Sun South LLC v. Bayou Vista LLC

• Court: Court of Appeals of Mississippi
• Decided: April 23, 2019
• Docket: 2018-CA-00259-COA
• Status: Published

Opinion

IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI

NO. 2018-CA-00259-COA

SUN SOUTH LLC APPELLANT

v.

BAYOU VISTA LLC APPELLEE

DATE OF JUDGMENT: 02/01/2018 TRIAL JUDGE: HON. JOHN ANDREW GREGORY COURT FROM WHICH APPEALED: LAFAYETTE COUNTY CIRCUIT COURT ATTORNEY FOR APPELLANT: WALTER ALAN DAVIS ATTORNEYS FOR APPELLEE: ARTHUR F. JERNIGAN JR. WILLIAM M. VINES CORY T. WILSON NATURE OF THE CASE: CIVIL - CONTRACT DISPOSITION: REVERSED AND RENDERED - 04/23/2019 MOTION FOR REHEARING FILED: MANDATE ISSUED:

EN BANC.

TINDELL, J., FOR THE COURT:

¶1. On November 21, 2017, Sun South LLC filed a Mississippi Rule of Civil Procedure

60(b)(4) motion asking the Lafayette County Circuit Court to set aside the circuit court’s July

2012 default judgment against Sun South in favor of Bayou Vista LLC in the amount of

$658,842.13, plus interest and attorneys’ fees. The circuit court denied Sun South’s motion.

On appeal, Sun South argues that the July 2012 default judgment was void for lack of

personal jurisdiction over Sun South due to insufficient service of process on the part of

Bayou Vista.

¶2. Sun South made no formal or informal appearance in the litigation to file an answer or defend the merits of the case until its Rule 60(b)(4) motion, which has no time limitation

for void judgments. We therefore find the default judgment is void for insufficient service

of process. Accordingly, we reverse and render the circuit court’s default judgment.

FACTS

¶3. Sun South is a limited-liability company comprised of two members and managing

agents, Michael Halford and Ted Smith. On June 9, 2009, Sun South executed a promissory

note in which it agreed to pay $690,289.25 to Bayou Vista. On April 5, 2012, Bayou Vista

filed a complaint with the circuit court to collect the principal amount owed on the

promissory note, plus interest and attorney’s fees, and named only Sun South as a defendant.

The complaint stated that Sun South could be served with process through Smith, its

registered agent, at Smith’s address in Oxford, Mississippi.

¶4. Bayou Vista attempted service of process first by mailing a copy of the summons and

complaint to Smith at his address in Oxford. Bayou Vista then hired a process server who

delivered a copy of the summons and complaint to Halford’s wife, Elizabeth Halford, at their

address in Oxford. After Sun South filed no response to the complaint, Bayou Vista filed a

motion for summary judgment on May 16, 2012, asserting that the promissory note was valid

and remained unpaid. Bayou Vista asked the circuit court to issue a default judgment against

Sun South. Bayou Vista attached to the summary-judgment motion an affidavit signed by

Smith. In the affidavit, Smith testified that he and Halford had been the sole members of Sun

South since its inception and that “to his knowledge,” no payment had been made on the

2009 promissory note owed to Bayou Vista. Smith’s affidavit did not state that he was

2 testifying on behalf of Sun South, nor did he address the lawsuit or service of process in any

way. Smith signed the affidavit, but it not indicate a specific date on which it was executed.

On July 20, 2012, the circuit court entered a final judgment of default against Sun South in

the amount of $658,842.13, plus interest and $15,000 in attorney’s fees. The circuit court

found that Sun South had not “answered or otherwise appeared” in the action.

¶5. Following the default judgment, the circuit court entered a November 30, 2012 order

to issue writs of execution against Sun South’s property. The circuit clerk issued writs of

execution upon four pieces of property that Sun South owned. On October 27, 2015, the

circuit court entered an order directing that the sale of the four levied properties be advertised

for sale and auction pursuant to Mississippi law. The circuit court then ordered a writ of

execution to be issued and served upon Sun South, followed by a notice of public sale about

Sun South’s levied property. The writs of execution were issued on November 18, 2015,

and personally served upon Halford on November 19, 2015, marking the first time that Sun

South officially received notice of any default judgment levied against it. On December 1,

2015, Sun South’s real property was sold, and the circuit court confirmed the sale by an

order entered on December 2, 2015. On December 15, 2015, Sun South’s personal property

was sold, and the circuit court confirmed the sale by an order entered on December 16, 2015.

