DocRx, Inc. v. Emi Services of North Carolina, LLC

              IN THE SUPREME COURT OF NORTH CAROLINA

                                   No. 75PA13

                              FILED 12 JUNE 2014

DOCRX, INC.

             v.
EMI SERVICES OF NORTH CAROLINA, LLC



      On discretionary review pursuant to N.C.G.S. ' 7A-31 of a unanimous

decision of the Court of Appeals, ___ N.C. App. ___, 738 S.E.2d 199 (2013), vacating

an order entered on 6 February 2012 by Judge W. David Lee in Superior Court,

Stanly County, and remanding for further proceedings.       Heard in the Supreme

Court on 7 January 2014.


      Henson & Talley, LLP, by Karen Strom Talley and Perry C. Henson, Jr., for
      plaintiff-appellee.

      Chapman Law Group, PLC, by Avery S. Chapman, pro hac vice; and Tin,
      Fulton, Walker & Owen, PLLC, by Sam McGee, for defendant-appellant.



      PARKER, Chief Justice.


      The issue in this case is whether the Court of Appeals erred by holding that

the Full Faith and Credit Clause precludes the use of intrinsic fraud to defeat a

foreign monetary judgment pursuant to North Carolina’s Uniform Enforcement of

Foreign Judgment Act and N.C.G.S. § 1A-1, Rule 60(b)(3). For the reasons stated

herein, we modify and affirm the decision of the Court of Appeals.

      DocRx, Inc. (plaintiff), an Alabama corporation, filed a breach of contract
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action against EMI Services of North Carolina, LLC (defendant) in Mobile County,

Alabama on 6 August 2010. The complaint alleged that defendant failed to pay

plaintiff the agreed upon commission from defendant’s pharmaceutical sales under

a contract the parties entered on 28 June 2010. Specifically, the complaint alleged

that defendant failed to pay plaintiff “25% of all net profits of [defendant’s] sales

made of products supplied . . . by [an intermediate company]” located by plaintiff.

The complaint sought, inter alia, “compensatory damages, plus interest and costs”

but did not allege a specific monetary amount of damages.          Defendant did not

respond to the complaint, and an initial default judgment was entered on 24

September 2010.

       During the default proceedings in Alabama, Brian Ward (Ward), the

President and CEO of plaintiff corporation, filed an affidavit with the court in which

he stated that defendant sold 3,504 units “for $500 per unit, for a total profit of $475

per unit.” Plaintiff’s counsel filed a Motion To Enter Default Judgment Amount

adopting Ward’s statement. Plaintiff’s counsel calculated that defendant’s total net

profits for the sale of the units was $1,664,400 and that plaintiff was entitled to a

commission payment of $416,100, which represented 25% of defendant’s total net

profits.   Plaintiff’s counsel also alleged that plaintiff was entitled to recover

reasonable attorneys’ fees in the amount of $12,587.14 and interest on the breach of

contract claim in the amount of $24,996. On 1 April 2011, the Circuit Court of

Mobile County, Alabama entered a second default judgment against defendant for


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$453,683.14 (the Alabama judgment).

      On 2 August 2011, plaintiff filed a Request To File Foreign Judgment in the

Superior Court in Stanly County, North Carolina. Plaintiff presented a certified

copy of the Alabama judgment. On 25 August 2011, defendant filed a Motion For

Relief From And Notice Of Defense To Foreign Judgment. Defendant argued, inter

alia, that the Alabama judgment was obtained by extrinsic fraud. On 2 December

2011, plaintiff filed a Motion To Dismiss Defendant’s Defense Of Extrinsic Fraud

Pursuant To Rule 12(b)(6) Of The North Carolina Rules Of Civil Procedure and a

Motion To Enforce Foreign Judgment As A North Carolina Judgment.

