Aaron v. Mahl
Aaron v. Mahl
Opinion of the Court
This is a direct appeal from the trial court’s dismissal of appellant Jim Aaron’s action to enforce California and Indiana judgments against respondent Susan Mahl (a/k/a Susan Scott). We certified the appeal pursuant to Rule 204(b), SCACR, and now reverse.
Respondent was a California attorney.
In February 2001, she closed her practice, moved out of California, and then traveled with appellant, who was her boyfriend at the time. Eventually, she moved to Bluffton, South Carolina. In July 2001, respondent bought a house in Bluffton for $234,918 in cash, although the Bluffton house originally was titled in appellant’s name. According to appellant, respondent titled the house in his name in order to secure it from judgment.
R & R’s case against respondent went to trial on September 17, 2001. By this time, the California trial court had struck
After trial, respondent moved to have both the California judgment, and the sanction order which had struck her answer, set aside. Respondent represented that after she moved out of California, she received her mail through a mailing service located in South Dakota. Respondent claimed that although she had been aware her trial originally had been set for September 10, 2001, she never received notice that the case was scheduled for September 17, 2001, and did not know her attorney had withdrawn on September 7, 2001. She also alleged that her mental condition — major depression — impaired her ability to participate in the litigation.
The California trial court denied her motion to set aside the judgment.
In November or December of 2001, R & R assigned the California judgment for collection to appellant (“the Assignment”).
In December 2001, appellant filed suit against respondent in both Indiana and South Carolina to enforce the California judgment. The lawsuit filed in South Carolina is the subject of the instant appeal.
On October 24, 2002, the Indiana circuit court granted appellant summary judgment in favor of appellant (“the Indiana judgment”). The Indiana court specifically rejected respondent’s argument that R & R’s assignment to appellant was an invalid partial assignment. Respondent did not appeal the Indiana judgment. In January 2003, the Indiana court barred respondent from disposing, transferring or removing any of her assets, and specifically ordered respondent not to transfer any interest in her Bluffton house.
Various pretrial orders were also issued by the South Carolina court in the instant case. For example, on October 8, 2003, Judge Kemmerlin (the first Master in Equity assigned to this case) entered an order which directed the Beaufort Clerk of Court to enroll and index the California judgment, but delayed execution until the California appellate process had finalized.
Appellant moved for summary judgment in the instant action after the California judgment became final. The trial court, however, denied the motion and ordered appellant to produce the collection agreement. In July 2004, respondent amended her complaint to assert various counterclaims and defenses, including fraud on the court and the affirmative defense of unclean hands.
On March 20, 2006, the case went to trial before Master-inEquity Coltrane acting as a special circuit court judge. Ultimately, the trial court issued a written order of judgment which found that appellant could not enforce the California judgment. The trial court found various aspects of the collection agreement “troubling,” and specifically found that the Assignment from R & R to appellant was invalid. Additionally, the trial court decided that appellant’s hands were unclean because his actions were “rendered possible only through his
Both parties moved to alter or amend the judgment order. In its amended order, the trial court ruled on the issue of whether R & R should have been joined as a plaintiff at trial. The trial court found that because appellant had previously objected to respondent’s pretrial attempts to join R & R, he was estopped from seeking to join the firm as a party. Moreover, the trial court found joinder of R & R would not be just under Rule 21, SCRCP.
ISSUES
1. Did the trial court err in failing to find that respondent could not collaterally attack the California and Indiana judgments and by not giving full, faith and credit to both the California and Indiana judgments?
2. Did the trial court err in ruling that appellant had unclean hands?
STANDARD OF REVIEW
An action to enforce a judgment is an action at law. Minorplanet Sys. USA Ltd. v. American Aire, Inc., 368 S.C. 146, 149, 628 S.E.2d 43, 45 (2006). In an action at law, tried by a judge without a jury, the findings of the trial court must be affirmed if there is any evidence to support them. Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976).
DISCUSSION
1. Full Faith and Credit / Collateral Estoppel
Appellant argues the trial court erred by not granting full faith and credit to the California judgment and the Indiana judgment, both of which are final judgments. In addition, appellant contends the trial court should not have allowed respondent to collaterally attack those judgments at the South Carolina trial. We agree.
