(Fifth Third Bank, N.A. v. Maple Leaf Expansion, Inc., 188 Ohio App.3d 27, 2010-Ohio-1537.)

Background Facts ---

On October 17, 2006, Maple Leaf signed two mortgage motes with Fifth Third for properties in Trumbull and Mahoning Counties. The notes identify Maple Leaf as an Ohio corporation, and indicate that payments are to be made to Fifth Third in Pennsylvania. The notes include clauses indicating that the notes are to be governed by Ohio law and warrants of attorney to confess judgment in the event that Maple Leaf defaults on the notes. On April 22, 2008, Fifth Third sent a notice of default and notice of acceleration to Maple Leaf on both notes. On or about September 26, 2008, a complaint in confession of judgment was filed on behalf of Fifth Third in the Court of Common Pleas of Butler County, Pennsylvania. On October 1, 2008, the Pennsylvania court entered judgment on the confession. On February 17, 2009, Fifth Third filed the October 1, 2008 foreign judgment of the Pennsylvania court with the Mahoning County Court of Common Pleas. On March 13, 2009, Maple Leaf filed a motion to vacate the foreign judgment, arguing that the notes contained invalid confession of judgment clauses and that the Pennsylvania court did not have jurisdiction to enter judgment. On June 10, 2009, the trial court overruled Maple Leaf's motion to vacate.

Issue ---

In its sole assignment of error, Maple Leaf asserts: “The Trial Court erred by overruling Maple Leaf Expansion, Inc.'s Motion to Vacate Foreign Judgment because the Pennsylvania Court lacked subject matter jurisdiction to issue the Foreign Judgment rendering it void.”

Analysis ---

Ohio courts are required to honor judgments from foreign states pursuant to the Full Faith and Credit Clause, Section 1, Article IV, United States Constitution. Ohio's Uniform Enforcement of Foreign Judgment Act, R.C. 2329.021 et seq., sets forth Ohio’s obligations under the Full Faith and Credit Clause and its federal statutory codification in Section 1738, Title 28, U.S. Code. “The doctrine of full faith and credit requires that the state of Ohio give to * * * judicial proceedings of another state the same faith and credit as they have by law or usage in the courts of the state from which they are taken.” Holzemer v. Urbanski (1999), 86 Ohio St.3d 129, 712 N.E.2d 713, syllabus.

The United States Supreme Court has explained, “The concept of full faith and credit is central to our system of jurisprudence. Ours is a union of States, each having its own judicial system capable of adjudicating the rights and responsibilities of the parties brought before it. Given this structure, there is always a risk that two or more States will exercise their power over the same case or controversy, with the uncertainty, confusion, and delay that necessarily accompany relitigation of the same issue.” Underwriters Natl. Assur. Co. v. North Carolina Life & Acc. & Health Ins. Guar. Assn. (1982), 455 U.S. 691, 703-704, 102 S.Ct. 1357, 71 L.Ed.2d 558. Thus, in order to protect the finality of judgments and prevent conflict or confusion, we are generally bound to honor judgments from foreign states. A Pennsylvania judgment therefore must be given the same credit and res judicata effect in Ohio as it would hold in Pennsylvania. Durfee v. Duke (1963), 375 U.S.106, 109, 84 S.Ct. 242, 11 L.Ed.2d 186.

However, the question of subject-matter jurisdiction is one that is always open to inquiry and provides an exception to the general concept of full faith and credit. Thompson v. Whitman (1873), 85 U.S. 457, 21 L.Ed. 897. If a court lacks subject matter jurisdiction to render judgment on an action, then that court’s proceedings are void ab initio and the Full Faith and Credit Clause would not apply. Underwriters, 455 U.S. at 705, 102 S.Ct. 1357, 71 L.Ed.2d 558. Thus, although parties are generally barred from collaterally attacking a foreign judgment in a different state, they may do so if the foreign court lacked subject-matter jurisdiction. Durfee, 375 U.S. at 110, 84 S.Ct. 242, 11 L.Ed.2d 186; Wyatt v. Wyatt (1992), 65 Ohio St.3d 268, 270, 602 N.E.2d 1166. If the Court of Common Pleas of Butler County, Pennsylvania truly lacked the requisite subject-matter jurisdiction to provide a ruling on a confession of judgment, then the Ohio trial court would not be bound to afford full faith and credit to the judgment and the denial of Maple Leaf's Civ.R. 60(B) motion would be in error. However, the term “jurisdiction” tends to be quite liberally applied, and as a result the term “subject-matter jurisdiction” can often be misconstrued. Cheap Escape Co., Inc. v. Haddox, L.L.C., 120 Ohio St.3d 493, 2008-Ohio-6323, 900 N.E.2d 601, at ¶5; Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980, 806 N.E.2d 992, at ¶12.

Subject-matter jurisdiction is defined as a court's power to hear and decide cases. Pratts at ¶11; State ex rel. Tubbs Jones v. Suster (1998), 84 Ohio St.3d 70, 73, 701 N.E.2d 1002; Morrison v. Steiner (1972), 32 Ohio St.2d 86, 61 O.O.2d 335, 290 N.E.2d 841. Subject-matter jurisdiction relates to the proper forum for an entire class of cases, not the particular facts of an individual case. In re Ohio Bur. of Support, 7th Dist. No. 00AP0742, citing State v. Swiger (1998), 125 Ohio App.3d 456, 462, 708 N.E.2d 1033. In the civil context, subject-matter jurisdiction is present if the action brought before a court alleges “any cause of action cognizable by the forum.” Id.

