Commercial Litigation: Judgment Enforcement: You have obtained a judgment in another state and want to enforce it in the State of New Jersey, which is where all of defendant’s assets are located. What is the next step?

The New Jersey Foreign Judgment Act outlines the requirements with which a plaintiff must comply in order to enforce a foreign judgment in New Jersey. Most importantly, the plaintiff must establish that the foreign court that issued the judgment had jurisdiction over the defendant. A common situation arises where a plaintiff obtains a judgment against a defendant in a foreign jurisdiction through default – the defendant fails to answer or otherwise appear in the matter and the plaintiff obtains a default judgment against the defendant. Subsequently and when the plaintiff attempts to enforce the foreign judgment in the State of New Jersey, the defendant could very well challenge the enforceability by asserting that the foreign court lacked personal jurisdiction over the defendant.

However, a different situation arises where the defendant appeared in the foreign action, by answering or otherwise, and did not object to the jurisdiction of the foreign court. In that scenario, a subsequent challenge of the foreign court’s jurisdiction in the New Jersey courts will likely fail. This is even more so true where the defendant in the foreign action files a counterclaim without objecting to the foreign court’s jurisdiction. The New Jersey courts will likely construe the above situations as defendant consenting to the foreign court’s jurisdiction.

In that regard, where there is a claim that a foreign court does not have jurisdiction over a particular defendant, that defendant may take one of two approaches: (a) not answer or otherwise appear in the foreign action and then challenge the enforceability of the foreign judgment in the New Jersey courts by asserting that the foreign judgment did not have personal jurisdiction over the defendant; or (b) answer or otherwise appear and explicitly state any objections to the foreign court’s jurisdiction. The first approach should be used with extreme caution because if the New Jersey courts subsequently find that the foreign court did in fact have jurisdiction, it could very well enforce the foreign judgment despite the defendant’s failure to answer and/or otherwise appear in the foreign jurisdiction because he/she did not believe the foreign court had personal jurisdiction over him/her. At that point, the defendant may be deemed to have waived any of his rights or defenses.

Comments/Questions: ljm@gdnlaw.com

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