Facts
- Citizens Bank sued Elmo Greer & Sons, Inc. in Tennessee in 2009 over a returned check and obtained a default judgment on April 28, 2010 for $15,523.67.
- More than 30 days later, on June 11, 2010, the Tennessee court entered an “amended judgment” adding Elmo Greer & Sons, LLC as an additional judgment debtor for the same amount plus costs.
- Citizens Bank did not file an amended complaint in Tennessee naming the LLC, and the LLC was never served with process in the Tennessee action.
- Citizens Bank registered the amended Tennessee judgment in Bell Circuit Court, Kentucky under Kentucky’s Uniform Enforcement of Foreign Judgments Act.
- Greer, Inc. and Greer, LLC moved to dismiss, arguing the amendment was untimely under Tennessee procedure and void for lack of personal jurisdiction and notice as to the LLC.
- The Kentucky circuit court granted full faith and credit, reasoning the two entities were effectively the same based on their relationship and the LLC’s involvement in endorsing and depositing the check.
- Greer, Inc. and Greer, LLC appealed.
Issues
- Whether Kentucky must give full faith and credit to a foreign amended judgment that added a new entity as a judgment debtor when that entity was never made a party or served in the rendering state.
- Whether adding the LLC to the judgment could be treated as a clerical correction, rather than a substantive amendment subject to Tennessee’s time limits for altering or amending a judgment.
Decision
- The Kentucky Court of Appeals reversed and remanded with instructions to dismiss the Kentucky enforcement action.
- The court held the amended Tennessee judgment was void as to Greer, LLC because the Tennessee court lacked jurisdiction to add the LLC as a judgment debtor after entry of the default judgment.
- The court rejected the argument that the amendment was a clerical correction; adding a separate legal entity was a substantive change.
- The court concluded Kentucky could not enforce the amended judgment under full faith and credit principles because the rendering court lacked jurisdiction over the added party.
Legal Principles
- Full faith and credit applies only to judgments validly rendered by a court with subject-matter jurisdiction and personal jurisdiction over the parties bound.
- A forum asked to enforce a sister-state judgment may examine whether the rendering court had jurisdiction over the parties and authority to enter the judgment.
- A post-judgment change that adds a new judgment debtor is a substantive alteration, not a clerical correction.
- Due process requires notice and an opportunity to be heard; a court cannot bind an entity that was never made a party and never served.
- Close corporate relationships or shared operations do not cure the absence of party status and service necessary for personal jurisdiction.
Conclusion
The court refused to enforce a foreign amended judgment that added an unserved LLC as a judgment debtor after the original default judgment, holding the amendment was a substantive, jurisdictionally defective action that rendered the amended judgment void and unenforceable in Kentucky.