be able to successfully attack the default judgment in a Louisiana court. Cappaert correctly notes that extrinsic or actual fraud is not required for the annulment of a default judgment under Louisiana law. Louisiana Statutes Annotated, C.C.P. Article 2004 provides that: A final judgment obtained by fraud or ill-practices may be annulled. An action to annul a judgment on these grounds must be brought within one (1) year of the discovery by the plaintiff in the nullity action of the fraud and ill-practices. In Alker v. Martinez, 477 So.2d 855 (La. App. 5 Cir.1985), a Louisiana Court of Appeals noted that: C.C.P. Article 2004 is not limited to cases of actual fraud or intentional wrongdoing, but is sufficiently broad to encompass all situations wherein a judgment is rendered through some improper practice or procedure which operates, even innocently, to deprive the party cast in judgment of some legal right, and where the enforcement of the judgment would be unconscionable and inequitable. Alker, 477 So.2d at 857 ( citing Kem Search, Inc. v. Sheffield, 434 So.2d 1067 (La. 1983)). Kem Search, cited in Alker, contained factual and legal issues very similar to those in the present case. In Kem Search, the Louisiana appellate court noted that: Conduct which prevents an opposing party from having an opportunity to appear or to assert a defense constitutes a deprivation of his legal rights. Thus, when a party fails to defend a suit because of the failure of the opposing party to warn him that a default would be taken, this judgment may be annulled when the parties had an agreement to give notice of any action taken on the suit, or the defaulted party relied on facts which he reasonably believed created such an agreement, and the enforcement of the judgment would be unconscionable and inequitable. Kem Search, 434 So.2d at 1070. Thus, Louisiana courts, while not requiring that actual fraud be proven to void a judgment, do appear to require that the defendant prove some level of fraud or ill-practices in the procurement of the judgment and that he demonstrate that the enforcement of the judgment is unconscionable under the facts of the case. That is, the ill practices must have served to prevent the defendant or prospective defendant from exercising his rights. It is clear that the Louisiana courts do not view Article 2004 as a means to allow a defendant who was properly served with process but through his own choice failed to defend against the suit to receive a second chance to assert a defense which he could have asserted at trial. Cappaert and Way make special note of the fact that, as mentioned earlier, Ashton Hardy represented to the Federal Communications Commission that Price was the sole owner of KNEK FM. Cappaert and Way argue that this apparent misrepresentation constitutes an ill-practice which would lead a Louisiana court to void the judgment. In reality, however, the statements made to the FCC were unrelated to the suit for attorney fees filed by Walker, Bordelon, except to the extent that they may have been admissible as evidence if Cappaert and Way had elected to defend against said suit. Ashton Hardy testified at trial that his inaccurate statements made to the FCC were made initially as a result of his uncertainty as to whether the joint venture agreement served to create an ownership interest in Cappaert and Way which must be reported to the FCC. Hardy testified that he did not subsequently inform the FCC as part of his efforts to maintain the confidences of his client Price, given that Price would likely face sanctions from the FCC if he were shown to have made a misrepresentation in an FCC application. The circumstances surrounding this apparent falsehood are less than clear, and the actions of Walker, Bordelon in this regard may or may not be of interest to the FCC or the Louisiana bar depending upon their rules regarding candor before a tribunal and related matters. With regard to the present appeal, however, the actions by Walker, Bordelon can not be said to have justified Cappaert and Way in failing to file an answer to the suit in question. Therefore, this Court does not address the legal and ethical implications of the apparently erroneous information provided to the FCC by Walker, Bordelon. Both Cappaert and Way acknowledge that they were properly served with process in the Louisiana suit, and they must bear the consequences of failing to assert the defenses which they may have had but failed to assert to Walker, Bordelon's suit on open account. Thus, the Louisiana judgment was properly granted full faith and credit by the circuit judge and points of error B, C, and D are without merit and are overruled.