In other words, “the judgment of a state court should have the same credit, validity and effect, in every other court of the United States, which it had in the state where it was pronounced.” Id.; see also Hamilton v. Patterson, 236 S.C. 487, 115 S.E.2d 68, 70 (1960) (a defendant may not a second time challenge the validity of a plaintiffs right which has ripened into a judgment) (citation omitted).
We find the trial court erred by not enforcing the California judgment in South Carolina. This judgment resulted from a trial at which respondent did not appear. She subsequently • attempted to set aside the judgment, but all her attempts at appeal were denied by the California courts. Thus, the trial court should have followed the general principles of Full Faith and Credit in the instant case and given effect to R & R’s valid foreign judgment.
Moreover, the basic principles of res judicata and collateral estoppel also apply. Res judicata bars subsequent actions by the same parties when the claims arise out of the same occurrence that was the subject of a prior action between those parties. E.g., Riedman Corp. v. Greenville Steel Structures, Inc., 308 S.C. 467, 469, 419 S.E.2d 217, 218 (1992). Collateral estoppel prevents a party from re-litigating an issue in a subsequent suit which was actually and necessarily litigated and determined in a prior action. E.g., Jinks v. Richland County, 355 S.C. 341, 349, 585 S.E.2d 281, 285 (2003).
Nevertheless, respondent maintains that because the collection agreement was not disclosed in either the California or the Indiana litigation, she is permitted not only to raise and litigate the issue again, but to have the entire lawsuit dismissed because of the existence of the collection agreement (which she alleges invalidates the Assignment). Respondent, however, has already had her bites at the apple. In both the California and Indiana actions, respondent unsuccessfully challenged the validity of the assignment; ultimately, she prevailed here in South Carolina on the very same issue. This was error. We find res judicata and collateral estoppel apply to preclude her from re-litigating issues which have already been actually litigated in a prior action.
Respondent further contends that the failure to produce the collection agreement amounts to extrinsic fraud, and therefore, an exception should be made to the general rules governing Full, Faith, and Credit and collateral estoppel.
It is true that these general rules may not apply “where extrinsic fraud has been practiced to procure the judgment.” Bankers Trust Co. v. Braten, 317 S.C. at 550, 455 S.E.2d at 200. However, allegations that a party failed to disclose documents generally amount to intrinsic, rather than extrinsic, fraud. Chewning v. Ford Motor Co., 354 S.C. 72, 579 S.E.2d 605 (2003). Moreover, relief from a judgment is generally denied in a case of intrinsic fraud because when an issue has been litigated and determined in a former action, it “should not be retried, ... otherwise litigation would be interminable.” Id. at 82, 579 S.E.2d at 610 (citation omitted).
Appellant, on the other hand, argues that the collection agreement does not negate the Assignment, and thus, there was nothing false about presenting the Assignment as evidence that R & R had assigned the California judgment to him for collection.
We find the, facts of the instant case do not establish an extrinsic fraud on the court. See id. at 82, 579 S.E.2d at 610 (“The subornation of perjury by an attorney and/or the intentional concealment of documents by an attorney are actions which constitute extrinsic fraud.”).
2. Unclean Hands
Appellant argues that the equitable defense of unclean hands should not have been allowed because he was not seeking equity, but instead was pursuing an action at law — the domestication and enforcement of a foreign judgment. We agree.
The doctrine of unclean hands “precludes a plaintiff from recovering in equity if he acted unfairly in a matter that is the subject of the litigation to the prejudice of the defendant.” Ingram v. Kasey’s Assocs., 340 S.C. 98, 107 n. 2, 531 S.E.2d 287, 292 n. 2, (2000) (emphasis added). The equitable doctrine of unclean hands, however, has no application to an action at law. E.g., Holmes v. Henderson, 274 Ga. 8, 549 S.E.2d 81 (2001); Ellwood v. Mid States Commodities, Inc., 404 N.W.2d 174, 184 (Iowa 1987). Thus, the trial court erred in applying this particular equitable defense to the
CONCLUSION
For the reasons outlined above, we reverse the trial court’s dismissal and remand for enforcement of the California judgment.
REVERSED AND REMANDED.
. Respondent was admitted to the California Bar in 1980. Effective February 1, 2001, her status changed to inactive. On July 29, 2005, respondent had disciplinary charges pending, and she tendered her resignation. Respondent's resignation became effective as of September 14, 2005. See http://members.calbar.ca.gov/search/member_detail. aspx?x=95447.
