Domesticating and Collecting a Foreign Judgment in Texas

How to Collect Judgments Across State Lines

  

Do you have a judgment against a debtor or debtors who now live in Texas? If you have obtained a judgment against a Texas resident or a business with assets in Texas, then you can seek to enforce your judgment in Texas under a procedure known as domestication. A foreign judgment is any judgment obtained in a court that is located outside of the State of Texas. Likewise, a foreign court is any court located in other state other than the state of Texas.


Trying to collect a debt can be frustrating. When demand letters and phone calls fail to solicit a response from the debtor, the creditor’s sole remedy is to get a judgment against the debtor. In order to get a judgment, the creditor must first file a lawsuit and then receive a verdict in the creditor’s favor or enter a default judgment against the debtor if the debtor fails to respond to the action. However, judgments do not automatically compel a debtor to pay. In many instances, the creditor must utilize post judgment collection remedies in order to locate and seize assets, levy bank accounts or force a sale of other assets owned by the debtor. A complicating factor is the location of the debtor or the debtor’s assets. If a judgment is entered against the debtor in one state, but the debtor resides in another state or the debtor’s assets are located in another state, then the creditor must transfer the judgment to that state, which is referred to as domestication, or “domesticate a judgment”.


Let’s say for example, that the debtor is a company located in Texas. The debtor owns assets located in Texas, which can include real or tangible property. The creditor is a business in Pennsylvania that provided goods and services to the debtor, but the debtor failed to pay. The creditor files a lawsuit against the debtor in Pennsylvania and gets a Pennsylvania judgment. Since the debtor is not located in Pennsylvania and does not have any assets in Pennsylvania, the Pennsylvania judgment will not be useful for the creditor when the creditor attempts to enforce the judgment because the Pennsylvania court has no jurisdiction over the company or the property in Texas. Instead of the creditor filing a new lawsuit in Texas against the same debtor, the creditor can follow the process under the Unified Enforcement of Foreign Judgments Act (UEFJA).


Texas has adopted the Uniform Enforcement of Foreign Judgments Act (UEFJA) to allow people and companies who have obtained foreign judgments to enforce their judgments in Texas without the necessity of having a separate trial for enforcement in Texas. The Texas Civil Practices and Remedies Code provides that a foreign judgment properly filed in Texas in a court of competent jurisdiction should be treated in the same manner as the judgment would have been treated in the foreign court.


The UEFJA allows a more streamlined method of enforcing foreign judgments as opposed to bringing a separate suit to enforce the judgment. However, enforcement under the UEFJA is not guaranteed. In order for a foreign judgment to be enforceable in Texas, it must be entitled to Full Faith and Credit. Essentially, this means that the foreign judgment must be final and must have been obtained in a way that respects the defendant’s Due Process rights. The party who obtained the foreign judgment must have properly served the defendant according to the laws of the foreign court and the defendant must have been subject to the personal jurisdiction of the foreign court; or the foreign judgment may be found to not be entitled to Full Faith and Credit and therefore unenforceable in Texas.


What is the procedure for domesticating a foreign judgment in Texas? We would need what is called an “exemplified” copy of the judgment. An exemplified copy is a copy of an official document, such as a court pleading or judgment, which is obtained from the County Clerk or the Judgment Clerk where the particular judgment was obtained. The clerk will certify in writing, affixing a corporate seal or some form of a raised stamp on the document, that the particular document as was properly signed and entered. Exemplified copies are more than certified copies -- the clerk certifies that the copies are genuine and the judge certifies that the clerk has the authority to say they are genuine.


We would then file the exemplified copy of the judgment in Texas. Once signed, we recommend an aggressive post judgment collection tool known as a “Turnover Order” or having a third-party court-appointed Receiver assigned to seize and sell a judgment debtor’s non-exempt assets, which also include the authority to do bank levies and mail levies. (Also known as the Turnover Statute”.) For more information regarding Turnover Orders (Receiverships), click here.


We handle commercial debt collection and debt collection activities, as well as the filing of foreign judgments, for businesses across the nation that have matters residing in Texas. Give us a call at 972-594-1133 or email Kim Guest, attorney, at Kim@Guestandassociates.com.

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