NJ Business Law Blog

Enforcing a Foreign Judgment in the State of New Jersey

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

© 2008 Nissenbaum Law Group, LLC

Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

Avoiding Potential Pitfalls of Electronic Discovery Rules

Commercial Litigation: Courts are taking a hard line in requiring litigants to preserve evidence. It is only logical that given the increased use of technology in our lives, courts are taking an active role in sanctioning litigants for destroying electronically stored data. The problem arises because electronically stored data can be voluminous and often erased by a mere click of a button. Sometimes evidence is destroyed by companies who routinely erase data. However, it can be difficult to determine whether documents were destroyed in the ordinary course of business or in an effort to avoid presentation in a lawsuit. For this reason, simply asserting that the destruction of electronic documents was routine might not avoid court sanctions.

The problem becomes more burdensome since many litigants are not aware of some of these rather elaborate court rules regarding discovery and yet the litigants are still required to follow the rules. And the consequences of failing to abide by electronic discovery rules may be harsh. Sanctions may include requiring a litigant to pay an adversary’s attorney’s fees, preclusion of evidence and/or striking a litigant’s pleadings, the latter two of which could certainly prejudice a litigant in his case.

Even more troubling are situations where discovery is destroyed prior to the filing of a lawsuit. A potential litigant should be aware that courts can impose sanctions for failing to comply with the litigant’s discovery obligations even if the destruction of the documents happened prior to the commencement of the litigation.

Accordingly, there are some steps that can be taken to help minimize the risk of sanctions. First, we generally recommend that all businesses have a document retention policy, that it has prepared with its attorney. This should outline what can be destroyed and when. Moreover, businesses should always be prepared for a situation where litigation is commenced or threatened. At that point, the attorney for the claimant may create what is called a “litigation hold.” During that time, there is usually a moratorium placed on any destruction of emails, documents and other materials in the possession of the business. In such event, the “hold” would likely interrupt the destruction that may have transpired in the ordinary course of business under the document destruction policy.

In short, it is important to consult an attorney sooner rather than later when a lawsuit is brought or threatened. In addition to evaluating the claim, defenses and potential counterclaims, you need an attorney to advise you as to the type of information that should be preserved and the amount of time that preservation should last.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com