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Campion v. Alaska Housing Assistance Division (7/1/94), 876 P 2d 1096
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Notice: This is subject to formal
correction before publication in the Pacific
Reporter. Readers are requested to bring
errors to the attention of the Clerk of the
Appellate Courts, 303 K Street, Anchorage,
Alaska 99501.
THE SUPREME COURT OF THE STATE OF ALASKA
DENIS McA CAMPION, )
) Supreme Court No. S-5547
Appellant, )
) Superior Court No.
v. ) 3AN-92-1593 CI
)
STATE OF ALASKA, DEPARTMENT ) O P I N I O N
OF COMMUNITY & REGIONAL )
AFFAIRS, HOUSING ASSISTANCE ) [No. 4096 - July 1, 1994]
DIVISION, )
)
Appellee. )
______________________________)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
J. Justin Ripley,
Judge.
Appearances: Kevin M. Morford, Jensen,
Harris & Roth, Anchorage, for Appellant.
Richard N. Ullstrom, Routh & Crabtree, P.C.,
Anchorage, for Appellee.
Before: Moore, Chief Justice,
Rabinowitz, Matthews and Compton, Justices,
and Bryner, Justice, pro tem.*
MOORE, Chief Justice.
INTRODUCTION
The State of Alaska brought an action to recover upon a
deficiency judgment against Denis McA Campion ("Campion") in the
United States District Court for the Virgin Islands. The
original judgment against Campion was rendered in Nome, Alaska.
The Virgin Islands District Court granted Campion's motion to
dismiss on the ground that the original Alaska judgment was void
for improper service of process. The State then filed another
action in Anchorage to recover the deficiency. The parties filed
cross-motions for summary judgment. The superior court granted
the State's motion. Campion appeals, arguing that the Virgin
Islands decision precludes the State from relying on the original
Alaska judgment as a basis for a deficiency action. We reverse
the trial court and hold that the State is collaterally estopped
from relying on the Nome superior court's judgment.
FACTS AND PROCEEDINGS
On March 27, 1990, the State of Alaska filed a
complaint against Campion in Anchorage superior court to
foreclose on a deed of trust and to enforce a promissory note.
Because the property at issue was located in Nome, the action was
dismissed without prejudice for improper venue.
The State then refiled in Nome superior court seeking
the same relief. At the time the suit was filed, Campion was
residing in the U.S. Virgin Islands. The State sent copies of
the summons and complaint to Campion at a Virgin Islands business
address (Roe-Win Corporation)1 pursuant to Alaska Rule of Civil
Procedure 4(h).2 The material was sent certified mail, return
receipt requested, addressed for restricted delivery to Campion
only. However, a receptionist accepted and signed for the
delivery. Campion asserts that the receptionist did not deliver
the summons and complaint to him.
Campion did, however, receive actual notice of the Nome
suit.3 He then contacted counsel, who advised him that he had
not been properly served and that he therefore need not respond
to the Nome suit. Based upon this advice, Campion did not answer
the complaint and did not actively defend against the suit. On
March 8, 1991, the Nome superior court entered a default judgment
and order of sale against Campion. The State thereafter sold the
property at a judicial sale, leaving a deficiency of
approximately $70,000.
The State then filed an action in the United States
District Court for the Virgin Islands to enforce the Alaska
deficiency judgment. The State moved for summary judgment, while
Campion filed a motion to dismiss on the grounds that the Alaska
judgment was void for lack of personal jurisdiction, based on
improper service of process. The court granted Campion's motion
to dismiss. The court's order stated "that the defendant was not
properly served in the manner required by the Alaska Statute
. . . ." The order further stated "that the Alaska court lacked
personal jurisdiction over the defendant and that the default
judgment is void." Though the order was appealable under 28
U.S.C. 1291, the State chose not to appeal.
The State instead filed a "Complaint for Deficiency"in
Anchorage superior court, based upon the Nome suit. Campion
filed for summary judgment, arguing inter alia that the Virgin
Islands decision collaterally estopped the State from relying on
the Nome suit as a basis for a deficiency action. The State
filed a cross motion for summary judgment. The superior court
granted the State's motion without comment and entered judgment
against Campion in the amount of $81,991.50, including interest,
costs, and fees. This appeal followed.
