For most individuals outside of the legal community, the term foreign judgment typically evokes images of a lawsuit originating in some far off, perhaps even exotic, locale. Reality, like so often is the case, is usually strikingly different from people’s perceptions. While there are certainly instances where judgments secured in other countries are domesticated in the states, when I use the term foreign judgment, I mean something a little closer to home.
Thanks to the Full Faith and Credit Clause provided for in Article IV, Section 1 of the United States Constitution, our fifty states offer their respective denizens and one another something few enough other countries can boast – an ability to recognize judgments secured across their respective borders. What does this mean exactly? Pretty much just what it sounds like. I’ll give you a hypothetical example to hopefully explain.
Take the following scenario for instance. A plaintiff and defendant are involved in a breach of contract suit in Pennsylvania. Whether by motion or verdict (it doesn’t matter for our purposes), let’s further assume that the plaintiff secures a judgment against the defendant. Before having a chance to collect that judgment, however, the defendant moves to New York and brings all of his assets with him. What’s the plaintiff to do now?? Aha! The beauty of our Constitution at work. Because of the Full Faith and Credit Clause, creditors that hold judgments in one state can actually chase down (and I use those words loosely) debtors in other states. In other words, for the persistent creditor, judgments are fairly portable and can be chased across state lines.
Thanks to our Constitution, each state recognizes judgments secured in every other state. The states essentially allow creditors to file their “foreign” judgments locally to allow them to pursue debtors toward satisfaction. Pretty nifty system, eh?
In New York, the ease with which one can file a foreign judgment can vary depending on the circumstances by which it was acquired. How a creditor secured a judgment will impact whether he can simply transcribe the judgment locally with the county clerk’s office or whether an action will be needed to domesticate the judgment.
If a judgment is secured on the merits (meaning it was a contested action that either went to verdict or was won through a summary judgment motion), the path of a foreign creditor is fairly easy; he merely needs to transcribe his judgment. If the judgment is taken on default, however, New York requires foreign creditors to institute a legal proceeding wherein they must essentially demonstrate that the judgment was properly obtained in the original jurisdiction. The legal proceeding is an easy enough matter for competent counsel familiar with the process, but it’s unfortunately just an extra hoop with added expenses that creditors should be prepared to navigate when domesticating their judgments in New York. For this reason, it’s always best to consult with counsel to determine what will be necessary in your particular case.