. The firm was previously named Mahl Rehon Walworth & Roberts.
. Appellant subsequently deeded the house back to her on October 5, 2001. Nonetheless, respondent filed suit against appellant in Indiana on October 11, 2001. According to respondent, appellant “had misappropriated funds entrusted to him.” As of the time of trial in South Carolina, the Indiana litigation between respondent (as plaintiff) and appellant (as defendant) was still pending. Moreover, in the instant case, respondent admitted that she encumbered the Bluffton house by mortgages despite the fact that the Indiana court had ordered against such encumbrances.
. Respondent declared on the name change petition that she had “no intention to defraud anyone or to avoid creditors by virtue of the name change.” The family court granted her the name change on September 24, 2001. In the instant case, appellant testified that respondent told him she was going to change her name in order to "disappear” and avoid her creditors.
. The California judge specifically found that respondent "deliberately refrained from obtaining information about the status of her case.” The judge also rejected respondent’s allegations that her mental condition impaired her functioning, and noted respondent had been “active in litigation in other states, including a change of her surname, buying and selling real estate in two different states, and significant travel." The judge also specifically noted that respondent had “the wherewithal to transfer the title to her late model Jaguar automobile within a few days after she purportedly learned of the judgment against her.”
. The assignment itself is undated, but testimony from appellant's attorney at the South Carolina trial establishes the approximate date of the assignment.
. The collection agreement was not disclosed in either the California litigation or the Indiana litigation. In May 2004, its production was
. Respondent's counterclaims were also dismissed because she did not oppose appellant’s directed verdict motion.
. Furthermore, in the California post-judgment litigation, respondent also claimed the Assignment was invalid.
. At most, respondent's allegations amount to nondisclosure of a document which generally is considered intrinsic fraud; thus, the issue should not have been re-litigated.
. We decline to address appellant's remaining issues. See Futch v. McAllister Towing of Georgetown, 335 S.C. 598, 613, 518 S.E.2d 591, 598 (1999) (an appellate court need not address additional issues if the resolution of another issue is dispositive).
Dissenting Opinion
I respectfully dissent. In my view, Appellant’s repeated failure to present the Collection Agreement amounted to extrinsic fraud, and I would therefore hold that the trial court properly dismissed Appellant’s action to enforce the California judgment.
Extrinsic fraud is fraud that induces a person not to present a case or deprives a person of the opportunity to be heard. Relief is granted for extrinsic fraud on the theory that because the fraud prevented a party from fully exhibiting and trying his case, there has never been a real contest before the court on the subject matter of the action. Chewning v. Ford Motor Co., 354 S.C. 72, 80, 579 S.E.2d 605, 610 (2003) (quoting Hilton Head Ctr. of South Carolina v. Public Serv. Comm’n, 294 S.C. 9, 11, 362 S.E.2d 176, 177 (1987)). On the other hand, intrinsic fraud is fraud which was presented and considered in the trial. Chewning, 354 S.C. at 81, 579 S.E.2d at 610. It is fraud which misleads a court in determining issues and induces the court to find for the party perpetrating the fraud. Id.
In the instant case, Appellant retained Attorney Thomas Botkin to negotiate an assignment agreement between him and Rehon & Roberts for collection of the California judg
In my view, the evidence shows that Appellant’s attorney intentionally concealed the Collection Agreement. As a result of these actions, Respondent was prevented from fully litigating her claim that the assignment was invalid
. Botkin’s signature appears on the Collection Agreement.
. Botkin was admitted pro hac vice to represent Appellant in the South Carolina litigation.
. The Collection Agreement purports to disclaim any fiduciary duty between the parties and appears to be a partial assignment, both of which are prohibited under California law. Thus, the alleged assignment upon which Appellant relied for his authority to enforce the judgment was invalid.
Reference
- Full Case Name
- Jim AARON, Appellant, v. Susan J. MAHL, A/K/A Susan J. Scott and Elizabeth M. Smith, Clerk of Court for Beaufort County, South Carolina, Defendants, of Whom Susan J. Mahl, A/K/A Susan J. Scott is the Respondent; And Susan J. Scott, Respondent, v. Rehon & Roberts, a Professional Corporation, Peter M. Rehon and Ronald D. Foster, Additional Plaintiffs on the Counterclaim
- Cited By
- 16 cases
- Status
- Published