DISCUSSION
The doctrine of collateral estoppel, also referred to
as issue preclusion, "bars relitigation, even in an action on a
different claim, of all 'issues of fact or law that were actually
litigated and necessarily decided' in [a] prior proceeding."
Americana Fabrics v. L & L Textiles, 754 F.2d 1524, 1529 (9th
Cir. 1985) (citations omitted). The doctrine serves "the dual
purpose of protecting litigants from the burden of relitigating
an identical issue with the same party or his privy and of
promoting judicial economy by preventing needless litigation."
Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979). The
applicability of the doctrine is a question of law subject to
independent review by this court. Borg-Warner v. Avco Corp., 850
P.2d 628, 634 n.15 (Alaska 1993).
The doctrine of collateral estoppel generally involves
the effect of a judgment in the courts of the state in which it
was rendered. However, the doctrine applies with equal (if not
greater) force when the second action is brought in the courts of
a different state, or where, as in the present case, the first
action is brought in a federal court and the second action in a
state court. The Restatement (Second) of Judgments states that,
in such cases, "the Full Faith and Credit Clause or the Supremacy
Clause of the United States Constitution, or federal statutes or
rules of decision, may require that preclusive effect be given to
the first judgment." Restatement (Second) of Judgments 28 cmt.
e (1982). In Americana Fabrics, the court noted that "a
combination of constitutional and statutory considerations
requires state courts to give [preclusive] effect to the
judgments of federal courts." Americana Fabrics, 754 F.2d at
1529 (citing Stoll v. Gottlieb, 305 U.S. 165, 170-71 (1938)); see
also Delaware Valley Citizens' Council for Clean Air v.
Pennsylvania, 755 F.2d 38, 43 (3d Cir.) (noting the "clearly
established rule that state courts must give full faith and
credit to the proceedings of federal courts"), cert. denied, 474
U.S. 819 (1985).
In Murray v. Feight, 741 P.2d 1148, 1153 (Alaska 1987),
we stated the elements for collateral estoppel:
1. The plea of collateral
estoppel must be asserted against a party or
one in privity with a party to the first
action;
2. The issue to be precluded from
relitigation by operation of the doctrine
must be identical to that decided in the
first action;
3. The issue in the first action
must have been resolved by a final judgment
on the merits.
See also Pruitt v. State, Dept. of Public Safety, 825 P.2d 887,
890 (Alaska 1992) (requiring identity of issue, final judgment,
and mutuality of parties); Bignell v. Wise Mech. Contractors, 720
P.2d 490, 494 (Alaska 1986) ("issue must have been actually
litigated and determined . . . by a valid and final judgment, and
the determination must have been essential to the judgment"). It
is well-established that the doctrine applies to jurisdictional
issues as well as substantive issues. Americana Fabrics, 754
F.2d at 1529 (citing Durfee v. Duke, 375 U.S. 106 (1963)).
In the instant case, the requirements for application
of collateral estoppel, as enumerated in Murray, are clearly
satisfied. The present action involves the same parties as the
Virgin Islands suit. Thus, the first requirement is met.
Likewise, the issue to be precluded here is identical to the
issue litigated in the prior decision--whether the Alaska
judgment against Campion is void based on improper service of
process. Finally, the resolution of this issue by the Virgin
Islands court was by a final, appealable judgment, resulting in
the dismissal of the action. See Briggs v. State, Dep't of
Public Safety, 732 P.2d 1078, 1082 (Alaska 1987) ("'[F]inal
judgment' includes 'any prior adjudication of an issue . . . that
is determined to be sufficiently firm to be accorded conclusive
effect.'").4
The State argues, however, that the superior court's
decision should be upheld on the principle that when the courts
of two states have reached conflicting decisions on the same
issue and one of the conflicting decisions was rendered by a
court of the state in which the current action is pending, that
decision is controlling, notwithstanding the Full Faith and
Credit Clause and the doctrine of collateral estoppel. In
support of this argument, the State cites several cases
expounding this general rule. See, e.g., Jensen v. Barnes, 519
P.2d 1223, 1224 (Colo. App. 1974) ("when one of the conflicting
decisions was entered by a court of the state in which the
current action is pending, that decision takes precedence over
the court of a sister state"); Stuart v. Lilves, 258 Cal. Rptr.