Neither member of Sun South was present at the sale of the real or personal property, and no

one took action to prevent the execution of the writs or the sale of Sun South’s property.

¶6. On November 17, 2015, Bayou Vista filed a motion for a judgment-debtor

examination. The circuit court granted the motion on November 20, 2015, and ordered the

3 examination to take place on December 11, 2015, at 10 a.m. Again, the record reflects no

appearance by either member of Sun South at the judgment-debtor examination on December

11, 2015.

¶7. On November 21, 2017, Sun South filed a motion for relief from judgment, pursuant

to Rule 60(b)(4), and argued that Bayou Vista failed to properly serve Sun South, which

voided the judgment for lack of personal jurisdiction. The circuit court heard the motion on

January 10, 2018, and ultimately denied Sun South’s motion after finding that Smith’s

affidavit constituted an entry of appearance by him on behalf of Sun South. Aggrieved, Sun

South appeals.

STANDARD OF REVIEW

¶8. “Under Mississippi law, the grant or denial of a [Rule] 60(b) motion is generally

within the [trial] court’s discretion, unless the judgment in question is deemed to be void.”

Evans v. Oberon Holding Corp., 729 So. 2d 825, 827 (¶5) (Miss. Ct. App. 1998). If a

judgment is deemed to be void, the trial court has no discretion and must set the judgment

aside. Id.

¶9. Trial courts must have proper jurisdiction over a party to effectuate a default

judgment. McCain v. Dauzat, 791 So. 2d 839, 842 (¶7) (Miss. 2001). Without proper

jurisdiction, the default judgment is void. Id. Where service of process is not properly

complete, the court does not have personal jurisdiction and, therefore, a default judgment

would automatically be void. Id. “Sufficiency of service of process is a jurisdictional issue

which is reviewed de novo.” S&M Trucking LLC v. Rogers Oil Co. of Columbia Inc., 195

4 So. 3d 217, 221 (¶16) (Miss. Ct. App. 2016).

¶10. Rule 60(b)(4) governs motions to set aside default judgments as void due to improper

service of process. Evans, 729 So. 2d at 827 (¶5). Rule 60(b)(1)-(3) requires a party to file

its motion to set aside a judgment no later than six months after the judgment is entered, but

only for judgments based upon mistake, newly discovered evidence, and fraud. Overbey v.

Murray, 569 So. 2d 303, 305 (Miss. 1990). Rule 60(b)(4) regarding void judgments has no

time limitation. Id. Although Rule 60(b) indicates that such a motion should be filed “within

a reasonable time,” the “[Mississippi Supreme] Court previously has recognized that,

essentially, there can be no time limitation for relief from a void judgment as no amount of

time or delay may cure a void judgment.” O’Neal v. O’Neal, 17 So. 3d 572, 575 (¶14) (Miss.

2009); see also Ravenstein v. Ravenstein, 167 So. 3d 210, 216-17 (¶12) (Miss. 2014)

(“[T]here is no effective time limit for seeking relief from a void judgment under Rule

60(b)(4) . . . .”).

ANALYSIS

I. INSUFFICIENT SERVICE OF PROCESS

¶11. Before a court can enter a default judgment against a party, the party must be

adequately served with process, thereby subjecting itself to the court’s jurisdiction. Williams

v. Kilgore, 618 So. 2d 51, 56 (Miss. 1992). Mississippi Rule of Civil Procedure 4(d)(4)

governs service of process for a domestic or foreign corporation, partnership, or other

unincorporated association. Specifically, the rule states that service of process is perfected

upon these entities “by delivering a copy of the summons and of the complaint to an officer,