      Defendant filed an Amended Motion For Relief From And Notice Of Defense

To Foreign Judgment on 17 January 2012 in which it added defense based on fraud,

pursuant to N.C.G.S. § 1A-1, Rule 60(b).        Defendant argued that Ward and

plaintiff’s counsel falsely inflated the amount of damages owed plaintiff in their

respective filings in Alabama. In support of its motion, defendant submitted an

affidavit of Douglas R. Smith, Jr. (Smith), a representative of defendant. In his

affidavit Smith stated that Ward and plaintiff’s counsel knew their statements

regarding the amount of damages were false because of emails Ward sent

defendant. Smith alleged that on 18 June 2010, Ward sent two emails to defendant

wherein he acknowledged that the selling price per unit was $67, not $500 as

alleged by Ward and plaintiff’s counsel.      Smith further alleged that Ward and

plaintiff’s counsel knew that their statements were false because on 12 July 2010,


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Ward sent an email to defendant wherein he acknowledged the selling price per

unit to pharmacies and wholesalers was $45.         Ward’s emails were attached as

exhibits to Smith’s affidavit.

      On 30 January 2012, Ward and plaintiff’s counsel both filed affidavits in

opposition to defendant’s Amended Motion For Relief From And Notice Of Defense

To Foreign Judgment. In his affidavit Ward stated that the emails dated 18 June

2010 predated the contract between plaintiff and defendant and referred to

pharmaceutical sales that took place prior to the execution of the Agreement. Ward

further alleged that the email dated 12 July 2010 referred to a rate that was

established for plaintiff’s clients during the initial business relationship between

the parties.

      The trial court heard the matter on 30 January 2012 and entered an order

denying plaintiff’s motion to enforce the Alabama judgment as a judgment of the

State of North Carolina on 6 February 2012.         In its order the trial court first

determined that the affidavits and exhibits submitted by defendant supported

defendant’s argument that plaintiff obtained the Alabama judgment as a result of

fraud. The trial court then stated that under N.C.G.S. § 1C-1703(c), a provision of

North Carolina’s Uniform Enforcement of Foreign Judgments Act (UEFJA), the

Alabama judgment was “ ‘subject to the same defenses as a judgment of this State.’

” The trial court explained that under Rule 60(b)(3) of the North Carolina Rules of

Civil Procedure, relief from enforcement of a judgment was available if the trial


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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 “in accordance with NCRCP 60(b)(3) the intrinsic

fraud, misrepresentation and misconduct of the plaintiff in obtaining the underlying

Alabama judgment precludes enforcement of the Alabama judgment as a judgment

of this State.” Plaintiff gave timely notice of appeal to the Court of Appeals.

      On appeal plaintiff argued that the trial court erred in denying its motion to

enforce the Alabama judgment as a judgment of the State of North Carolina,

contending that under the Full Faith and Credit Clause of the United States

Constitution a state may only deny enforcement of a sister state’s judgment for

extrinsic fraud, not intrinsic fraud.

      The Court of Appeals vacated the trial court’s order denying enforcement of

the Alabama judgment and remanded for further proceedings. DocRx, Inc. v. EMI

Servs. of N.C., LLC, ___ N.C. App. ___, ___, 738 S.E.2d 199, 204 (2013). The court

below recognized that the interplay among the Full Faith and Credit Clause,

N.C.G.S. § 1A-1, Rule 60(b), and our UEFJA is an issue of first impression in this

State. Id. at ___, 738 S.E.2d at 201-02.           The Court of Appeals noted that

“[t]raditionally, foreign judgments have been subject to attacks on limited grounds,”

requiring a showing “that the court lacked jurisdiction, or that the judgment was

procured through fraud.” Id. at ___, 738 S.E.2d at 201 (emphasis and quotation

marks omitted) (citing Thomas v. Frosty Morn Meats, Inc., 266 N.C. 523, 146 S.E.2d


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397 (1966)). The court also recognized that the UEFJA, enacted in 1989, states, in

pertinent part, that a foreign judgment “ ‘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[.]’ ” Id. at ___, 738 S.E.2d at 202 (brackets in original) (quoting N.C.G.S. §

1C-1703(c) (2011)). The Court of Appeals acknowledged that the plain language of

the UEFJA would seem to allow a foreign judgment debtor to utilize any defense

applicable to a domestic judgment, such as Rule 60(b). Id. at ___, 738 S.E.2d at 202.