780, 782 (Cal. App. 1989) (full faith and credit does not compel
court to set aside judgment rendered in this state in action
involving the same issue as that subsequently adjudicated by
court of a sister state).
The cases cited by the State do not persuasively
support its argument in the present case. The rule discussed
above is expressly limited to those situations in which the
subsequent out-of-state action involves the same issue which was
decided in the initial in-state action. In the present case, the
Nome superior court simply was not faced with and did not address
the question of whether service of process on Campion was
sufficient to confer jurisdiction. See Restatement (Second) of
Judgments 27 cmt. e (1982) ("[i]n the case of a judgment
entered by . . . default, none of the issues is actually
litigated"). Thus, it cannot be said that the Alaska court and
the Virgin Islands court reached conflicting decisions on the
same issue.
The State also relies on Pace v. Pace, 281 S.E.2d 891,
894 (Va. 1981), in which the court stated that full faith and
credit does not require a court to give "greater force and effect
to the judgment of a sister-state than we give to the judgments
of our own courts." Again, however, the State's reliance is
misplaced. In Pace, a Virginia court addressed a conflict
between a 1977 Virginia decision (declaring that a husband had no
child support obligation) and a 1978 Missouri decision (ordering
the husband to pay child support and arrearages of nearly
$4,000). The wife argued that the court should give Full Faith
and Credit to the Missouri judgment, based on certain alleged
irregularities in the earlier Virginia proceeding.
The court, however, disagreed. In concluding that the
Court was not required to give full faith and credit to the
Missouri decision, the court noted that the wife was "precluded
from collaterally attacking the 1977 Virginia order upon non-
jurisdictional grounds. The alleged errors . . ., while serious,
do not render the 1977 Virginia order void for lack of
jurisdiction." Pace, 281 S.E.2d at 893 (emphasis added). Thus,
the court implied that a different result would have been reached
had the wife challenged the first order on jurisdictional
grounds. Of course, in the instant case, this is exactly the
argument offered by Campion and the basis for the Virgin Islands
decision.
Finally, the State also cites Colby v. Colby, 369 P.2d
1019 (Nev.), cert. denied, 371 U.S. 888 (1962). In Colby, the
Nevada Supreme Court addressed two conflicting divorce decrees,
one issued in Nevada, the other in Maryland. The wife was
granted a Nevada divorce in 1955. The husband, though properly
served in accordance with Nevada law, failed to appear and his
default was entered. Id. at 1019. Two years later, the husband
sought a Maryland divorce decree. The wife pleaded the Nevada
default judgment as a defense. However, the Maryland court
declared the prior decree to be "null, void and of no effect in
law or in equity,"apparently based on the court's conclusion
that the wife was not a domiciliary of Nevada.5 Id. at 1019-20.
Thereafter, the husband brought suit in Nevada seeking to have
the initial default decree vacated on the grounds that the
Maryland judgment must be given full faith and credit. Id. at
1020.
The court, however, refused to vacate the Nevada
divorce. The court stated that to hold otherwise would be "to
give [the Maryland decree] greater credit and respect than the
prior decree of our own State lawfully entered." Id. at 1023.
The court noted that domicile, at least in the context of divorce
proceedings, is a "matter[] of most intimate concern"to a state.
Id. (quoting Williams v. North Carolina, 325 U.S. 226, 231
(1945)). Thus, the court concluded that "[t]he State of Nevada
has unquestioned authority, consistent with procedural due
process, to grant divorces on whatever basis it sees fit to all
who meet its statutory requirements. It is entitled, moreover,
to give its divorce decrees absolute and binding finality within
the confines of its borders." Id.
