King v. Water's Edge Condominium Unit Owners' Assn.

2021 Ohio 1717

• Court: Ohio Court of Appeals
• Decided: May 20, 2021
• Docket: 109895
• Status: Published

Opinion

[Cite as King v. Water's Edge Condominium Unit Owners' Assn., 2021-Ohio-1717.]

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

PATRICIA KING, :

Plaintiff-Appellee, : No. 109895 v. :

WATER’S EDGE CONDOMINIUM : UNIT OWNERS’ ASSOC., ET AL.,

Defendants-Appellants. :

JOURNAL ENTRY AND OPINION

JUDGMENT: REVERSED AND REMANDED RELEASED AND JOURNALIZED: May 20, 2021

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-17-890996

Appearances:

Wendy S. Rosett, for appellee.

Cavitch, Familo & Durkin Co., L.P.A., Gregory E. O’Brien and Spencer E. Krebs, for appellant.

KATHLEEN ANN KEOUGH, J.:

Defendant-appellant, Geotech Services, Inc., appeals from the trial

court’s judgment denying its motion to vacate a default judgment. For the reasons

that follow, we reverse and remand. I. Background

On December 27, 2017, plaintiff-appellee, Patricia King, filed a nine-

count complaint against Geotech and 11 other defendants. The suit arose out of

alleged defects in King’s condominium and repairs made thereto.

On January 3, 2017, the clerk issued a summons and complaint to

Geotech, c/o attorney Dennis Kaselak, 1350 Euclid Avenue, Suite 1500, Cleveland,

OH 44115, as Geotech’s statutory agent. On January 5, 2017, the clerk noted on the

docket that, as evidenced by receipt No. 34173572, service had been completed on

January 4, 2017. A “D. Campbell” had signed the certified mail-return receipt.

On January 10, 2018, the clerk docketed a “Communication Letter.”

The “letter” was a copy of the summons addressed to Geotech’s statutory agent

Kaselak at the Euclid Avenue address. An unsigned handwritten note on the

summons stated:

This company [i.e. Geotech] or person [i.e. Kaselak] do not work at this address. Our company name is GCA Services Group, Inc. an AMB Company 1350 Euclid Avenue, Suite 1500, Cleveland, OH 44115

On March 26, 2018, the clerk sent a copy of a judgment entry by

regular mail to Geotech at the Euclid Avenue address. There is no indication on the

docket that the mail was returned as undeliverable.

On June 4, 2018, the clerk sent another judgment entry by regular

mail to Geotech at the Euclid Avenue address. The mail was returned on June 11,

2018, to the clerk. The docket entry states: Regular mail service receipt No. 35530677 returned 06/11/2018 Failure of service on defendant Geotech Services Inc. Unable to deliver notice mailed to pltfs attorney.

Thereafter, the case continued with respect to the other defendants;

King settled with some and dismissed others without prejudice. On March 28, 2019,

King filed a motion for default judgment against Geotech as the only remaining

defendant in the litigation.

The trial court set a default hearing for April 18, 2019, and ordered

that at the hearing, King was to provide an affidavit of damages, a proposed

judgment entry, and a copy of correspondence sent by King to Geotech via certified

mail notifying Geotech of the date and time of the hearing.

On April 18, 2019, the trial court granted King’s motion for default

judgment against Geotech in the amount of $66,557.92, plus court costs and

statutory interest. The trial court’s entry noted that King had provided the court

with an affidavit of damages with supporting documentation and a copy of service

of the notice of the hearing. King subsequently filed, as ordered by the court, a copy

of her receipt showing that notice of the hearing had been served by certified mail

on Geotech, c/o Dennis Kaselak as statutory agent, at the Euclid Avenue address.

