Opinion ID: 15886
Heading Depth: 2
Heading Rank: 1

Heading: Denial of Motion to Set Aside Default

Text: 8 The district court denied AKB and Lange's motion to set aside the default judgment under Federal Rule of Civil Procedure 60(b). We will not disturb a district court's decision to deny relief under Rule 60(b) unless the denial is so unwarranted as to constitute an abuse of discretion. Bludworth Bond Shipyard, Inc. v. M/V Caribbean Wind, 841 F.2d 646, 649 (5th Cir.1988). However, when a district court lacks jurisdiction over a defendant because of lack of service of process, the default judgment is void and must be set aside under Rule 60(b)(4). Id. 9 AKB and Lange argue that Leedo failed to comply with the Texas Long Arm Statute which provides in pertinent part: 10 § 17.045. Notice to Nonresident 11 (a) If the secretary of state is served with duplicate copies of process for a nonresident, he shall require a statement of the name and address of the nonresident's home or home office and shall immediately mail a copy of the process to the nonresident. 12 Tex. Civ. Prac. & Rem.Code § 17.045(a).
13 Under the Texas Long Arm Statute, Leedo had to provide the Secretary of State the home office address of AKB. AKB maintains that its home office is located at 2211 North Elston, Chicago, Illinois, and that Leedo was aware of this address due to prior dealings between Leedo's representatives and Lange. However, Leedo provided the Texas Secretary of State with one of AKB's satellite retail locations address at Sibley Blvd., Posen, Illinois. Leedo chose this address because AKB listed the Sibley Blvd-Posen address with the Illinois Secretary of State as the correct address for service of process. Additionally, the sales agreement between Leedo and James Sales and AKB had the Sibley Blvd-Posen address. See Plaintiff's Original Petition, Exhibit A. Regarding service on AKB, the Texas Secretary of State's certificate reflected that the certified mail return receipt bore the signature of Addressee's Agent at the Sibley Blvd-Posen address. 14 The Texas Long Arm Statute provides no definition for home or home office. See Tex. Civ. Prac. & Rem.Code §§ 17.044, 17.045 (Vernon 1997). See also Mahon v. Caldwell, Haddad, Skaggs, Inc., 783 S.W.2d 769 (Tex.App.-Fort Worth 1990, no writ). Although no Texas case addresses the precise issue before the court, Mahon 1 offers some guidance. In Mahon, the court held inter alia that where only one address is given in a contract as the business address it is the 'home office' of the party using such address. Id. at 771. The actual address of the home office was much clearer in Mahon as that address was the only address to appear in all documents in the record. In this case, the Sibley Blvd-Posen address appears in the sales contract, the Harvey, Illinois address appears in various invoices throughout the record as the cabinets were shipped to that address, and two Leedo representatives met Lange at the actual home office (the North Elston-Chicago address). Nonetheless, the Mahon court singled out the only address given in the contract as being the home office for purposes of the Long Arm Statute. 15 In this case, we need not rely solely on the argument that the Sibley Blvd-Posen address was the only address to appear in the sales agreement, because it also was the address provided by AKB to the Illinois Secretary of State as the correct address for service of process. We conclude that Leedo provided AKB's home office address for purposes of the Long Arm Statute. Even if the Sibley Blvd-Posen address was not in fact the home office of AKB, AKB held out the Sibley Blvd-Posen address as its home office by registering that address with the Illinois Secretary of State and by placing it as the only address in the sales agreement. We find it disingenuous for AKB to argue otherwise. The objective of the Texas Long Arm Statute is to provide reasonable notice of the suit and an opportunity to be heard. See Barnes v. Frost National Bank, 840 S.W.2d 747, 750 (Tex.App.--San Antonio 1992, no writ). That objective has been satisfied. 16 Alternatively, AKB argues that this court should set aside the default judgment under Fed.R.Civ.P. 60(b) for good cause. See CJC Holdings, Inc. v. Wright & Lato, Inc., 979 F.2d 60 (5th Cir.1992). AKB maintains that good cause exists because it did not expect that Leedo had a viable claim against it and upon receipt of the Original Petition, Lange could have been confused as to which company was alleged to be liable on the debt for cabinets in the possession of James Sales. We fail to see how this establishes good cause. Finally, AKB argues that it has a meritorious defense because the documents appended to the Original Petition fall short of even raising an inference that a debt was owed to Leedo by AKB. We disagree. AKB signed the Security Agreement. Further, AKB failed to cite any authority on appeal or below to support the argument that it had a meritorious defense. We find that the district court did not abuse its discretion. 17 Accordingly, the denial of the motion to set aside default judgment against AKB is affirmed.
18 Under the Texas Long Arm Statute, Leedo had to provide the Secretary of State with Lange's home address which was 17809 Park, Lansing, Illinois 60438. Lange was never served at this address. Leedo attempted service upon Lange, individually, by requesting the Texas Secretary of State to forward process to the James Sales location on North Lathrop in Harvey, Illinois. As a result of the James Sales bankruptcy, the Harvey location was vacated; thus, the Secretary of State's certification for Lange reflected the return receipt as having the notation, Forwarding Order Expired. 19 The law makes no presumptions in favor of valid issuance, service, and return of citation in a default judgment case. See Uvalde Country Club v. Martin Linen Supply Co., 690 S.W.2d 884, 885 (Tex.1985). Here, Leedo clearly failed to comply with the provisions of the long arm statute. The statute requires that Lange be served at his home address in Lansing, Illinois. Leedo admits it provided the Secretary of State with the Havey, Illinois address to serve Lange in his individual capacity. Unlike AKB's home office address, there is no question in the record as to Lange's home address throughout this period. Interestingly enough, attached as Exhibit E to Leedo's Response to the Motion to Vacate Default Judgment is a copy of the Illinois Secretary of State record obtained by Leedo's counsel prior to filing suit which was used by Leedo to show that AKB's address for service of process was the Sibley Blvd-Posen address. James Lange's home address also appears on that same document. There appears to be no reason why Lange should have been served at any address other than his home address in Lansing, Illinois. 20 Alternatively, Leedo argues that service on Lange was effective because it complied with Tex.R. Civ. P. 108 and 106(a)(2). Assuming compliance with these rules, Leedo fails to cite any case to support the proposition that a party's compliance with Texas Rules of Civil Procedure obviates the need to comply with the long arm statute's requirement to serve and provide to the Secretary of State the nonresident defendant's home address. Moreover, Leedo's argument is foreclosed by World Distributors, Inc. v. Knox, 968 S.W.2d 474, 479 (Tex.App.-El Paso 1998, no writ)(holding that Rule 108 authorizes service by any disinterested person competent to make oath of the fact, but that the Secretary of State is not authorized by law to serve process). 21 Under the Texas Long Arm Statute, process had to be forwarded by the Secretary of State to Lange's home address. Leedo failed to provide Lange's home address to the Texas Secretary of State, the return receipt had the notation Forwarding Order Expired, and Lange provided an affidavit attesting that he never personally received service. Under these circumstances, personal service cannot possibly have been effected. Accordingly, default judgment against Lange is reversed for failure to effect service of process, and the judgment with respect to Lange is vacated and the case is remanded to the district court.