      However, relying on cases from Utah, Montana, and Colorado that have

interpreted similar statutes, the court below held 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.’ ” Id.

at ___, 738 S.E.2d at 202-03 (quoting Bankler v. Bankler, 963 P.2d 797, 799-800

(Utah Ct. App. 1998)). The court adopted the rule articulated by the Colorado

Court of Appeals in Craven v. Southern Farm Bureau Casualty Insurance Co., 117

P.3d 11, 14 (Colo. App. 2004), and then concluded that “intrinsic fraud,

misrepresentation and misconduct” were not sufficient grounds under the Full

Faith and Credit Clause to deny plaintiff’s motion to enforce the Alabama

judgment. Id. at ___, 738 S.E.2d at 203. This Court allowed defendant’s petition for

discretionary review.

      Before this Court defendant argues that the Full Faith and Credit Clause

does not limit attack on fraudulent foreign judgments to those obtained by extrinsic


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fraud. Defendant contends that the decision of the Court of Appeals improperly

gives foreign judgments more deference than domestic judgments because a foreign

judgment cannot be attacked for intrinsic fraud under Rule 60(b) and the UEFJA,

but a domestic judgment can be attacked on such grounds. We disagree.

      The central issue in this case is whether the Full Faith and Credit Clause

requires North Carolina courts to enforce the Alabama monetary judgment. This

issue involves a question of law, which we review de novo. State v. Cox, 367 N.C.

147, 151, 749 S.E.2d 271, 275 (2013).

      To determine this issue, we look first to the language of the Full Faith and

Credit Clause and the United States Supreme Court’s jurisprudence interpreting

this constitutional provision. The Full Faith and Credit Clause of the United States

Constitution provides that “Full Faith and Credit shall be given in each State to the

public Acts, Records, and judicial Proceedings of every other State. And the

Congress may by general Laws prescribe the Manner in which such Acts, Records

and Proceedings shall be proved, and the Effect thereof.” U.S. Const. art. IV, § 1.

Pursuant to that clause Congress has prescribed:

                    Such Acts, records and judicial proceedings or
             copies thereof, so authenticated, shall have the same full
             faith and credit in every court within the United States
             and its Territories and Possessions as they have by law or
             usage in the courts of such State, Territory or Possession
             from which they are taken.

28 U.S.C. § 1738 (2012). The purpose of the full faith and credit command



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             “was to alter the status of the several states as
             independent foreign sovereignties, each free to ignore
             obligations created under the laws or by the judicial
             proceedings of the others, and to make them integral
             parts of a single nation throughout which a remedy upon
             a just obligation might be demanded as of right,
             irrespective of the state of its origin.”

Baker v. Gen. Motors Corp., 522 U.S. 222, 232, 139 L. Ed. 2d 580, 591 (1998)

(quoting Milwaukee Cnty. v. M.E. White Co., 296 U.S. 268, 277, 80 L. Ed. 220, 228

(1935)).

      Under United States Supreme Court decisions, the test for determining when

the Full Faith and Credit Clause requires enforcement of a foreign judgment

focuses on the validity and finality of the judgment in the rendering state. See New

York ex rel. Halvey v. Halvey, 330 U.S. 610, 91 L. Ed. 1133 (1947); Morris v. Jones,

329 U.S. 545, 91 L. Ed. 488 (1947). In Morris v. Jones, Morris brought suit in

Missouri against Chicago Lloyds, an Illinois insurance company authorized to do

business in Missouri, for malicious prosecution and false arrest. 329 U.S. at 546-47,

91 L. Ed. at 493. Before a judgment was obtained in Missouri, Chicago Lloyds was

ordered into liquidation in Illinois, and a liquidator was appointed. Id. at 547, 91 L.