On January 27, 2020, counsel for King filed an affidavit in aid of

execution of the default judgment against Geotech. Notably, counsel listed two

addresses for Geotech in her affidavit: the Euclid Avenue address and 350 Golden

Oak Parkway, Cleveland, OH 44146, Geotech’s principal place of business since

2003. Upon obtaining an order in aid of execution, counsel filed instructions for service of the order, requesting that the sheriff serve Geotech at both addresses. The

docket reflects that on February 4, 2020, the sheriff’s attempted service on Geotech

at the Euclid Avenue address was unsuccessful. On February 6, 2020, the sheriff

successfully served Geotech at its place of business on Golden Oak Parkway.

Two weeks later, on February 21, 2020, counsel for Geotech filed a

notice of appearance, a motion to vacate the default judgment, a motion to stay, and

a motion for leave to file an answer to the complaint. In its motion to vacate, Geotech

argued that it had no knowledge of the litigation until February 6, 2020, when it

received the affidavit and order in aid of execution of the default judgment at its

principal place of business. It acknowledged that Kaselak became Geotech’s

statutory agent in November 2000, but asserted that Kaselak moved his office from

1350 Euclid Avenue, died in October 2019, and never forwarded any correspondence

to Geotech regarding the litigation. Geotech argued further that it had meritorious

defenses to King’s complaint, its motion was timely, and it was therefore entitled to

relief from judgment under Civ.R. 60(B)(1) and (5).1

The affidavit of Steven V. Tartabini, vice-president of Geotech, was

attached to the motion to vacate. In his affidavit, Tartabini averred that Geotech’s

principal place of business since 2003 was at 350 Golden Oak Parkway in Cleveland,

Ohio. Tartabini further averred that Geotech was never served with the summons

and complaint at its principal place of business, and had no knowledge of the

1 Civ.R. 60(B)(1) provides for relief from judgment due to “mistake, inadvertence, surprise, or excusable neglect;” Civ.R. 60(B)(5) allows relief from judgment for “any other reason justifying relief from the judgment.” litigation until it was served on February 6, 2020, at the Golden Oak Parkway

address with the affidavit and order in aid of execution. Tartabini averred that if

Geotech had been properly served with the summons and complaint, it would have

answered the complaint, as well as submitted the claim to its insurance company.

Tartabini further averred that attorney Kaselak was Geotech’s statutory agent from

November 2000, but that he had moved his office to 401 South St. in Chardon, and

never forwarded any correspondence regarding this matter. With respect to the

merits of the case, Tartabini averred that Geotech never had a contract with King

and had offered no warranties to her, and that it had been hired and paid by

codefendant Neighborhood Housing Services of Greater Cleveland, Inc. Tartabini’s

affidavit was unsworn, and Geotech subsequently filed his sworn affidavit.

Geotech also filed an amended motion to vacate, asserting that the

default judgment should be vacated pursuant to Civ.R. 60(B)(1) and (5) because

service had never been perfected, and the trial court therefore lacked jurisdiction to

enter a judgment against Geotech. Geotech argued that in addition to Tartabini’s

averments that Geotech had not been notified of the litigation at its principal place

of business until February 6, 2020, the “Communication Letter” filed on January 10,

2018, and the docket entry of June 11, 2018, which noted that regular mail to

Geotech at the Euclid address had been returned for “failure of service” and “unable

to deliver,” supported its claim that service was never perfected.

King filed a brief in opposition to Geotech’s amended motion to

vacate, after which the trial court held a hearing. Both parties submitted post- hearing briefs. In its brief, Geotech again asserted that the trial court was without

jurisdiction to enter a default judgment because service had never been perfected.

Geotech attached another sworn affidavit by Tartabini to its post-

hearing brief. In addition to his prior averments, Tartabini averred that Geotech

had no affiliation with GCA Services Group, Inc., the business located at the Euclid

Avenue address. Geotech also attached to its brief the sworn affidavit of attorney

Casey P. O’Brien, a partner with the law firm of Ibold & O’Brien. O’Brien averred

that Kaselak became affiliated with the firm in July 2008, and that the firm’s main

office is located at 401 South Street, Chardon, Ohio, a satellite office is located in

Orwell, Ohio, and the firm has never been located at the Euclid Avenue address. He

also averred that the firm had no affiliation with GCA Services Group, Inc. or AMB

Company.

