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Constitutional – Due Process – V.I. Small Claims Court – Full Faith & Credit Denied – First Impression – Attorneys

Teresa Bruno, Opinions Editor//February 7, 2017

Constitutional – Due Process – V.I. Small Claims Court – Full Faith & Credit Denied – First Impression – Attorneys

Teresa Bruno, Opinions Editor//February 7, 2017

Tropic Leisure Corp. v. Hailey (Lawyers Weekly No. 011-035-17, 15 pp.) (Mark Davis, J.) Appealed from Wake County District Court (Debra Sasser, J.) N.C. App.

Holding: The U.S. Virgin Islands’ small claims court deprives litigants of representation by counsel at any fact-finding stage of the proceedings. This violates the due process rights of litigants like defendant.

We vacate the district court’s conclusion that the judgment against defendant is entitled to full faith and credit. Remanded.

Plaintiffs obtained a $5,764 default judgment against defendant in the small claims division of the Virgin Islands Superior Court. The Wake County District Court concluded that plaintiffs were entitled to enforcement of the judgment under the Full Faith and Credit Clause of the U.S. Constitution and North Carolina’s Uniform Enforcement of Foreign Judgments Act. Defendant appeals the District Court’s denial of his motion for relief.

In proceedings before the Virgin Islands small claims court, “[n]either party may be represented by counsel and parties shall in all cases appear in person except for corporate parties, associations and partnerships which may appear by a personal representative.” V.I. Code Ann. tit. 4, § 112(d). In addition, small claims cases are heard before a magistrate without a jury. V.I. Super. Ct. R. 64.

Appeals are to the Appellate Division of the Superior Court, but “[n]o additional evidence shall be taken or considered” in the Appellate Division. V.I. Super. Ct. R. 322.3(a). On further appeal to the Virgin Islands Supreme Court, parties may be represented by counsel. V.I. Sup. Ct. R. 4(d).

The question of whether a rendering jurisdiction’s prohibition on a party being represented by counsel is a due process violation that can serve as a defense to the enforcement of a foreign judgment presents an issue of first impression in North Carolina. We hold that the Virgin Islands judgment was issued in violation of defendant’s due process rights because he was not provided a meaningful opportunity to be heard.

The U.S. Supreme Court has explained, “If in any case … a state or federal court were arbitrarily to refuse to hear a party by counsel, employed by and appearing for him, it reasonably may not be doubted that such a refusal would be a denial of a hearing, and, therefore, of due process in the constitutional sense.” Powell v. Alabama, 287 U.S. 45 (1932).

Courts in several jurisdictions have considered the constitutionality of procedures under which parties are not permitted to be represented by counsel at trial in small claims court. These cases make clear that, while due process is satisfied when a party may appeal from a small claims court judgment and receive a trial de novo with the opportunity to be represented by counsel, a due process violation occurs where the laws of a jurisdiction prohibit a civil litigant from ever being represented by counsel at the fact-finding stages of the proceedings.

In the Virgin Islands, there is no opportunity for a small claims court litigant to be represented by counsel during any part of the critical fact-finding phase of the litigation. Thus, defendant was denied the opportunity to be heard at a meaningful time and in a meaningful manner.

Because the judgment was obtained in a manner that denied defendant his right to due process, it is not entitled to full faith and credit in North Carolina. The trial court erred by allowing enforcement of the judgment.

Vacated and remanded.

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