Domesticating foreign judgments can become a critical tool in the collection process. Understanding the nuances of domesticating and enforcing judgments can improve your ability to collect on the debt owed to your institution.
Attorney Nick Rohner, a seasoned professional in commercial collections and judgment enforcement, recently shed light on the process of domesticating foreign judgments during a recent #CommercialCollectionsCorner webinar.
Here's a brief overview of some topics covered during Nick’s webinar, including the domestication process and potential challenges related to enforcement!
What is a foreign judgment?
It is a judgment made by a court in a jurisdiction different than the one where enforcement is sought. Domestication of such judgments becomes necessary to ensure legal enforceability within the new jurisdiction. By domesticating the judgment, the creditor paves the way for effective enforcement actions.
What is the legal basis for domesticating judgments?
The basis lies in the U.S. Constitution. Within the Full Faith and Credit Clause (Article IV, Section 1), it states, “Full Faith and Credit shall be given in each state to the public acts, records, and judicial proceedings of every other state…”
The Uniform Enforcement of Foreign Judgments Act (UEFJA) is the law that governs the mechanics of domestication. Originating in 1948, UEFJA has been adopted by 48 states. In most cases, this makes the domestication process a formality.
Why would you domesticate a foreign judgment?
There are a few common reasons to domesticate a foreign judgment. They include:
- The debtor has moved – This is one of the most common reasons to domesticate a commercial judgment. For example, suppose the debtor moves from Ohio to Arizona after the judgment is entered. In that case, the creditor may need to domesticate the judgment in Arizona to pursue collections and/or seize assets.
- Forum Selection clause– If the creditor originally took a judgment against an out-of-state debtor pursuant to a forum selection clause in the contract, the creditor may want to domesticate the judgment in the debtor’s home state to place a lien on their property or pursue other types of enforcement.
- To attach wages/assets located in another jurisdiction: This could happen if the debtor still lives in the original jurisdiction, but has property or earns wages in another state. Domesticating the judgment would allow the creditor to attach those assets.
What is the process of domesticating a foreign judgment?
The process of domesticating a judgment typically involves the following steps:
1. Obtain an authentic copy of the judgment: You will need to file an authenticated copy of the original judgment in the new jurisdiction, so the first step is to request an “exemplified” or “triple-seal” copy of the judgment from the original court. Watch the full webinar to hear more about these types of authenticated documents.
2. File the judgment along with an affidavit: You will first need to find out if the new jurisdiction requires foreign judgment paperwork to be e-filed, or if the originals must be mailed in. In addition to paying the filing fee, the creditor also needs to provide an affidavit, which must include the name and last known address of the judgment creditor and judgment debtor. This affidavit is required under UEFJA.
3. Notice of filing of foreign judgment: Once the judgment is filed, the judgment debtor is served with a notice of the domestication proceedings. This step ensures compliance with due process requirements and gives the debtor an opportunity to respond to the domestication.
The notice is typically prepared by the judgment creditor and issued by the clerk to the judgment debtor. Under UEFJA, it must include the name and address of the judgment creditor and its attorney.
What are enforcement actions and when are they enforceable?
- Wage garnishment: Requesting that the court to withhold a portion of the debtor's wages until the judgment is paid.
- Property lien(s): Placing a lien on the debtor's real estate, preventing them from selling or refinancing without satisfying the judgment.
- Bank garnishment: Seizing funds from the debtor's bank account(s) through a court order.
- Asset seizure: A levy on the debtor's personal property or business assets.
Enforcement waiting periods will vary depending on the state. For example, in Ohio, you must wait 30 days after the notice is issued. In Kentucky, the waiting period is 20 days after the foreign judgment is filed via form AOC-160. In Indiana, the enforcement waiting period is only 21 days from the entry of judgment in the judgment’s original jurisdiction.
What stops the enforcement of a foreign judgment?
While the process may seem straightforward, a debtor can challenge the enforcement of a foreign judgment. Reasons include:
2. Statute of limitations: Some jurisdictions have a statute of limitations for enforcing judgments. If too much time has passed since the original judgment was entered, it may no longer be enforceable.
Please note that a motion for relief from judgment should always be filed by the debtor in the original jurisdiction.
Watch the full webinar and contact Weltman today!
Domesticating foreign judgments is a process that requires an understanding of jurisdictional laws and enforcement action steps. By seeking professional legal advice, creditors can significantly increase their chances of successful judgment collection.
We highly encourage you to watch Nick’s full webinar to learn more about this important topic and our commercial collections solutions!
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