The trial court subsequently denied Geotech’s motion to vacate,

ruling:

The court held a hearing on this motion to vacate and had the parties provide additional briefing on this matter. The court reviewed the case law cited by both parties. It is clear the plaintiff served the named statutory agent at the address on file with the secretary of state. Service was perfected on the docket. A correspondence was later docketed indicating service may not be perfected, but nothing additional was provided to document or authenticate that correspondence. At the hearing, the defendant did not dispute the fact that the defendant failed to update the address on record for the business with the Ohio Secretary of State. As such, the court finds the plaintiff’s argument and case law to be well-taken.

This appeal followed. II. Law and Analysis

In its single assignment of error, Geotech asserts that the trial court

erred in denying its motion to vacate the default judgment. Geotech argues that the

trial court should have granted relief under Civ.R. 60(B)(1) and (5) because service

was never perfected, and the trial court therefore never acquired jurisdiction over

Geotech. King, on the other hand, contends that the trial court properly denied

Geotech’s motion to vacate because Geotech failed to meet the requirements of

Civ.R. 60(B).

A default judgment may be rendered against a defendant who has

failed to answer or otherwise defend against allegations raised in a complaint. Ohio

Valley Radiology Assocs., Inc. v. Ohio Valley Hosp. Assn., 28 Oho St.3d 118, 121,

502 N.E.2d 599 (1986); Civ.R. 55(A). When a defendant fails to answer, default

judgment is warranted because liability has been admitted “by the omission of

statements in a pleading refuting the plaintiff’s claims.” Girard v. Leatherworks

Partnership, 11th Dist. Trumbull No. 2004-T-0010, 2005-Ohio-4779, ¶ 38.

However, a judgment rendered without personal jurisdiction over a

defendant is void. Patton v. Diemer, 35 Ohio St.3d 68, 518 N.E.2d 941 (1988),

paragraph three of the syllabus. A court acquires jurisdiction over a party in one of

three ways: (1) proper and effective service of process; (2) voluntary appearance by

the party; or (3) limited acts by the party or his counsel that involuntarily submit the

party to the court’s jurisdiction. Austin v. Payne, 107 Ohio App.3d 818, 821, 669

N.E.2d 543 (9th Dist.1995), citing Maryhew v. Yova, 11 Ohio St.3d 154, 156, 464 N.E.2d 538 (1984). Therefore, “where the plaintiff has not perfected service on a

defendant and the defendant has not appeared in the case or otherwise waived

service, the court lacks jurisdiction to render a default judgment against the

defendant.” Professional Bank Servs. v. Abboud, 8th Dist. Cuyahoga No. 102078,

2015-Ohio-1651, ¶ 12, citing Rite Rug Co., Inc. v. Wilson, 106 Ohio App.3d 59, 62,

665 N.E.2d 260 (10th Dist.1995).

“The authority to vacate a void judgment is not derived from Civ.R.

60(B) but, rather, constitutes an inherent power possessed by Ohio courts.” Patton

at paragraph four of the syllabus. Thus, the Civ.R. 60(B) requirements are not

applicable when a party asserts the trial court lacked personal jurisdiction because

of improper service of process. GGNSC Lima, L.L.C. v. LMOP, L.L.C., 8th Dist.

Cuyahoga No. 105910, 2018-Ohio-1298, ¶ 15, citing Patton at id. and Khatib v.

Peters, 2017-Ohio-95, 77 N.E.3d 461, ¶ 30 (8th Dist.). Instead, the party only needs

to establish lack of proper service. Id.

In light of the foregoing, it is apparent that we need not consider the

parties’ various arguments regarding how Geotech did or did not meet the

requirements of Civ.R. 60(B). The issue to be decided is whether effective service of

process was made.

