North Carolina Lawyers Weekly
Sollis v. Holman (Lawyers Weekly No. 12-16-1258, 18 pp.) (Douglas McCullough, J.) Appealed from Onslow County Superior Court (Arnold O. Jones, J.) N.C. App. Unpub.
Holding: After obtaining a Texas judgment against a no-asset Texas corporation, plaintiff cannot bring a North Carolina action to pierce the corporate veil in order to enforce the judgment against the Texas corporation’s owner, a Texas resident.
We affirm summary judgment for defendant.
The N.C. plaintiff gave defendant, a fellow Marine and a resident of Texas, $25,000 in the form of personal checks payable to defendant, individually. In return, he received a promissory note from defendant’s Texas corporation, Vinedos Argentinos, Ltd. Vinedos defaulted on the note, and plaintiff obtained a judgment against Vinedos in Texas state court.
Plaintiff filed this action against defendant, individually, seeking to pierce the corporate veil and enforce the Texas judgment.
Action on the Debt
To the extent plaintiff’s action seeks to hold defendant personally liable for the advances plaintiff made to defendant, we note that plaintiff obtained the Texas judgment on the basis of that same debt.
Our Supreme Court has stated the rule that “a judgment merges the debt upon which it is based and becomes the only evidence of the existence of the debt that can be used in court.” Saieed v. Abeyounis, 217 N.C. 644, 9 S.E.2d 399 (1940). The doctrine of merger is a collateral aspect of res judicata which determines the scope of claims precluded from re-litigation by an existing judgment.
Our Supreme Court explained this merger rule as follows: “It is said that by judgment, the contract upon which it is based becomes entirely merged – loses all its vitality – and ceases to be obligatory upon the parties. Its force and effect are wholly expended, and all remaining liability is transferred to the judgment, which then becomes the evidence, and the only evidence that can be used in a court, of the existence of the original debt.” NCNB v. Robinson, 80 N.C. App. 154, 341 S.E.2d 364 (1986).
In light of the merger rule, any cause of action premised on the underlying debt evidenced by the Vinedos note was extinguished upon plaintiff’s obtaining the Texas judgment. The same facts establishing the debt owed to plaintiff under the Vinedos note also form the basis of plaintiff’s claim against defendant personally for repayment of the funds advanced. Therefore, plaintiff cannot maintain an
action to hold defendant personally liable on the same debt.
Guaranty
As part of the Texas action, defendant signed a deposition transcript which included his testimony that he would personally repay the Vinedos note. Although the statute of frauds is satisfied, this personal guaranty was not supported by any new consideration; therefore, it is unenforceable.
Action on the Judgment
Generally, an action on a judgment is instituted under two circumstances: (1) to obtain a new judgment on the underlying judgment when the statute of limitations on the underlying judgment is about to run out or when the underlying judgment has become dormant, or (2) to enforce the underlying judgment in another state. As plaintiff instituted the present N.C. action within a matter of months of obtaining the Texas judgment, the first rationale is inapposite. Accordingly, the remaining rationale supporting plaintiff’s present action would be to enforce the Texas judgment in this state in order to facilitate his goal of securing satisfaction of the Texas judgment.
However, defendant has no N.C. contacts which would support the exercise of personal jurisdiction over him. Therefore, even if defendant were the alter ego of Venedos and therefore liable on the Texas judgment, the trial court properly granted summary judgment for him.
Affirmed.