Ed. at 493. The Illinois court set “a time for the filing of claims against Chicago

Lloyds and issued an order staying suits against it.” Id. Morris had notice of the

stay order but continued to prosecute his suit in Missouri. Id. Chicago Lloyds’s

counsel withdrew from the Missouri suit, “stating to the Missouri court that the

Illinois liquidation proceedings had vested all the property of Chicago Lloyds in the


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liquidator.” Id. Thereafter, Morris obtained a judgment against Chicago Lloyds in

Missouri and filed a proof of claim in the Illinois proceedings, attaching a copy of his

Missouri judgment. Id. The Illinois Supreme Court upheld an order disallowing the

claim, notwithstanding Morris’s argument that allowance of the claim was

mandated by the Full Faith and Credit Clause. Id. The United States Supreme

Court allowed Morris’s petition for certiorari.

      Before the United States Supreme Court, Jones, the statutory liquidator

appointed by the Illinois court, contended that the Illinois Supreme Court correctly

concluded that title to all property of Chicago Lloyds was vested in the liquidator

and was not subject to the process of any other court. Id. at 548, 91 L. Ed. at 494.

The Illinois court further concluded “that if a liquidator had been appointed in

Missouri, [Morris] could not have obtained his judgment or if he had obtained it, he

could not have enforced it against the property in the hands of the Missouri

liquidator.” Id. (citation omitted). Accordingly, the Illinois court determined that

disallowance of the Missouri judgment in the Illinois proceedings gave the Missouri

judgment “the same effect that it would have had under the same circumstances in

Missouri.” Id.

      The Supreme Court initially made clear that Morris was “not seeking . . .

anything other than the right to prove his claim in judgment form.”           Id.   The

Supreme Court then reasoned as follows:

                    “A judgment of a court having jurisdiction of the


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             parties and of the subject matter operates as res judicata,
             in the absence of fraud or collusion, even if obtained upon
             a default.” Such a judgment obtained in a sister State is
             . . . entitled to full faith and credit in another State,
             though the underlying claim would not be enforced in the
             State of the forum. It is no more important that the suit
             on this underlying claim could not have been maintained
             in Illinois after the liquidator had been appointed than
             the fact that a statute of limitations of the State of the
             forum might have barred it. . . . The full faith and credit
             to which a judgment is entitled is the credit which it has
             in the State from which it is taken, not the credit that
             under other circumstances and conditions it might have
             had.

                    Under Missouri law petitioner’s judgment was a
             final determination of the nature and amount of his claim.
             That determination is final and conclusive in all courts.

                    ....

                    . . . The command [of the federal statute
             implementing the Full Faith and Credit Clause] is to give
             full faith and credit to every judgment of a sister State.
             And where there is no jurisdictional infirmity, exceptions
             have rarely, if ever, been read into the constitutional
             provision or the Act of Congress in cases involving money
             judgments rendered in civil suits.

Id. at 550-53, 91 L. Ed. at 495-97 (citations omitted).         The Court in Morris

concluded “that the nature and amount of petitioner’s claim has been conclusively

determined by the Missouri judgment and may not be relitigated in the Illinois

proceedings, it not appearing that the Missouri court lacked jurisdiction over either

the parties or the subject matter.” Id. at 554, 91 L. Ed. at 497-98.

      New York ex rel. Halvey v. Halvey involved a New York court’s modification of



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a child custody decree rendered in Florida. 330 U.S. at 611-12, 91 L. Ed. at 1134-35.