Civ.R. 4(A) provides that “[u]pon the filing of the complaint the clerk

shall forthwith issue a summons for service upon each defendant listed in the

caption.” To be effective, service of process must comport with the requirements of

due process. Akron-Canton Regional Airport Auth. v. Swinehart, 62 Ohio St.2d 403, 406 N.E.2d 811 (1980), syllabus. “Service of process is consistent with due

process standards where it is reasonably calculated, under the circumstances, to give

interested parties notice of a pending action and an opportunity to appear.” Lauver

v. Ohio Valley Selective Harvesting, L.L.C., 12th Dist. Clermont No. CA2016-11-076,

2017-Ohio-5777, ¶ 17, quoting Motorists Mut. Ins. Co. v. Roberts, 12th Dist. Warren

No. CA2013-09-089, 2014-Ohio-1893, ¶ 32. See also Chilcote v. Kugelman, 8th

Dist. Cuyahoga No. 98873, 2013-Ohio-1896, ¶ 6, citing Akron-Canton Regional

Airport Auth. at 406.

Civ.R. 4.1(A) outlines the methods for obtaining service of process

within the state of Ohio, and provides for service by certified mail, personal service,

or residential service. Regarding certified mail, “a signed receipt returned to the

sender establishes a prima facie case of delivery to the addressee. * * * Valid service

of process is presumed when any person at the defendant’s address received the

certified mail envelope, whether or not the recipient is the defendant’s agent.” TCC

Mgt. v. Clapp, 10th Dist. Franklin No. 05AP-42, 2005-Ohio-4357, ¶ 11.

With respect to corporations, R.C. 1701.07 provides that every

corporation “shall have and maintain an agent, sometimes referred to as the

‘statutory agent,’ upon whom any process, notice, or demand required or permitted

by statute to be served upon a corporation may be served.” R.C. 1701.07(H) provides

that “any process, notice, or demand required or permitted by statute to be served

upon a corporation may be served upon the corporation by delivering a copy of it to its agent, if a natural person, or by delivering a copy of it at the address of its agent

in this state.”

The plaintiff bears the burden of obtaining proper service on a

defendant. Capital One Bank (USA) N.A. v. Smith, 8th Dist. Cuyahoga No. 108669,

2020-Ohio-1614, ¶ 14, citing Cincinnati Ins. Co. v. Emge, 124 Ohio App.3d 61, 63,

705 N.E.2d 408 (1st Dist.1997). Where a plaintiff follows the rules of civil procedure

regarding service of process, a rebuttable presumption of proper service arises. Id.,

citing Lakhodar v. Madani, 8th Dist. Cuyahoga No. 91564, 2008-Ohio-6502, ¶ 13.

This presumption can be rebutted, however, where a defendant presents sufficient

evidentiary-quality information demonstrating that service was not accomplished.

Id. See also Gaston v. Medina Cty. Bd. of Revision, 133 Ohio St.3d 18, 2012-Ohio-

3872, 975 N.E.2d 941 ¶ 18, fn. 2 (recognizing that “the presumption of valid service

is rebuttable”).

“A failure of service may * * * occur where ‘the defendant does not

receive the summons and complaint, even though the plaintiff complied with the

civil rules and service was made at an address where the plaintiff could reasonably

anticipate that the defendant would receive it.’” Chuang Dev. L.L.C. v. Raina, 10th

Dist. Franklin Nos. 15AP-1062 and 16AP-500, 2017-Ohio-3000, ¶ 32, quoting Erin

Capital Mgmt. v. Fournier, 10th Dist. Franklin No. 11AP-483, 2012-Ohio-939, ¶ 19.

See also Rafalski v. Oates, 17 Ohio App.3d 65, 67, 477 N.E.2d 1212 (8th Dist.1994)

(because the defendant never received the summons and complaint, she was entitled

to have the judgment against her vacated even where the plaintiff complied with the civil rules and service was made at an address where the plaintiff could reasonably

have anticipated that the defendant would receive it).

Here, the clerk of courts sent the summons and complaint via

certified mail to the address of Geotech’s statutory agent as listed with the secretary

of state. A “D. Campbell” signed the return receipt for the certified mail on January

4, 2017, it was returned to the clerk of courts on January 5, 2017, and notice of

effective service was docketed. Because King followed Civ.R. 4.1., a rebuttable

presumption of proper service on Geotech arose.