5 a managing or general agent, or to any other agent authorized by appointment or by law to

receive service of process.” M.R.C.P. 4(d)(4). In its brief, Bayou Vista states that it served

process upon Sun South “by mailing a summons and copy of the complaint to Sun South’s

registered agent, member/manager Ted L. Smith, Jr. . . . and by leaving a copy of the

summons and complaint with the wife of Sun South’s other member/manager, Michael

Halford . . . .” However, the text of Rule 4(d)(4) makes it clear that a copy of the summons

and complaint must be delivered to an officer, managing or general agent, or any other agent

authorized by law. Bayou Vista mailed copies of the summons and complaint to the

appropriate agents but only delivered copies, via process server, to the wife of

member/manager Halford. Delivery to a defendant’s spouse is only appropriate under the

circumstances set forth in Rule 4(d)(1)(B), where an individual (other than an unmarried

infant or mentally incompetent person) is being served. Bayou Vista asserts no argument that

it properly served Sun South, only that Sun South waived insufficient service of process by

virtue of Smith’s affidavit. Furthermore, Bayou Vista, on appeal, does not dispute the fact

that service of process was insufficient. Because Bayou Vista did not comply with the

service-of-process requirements as enumerated in Rule 4(d)(4), the Court finds that Sun

South was not properly served with process.

II. WAIVER OF JURISDICTION AND SERVICE OF PROCESS

¶12. We must next determine whether Sun South’s conduct (or lack thereof) constitutes a

waiver of its affirmative defense. Under Mississippi law, a party may waive insufficient

service of process. Young v. Huron Smith Oil Co., 564 So. 2d 36, 39 (Miss. 1990). Pursuant

6 to Mississippi Rule of Civil Procedure 12(h)(1), a defendant must assert defenses of lack of

jurisdiction and insufficient service of process initially—meaning in its first responsive

pleading or an initial motion addressing such defenses. Failure to timely assert such defenses

results in a waiver of that particular defense. Miss. Credit Ctr. Inc. v. Horton, 926 So. 2d

167, 180 (¶42) (Miss. 2006). Such a waiver constitutes consent by the defending party for

the Court to exercise jurisdiction over that party’s case. Richard v. Garma-Fernandez, 121

So. 3d 929, 933 (¶23) (Miss. Ct. App. 2013). A defendant may formally waive a service-of-

process defense in writing, signed by the defendant and dated after the complaint was filed.

M.R.C.P. 4(e). A party who makes a general appearance to defend the merits of the case

without asserting these affirmative defenses waives those defenses under the rules. Courtney

v. McCluggage, 991 So. 2d 642, 645 (¶13) (Miss. Ct. App. 2008).

¶13. Bayou Vista relies heavily upon the argument that Smith’s affidavit constituted an

entry of appearance on behalf of Sun South, because the affidavit addressed the merits of the

case. Bayou Vista argues that this, coupled with Sun South’s long delay in asserting its

service-of-process and personal-jurisdiction defenses, serves as a waiver of these defenses.

We disagree.

¶14. A somewhat analogous case recently before this Court is S&M Trucking, where the

plaintiff failed to properly serve S&M Trucking after two attempts. S&M Trucking, 195 So.

3d at 219 (¶¶4-9). The circuit court entered a default judgment against S&M Trucking and

then granted the plaintiff’s motion for a judgment-debtor examination. Id. at 220 (¶12). In

its order setting the judgment-debtor examination, the circuit court also acknowledged an

7 entry of appearance made by S&M Trucking’s attorney. Id. S&M Trucking appeared for

the judgment-debtor examination but filed a Rule 60(b) motion to set aside the default

judgment fifteen days later. Id. at (¶13). This Court held that the attorney’s entry of

appearance, by itself, was insufficient to waive an objection to service of process. Id. at 223

(¶23). To effectively waive a defense of insufficient service of process and submit to the

jurisdiction of a particular court, a defendant must (1) enter an appearance and (2) file an

answer or otherwise defend the merits of the case in some way. Id. at (¶24). This Court

found that S&M Trucking was not appearing to defend the merits of the case by voluntarily

submitting to the judgment-debtor examination. Id. at 224 (¶25). We found that the entry

of appearance made by S&M Trucking’s attorney, along with an appearance at the judgment-

debtor examination, did not meet the threshold for waiving a jurisdictional argument at a later

time. Id.

