Contract – Foreign Default Judgment – Jurisdiction – Full Faith & Credit

Frontier Leasing Corp. v. Hunt. (Lawyers Weekly No. 10-16-0709, 13 pp.) (Martha A. Geer, J.) Appealed from Wayne County Superior Court (John E. Nobles, J.)

Holding: A foreign default judgment is valid and enforceable when the debtor signed an agreement specifying that the contract is governed by the laws of another state.

We affirm the trial court’s order enforcing the foreign default judgment.

Facts

Defendant worked as a golf pro and ran the pro shop at Southern Wayne Country Club. In 2003, a salesman for Royal Links USA proposed in that in exchange for the defendant’s leasing of a beverage court bearing certain advertisements, Royal Links would make the lease payments on the court. Defendant agreed and signed a lease agreement with C&J Vantage Leasing Co. He also signed an “unconditional personal guarantee.”

The lease agreement, a pre-printed form, said: “This lease shall be governed by the laws of Iowa,” adding that any legal action should be taken in Polk County, Iowa. It also contained the clause: “I consent to the personal jurisdiction and venue of federal and state courts in Iowa.”

The defendant made several lease payments by mailing checks to C&J in Des Moines, Iowa. He then received reimbursement checks from Royal Links. In 2004, however, Royal Links notified defendant that it would no longer reimburse him for the lease payments.

C&J later sold and assigned the lease to plaintiff Frontier. Defendant was sued in Iowa district court for damages of over $13,000 plus interest, court costs and attorneys fees. He was served but did not make an appearance. C&J obtained a default judgment, which was later amended to substitute Frontier as the plaintiff.

Plaintiff filed in Wayne County superior court a notice seeking to enforce the Iowa default judgment pursuant to the Uniform Enforcement of Foreign Judgments Act. Defendant argues that the Iowa court lacked personal jurisdiction in that the lease’s forum selection was unenforceable, and that he lacked minimum contacts with the state of Iowa.

Discussion

Plaintiff introduced a properly authenticated Iowa default judgment, raising a presumption that the judgment was entitled to full faith and credit. The trial court found that the lease contained a valid, enforceable forum-selection clause and concluded that the judgment was entitled to full faith and credit.

Defendant argues that the trial court erred because he lacked minimum contacts with Iowa to support personal jurisdiction. He concedes, however, that if the forum-selection clause is upheld, minimum contacts is immaterial.

Since the judgment was entered in Iowa, we consider its validity under Iowa law. Under Iowa law, forum-selection clauses are prima facie valid and should be enforced unless unreasonable. Iowa law provides that choice of forum made in an “arm’s length negotiation by experienced and sophisticated businessmen” should be honored.

Defendant argues that the forum-selection clause should not be honored because it was not prominently displayed on the form, there was no bargaining over the terms of the lease, he received no legal assistance, and there is no evidence that he read the clause.

He also argues that he is not a sophisticated businessman with experience in these matters. But he has pointed to nothing in the record showing that he was unable to understand the terms of the lease.

We find that since the trial court did not err in enforcing the forum-selection clause, we do not need to address the minimum-contacts issue.

Affirmed.