Enforcing Out of State Judgments in Tennessee
The goal of a lawsuit is usually to win and obtain a money judgment against the other party. Unfortunately, a judgment is nothing more than a piece of paper. A judgment creditor does not get “paid” unless and until the judgment is enforced and the debt collected.
What happens when the judgment debtor is located in another state or re-locates to another state without paying the judgment? What happens when all of the judgment debtor’s assets are located in another state? Is a judgment obtained out-of-state enforceable in Tennessee? No, a judgment obtained out-of-state is not enforceable in Tennessee, unless the out-of-state judgment is properly domesticated in a Tennessee court.
Fortunately, judgments obtained in other states are ordinarily entitled to “full, faith and credit” in Tennessee. That is, Tennessee courts are required by Art. IV § 1 of the Constitution of the United States to give full faith and credit to judgments of other states. Generally, a judgment creditor has two options for enforcing a foreign judgment: 1) file a new lawsuit to enforce the judgment in the other jurisdiction, or 2) register the foreign judgment in the other jurisdiction pursuant to the procedures under the Uniform Enforcement of Foreign Judgments Act.
Of course, pursuing a lawsuit to enforce a foreign judgment can be a time consuming and expensive endeavor. Consequently, the procedures under the Uniform Enforcement of Foreign Judgments Act, Tenn. Code Ann. § 26-6-101, et seq., are almost always more efficient and effective. Tennessee is one of 48 states that has adopted some form of the uniform Act (California and Vermont have not adopted the Act). Tennessee’s version of the Act provides that a final judgment entered by a court in one state may be enforced in Tennessee simply by obtaining an authenticated copy of the judgment and filing it with the appropriate Tennessee court. Tenn. Code Ann. § 26-6-104. The Act also stipulates the technical procedures for filing the judgment and providing notice and service of process on the judgment debtor. It is important to note that 30 days following service on the judgment debtor, the judgment creditor can enforce the judgment in Tennessee and begin various judgment collection methods, including garnishments, placing liens and executing on property.
The Act directs courts in Tennessee to treat the foreign judgment in the same manner as a judgment of a court of record in Tennessee. Once a foreign judgment has been enrolled, it has the same effect and is subject to the same procedures, defenses, and proceedings for reopening, vacating, or staying as a judgment of a court of record in Tennessee and may be enforced or satisfied in the same manner. Tennessee does recognize a few narrow exceptions to giving a foreign judgment full faith and credit (for example, if the judgment is based on fraud). However, a recent Tennessee Court of Appeals case explains that “a party who seeks to show that a foreign judgment should not be enforced in Tennessee must meet a ‘stern and heavy’ burden.” BancorpSouth Bank v. Johnson, W2012-00452-COA-R3CV, 2013 WL 3770856 (Tenn. Ct. App. July 16, 2013). In Tennessee, foreign judgments are presumed valid. Moreover, the recent BancorpSouth Bank opinion and other Tennessee appellate decisions support the notion that “[t]he important policies that underlie Full Faith and Credit would be greatly undermined by permitting a judgment debtor on a foreign judgment to relitigate the ‘factual issues underlying the foreign judgment.’” Id., citing First State Bank of Holly Springs, Mississippi v. Wyssbrod, 124 S.W.3d 566, 573 (Tenn. Ct. App. 2003). The purpose of the Act is to prevent persons in one state from having to re-litigate the enforcement of a judgment in another state.
The Litigation & Dispute Resolution attorneys at Thompson Burton PLLC are regularly retained to assist in the enrollment and enforcement of foreign judgments in Tennessee. Should you have questions regarding a foreign judgment or are seeking local counsel, please contact the Thompson Burton PLLC business litigation and dispute resolution team.