¶15. The present case falls even farther behind the threshold of S&M Trucking. Here, no

entry of appearance was made by Sun South’s attorney. Bayou Vista asks this Court to deem

Smith’s affidavit, which was submitted as part of Bayou Vista’s own motion for summary

judgment, as an entry of appearance for purposes of waiving any future jurisdictional

arguments by Sun South. But an appearance is made when a party or interested person

comes to court on its own behalf (often for purposes of taking part in the lawsuit). Black’s

Law Dictionary 118 (10th ed. 2009). In the affidavit, which was signed on behalf of

Smith—not Sun South—Smith testified that, to his knowledge, Sun South’s promissory note

to pay Bayou Vista remained unpaid. At best, this constituted an acknowledgment of the

outstanding note on behalf of Smith, individually, and was not indicative that Smith, on

8 behalf of Sun South, sought to “come to court” to address Bayou Vista’s lawsuit against Sun

South.

¶16. It is undisputed that Sun South never filed an answer in this case, nor did it participate

in any collection proceedings following the circuit court’s final judgment of default. The

record does not reflect that Sun South participated in any type of litigation. Prior to the Rule

60(b) motion, the only activity directly related to Sun South was Smith’s affidavit, which

Bayou Vista submitted with its summary-judgment motion. The summary-judgment motion

was never set for a hearing before the circuit court. Instead, the circuit court issued its final

default judgment against Sun South on July 20, 2012, and ordered the issuance of writs of

execution upon Sun South on December 10, 2012. In its final judgment, the circuit court

found that Sun South was in default because it had not “answered or otherwise appeared to

defend this action.” Bayou Vista states in its own brief that Sun South “did nothing” and

“took no action” as Bayou Vista proceeded to collect on the default judgment until Sun South

filed the motion for relief of judgment on November 21, 2017. Thus, Sun South’s first

defensive move, much like in S&M Trucking, was to file a motion to set aside the default

judgment.

¶17. Last, Bayou Vista attempts to insert a laches argument by asserting that Sun South

slept on its rights by waiting five years to assert the affirmative defenses in its Rule 60(b)

motion. Although Sun South filed the motion over five years after the complaint, “there is

no effective time limit for seeking relief from a void judgment under Rule 60(b)(4).”

Ravenstein, 167 So. 3d at 216-17 (¶12). Because the rule explicitly removes delay as an

obstacle to a jurisdictional defense, the doctrine of laches is inapplicable in this type of case.

9 Jackson v. FIE Corp., 302 F.3d 515, 523-24 (5th Cir. 2002). Without some extraordinary

circumstances, “the mere passage of time alone cannot convert an absolutely void judgment

into a valid one.” Id at 523.1

¶18. Smith’s affidavit is insufficient to mark Sun South’s first defensive move because it

constituted neither an appearance before the circuit court nor notification to Bayou Vista of

Sun South’s jurisdictional defense. In fact, the affidavit was included in Bayou Vista’s own

motion submitted to the circuit court. Following the default judgment, Sun South made no

other appearance in this case until the filing of its motion to set aside the judgment, which

has no time restriction because it sought to challenge a void judgment. As such, this Court

finds that Sun South did not waive its affirmative defense of insufficient service of process,

and the default judgment is void as a matter of law.

CONCLUSION

¶19. At the onset of this litigation, Sun South was never properly served with a copy of the

summons and complaint as required for proper jurisdiction. Further, Bayou Vista raises no

dispute that service of process upon Sun South was insufficient. Because Bayou Vista failed

to properly serve Sun South and there was no effective waiver of service of process, the

default judgment is void. We therefore reverse and render the default judgment. Bayou

Vista’s claim is dismissed without prejudice.

¶20. REVERSED AND RENDERED.

BARNES, C.J., CARLTON AND J. WILSON, P.JJ., GREENLEE,

1 See In re Knight, 208 F.3d 514, 517 (5th Cir. 2000) (holding that the failure to assert an affirmative defense, when properly summoned, may constitute a waiver, resulting in an otherwise flawed judgment becoming enforceable).

10 WESTBROOKS, McDONALD, LAWRENCE AND McCARTY, JJ., CONCUR. C. WILSON, J., NOT PARTICIPATING.