Capstone Capital Group v. Alexander Perry, Inc
2021 Pa. Super. 195
| Pa. Super. Ct. | 2021Background
- Capstone purchased accounts receivable from Alexander Perry, Inc. (API); API's president is Patricia Sanford. Some receivables related to a construction job for J.R. Beale, Inc., which failed to pay Capstone.
- Capstone sued in New York; in June 2019 the parties executed a settlement where Appellants agreed to pay $30,000 and consented that, on default, each would be liable for a $53,400 judgment; Sanford also executed an affidavit confessing judgment for that amount.
- Appellants defaulted on the settlement; New York entered a default judgment on August 19, 2020 for $64,931.38 (principal, interest, costs).
- Capstone domesticated the New York judgment in Pennsylvania; Appellants filed a petition to open the foreign judgment in Pennsylvania on December 15, 2020, claiming promptness, a reasonable excuse (nonresident/limited ability to defend in NY), and a meritorious defense that they had paid Capstone in full.
- The Pennsylvania trial court denied the petition on January 13, 2021, concluding Appellants had not shown grounds to overcome the settlement/confession of judgment; the court also denied reconsideration and Appellants appealed.
- The Superior Court affirmed, holding that full faith and credit and the UEFJA prevent a transferee court from relitigating the merits of a sister-state judgment absent jurisdictional or due-process defects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Appellants satisfied the three-part test to open a default judgment (promptness; reasonable excuse; meritorious defense) | Appellants: petition filed promptly; excused from defending in NY because nonresidents/financially unable; meritorious defense that debts were paid. | Capstone: full faith and credit bars merits review of a foreign judgment; Appellants did not allege NY lacked jurisdiction or that due process was violated; settlement and confession support the NY judgment. | Court: Affirmed denial — transferee court cannot relitigate merits under full faith and credit; Appellants raised no jurisdictional/due-process irregularity to defeat recognition. |
| Whether the trial court abused its discretion by not issuing a rule to show cause and permitting depositions/discovery under Pa.R.C.P. 206 and local rules | Appellants: local rule and petition practice entitled them to a rule to show cause and discovery (depositions to prove payment). | Capstone: Local Rule 206.4(c) does not mandate discovery; discovery is allowed only if answer raises disputed material facts within the transferee court’s limited scope. | Court: No abuse of discretion — the clerk’s failure to issue the form rule did not prejudice Appellants; discovery under Rule 206.7 is only required when material facts in scope are disputed, which here implicated merits outside the transferee court’s review. |
Key Cases Cited
- Baker by Thomas v. General Motors Corp., 522 U.S. 222 (U.S. 1998) (Full Faith and Credit prevents states from relitigating merits of sister-state judgments.)
- V.L. v. E.L., 577 U.S. 404 (U.S. 2016) (Per curiam: Full Faith and Credit precludes inquiry into the merits or reasoning of a sister-state judgment.)
- Milliken v. Meyer, 311 U.S. 457 (U.S. 1940) (A final judgment of one state is entitled to recognition in others if rendered by a court with adjudicatory authority.)
- Standard Chartered Bank v. Ahmad Hamad Al Gosaibi & Bros. Co., 99 A.3d 936 (Pa. Super. 2014) (Pennsylvania transferee courts may not reopen foreign judgments on the merits; review limited to jurisdictional/due-process defects.)
- Gersenson v. Pennsylvania Life & Health Ins. Guaranty Ass'n, 729 A.2d 1191 (Pa. Super. 1999) (Recognition requires that the rendering court had jurisdiction and afforded due process.)
- Greate Bay Hotel & Casino, Inc. v. Saltzman, 609 A.2d 817 (Pa. Super. 1992) (Transferred judgments are enforceable unless procedural/jurisdictional irregularities defeat full faith and credit.)