Out Of State, Out Of Luck

A decision of the Nebraska Supreme Court affirmed the dismissal of a law firm’s suit for legal fees

A law firm sued an out-of-state defendant for failure to pay his ex-wife’s attorney fees (for services by that law firm) pursuant to an out-of-state divorce settlement. After the defendant failed to appear, the district court overruled the law firm’s motion for default judgment and sua sponte dismissed the case for lack of personal jurisdiction. The law firm appeals, presenting novel arguments that (1) the defendant waived any defense of personal jurisdiction by default and (2) the court erred in raising personal jurisdiction on its own motion. We reject both arguments and affirm the district court’s final order.

Facts

According to the complaint, this action stems from an out-of-state divorce settlement. The complaint alleged the following facts: Montoya and his ex-wife divorced in Arizona. SBV is a Nebraska limited liability company and law firm that represented the ex-wife in the dissolution case. As part of the settlement of the divorce, Montoya agreed to pay SBV the attorney fees incurred by the ex-wife in the divorce. Montoya also agreed to a decree of dissolution—which was entered by an Arizona court in 2017—that ordered him to pay the ex-wife’s attorney fees in monthly installments. Montoya failed to make the payments.

Other allegations in the complaint are particularly relevant to the overarching issue on appeal—the district court’s personal jurisdiction over Montoya. The complaint alleged that Montoya is an Arizona resident and that he “knowingly entered into an agreement with and promised to pay SBV while it was located in Douglas County, and Montoya has initiated communications with SBV in Douglas County regarding this matter.” It further alleged that SBV had “contacted” Montoya about the payments and that Montoya had “reached out to SBV directly” to promise the payments were forthcoming. However, he “failed to make any payments” and “ignored SBV’s communications and demands for payment” from then on.

Conclusion

As set forth in the analysis, we conclude the following:

• An objection to personal jurisdiction is not waived by default when a nonresident fails to respond to process served out of state and does not appear.

• A trial court may raise personal jurisdiction on its own motion when deciding whether to enter a default judgment because the defendant has failed to appear.

• Before resolving a personal jurisdiction question and declining to enter a default judgment, a court must first give the plaintiff an adequate opportunity to assert facts establishing the court’s jurisdiction over the defendant.

Here, the district court did not abuse its discretion in overruling the motion for default judgment. SBV failed to establish a prima facie showing of personal jurisdiction over Montoya. The court did not err in dismissing SBV’s complaint. We affirm.

The case is SHERRETS BRUNO & VOGT v. MONTOYA Cite as 318 Neb. 532. (Mike Frisch)