6 Steps To Domesticate A Foreign Judgment In Indiana

If you hold a judgment entered in a state other than Indiana, and if you believe the judgment debtor has assets in Indiana that could satisfy the judgment, then keep reading. The hoops through which you must jump to reach those assets are outlined in Indiana Code § 34-54-11 “Enforcement of Foreign Judgments.”

I.C. § 34-54-11. Enacted in 2003, and amended in 2010, this Indiana statute tells you just about everything you need to know. Here are the six major steps:

1. Wait at least twenty-one days after the entry of the judgment in the original (non-Indiana) court.

2. File a copy of the foreign judgment, authenticated in accordance with 28 U.S.C. 1963 or any applicable Indiana statutes, in the clerk’s office of any Indiana county.

3. File an affidavit, signed by the judgment creditor, with the clerk that states: a. the name/address of the judgment debtor; and b. the name/address of the judgment creditor.

4. Send a notice of the filing of the foreign judgment to the judgment debtor. Ensure the clerk also has sent the same notice to the judgment debtor. See, I.C. § 34-54-11-2(b) and (c). The clerk’s notice specifically must contain: a. the name and address of the judgment creditor; and b. the name and address of the judgment creditor’s attorney, if any.

5. File proof of your mailing from #4 with the clerk. (Please note: the lack of mailing by the clerk does not affect the viability of the proceedings so long as the judgment creditor files proof of its mailing to the judgment debtor.)

6. Pay a filing fee, which is $141 currently.

Once the filing and notice requirements have been met, the judgment creditor is free to proceed as if it holds an Indiana judgment. In other words, you may begin to enforce the judgment by execution or other process.

Statutory changes – mailing and timing. The 2010 amendments deleted the requirement for more traditional constitutional service of process (i.e., certified mail or proof of hand delivery). Instead, it would appear that an overnight-type mailing, which establishes delivery to the address, should suffice. Finally, there is no longer a statutory twenty-one day waiting period to begin post-domestication execution proceedings from the date of delivery of the notice.  Execution can commence as soon as steps 1-6 have been met.

Defenses. My understanding always has been that, in cases of domesticating foreign judgments in Indiana, the judgment debtor’s (the defendant’s) only defense relates to jurisdiction. In other words, the judgment debtor only can attack the validity of the judgment (halt enforcement) by establishing that the original court did not have the power to enter the judgment in the first place – an unlikely scenario. Otherwise, the judgment essentially is presumed to be valid, and the underlying case will not be re-litigated in Indiana. The other potential barrier is if the defendant files an appeal in the original case. An appeal generally will stay the enforcement of the foreign judgment in Indiana until the underlying case concludes.

Old school. I.C. § 34-54-11-5 states that the statute “does not impair” the right to bring an action to enforce a foreign judgment by other means. Before the enactment of the statute, it was common to file a complaint to domesticate (certify) the non-Indiana judgment and to follow all the normal rules and procedures applicable to new lawsuits. I no longer see a benefit to this course of action. The new statute now allows the judgment creditor, initially, to bypass the judge because a separate Indiana court order domesticating or certifying the foreign judgment is not required, unless the debtor files a notice under Sections 2 or 4. The statutory formula should result in the enforcement of a foreign judgment more quickly and, therefore, more inexpensively.

If as an out-of-state judgment creditor you need to pursue the assets of a judgment debtor that are located in Indiana, please contact me or another Indiana lawyer to assist with the process. I.C. § 34-54-11, the relatively new “Enforcement of Foreign Judgments” statute, is your ticket to an expeditious and cost-effective enforcement of your lien.

Pre-Judgment Seizure of Property: Attachment Fundamentals

Can lenders seize property of a borrower or a guarantor to ensure its availability to satisfy a subsequent judgment?  Rarely.  I touched on this area of the law back on 3/6/07.  Woodward v. Algie, 2014 U.S. Dist. LEXIS 52997 (S.D. Ind. 2014) is an excellent opinion detailing the nuts and bolts of the remedy of attachment. 

The dispute.  The heart of the Woodward case was the plaintiff’s breach of contract claim against the defendant.  The contract involved the design and building of airplanes.  The plaintiff funded the project, and the defendant was on the production side.  The plaintiff alleged that the defendant failed to produce any planes, resulting in damages.  Following the filing of the complaint, the plaintiff filed a petition for a pre-judgment writ of attachment under Ind. Code § § 34-25-2-1(b)(4)-(6) seeking the seizure of the defendant’s property connected to the airplane project.

Attachment law, generally.  In Indiana, Trial Rule 64 and I.C. § 32-25-2-1 authorize pre-judgment attachment.  The Woodward opinion dealt only with statutory attachment, however.  Indiana’s statute requires plaintiffs to file an affidavit in support of any petition showing, (1) the nature of the claim, (2) that the claim is just, (3) the amount sought to be recovered and (4) one or more of the grounds for attachment in I.C. § 34-25-2-1(b).  Indiana law also requires plaintiffs to post a bond “with sufficient surety payable to the defendant, that the plaintiff will duly prosecute the attachment proceeding and pay all damages suffered by the defendant if the attachment proceedings are both wrongful and oppressive.”  See, I.C. § 34-25-2-5. 

Grounds - § (b)(4) – asset movement.  This statutory provision mandates that the plaintiff show the defendant was removing, or was about to remove, property outside of Indiana and was not leaving enough in Indiana to satisfy the plaintiff’s claim.  Plaintiff’s supporting affidavit in Woodward did not meet this requirement.  There was no basis for the Court to find that the defendant had or would have insufficient assets to satisfy the judgment sought by the plaintiff. 

