George T. Hawes
v.
Daniel P. Reilly.
Newport County Superior Court (NC 14-148) Associate Justice
Brian P. Stern
For
Plaintiff: Michael S. Pezzullo, Esq.
For
Defendant: Brandon S. Bell, Esq.
Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and
Indeglia, JJ.
OPINION
William P. Robinson III, Associate Justice
The
plaintiff, George T. Hawes, appeals from a May 4, 2015 final
judgment entered in the Newport County Superior Court. That
judgment was entered to reflect an April 27, 2015 written
decision in which the hearing justice quashed an execution
previously issued by the Rhode Island Superior Court on a
State of Utah District Court judgment and dismissed the
plaintiff's petition to enforce the Utah judgment, on the
grounds that Utah did not have personal jurisdiction over the
defendant, Daniel P. Reilly.[1] On appeal, the plaintiff contends
that the hearing justice erred in refusing to grant full
faith and credit to the order of the Utah District Court with
respect to personal jurisdiction. He further avers that the
hearing justice erred in determining that Utah did not have
personal jurisdiction over Daniel. Lastly, he posits that
Daniel "forfeited the defense of lack of personal
jurisdiction."
For the
reasons set forth in this opinion, we affirm the judgment of
the Superior Court.
I
Facts
and Travel
The
facts of the case before this Court are somewhat complicated
but are not materially in dispute. In relating those facts in
this opinion, we rely primarily on the March 16, 2010
complaint filed in state court in Utah, the April 27, 2015
decision of the Rhode Island Superior Court in the instant
case, and other documents in the record.
A
company named InnerLight Holdings, Inc. (InnerLight), with
its principal place of business in Utah, hired William Reilly
(Daniel's father) to act as their corporate counsel for
the purpose of obtaining authorization from the United States
Securities and Exchange Commission (SEC) to publicly trade
InnerLight stock. Ultimately, however, InnerLight did not
receive final authorization from the SEC to trade its shares
publicly.
In its
March 16, 2010 First Amended Complaint filed in the State of
Utah District Court, InnerLight represented that it had
agreed to pay William with 650, 000 shares of InnerLight
stock and had agreed to let him hold an additional 600, 000
shares, to be transferred after InnerLight became a public
company. InnerLight further alleged that William, in the
process of acting as InnerLight's corporate counsel,
transferred 700, 000 shares without permission through
several corporate entities-Ashworth Development, LLC
(Ashworth); Doylestown Partners, Inc. (Doylestown); Shamrock
Equities, Inc. (Shamrock); and Beachview Associates, Inc.
(Beachview) (collectively, the corporate entities). Of
significance is the fact that, according to his affidavit
filed in Rhode Island Superior Court, Daniel was a minority
shareholder in Doylestown, Shamrock, and Beachview, as well
as being the secretary of Doylestown and Beachview and the
Vice President of Shamrock.[2] Mr. Hawes ultimately purchased
shares of InnerLight stock that had purportedly been
transferred by William to the corporate entities. Mr. Hawes
also purchased warrants.[3] InnerLight then rescinded the stock
offerings, but Mr. Hawes did not receive a refund for the
shares he had purchased.
On
March 16, 2010, InnerLight filed its previously mentioned
First Amended Complaint in state court in Utah against
William, Daniel, Shannon, the corporate entities, Mr. Hawes,
and other investors who had purchased shares of InnerLight
stock.[4] Thereafter, Mr. Hawes answered the
complaint. Included in his answer was a cross-claim against
William, Daniel, Shannon, and the corporate entities, as well
as other parties.[5] On June 29, 2010, Daniel, Shannon, and the
corporate entities filed a motion to dismiss InnerLight's
First Amended Complaint in state court in Utah on the ground
that Utah did not have personal jurisdiction over
them;[6] in addition, both sides filed memoranda of
law with respect to that motion. Daniel's Utah counsel
subsequently withdrew, and neither Daniel nor counsel
representing him were present at the hearing on the motion to
dismiss. The Utah District Court then denied the motion to
dismiss in a brief order which stated that "Innerlight
made a prima facie showing by pleading sufficient facts to
establish that this Court may exercise personal jurisdiction
over each of the non-resident Defendants." They then
continued not to appear in the state court, and they did not
engage new counsel. Accordingly, on May 11, 2012, an amended
default judgment on Mr. Hawes's cross-claim was entered
against Daniel, William, Shannon, and the corporate entities
in the amount of $775, 000, plus "reasonable expenses,
including attorney's fees * * *."
On
April 21, 2014, Mr. Hawes filed a "Petition to Enforce a
Foreign Judgment" in the Rhode Island Superior Court,
seeking enforcement in this jurisdiction of the default
judgment from Utah against Daniel. On June 20, 2014, an
execution was issued in the amount of $971, 351.78. On
October 30, 2014, Daniel filed a motion to quash the
execution and dismiss the petition for lack of personal
jurisdiction in the foreign action.
The
hearing justice, after considering the briefings of the
parties and after hearing argument, issued a written decision
on April 27, 2015. In his written decision, the hearing
justice first addressed whether or not he needed to give full
faith and credit to the order of the state court in Utah that
denied Daniel's motion to dismiss. After a thorough and
commendable discussion of the facts and applicable precedent,
the hearing justice determined that he would not be obligated
to give full faith and credit to the denial of the motion to
dismiss because that order was "vague" and did not
include any "underlying reasoning." He added that
"[i]n this case, it does not seem that a final
determination of personal jurisdiction had [been]
reached;" and he expressly noted that "[t]he order
only states a prima facie showing of personal
jurisdiction ha[d] been made." The hearing justice then
reviewed Daniel's contacts with Utah and the applicable
Utah law and came to the conclusion that Utah did not have
personal jurisdiction over Daniel. For that reason, he
quashed the execution and dismissed Mr. Hawes's petition.
Final judgment subsequently entered on May 4, 2015. Mr. Hawes
filed a timely appeal.
II
Standard
of Review
In a
case which similarly involved the doctrine of full faith and
credit, we stated, with respect to the standard of review to
be applied, that "this Court will apply a de
novo standard of review to questions of law that may
implicate a constitutional right." Goetz v. LUVRAJ,
LLC, 986 A.2d 1012, 1016 (R.I. 2010).[7]
With
respect to issues of personal jurisdiction, we have explained
that usually "mixed questions of law and fact, as well
as inferences and conclusions drawn from the testimony and
evidence presented at trial, are entitled to the same
deference as the trial justice's findings of fact, that
is, they will not be disturbed on appeal unless it is clearly
wrong or otherwise incorrect as a matter of law."
Cassidy v. Lonquist Management Co., LLC, 920 A.2d
228, 232 (R.I. 2007) (internal quotation marks omitted).
However, we went on in Cassidy to clarify that
"when deciding mixed questions of law and fact that
involve constitutional issues, our review is de
novo." Id. Therefore, we concluded that
"[o]ur review of a challenge to in personam
jurisdiction is de novo." Id.; see
also Cerberus Partners, L.P. v. Gadsby & Hannah,
LLP, 836 A.2d 1113, 1117 (R.I. 2003) (stating that
"[o]ur review [of the dismissal of a case for failure to
make a prima facie showing of personal jurisdiction]
is de novo").
III
Analysis
A
Full
Faith and Credit
Mr.
Hawes contends on appeal that the hearing justice erred in
granting the motion to quash the execution and dismiss the
petition because he did not grant full faith and credit to
the order of the ...