Colby is unpersuasive authority with respect to the
instant case. The State relies on Colby to support its argument
that "neither collateral estoppel nor the full faith and credit
clause . . . require that the forum state's courts must give
effect to a sister state judgment holding that a prior judgment
of the forum state is void, if the forum state's courts conclude
that it was valid." To the extent Colby may be read to support
such a position, we conclude that it is questionable law.6 To
disregard an out-of-state judgment based on the conclusion that
the sister state court was incorrect would eviscerate all meaning
from the full faith and credit clause and the doctrine of
collateral estoppel, at least where the out-of-state judgment is
not clearly in error. To hold otherwise would require a court to
address the merits of the underlying dispute when deciding the
threshold issue of whether collateral estoppel applies, thereby
defeating the very purpose of the doctrine.
The State also maintains that giving collateral
estoppel effect to the Virgin Islands judgment "has the effect of
holding that a court sitting in the Virgin Islands is a better
judge of the validity of an Alaska judgment in Alaska than is an
Alaska court." This statement is both misleading and a
misinterpretation of the doctrine of collateral estoppel.
Clearly, the Virgin Islands decision does not offer the
definitive interpretation of Alaska's service of process
requirements. However, under the doctrine of collateral
estoppel, where two parties have fully litigated an issue, the
holding of the deciding court is binding in subsequent litigation
as between the two parties or their privies.
We have recognized that under the principles of
collateral estoppel, a sister state judgment interpreting an
Alaska statute is binding as between the parties to the out-of-
state litigation. State v. Baker, 393 P.2d 893 (Alaska 1964).
In Baker, the State of Alaska brought suit in Washington superior
court to collect business license taxes under the Alaska Business
Licensing Act. The defendants claimed that the Act was
unconstitutional. Id. at 894. The trial court agreed with the
defendants and dismissed the action. The State appealed and the
Washington Supreme Court affirmed in part and reversed in part,
holding that certain regulatory portions of the statute were
unconstitutional and severable. Id. at 896.
The defendants in the Washington action then brought
suit in Alaska for a refund of taxes paid in prior years,
asserting that the State was collaterally estopped by the
Washington decision from relitigating the constitutionality of
the Act. Id. at 894, 896. The Alaska trial court granted
summary judgment against the State. Id. at 894.
On appeal, we held that "[t]he Constitution of the
United States requires that the courts of Alaska give full faith
and credit to the judgment of the Washington Supreme Court . . .
." Id. at 896. The court stated that "under the doctrine of res
judicata [later referred to in the opinion as collateral
estoppel] neither the Washington courts nor the Alaska courts may
relitigate the question of whether or not the business license
taxes were collectible by the State of Alaska . . . ." Id. The
court concluded that the doctrine barred relitigation not only
with respect to the year at issue in the Washington action, but
also with respect to previous years. Id. at 898. In reaching
this result, the court outlined the general purposes of the
doctrines of res judicata and collateral estoppel:
[These doctrines are] founded upon the
principle that parties ought not to be
permitted to litigate the same issue more
than once and that when a right or fact has
been judicially determined by a court of
competent jurisdiction or an opportunity for
such trial has been given, the judgment of
the court, so long as it remains unreversed,
should be conclusive upon the parties . . . .
Id. at 897.
In Baker, the court held that collateral estoppel
precludes the relitigation of an interpretation of an Alaska
Statute given by a sister state court of competent jurisdiction.
In the present case, the Virgin Islands court's conclusion that
the Alaska judgment was void for lack of personal jurisdiction
was based on its interpretation of Alaska Civil Procedure Rules
4(h) and 12. By analogy, Baker indicates that this
interpretation should be given preclusive effect.
CONCLUSION
Based on the above analysis, we reverse the trial
court's grant of summary judgment in favor of the State and hold
that the State is collaterally estopped from asserting or relying
upon the validity of the Nome judgment.7 The elements for the
application of collateral estoppel are satisfied and the
limitations on the doctrine urged by the State are inapposite to
the circumstances of this case.8
_______________________________
* Sitting by assignment made pursuant to article IV, section
16 of the Alaska Constitution.