The United States Supreme Court determined that since a Florida court could

modify the custody decree, it was not res judicata and the modification by the New

York Court did not violate the Full Faith and Credit Clause. Id. at 613-14, 91 L. Ed.

at 1135-36. In reaching this decision, the Court stated:

             The general rule is that [the Full Faith and Credit
             Clause] requires the judgment of a sister State to be given
             full, not partial, credit in the State of the forum. But a
             judgment has no constitutional claim to a more conclusive
             or final effect in the State of the forum than it has in the
             State where rendered. If the court of the State which
             rendered the judgment had no jurisdiction over the person
             or the subject matter, the jurisdictional infirmity is not
             saved by the Full Faith and Credit Clause. . . . Whatever
             may be the authority of a State to undermine a judgment
             of a sister State on grounds not cognizable in the State
             where the judgment was rendered, it is clear that the
             State of the forum has at least as much leeway to
             disregard the judgment, to qualify it, or to depart from it
             as does the State where it was rendered.

Id. at 614-15, 91 L. Ed. at 1136 (citations omitted). The Court then concluded that

“[i]t is not shown that the New York court in modifying the Florida decree exceeded

the limits permitted under Florida law. There is therefore a failure of proof that the

Florida decree received less credit in New York than it had in Florida.” Id. at 615,

91 L. Ed. at 1136.

      Thus, if the foreign judgment is valid and final in the rendering state, it is

conclusive in the forum state and is entitled to receive full faith and credit. See

Morris, 329 U.S. at 554, 91 L. Ed. at 497-98.            If the foreign judgment can be


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modified in the rendering state, it is not conclusive and can be modified by the

forum state. Halvey, 330 U.S. at 614-15, 91 L. Ed. at 1136.

      The UEFJA enacted in North Carolina sets out the procedure for filing a

foreign judgment. N.C.G.S. §§ 1C-1701 to -1708 (2013). Section 1C-1703(c) 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.” N.C.G.S.

§ 1C-1703(c). A foreign judgment debtor may seek relief from the foreign judgment

on the grounds that it “has been appealed from” or “stayed by” the rendering court

“or on any other ground for which relief from a judgment of this State would be

allowed.” N.C.G.S. § 1C-1705(a).

      Defendant contends that the phrase “is subject to the same defenses as a

judgment of this State,” N.C.G.S. § 1C-1703(c), entitles it to challenge the Alabama

judgment under Rule 60(b) of the North Carolina Rules of Civil Procedure and that

the trial court was, therefore, correct in denying plaintiff’s motion to enforce the

Alabama judgment on the ground that it was obtained by “intrinsic fraud,

misrepresentation and misconduct of the plaintiff,” namely, false testimony as to

the amount of defendant’s indebtedness to plaintiff. Defendant asserts that because

Rule 60(b)(3) of the Alabama Rules of Civil Procedure, like Rule 60(b)(3) of the

North Carolina Rules of Civil Procedure, provides for relief from a judgment for

“fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation,

or other misconduct of an adverse party,” Ala. R. Civ. P. 60(b)(3), both the Full


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Faith and Credit Clause and the UEFJA are satisfied. See N.C.G.S. § 1A-1, Rule

60(b)(3) (2013).

      This Court has not previously addressed the interplay among the Full Faith

and Credit Clause, North Carolina’s UEFJA, and Rule 60(b) of the North Carolina

Rules of Civil Procedure. However, other state supreme courts that have considered

the interplay between the Full Faith and Credit Clause and the UEFJA have

rejected the argument that the judgment of the rendering state can be reopened in

the forum state under Rule 60 of the Rules of Civil Procedure. For example, in

Matson v. Matson, the Minnesota UEFJA provided that “[a] judgment so filed has

the same effect and is subject to the same procedures, defenses and proceedings for

reopening, vacating, or staying as a judgment of a district court or the supreme court

of this state, and may be enforced or satisfied in like manner.” 333 N.W.2d 862, 867

(Minn. 1983) (en banc) (quoting Minn. Stat. § 548.27 (1982) (emphasis added)).

