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How Procedural Errors Can Derail Your Judgment Collection Activity in Georgia

Poole Huffman, LLC

Sometimes, getting the compensation your business deserves for a breach of a contract simply involves filing legal action and then presenting a persuasive argument and getting a judgment in your favor. In other circumstances, this step is the first in a multi-faceted process. Whether your needs are related to commercial litigation or judgment collection, you need to make sure that you have the sort of experienced Georgia business counsel that your case demands.

A matter recently decided by the Court of Appeals is an example of how elaborate such disputes can be, and how very minute errors can have major consequences. The first legal case was a contractor firm’s commercial litigation action in California. The contractor won that lawsuit and obtained a judgment that included a $1 million damages award. Of course, getting the compensation you’re owed sometimes involves more than winning your case. This is particularly true if you believe that the entity that owes you damages is engaging in improper conduct, such as making fraudulent conveyances, to evade paying the judgment. When that happens, you may need to litigate in multiple different jurisdictions to get the benefit of your damages award.

This contractor firm allegedly found itself in that type of situation. The defendant in the California case had, according to the contractor firm, provided another entity with the funds needed to acquire a piece of real estate in Roswell. Allegedly, this was all a part of a scheme to shelter the California defendant’s assets from the judgment creditor.

That required the contractor firm to bring an action in Georgia. The judgment creditor’s case, filed in Fulton County, existed in two key parts. First, the case sought domestication of the California judgment. Second, it alleged a claim of fraudulent conveyance related to the Roswell real estate purchase transaction. Under Georgia law, a domestication of a foreign judgment (which is governed by the Uniform Enforcement of Foreign Judgments Act) is the process by which a Georgia court declares an out-of-state judgment to be enforceable here. Once domesticated, that out-of-state judgment carries as much force of law as if it had been issued by a Georgia court.

Sometimes, the opposing side’s missteps may provide you with extra opportunities. In this judgment creditor’s case, neither of the defendants filed a response to the judgment creditor’s complaint. When that happens, you may be able to obtain a default judgment. A default judgment means that a party is in default because it has failed to comply with certain procedural requirements. A default judgment is just as effective as a judgment on the merits. This contractor firm got a default judgment and, among other relief, a $1 million lien on the Roswell property.

Ultimately, that decision was overturned, and the reversal is an important lesson about the importance of total compliance with all of the procedural details of a case. The defendant was able to get the judgment overturned because the judgment creditor did not properly serve notice of the Fulton County case. The entry of service form did not indicate that the man who received service was authorized to accept such papers on behalf of the defendant. The form identified the man as an individual defendant in the case, which was clearly incorrect. This meant that the judgment creditor failed to establish that “service was perfected,” which in turn meant that the judgment creditor did not have proof that the Fulton County court had jurisdiction over the defendant.

Whether you are preparing to launch a commercial litigation action or defend against one, or you are a judgment creditor seeking to collect, the experienced Atlanta collections attorneys at Poole Huffman, LLC are here to help. Put the power of our attorneys’ skills and experience to work for you. Contact us online or by calling 404-373-4008 to schedule your confidential consultation.

More blog posts:

New Garnishment Ruling: What You Should Know, Atlanta Business Litigation Attorneys Blog, Sept. 29, 2015

Commercial Real Estate Broker’s Liens, Atlanta Business Litigation Attorneys Blog, Sept. 23, 2013

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