Geotech rebutted that presumption, however, with competent,

credible evidence demonstrating that it was never served. In its amended motion to

vacate, Geotech referred the court to the “Communication Letter,” which was

docketed on January 10, 2018, only five days after the clerk’s entry that service on

Geotech was completed on January 4, 2018. It also referred the court to the mail

sent by the clerk to Geotech on June 4, 2018, that was returned as undeliverable on

June 11, 2018. Both the Communication Letter and the returned mail are competent

evidence that Geotech’s statutory agent was not located at the Euclid Avenue

address at any point during this litigation.

Likewise, Tartabini’s sworn affidavit, which was attached to Geotech’s

amended motion to vacate, provided competent, credible evidence that Geotech had

no knowledge whatsoever of the litigation until it was served at its principal place of

business on Golden Oak Parkway in Cleveland on February 6, 2020. Tartabini’s

affidavit also contained evidence regarding why the service on Geotech’s statutory agent at the Euclid Avenue address was not successful, even though Kaselak was

listed at that address as Geotech’s statutory agent. Specifically, Tartabini provided

evidence that Kaselak had moved his office from the Euclid Avenue address in 2008,

many years before this litigation commenced. The affidavit of attorney Casey

O’Brien, also attached to Geotech’s amended motion to vacate, provided more

evidence as to why Geotech was never served at the Euclid Avenue address. O’Brien

averred that from July 2008, until his death in October 2019, Kaselak was affiliated

with the law firm of Ibold & O’Brien, whose offices were located in Chardon and

Orville, Ohio, and never at the Euclid Avenue address.

When the movant’s motion to vacate contains allegations of operative

facts that would warrant relief, the trial court should at least grant a hearing on the

motion. GGNSC Lima, L.L.C., 8th Dist. Cuyahoga No. 105910, 2018-Ohio-1298, at

¶ 16, citing Adomeit v. Baltimore, 39 Ohio App.2d 97, 105, 316 N.E.2d 469 (8th

Dist.1974).

The trial court properly held a hearing, but concluded that Geotech’s

motion should be denied because it did not produce evidence substantiating the

Communication Letter. The trial court also concluded that although King had

apparently served Geotech at an incorrect address for its statutory agent, service was

valid because Geotech had not updated the address for its statutory agent with the

secretary of state after Kaselak moved in 2008, as required by R.C. 1701.07(E).2

2R.C. 1701.07(E) states that “If the agent changes the agent’s address from that appearing upon the record in the office of the secretary of state, the corporation or the agent shall forthwith file with the secretary of state, on a form prescribed by the secretary A trial court’s determination of whether service was completed should

not be disturbed absent an abuse of discretion. State ex rel. Ballard v. O’Donnell,

50 Ohio St.3d 182, 553 N.E.2d 650 (1990), syllabus. Under the facts and

circumstances of this case, we find that the trial court abused its discretion in

concluding that service was perfected on Geotech.

First, although there is no evidence in the record that Geotech ever

learned or informed the court who filed the unsworn and unsolicited

Communication Letter with the clerk, the averments contained in Tartabini and

O’Brien’s affidavits were credible evidence that supported the letter. The affidavits

demonstrated that Geotech’s principal place of business was never located at the

Euclid Avenue address, and that Geotech’s statutory agent did not have his office at

the Euclid Avenue address in 2017, when the complaint and summons were served

there. The evidence demonstrated, in fact, that Kaselak had not worked out of the

Euclid Avenue address since 2008. This evidence directly supports the conclusion

that the letter filed with the clerk was correct, and that, as handwritten on the letter,

neither Geotech nor its statutory agent were located at the Euclid Avenue address in

2017, when service was made there.

