In re PROCEEDING TO ENFORCE JUDGMENT AGAINST NATIONAL PARTITIONS, INC.
Session October 19, 2016
from the Chancery Court for Knox County No. 187666-3 Michael
W. Moyers, Chancellor
Plastics Technologies, Inc. (APT) and RAO Design,
International, Inc. (RDI) (collectively the Plaintiffs)
brought this action in the trial court seeking to enroll an
Illinois judgment against National Partitions (NP). The
judgment had been awarded by the Circuit Court of Cook
County, Illinois. NP filed an answer questioning the
jurisdiction of the Illinois court. NP coupled its answer
with a counterclaim asserting that the Plaintiffs had been
guilty of the initial breach of the contract. Following a
hearing, the trial court decreed registration of the Illinois
judgment and ultimately dismissed NP's counterclaim. NP
appeals. We affirm.
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Frederick L. Conrad, Jr., Knoxville, Tennessee, for the
appellant, National Partitions, Inc.
Bradley Block, Northbrook, Illinois, and Garrett P.
Swartwood, Knoxville, Tennessee, for the appellees, American
Plastics Technologies, Inc. and RAO Design International,
Charles D. Susano, Jr., J., delivered the opinion of the
court, in which D. Michael Swiney, C.J., and John W.
McClarty, J., joined.
CHARLES D. SUSANO, JR., JUDGE
RDI are both corporations organized under the laws of the
State of Illinois, and each has its principal place of
business in Illinois. According to APT, it is involved
in the business of, among other things, manufacturing
equipment used to create IV bags and bottles containing
sterile, pure saline and medicinal solutions. On occasion,
[it] also helps customers design and/or construct either all
or a portion of their factories, and supplies components for
RDI are affiliates. NP is a corporation organized under the
laws of the State of Tennessee and has its principal place of
business in Tennessee. The Plaintiffs assert that "[NP]
supplies components used to build clean rooms - interior
rooms which have minimal airborne contaminants and which are
frequently used in the manufacture of sterile, pure saline
and medicinal solutions."
2011, the parties entered into a contract for NP to supply
the Plaintiffs with components for and assembly of a clean
room and assemble the clean room in Nigeria, Africa. The
terms of the contract provide the following payment terms:
"Deposits per policy. Balance due at shipment." As
agreed by the parties, APT paid a $60, 000 deposit to NP.
August 2013, after APT's project was delayed and because
NP was having production problems, the parties modified the
contract. The modification affected the price and delivery
date of the components and the price of the installation. At
some point after the modification of the contract and prior
to the shipment of the components, NP demanded that APT pay
the balance due immediately. APT, however, refused to pay,
relying upon the terms of the contract, which recite that
payment of the balance is not required until NP ships the
components. Because NP refused to ship the components before
the Plaintiffs paid the balance, the Plaintiffs sought the
return of their $60, 000 deposit due to NP's refusal to
and failure to perform.
September 23, 2013, because NP failed to perform under the
contract or return the deposit, the Plaintiffs filed a
complaint against NP for breach of contract and unjust
enrichment in the Circuit Court of Cook County, Illinois. NP
did not file an answer or make an appearance in that case.
Accordingly, the Plaintiffs filed a motion for default
judgment. On November 21, 2013, after NP failed to appear at
the default hearing, the circuit court entered a judgment in
favor of the Plaintiffs, awarding them $60, 000 in damages
and $590.14 in costs.
July 11, 2014, the Plaintiffs sought to enroll their Illinois
judgment in Tennessee. NP timely filed an answer objecting to
enrollment of the judgment. NP attacked the judgment on the
grounds that neither jurisdiction nor venue was proper in the
Circuit Court of Cook County, Illinois. NP also asserted a
counterclaim against the Plaintiffs, alleging that the
Plaintiffs were the ones who, in fact, breached the contract
and that it, NP, had suffered damages in the amount of $77,
361.31. Its claim of damages included the unpaid balance,
storage fees, administrative costs, crating and uncrating
fees, and lost profits.
the Plaintiffs did not file an answer to the counterclaim, NP
filed a motion for default judgment. NP also filed a motion
for summary judgment asking the court to deny entry of the
Illinois judgment. It stated the following in its motion for
[NP] did not appear in the . . . case . . . and, therefore,
has not submitted to the jurisdiction of the Circuit Court
for Cook County, Illinois.
Neither jurisdiction nor venue was appropriate in the
[NP] does not have an office in Illinois . . . and its main
office is located [in] Tennessee.
[NP] was contacted in Tennessee by [APT] to initiate the
contract underlying this litigation. . . .
The materials underlying the litigation shipped from Knox
County, Tennessee. . . .
The materials were to be paid by [APT] to initiate shipment
with said payment to be made at the offices of [NP] in Knox
The materials underlying this litigation were to be shipped
(Paragraph numbering in original omitted.)
then filed a motion to dismiss NP's counterclaim on the
basis of res judicata. In their motion to dismiss, they
asserted the following:
The allegations of the [c]ounterclaim concern the same
contract and the same set of operative facts as the
allegations in the [c]omplaint in the Illinois [a]ction. . .
. [I]n a proceeding to register and enforce a foreign
judgment, "issues of fact underlying a foreign judgment
may not form the basis for attacking the validity of a
foreign judgment." . . . " . . . Foreign judgments
are treated in the same manner as the judgment of a court of
record of this state." Even a judgment this [c]ourt
believes is incorrect is still entitled to full faith and
[NP] may only challenge the Judgment on the same basis that
it could vacate the Judgment under Tennessee Rule of Civil
Procedure 60. The only such ground that [NP] has asserted is
its . . . claim that the Illinois Court did not have personal
jurisdiction over it. [NP] cannot contest the merits of the
parties' claims in a motion made pursuant to Rule 60, and
cannot do so here.
The second reason for dismissing the [c]ounterclaim is
because the Uniform Enforcement of Foreign Judgments Act
describes the procedure for registration of a foreign
judgment; it does not provide for counterclaims whereby
parties can litigate issues other than the validity of the
foreign judgment. . . . [T]here is no procedure for the
filing of a counterclaim at this time in this proceeding.
(Internal citations and paragraph numbering in original
addition to its initial attack on the personal jurisdiction
and venue of the Illinois court, NP later attacked the
court's subject matter jurisdiction. It asserted that
this action is transitory in nature and that only Knox
County, Tennessee has jurisdiction over the cause of action.
The Plaintiffs argued that, because the transaction
originated in and took place in Tennessee, the cause of
action in no way took place in Illinois to give it
jurisdiction over the matter. Additionally, NP argued that
APT's notice of its motion for default judgment was
insufficient under Tennessee law, arguing that the notice was
not served five days before the hearing on November 21, 2013
as required by Tennessee's Rules of Civil Procedure.
filed a motion for summary judgment seeking to deny entry of
the Illinois judgment. The court denied the motion.
Subsequently, the Plaintiffs filed a motion for summary
judgment asking the court to ...