Though the term “jurisdiction” is often used in reference to a court's subject-matter jurisdiction, it is also used in reference to a court’s jurisdiction over a particular case. Pratts, 102 Ohio St.3d 81, 2004-Ohio-1980, 806 N.E.2d 992, at ¶12. “There is a distinction between a court that lacks subject-matter jurisdiction over a case and a court that improperly exercises that subject-matter jurisdiction once conferred upon it.” Id. at ¶ 10. The term “jurisdiction” is commonly used when a court makes an unauthorized ruling in a case that is otherwise within that court’s subject-matter jurisdiction. Id. at ¶19-21. This latter use of “jurisdiction” does not relate to subject matter jurisdiction and would not render a judgment void ab initio. If there is any valid ground upon which a confession of judgment might be properly sought and entered in Pennsylvania, even if “it would be highly erroneous, even jurisdictionally wrong in the sense of inexcusable use of judicial authority” as applied in this case, then the Pennsylvania court’s decision might be voidable as erroneous, but it would not be void for lack of subject-matter jurisdiction. State ex rel. Beil v. Dota (1958), 168 Ohio St. 315, 321, 7 O.O.2d 36, 154 N.E.2d 634, quoting Cline v. Whitaker (1911), 144 Wis. 439, 129 N.W. 400, at paragraph three of the syllabus.

Subject-matter jurisdiction relates only to the power of the court, not to the rights of the parties. State ex rel. Tubb Jones, 84 Ohio St.3d at 75, 701 N.E.2d 1002. Specifically, arguments regarding whether a case should be tried in a Pennsylvania court versus an Ohio court based on the residency of the parties to an agreement or based on the location where the cause of action arose “call into question principles of conflict or choice of law, venue and, to some extent, personal jurisdiction; they do not go to subject matter jurisdiction, which ‘connotes the power of the court to hear and decide a case upon its merits.’ (Emphasis added.) Morrison v. Steiner (1972), 32 Ohio St.2d 86, 87, 290 N.E.2d 841. When determining whether a court has subject matter jurisdiction, a court does not determine which forum should hear and decide the case or which state’s legal principles should govern the outcome. Id.” Stocklas v. Erie Ins. Group (Oct. 10, 1997), 11th Dist. No. 96-L-186, 1997 WL 665980, *2. Thus, any disputes that the parties may have regarding choice of law do not implicate subject matter jurisdiction.

Application ---

Subject-matter jurisdiction is determined by the internal laws of a state and cannot be undermined by the laws of another state. Litsinger Sign Co. v. Am. Sign Co. (1967), 11 Ohio St.2d 1, 40 O.O.2d 30, 227 N.E.2d 609, at paragraph one of the syllabus. A determination of the Pennsylvania court’s subject-matter jurisdiction would come only from Pennsylvania constitutional and statutory law, and not from the laws of Ohio. R.C. 2323.13 therefore does not affect whether a Pennsylvania court may have subject-matter jurisdiction over the action at issue.

According to the Pennsylvania Supreme Court, “[t]he test for whether a court has subject matter jurisdiction inquires into the competency of the court to determine controversies of the general class to which the case presented for consideration belongs.” In re Administrative Order No. 1-MD-2003 (2007), 594 Pa. 346, 354, 936 A.2d 1. Subject-matter jurisdiction of a Pennsylvania court is determined through the constitution and statutes of the commonwealth. Id. at 355. Pennsylvania courts of common pleas are courts of general jurisdiction, and the Prothonotary of a court of common pleas has the authority to enter judgment on a confession of judgment from a cognovit note. Section 5, Article V, Pennsylvania Constitution; Pa.R.C.P. 2951. Thus the laws of Pennsylvania provide for subject-matter jurisdiction over the class of cases applicable to Maple Leaf. Because a Pennsylvania Common Pleas Court has subject-matter jurisdiction to enter judgments on cognovit notes, the Pennsylvania court's entry of judgment on the cognovit notes in this case was not void ab initio for lack of subject matter jurisdiction. Because the Pennsylvania court had subject-matter jurisdiction, the “judgment cannot be impeached in [this state] even if it went upon a misapprehension of [this state's] law.” Fauntleroy v. Lum (1908), 210 U.S. 230, 237, 28 S.Ct. 641, L.Ed. 1039. As long as the Pennsylvania court's decision remains unreversed in Pennsylvania, it is conclusive regarding the matter decided. See Hall v. Tucker, 161 Ohio App.3d 245, 2005-Ohio-2674, 829 N.E.2d 1259, at ¶42, quoting State ex rel. Schneider v. Brewer (1951), 155 Ohio St. 203, 205, 44 O.O. 170, 98 N.E.2d 2. If the decision of the Pennsylvania court was in fact erroneous, Maple Leaf's recourse against the decision lies in an appeal to a superior court within the Commonwealth of Pennsylvania.

Holding ---

The Pennsylvania court had subject-matter jurisdiction to enter judgment on warrant of attorney in favor of Fifth Third, and the decision must be given full faith and credit in Ohio.