Interpreting this provision, the Supreme Court of Minnesota stated:

             Appellant is under the misconception that the above-
             emphasized language allows the courts of this state to
             apply Minn.R.Civ.P. 60.02 to foreign judgments in the
             same manner it is applied to judgments of the courts of
             this state. It has been settled by the United States
             Supreme Court and courts of other states that the power
             of a state to reopen or vacate a foreign judgment is more
             limited than under the rules of civil procedure and that a
             foreign judgment cannot be collaterally attacked on the
             merits. After a foreign judgment has been duly filed, the
             grounds for reopening or vacating it are limited to lack of
             personal or subject matter jurisdiction of the rendering
             court, fraud in procurement (extrinsic), satisfaction, lack


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             of due process, or other grounds that make a judgment
             invalid or unenforceable. The nature and amount or other
             aspects of the merits (i.e., defenses) of a foreign judgment
             cannot be relitigated in the state in which enforcement is
             sought. See Morris v. Jones, 329 U.S. 545, 67 S.Ct. 451, 91
             L.Ed. 488 (1946).

Id. at 867-68 (citations omitted).

      Similarly, the Supreme Court of Nevada stated that “the defenses preserved

by Nevada’s Uniform Enforcement of Foreign Judgments Act and available under

NRCP 60(b) are limited to those defenses that a judgment debtor may

constitutionally raise under the full faith and credit clause and which are directed

to the validity of the foreign judgment.” Rosenstein v. Steele, 103 Nev. 571, 573, 747

P.2d. 230, 232 (1987) (per curiam) (citations omitted); see also Marworth, Inc. v.

McGuire, 810 P.2d 653, 657 (Colo. 1991) (en banc) (stating that under the Colorado

UEFJA “[o]ur courts may consider C.R.C.P. 60(b) motions for relief from a foreign

judgment only to the extent permitted by the full faith and credit clause”); Carr v.

Bett, 1998 MT 266, ¶42, 291 Mont. 326, 338-39, 970 P.2d 1017, 1024 (1998) (holding

that a foreign judgment filed under the Montana UEFJA may not “be subjected to

the same defenses and proceedings for reopening or vacating as a domestic

judgment, and remain consistent with full faith and credit. . . . [T]he 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”);

Wooster v. Wooster, 399 N.W.2d 330, 333 (S.D. 1987) (stating that “the grounds



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mentioned in Rule 60(b) which allow relief from a judgment are not available to

vacate a foreign judgment” under the South Dakota UEFJA); Salmeri v. Salmeri,

554 P.2d 1244, 1248 (Wyo. 1976) (holding that a foreign judgment for alimony and

child support arrearages was “not subject to attack in [Wyoming] except on grounds

that would permit attack upon any other money judgment, such as want of

jurisdiction in the court entering the judgment or lack of service so as to vest

jurisdiction over the defendant”).

      This interpretation of the UEFJA also finds support in the Prefatory Note to

the 1964 Revised Uniform Enforcement of Foreign Judgments Act, stating that the

UEFJA as revised

             adopts the practice which, in substance, is used in Federal
             courts. It provides the enacting state with a speedy and
             economical method of doing that which it is required to do
             by the Constitution of the United States. It also relieves
             creditors and debtors of the additional cost and
             harassment of further litigation which would otherwise be
             incident to the enforcement of the foreign judgment. This
             act offers the states a chance to achieve uniformity in a
             field where uniformity is highly desirable. Its enactment
             by the states should forestall Federal legislation in this
             field.

Rev. Unif. Enforcement of Foreign Judgments Act prefatory note (1964), 13 U.L.A.

156-57 (2002) [hereinafter Rev. UEFJA prefatory note]. The federal statute, after

providing for the registration of a judgment in any other district, mentions only one

defense, satisfaction, but does allow that “[t]he procedure prescribed under this

section is in addition to other procedures provided by law for the enforcement of


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judgments.” 28 U.S.C. § 1963 (2012).