Grounds - § (b)(5)-(6) – fraudulent intent.  These rules require the plaintiff to show that the defendant had sold, conveyed or otherwise disposed of, or was about to sell, convey or otherwise dispose of, executable property with the fraudulent intent to cheat, hinder, or delay the plaintiff.  Again, the Court in Woodward concluded that there was insufficient evidence of the alleged fraudulent intent.  “This Court cannot simply assume fraud on the part of the [defendant].”  I discussed establishing fraudulent intent, through Indiana’s “8 badges of fraud,” in my post dated 12/14/06. 

Property subject to attachment, and why.  The plaintiff in Woodward sought a writ of attachment against essentially all of the defendant’s property.  The Court viewed this as seeking an order for replevin, not attachment.  The attachment remedy "is available in an action for the recovery of money.”  Replevin actions, on the other hand, seek to recover property.  “The plaintiff must aver the amount of damages that he ought to recover, and the sheriff seizes only the amount of property, by value, to satisfy the plaintiff’s averred claim, beginning with personal property.”  One seeking a writ of attachment should not identify specific goods to be seized “because the purpose of attachment is only to ensure that property, any property, will be available to satisfy a money judgment; it is not to preserve the availability of specific items of property for recovery by the plaintiff.”  Because the plaintiff made no claim for replevin, but only money damages, the proposed remedy of seizing specific property of the defendant’s was inappropriate. 

Denied.  The Court denied the petition for prejudgment writ of attachment.  The plaintiff in Woodward failed to prove he was entitled to the relief.  The plaintiff also lost because he proposed an inadequate bond of only $2,500 and submitted no explanation of the calculation, despite seeking a judgment for $475,000.  A pre-judgment writ of attachment is very difficult to obtain in Indiana.  Allegations will not be enough, and concrete proof will be needed.  In my view, an evidentiary hearing, in contested cases, will be required before an Indiana judge will grant this extraordinary relief. 

Dismissal Of Mortgagor’s Post-Foreclosure Federal Lawsuit: Usually, But Not Always

A mortgagor’s federal suit attacking a prior state court foreclosure almost always will be dismissed.  At issue is the Rooker-Feldman doctrine, which I’ve discussed several times here.  Unlike the other cases, the Seventh Circuit Court of Appeals overturned, in part, the district court’s dismissal in Iqbal v. Patel, 2015 U.S. App. LEXIS 3241 (7th Cir. 2015).  Iqbal tells us that there may be unique situations where a mortgagor could survive dismissal for the purpose of pursuing a claim for money damages against a mortgagee. 

Borrower’s theory.  In Iqbal, the plaintiff bought a gas station and contracted with defendant S-Mart for gasoline.  The plaintiff then hired Mr. Patel, another defendant, to operate the business.  The plaintiff selected Mr. Patel on the recommendation of another defendant, Mr. Johnson, S-Mart’s president.  Mr. Patel allegedly ran the business but did not pay for the gasoline.  As a result, S-Mart obtained a judgment against the plaintiff, who guaranteed the contract.  To settle, the plaintiff gave S-Mart a promissory note and a mortgage on the business premises.  The plaintiff later defaulted on the note, resulting in a state court judgment and a foreclosure sale of the mortgaged property.  The plaintiff filed the federal lawsuit claiming that Patel and Johnson “acted in cahoots to defraud him out of this business.” 

Rooker-Feldman.  The defendants moved to dismiss the plaintiff’s case based on the Rooker-Feldman doctrine.  The Seventh Circuit stated that the doctrine will not bar a federal suit seeking damages for fraud that caused an adverse state court judgment.  In other words, the law permits a claim for damages for alleged unlawful conduct that misled the state court into issuing the judgment in the first place.  The doctrine will, however, bar the suit to the extent it seeks to set aside the judgment.  Here is what the Seventh Circuit said in Iqbal:

If a plaintiff contends that out-of-court events have caused injury that the state judiciary failed to detect and repair, then a district court has jurisdiction – but only to the extent of dealing with that injury.

Distinction.  Iqbal was not a standard borrower versus lender mortgage loan foreclosure.  The case was a commercial dispute in which the plaintiff claimed the defendants conducted a racketeering enterprise that pre-dated the state court judgment.  Distilled to its essence, the plaintiff’s case was that the defendants conspired to take over his business.  The foreclosure was the plan all along.  The Court held:

Because [the plaintiff] seeks damages for activity that (he alleges) predates the state litigation and caused injury independently of it, the Rooker-Feldman doctrine does not block this suit.  It must be reinstated.

The plaintiff in Iqbal could not set aside the sheriff’s sale and get the mortgaged property back.  Yet, he lived to fight another day on his damages claim, although the Court suggested that the plaintiff still may lose.  Claim preclusion (res judicata) could lead the trial court to determine that the plaintiff was required to bring his theories as counterclaims in the original state court case instead of waiting to sue after the fact. 

Indiana Moving Forward With Plan For Specialty Commercial Courts

Both the Indianapolis Star and the Indiana Lawyer have news about Indiana’s ongoing discussions to establish courts to handle commercial cases only, including presumably commercial foreclosures.  For details, click on these links: 

    Plan to establish commercial courts in Indiana moves forward

    Indiana seeks to establish commercial courts

This is a great idea, and I hope it comes to fruition.  As lawyers become more specialized, so too should judges if possible.  The new courts should help lenders, borrowers and guarantors alike.  Time and expense will be saved.  Hopefully by 2016 this will be a reality.