ARIZONA COURT RULES ‘LONG-ARM’ CASES MUST FOLLOW HOME-STATE LAW TO THE LETTER
Local law firm Baird Williams & Greer triumphs in Arizona Court of Appeals.
PHOENIX (May 29, 2013) – Companies that hope to enforce out-of-state judgments against Arizona firms must follow procedures to the letter of the law, the Arizona Court of Appeals has ruled.
The judges vacated a bid by Texas-based Hillcrest Bank to enforce a default judgment obtained in a Texas court against Phoenix resident Richard Sodja.
In their unanimous decision, the appellate judges acknowledged there are ways for out-of-state companies to sue Arizonans in their own state courts. And some states, such as Texas, do have applicable “long arm” laws. But Judge Margaret Downie, writing for the court, said Arizona courts will honor those out-of-state judgments only when they are in strict compliance with the applicable laws of the other state.
BWG Attorney Craig LaChance represented Sodja in his appeal.
“The bank sued Sodja in Texas, alleging breach of three guaranty agreements,” LaChance said. “Because Sodja is not a Texas resident, the bank relied on the Texas ‘long arm’ law to serve him with the papers, which involves serving the Texas secretary of state.”
That office forwarded the petition and citation, the equivalent of a complaint and a summons, to the Phoenix business address for Sodja listed in the bank’s petition, but not to his home. When Sodja failed to respond, a default judgment was entered against him.
The bank eventually filed a notice in Maricopa County Superior Court to enforce the Texas judgment. A trial judge here rejected Sodja’s bid to void that judgment, resulting in the appeal.
The judges ruled that Arizona courts are not required to enforce judgments if the originating court did not have jurisdiction over the defendant. Under Texas laws, there must be proper service of a claim against a defendant.
“One requirement is a statement of the name and address of the nonresident’s home or home office,” LaChance said. “The bank in this case failed to meet the requirement so the judgment against Sodja was vacated.”
The East Valley Tribune wrote a piece about the appeal: “Out-of-state judgments must follow Arizona law to sue, judges rule.“