      Defendant relies primarily on two intermediate court of appeals cases, one

from Ohio and one from Minnesota.       Both cases can be distinguished from the

present case.   In Schwartz v. Schwartz the defendant’s second wife sought an

annulment in Ohio on the ground that their marriage was null and void because the

defendant’s previous divorce in New York had been obtained by fraud. 113 Ohio

App. 275, 276, 173 N.E.2d 393, 393-94 (1960). An Ohio Court of Appeals granted

the annulment after determining that the New York divorce decree was not entitled

to full faith and credit when there was evidence of a prearranged, staged act of

adultery in order to obtain the divorce. Id. at 276, 279-80, 173 N.E.2d at 393, 395-

96. The court reasoned that the New York court could set aside the divorce on its

own motion for fraud on the court. Id. at 279, 173 N.E.2d at 395. Adultery was the

only ground for divorce in New York, and without an act of adultery, the court had

no authority to enter the divorce. Id. at 276, 279, 173 N.E.2d at 393, 395. Thus,

since the rendering New York court could have set aside the divorce, the divorce

was not entitled to full faith and credit in Ohio under Halvey v. Halvey. In the

present case, the Alabama court had the authority to enter a judgment on plaintiff’s

breach of contract claim. Ala. Code § 12-11-30 (2013).

      In Blume Law Firm PC v. Pierce, the Minnesota Court of Appeals considered

whether an Arizona judgment should be entitled to full faith and credit when it was

alleged that the judgment was obtained through an attorney’s fraudulent


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misrepresentations in his affidavit in support of the judgment. 741 N.W.2d 921,

926-27 (Minn. Ct. App. 2007). The law firm sued a client and his parents for unpaid

legal fees. Id. at 924. In the affidavit, the attorney alleged that a valid promissory

note and security agreement were entered into by the client and his father. Id. at

926. The Arizona court held the parents liable for their son’s attorneys’ fees. Id. at

924, 926. The promissory note and security agreement referenced in the attorney’s

affidavit were contained in the record in Minnesota, but those documents were

signed only by the son. Id. at 927. At oral argument before the Court of Appeals of

Minnesota, the plaintiff law firm was unable to provide a basis for holding either

parent liable. Id. The Court of Appeals stated that the allegations sounded in fraud

and remanded the case to the trial court to give the law firm the opportunity to

demonstrate the basis for suing the parents. Id.         The court did not distinguish

between extrinsic and intrinsic fraud, but instructed that if the law firm was

“unable to substantiate its claim,” the trial court “should then determine whether

the law firm’s conduct amounts to fraud that would justify disregarding the

judgment.” Id.   In the present case, defendant’s evidence of the amount owed,

consisting of emails from which inferences can be drawn, differs markedly from a

signed promissory note and security agreement. The emails do not demonstrate on

their face that plaintiff’s representations were false, and the record contains no

document disclosing to whom and for how much defendant sold the pills as required

by the terms of the fee agreement at issue in this case. Moreover, the Minnesota


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Court of Appeals did not hold that the allegations constituted fraud; the court

merely stated the allegations sounded in fraud and remanded the case to the trial

court.

         We hold that the defenses preserved under North Carolina’s UEFJA are

limited by the Full Faith and Credit Clause to those defenses which are directed to

the validity and enforcement of a foreign judgment. The language of the UEFJA

that a foreign judgment “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,” N.C.G.S.

§ 1C-1703(c), does not refer to defenses on the merits but rather refers to defenses

directed at the enforcement of a foreign judgment, such as, that the judgment

creditor committed extrinsic fraud, that the rendering state lacked personal or

subject matter jurisdiction, that the judgment has been paid, that the parties have

entered into an accord and satisfaction, that the judgment debtor’s property is

exempt from execution, that the judgment is subject to continued modification, or

that the judgment debtor’s due process rights have been violated. See Halvey, 330

U.S. at 614-15, 91 L. Ed. at 1136; Morris, 329 U.S. at 554, 91 L. Ed. at 497-98; White

Co., 296 U.S. at 275-76, 80 L. Ed. at 227; Matson, 333 N.W.2d at 867; Thomas, 266