1 The record on appeal contains no evidence that Roe-Win
Corporation was a proper business address for Campion, nor is
there any evidence in the record establishing that Campion owned
or was employed by Roe-Win.
2 Alaska Civil Rule 4(h) provides:
Service of Process by Mail. In addition
to other methods of service provided for by
this rule, process may also be served within
this state or the United States or any of its
possessions by registered or certified mail,
with return receipt requested . . . . In
such case, copies of the summons and
complaint or other process shall be mailed
for restricted delivery only to the party to
whom the summons or other process is directed
or to the person authorized under federal
regulation to receive his restricted delivery
mail. All receipts shall be so addressed
that they are returned to the party serving
the summons or process or his attorney.
Service of process by mail under this
paragraph is complete when the return receipt
is signed.
Alaska R. Civ. P. 4(h).
3 The State asserts that Campion received a copy of the
summons and complaint. However, the record establishes only that
Campion received actual notice of the claim; it does not
establish receipt of the summons and complaint.
4 The State argues that the second requirement, identity
of issue, is not met. First, the State notes that an action upon
a judgment is distinct from the underlying judgment. This
assertion is irrelevant. Both the Virgin Islands suit and the
instant suit are actions upon the same judgment.
The State also argues that the issue to be decided in
the instant case is not identical to that decided in the prior
adjudication, because the Virgin Islands court "simply decided
that it would not enforce the Alaska judgment as a Virgin Islands
judgment." This ignores the plain language of the court's order,
which expressly states "that the defendant was not properly
served in the manner required by the Alaska Statute . . . ."
Therefore, the order concludes "that the Alaska court lacked
personal jurisdiction over the defendant and that the default
judgment is void." This determination was the basis for the
Virgin Islands court's decision to dismiss and is identical to
the issue raised in the instant case. See Bignell, 720 P.2d at
494.
5 The appeal of the Maryland decision indicates that the
lower court based its conclusion on its finding that the wife was
not a domiciliary of Nevada. Thus, the trial court appears to
have concluded that the Nevada court lacked subject matter
jurisdiction to enter the divorce decree. The Maryland Court of
Appeals affirmed. See Colby v. Colby, 141 A.2d 506, 508 (Md.),
cert. denied, 358 U.S. 838 (1958).
6 We base this conclusion on our inference that the
wife's domiciliary status was not fully litigated in the initial
Nevada proceeding since the husband failed to appear. In this
respect, the facts in Colby are analogous to those in the instant
case. Of course, had the domicile issue been fully litigated in
the original proceeding, the Maryland court would have been bound
to accord the decision full faith and credit. Similarly, had the
question of proper service upon Campion been fully addressed and
litigated in an Alaska court prior to the Virgin Islands
decision, the Virgin Islands District Court would have been bound
by the prior determination. However, this did not happen.
7 Based on this conclusion, we need not address Campion's
claim on the merits that the Nome judgment was void for lack of
personal jurisdiction. Nor need we address the State's
contention that Campion waived his jurisdictional objection by
failing to raise the issue with the Nome superior court.
8 Insofar as the pleadings in this case encompass a claim
on the underlying promissory note signed by Campion, the action
can proceed. The judgment of the District Court for the Virgin
Islands that the superior court in Nome lacked personal
jurisdiction over Campion is clearly based on its conclusion that
service was improper, not that minimum contacts with Alaska were
lacking given proper service. Further, we express no view as to
whether the State is collaterally estopped from contending that
the foreclosure, as distinct from the deficiency, was effective,
in view of the special interest which a state court has in
adjudicating title to real property within its boundaries, Abadou
v. Trad, 624 P.2d 287, 291 n.6 (Alaska 1981), and in view of the
possibility that persons not parties to the Virgin Islands action
might have an interest in the foreclosure proceeding. See
Restatement (Second) of Judgments 28(5)(a) (1982).
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