The default judgment of a Utah court is enforceable under Quebec’s civil code, the Supreme Court of Canada decided today in dismissing the appeal of a Quebec businessman who was sued in Utah.
At issue in this private international law case was whether the jurisdiction of this foreign court could be recognized under Quebec’s civil code. In an 8-1 decision with three sets of reasons, the majority of the Supreme Court decided that it could.
Barer lives in Quebec and conducts business there and in the United States. He was sued personally in the state of Utah, together with two companies he allegedly controlled: Central Bearing Corporation, based in Montreal, and Barer Engineering Company of America, based in Vermont. The suit brought by Knight Brothers LLC, a Utah-based company, claimed that BEC had a balance owing under a contract between them, that Barer had fraudulently misrepresented that the defendants would pay it a certain amount for work performed on a building foundation in Utah, that the corporate veil of the two companies should be lifted, and that the defendants had been unjustly enriched.
Barer brought a motion to have the claim against him dismissed on a preliminary basis, claiming that Knight’s claim for fraudulent misrepresentation was barred at law; that the Utah court did not have jurisdiction over him personally; and that Knight had failed to show that the corporate veil should be lifted. The Utah court dismissed Barer’s motion and a default judgment was eventually rendered against all three defendants.
Knight then sought to have that decision recognized in Quebec and declared enforceable against Barer personally. The Superior Court ruled that the Utah court’s jurisdiction could be recognized on three possible grounds. Two of them related to the contract between Knight and BEC and the promise to pay allegedly made by Barer. But the main ground for recognizing the Utah decision was the fact that Barer had submitted to the Utah court’s jurisdiction. The Court of Appeal dismissed Barer’s appeal.
If Barer’s arguments had been accepted in Utah’s court, they would have resolved all or part of the dispute, Justice Clément Gascon noted in his reasons for the majority.
In concurring reasons, Justice Russell Brown agreed that the appeal should be dismissed, but did not agree that Barer had submitted to the jurisdiction of the Utah court within the meaning of art. 3168(6) of the C.C.Q. Rather, he found that the jurisdiction of the Utah court had been established under other provisions of the civil code (arts. 3168(4), 3164 and 3139 C.C.Q.). Even if Barer hadn’t personally signed the contract with Knight, the contractual dispute was connected to the state of Utah, where Knight performed the work, and so Utah had jurisdiction, Brown found.
Justice Suzanne Côté, dissenting, would have allowed the appeal. She did not view the Utah court’s jurisdiction as established under Quebec’s civil code, and the dispute was not attached to Barer personally, but rather to his company.
In this case, the Supreme Court “has established that the burden on proving foreign court jurisdiction is on the plaintiff,” says Jonathan Franklin of Franklin & Franklin in Montreal, who, with Lazar Sarna, represented the respondent (originally the plaintiff), Knight Brothers LLC.
“The plaintiff has to show what the defendant did,” such as making submissions in the foreign court and agreeing to a settlement conference, all of which acknowledge jurisdiction of that court, says Franklin. “That’s what a court will look at to see if the foreign court has jurisdiction.”
When Barer filed proceedings and made submissions in the Utah court, “the court held that that was a constitutional recognition of the Utah jurisdiction,” he told Legal Feeds. This was confirmed at all three levels of court in Canada, he adds.
Another aspect of the Supreme Court’s decision is that once a defendant has behaved in such a way as to recognize jurisdiction, “they can’t withdraw a recognition” at some future point, Franklin says. “That was what the defendant was pleading.”
What the Supreme Court did not resolve in today’s decision, says Sarna, was how foreign jurisdiction is determined where a defendant in an action files nothing, makes no submission to the foreign court, or alleges a lack of jurisdiction. “In this case, there happened to be an interlocutory judgment discussing the jurisdiction, which ultimately led to the default judgment” by the Utah court; “so, we’re able to point to the reasons of the foreign court in the interlocutory proceeding.”
But in the case of a default, two-line judgment from an American court, for example, “we have to know what kind of proof you can make [regarding] jurisdiction. … What are the extraneous documents, or proof, that one has to produce locally to show the foreign court had jurisdiction?”
In pleadings in this case, at all levels, the judges referred to “courts having a more international venue,” says Sarna, and that “we should be recognizing international judgements,” especially between those countries that recognize each other as upholding appropriate standards of international law. “But in order to technically get an authorization or recognition of a foreign judgement, there are hoops to jump through,” including an onus of proof on the plaintiff to show that the foreign court has jurisdiction.
“I think that caution is the watchword, in terms of dealing with a foreign lawsuit by a Quebecer, and to what extent [a defendant should] be involved in that foreign lawsuit,” says Leon Greenberg of Sternthal, Katznelson, Montigny in Montreal, who represented the appellant in this case; either “to settle it or to challenge the jurisdiction of the foreign court.”