Constitutional – Full Faith & Credit – Iowa Default Judgment – Contract – Floating Forum Selection Clause

Professional Solutions Financial Services v. Richard Yeager & Associates, D.D.S., P.A. (Lawyers Weekly No. 12-16-0286, 10 pp.) (Cheri Beasley, J.) Appealed from Mecklenburg County Superior Court. (Nathaniel J. Poovey, J.) N.C. App. Unpub. Full-text opinion.

Holding: Where plaintiff obtained a default judgment against defendants in Iowa and sought to enforce it here, our trial court was required to give full faith and credit to the Iowa judgment unless the judgment violated the public policy of Iowa, not the public policy of North Carolina.

We reverse the trial court’s denial of plaintiff’s motion to enforce the foreign judgment. Remanded.

The trial court found the “floating” forum selection clause in the parties’ contract to be a violation of public policy. However, in Liberty Bank, F.S.B. v. Best Litho, Inc., 737 N.W. 2d 312 (2007), the court upheld a forum selection clause that is almost identical to the clause at issue. This type of floating forum selection clause was not held to be unreasonable where the parties to the contract were sophisticated business people engaged in an arm’s length transaction.

Here, all parties to the lease were sophisticated business people engaging in an arm’s length transaction. Therefore, the trial court erred by not applying Iowa law.