Furthermore, contrary to the trial court’s finding, under the

circumstances of this case, the fact that King served Geotech at the listed address for

its statutory agent is insufficient to automatically establish effective service. This

of state, a written statement setting forth the new address.” The record reflects that Geotech filed updated information with the secretary of state on February 21, 2020, regarding its statutory agent. court has previously recognized that service on a listed agent is effective if the

defendant has failed to update its agent for service of process with the secretary of

state. See Previte v. Puinno, 187 Ohio App.3d 761, 2010-Ohio-1747, 933 N.E.2d 1127

(8th Dist.) (where the court rejected the defendant’s “efforts to create an exception

for effective service based upon its own neglect and failure to update its agent for

service of process with the Ohio Secretary of State” because “the law mandates each

[limited liability corporation] to ‘maintain continuously in this state an agent for

service of process on the company.’ R.C. 1705.06(A).”); but compare Runyon v.

Hawley, 9th Dist. Lorain No. 17CA011141, 2018-Ohio-2444, ¶ 32 (“there is no

provision in R.C. 1705.06 that interprets a violation of the statute as creating an

unrebuttable presumption of service.”).

The principle announced in Previte does not apply to this case,

however, because unlike the plaintiff in Previte, King knew that service was never

perfected. Only five days after the clerk’s entry docketing the return of service on

Geotech, King was put on notice by the Communication Letter that service on

Geotech’s listed statutory agent was not effective. King was again put on notice of

insufficient service when, approximately six months later, the clerk sent King a

notice that regular mail sent to the Euclid Avenue address had been returned as

“unable to deliver.” Significantly, King does not deny being on notice of either the

Communication Letter or the June 2018, notice of failure of service on Geotech.

It seems disingenuous that even with this knowledge, King served

notice of the default hearing on Geotech’s statutory agent at the Euclid Avenue address, and represented to the trial court at the default hearing that Geotech had

been properly served with both notice of the default hearing and the summons and

complaint at the Euclid Avenue address. King’s representation to the court about

proper service of notice of the default hearing seems especially disingenuous given

that upon obtaining the default judgment, King filed an affidavit in aid of execution

that for the first time, listed both the Euclid Avenue address and the address of

Geotech’s principal place of business. King also instructed the sheriff to serve notice

of the order in aid of execution at both addresses. Notably, the sheriff’s service at

the Euclid Avenue address failed while the service on Geotech at the Golden Oak

Parkway address was successful.

In light of these facts and circumstances, it is apparent that King was

aware that service of the summons and complaint on Geotech, c/o Dennis Kaselak

as statutory agent at the Euclid Avenue address, was never perfected, even though

the name and address was listed with the secretary of state as Geotech’s statutory

agent. Because King knew that service was ineffective, we cannot conclude that

Geotech’s failure to update the address of its statutory agent with the secretary of

state created an irrebuttable presumption of valid service.

Because service was never perfected, the trial court had no

jurisdiction to render judgment against Geotech, and the default judgment is

therefore void. Accordingly, the trial court abused its discretion in denying

Geotech’s motion to vacate the judgment. Our decision comports with the basic tenet in Ohio law that

“whenever possible cases should be decided on their merits.” Rafalski, 17 Ohio

App.3d at 67, 477 N.E.2d 1212, citing Perotti v. Ferguson, 7 Ohio St.3d 1, 3, 454

N.E.2d 951 (1983). This is particularly true where large sums of money are at issue.

GGNSC Lima, L.L.C., 8th Dist. Cuyahoga No. 105910, 2018-Ohio-1298, at ¶ 24,

citing Draghin v. Issa, 8th Dist. Cuyahoga No. 98890, 2013-Ohio-1898, ¶ 23

(“default judgments are not favored where large sums of money are at issue.”). The

assignment of error is sustained.

Judgment reversed and remanded.

It is ordered that appellant recover from appellee costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to said court to carry this judgment

into execution.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27

of the Rules of Appellate Procedure.

KATHLEEN ANN KEOUGH, JUDGE

SEAN C. GALLAGHER, P.J., and EILEEN T. GALLAGHER, J., CONCUR