Mr. Cueto contended that he never made any contract in Maryland, had not committed a tortious or wrongful act in Maryland, and has not been physically present in Maryland since 1969. In their oppositions, St. Paul and ABHI argued that the United States District Court for the District of Maryland had personal jurisdiction over Mr. Cueto because he enrolled the Illinois default judgments in Maryland courts. Mr. Cueto argued that his enrollment of the foreign judgments, absent any attempts to enforce them, was an insufficient basis for personal jurisdiction.

A federal court may exercise jurisdiction over a non-resident defendant if: (1) the requirements of the forum state's long-arm statute are satisfied; and (2) the exercise of jurisdiction comports with the Due Process Clause of the Fourteenth Amendment. Specifically, Maryland's long-arm statute provides that personal jurisdiction exists over anybody who transacts any business or performs any character of work or service in the State. MD. CODE ANN., CTS. & JUD. PROC. § 6-103(b)(1). The Court of Appeals has held that acts done within the State, which will support in personam jurisdiction as transacting "any business," include acts which constitute a purposeful activity within the State.

The Maryland Courts have not yet addressed the question of whether the enrollment of foreign judgments constitutes purposeful availment of state law and satisfies the "[t]ransacts any business" requirement of the state's long-arm statute. Neither Maryland, nor any other Court has directly decided the issue under its own long-arm statute or as a matter of constitutional due process. Likewise, the Uniform Enforcement of Foreign Judgments Act ("UEFJA") is silent on the issue of whether filing a foreign judgment confers personal jurisdiction in other proceedings. Therefore, given the lack of precedent and statutory guidance, the Court treated this issue as one of first impression.

The United States District Court for the District of Maryland held that a non-resident defendant who enrolls foreign default judgments in Maryland pursuant to UEFJA "[t]ransacts . . . . business" within the meaning of Maryland's long-arm statute. The Court arrived at this conclusion based on the similarities between the purposeful availment of a state's laws and protections when a judgment creditor enrolls a foreign default judgment and when a litigant files a lawsuit. A foreign judgment filed pursuant to UEFJA is treated as a Maryland judgment for all intents and purposes. Thus, the outcome of a proceeding under UEFJA is similar to those of a civil action. Just as civil actions voluntarily initiated by non-residents may constitute purposeful availment of the laws and protections of Maryland, so also should foreign judgment enrollment proceedings.

By enrolling the Illinois default judgments against ABHI in Maryland, the Court found that Mr. Cueto transacted business and engaged in purposeful activity in Maryland. Therefore, the Maryland long-arm statute authorized the exercise of personal jurisdiction over him for matters arising from or relating to the enrollment of the Illinois default judgments in Maryland. Since St. Paul's declaratory judgment action directly related to the Illinois default judgments enrolled in Maryland, the Court had personal jurisdiction over him.

The Court also found that the exercise of jurisdiction over Mr. Cueto was constitutionally reasonable. First, Mr. Cueto cannot say that litigating in Maryland is unduly burdensome when he enrolled three foreign judgments in the Maryland courts. Second, Maryland has great interest in adjudicating this dispute. Third, St. Paul has a strong interest in resolving the dispute in Maryland, because it is the only forum in which both Mr. Cueto and ABHI has sufficient contact. Fourth, the States have an interest in adjudicating claims in a single action against all defendants. Fifth, Maryland courts are in the best position to further the social policies implicated by this action. For these reasons, the "traditional notions of fair play and substantial justice" are not offended by the exercise of jurisdiction over Mr. Cueto in the United States District Court for the District of Maryland.