N.C. at 526, 146 S.E.2d at 400. To permit a party to relitigate matters that could

have and should have been litigated in the rendering court is inconsistent with

decisions of the United States Supreme Court holding that judgments that are valid

and final in the rendering state are entitled to enforcement in the forum state under


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                                   Opinion of the Court



the Full Faith and Credit Clause. See Halvey, 330 U.S. 610, 91 L. Ed. 1133; Morris,

329 U.S. 545, 91 L. Ed. 488. Further, to permit a party to collaterally attack a

foreign judgment on the merits would be contrary to the rationale underlying the

UEFJA, which is to streamline the procedure for enforcing a foreign judgment and

eliminate the need for additional litigation. Rev. UEFJA prefatory note.

      Moreover, even if the UEFJA and Rule 60(b) permit a foreign judgment

debtor to raise intrinsic fraud as a defense to the foreign judgment, on the record

before this Court, defendant would be barred from asserting that defense.

Alabama’s Rule 60(b) requires a judgment debtor to raise fraud within four months

of entry of the judgment. Ala. R. Civ. P. 60(b).

      In the present case a default judgment against defendant in the amount of

$453,683.14 was entered on 1 April 2011 in Alabama, and the Request To File

Foreign Judgment was filed in Stanly County on 2 August 2011. Defendant’s initial

Motion For Relief From And Notice Of Defense To Foreign Judgment was filed on

25 August 2011. In that filing defendant asserted, inter alia: “Extrinsic Fraud.

The Alabama foreign judgment is void and unenforceable because the underlying

judgment was obtained by fraud – EMI’s execution of the contract upon which the

Alabama Complaint was based was fraudulently induced and DocRx engaged in

fraudulent acts in its own alleged performance of that contract.” On 17 January

2012, defendant filed an Amended Motion For Relief From And Notice Of Defense

To Foreign Judgment. In that filing defendant raised a defense under Rule 60(b)(3)


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                                  Opinion of the Court



of the North Carolina Rules of Civil Procedure, alleging that plaintiff’s

representations as to the amount owed constituted fraud, whether intrinsic or

extrinsic.

      By the time the Alabama judgment was filed in Stanly County, the four-

month period for raising a challenge to the judgment under Alabama Rule of Civil

Procedure 60(b)(3) had passed, and the judgment was a final judgment under

Alabama law. Irrespective of whether the alleged fraud was intrinsic or extrinsic,

the Alabama judgment was final and enforceable in Alabama when it was filed in

North Carolina.    Thus, plaintiff’s claim had been conclusively determined in

Alabama.

      Therefore, we hold that the Alabama judgment is a final judgment, and

under Morris v. Jones it is entitled to the same credit in North Carolina that it

would be accorded in Alabama.      The defenses to a foreign judgment under the

UEFJA are limited by the Full Faith and Credit Clause to those defenses that are

directed to the enforcement of the foreign judgment, and Rule 60(b) of the North

Carolina Rules of Civil Procedure has no applicability.

      Defendant’s argument that the Court of Appeals decision should be reversed

because a foreign judgment creditor would get better treatment than a North

Carolina judgment creditor is misplaced and does not comport with the United

States Supreme Court’s language in Morris v. Jones and Halvey v. Halvey

emphasizing that the validity and finality of the judgment in the rendering state


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                                  Opinion of the Court



control whether that judgment is entitled to full faith and credit in the forum state.

The UEFJA is not on a parity with the Full Faith and Credit Clause. U.S. Const.

art. VI, cl. 2. In the present case the Alabama monetary judgment was valid and

final in Alabama, and North Carolina cannot give the Alabama judgment less credit

than it would be given in Alabama.

      For the reasons stated herein, the decision of the Court of Appeals is

affirmed, as modified. This case is remanded to the Court of Appeals for further

remand to the trial court for additional proceedings not inconsistent with this

opinion.


      MODIFIED AND AFFIRMED; REMANDED.




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