Opinion ID: 2508433
Heading Depth: 2
Heading Rank: 3

Heading: Discovery and Cross-Examination

Text: Graham further contends that the trial court erred when it failed to grant Graham's request for discovery and cross-examination in connection with respondents' Rule 59(e) motion. Graham contends that, in light of the determinative nature of the court's findings regarding jurisdiction, the court erred when it denied Graham an opportunity to fully explore the factual issues involved through further discovery and cross-examination of witnesses. We agree. Where important decisions turn on questions of fact, due process often requires an opportunity to confront and cross-examine adverse witnesses. Brown v. South Carolina State Board of Education, 301 S.C. 326, 329, 391 S.E.2d 866, 867 (1990) (citing Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970)); see South Carolina Department of Social Services v. Holden, 319 S.C. 72, 459 S.E.2d 846 (1995) (right to confrontation applies in civil context). The Court of Appeals explained the application of due process concerns to issues of personal jurisdiction: When the plaintiff can show that discovery is necessary in order to meet defendant's challenge to personal jurisdiction, a court should ordinarily permit discovery on that issue unless plaintiff's claim appears to be clearly frivolous. However, where a plaintiff's claim of personal jurisdiction appears to be both attenuated and based on bare allegations in the face of specific denials made by defendants, the court need not permit even limited discovery confined to issues of personal jurisdiction if it will be a fishing expedition. When a plaintiff offers only speculation or conclusory assertions about contacts with a forum state, a court is within its discretion in denying jurisdictional discovery. Sullivan v. Hawker Beechcraft Corporation, ___ S.C. ___, ___, ___ S.E.2d ___, ___, 2012 WL 387874 (Ct.App.2011) (internal quotation marks and citations omitted). [3] In this case, Graham's claim of personal jurisdiction over Makawi and his corporation through service on their agents is not conclusory, frivolous, or attenuated. Kim Richardson, who signed the receipt for the summons and complaint sent to Makawi individually, may have had authority to accept them if she did serve as an office manager with significant authority as an employee of IHOP or by virtue of the services Graham alleges Richardson performed for Makawi personally. [4] With regard to MKKM, Graham has claimed no greater status for Carvajal as an MKKM employee than that she was a hostess at IHOP for a few months. Even if it seems unlikely that further discovery will demonstrate that she had sufficient authority or responsibility to be deemed an agent for purposes of service of process on MKKM, Graham's claim that MKKM was properly served is not conclusory, frivolous, or attenuated, given that she was an employee of MKKM and signed the return receipt. Not only has Graham made a sufficient showing to entitle it to discovery on the issue of jurisdiction, but it must receive a full and fair opportunity to be heard on the matter, because the findings with regard to service of process may determine the merits of the case in chief. See Wetzel v. Woodside Development Limited Partnership, 364 S.C. 589, 615 S.E.2d 437 (2005) (finding that an order granting a motion to set aside an entry of default for improper service effectively dismisses an improperly served party from the action); Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187 (Colo.2005) (holding that a trial court's findings related to personal jurisdiction could later be preclusive). Because a finding that a party was not properly served for purposes of a motion to set aside an entry of default judgment is binding with regard to the remainder of the litigation, such a ruling may in effect determine[] the action or strike[] out . . . [a] pleading in [an] action. S.C.Code Ann. § 14-3-330(a), (c). In this case, if the court finds that no proper service was effected, Graham will be unable to dispute a statute of limitations defense. [5] Thus, due process requires that Graham receive an opportunity to conduct adequate discovery on this question and confront adverse witnesses. Respondents argue that Graham had an opportunity for discovery beginning with the respondents' motion for relief from the entry of default judgment that was filed on May 21, 2009, and failed to avail itself of it, not formally requesting an opportunity for discovery until its September 8 motion following the judge's order granting relief from the entry of default judgment on August 31. Graham denies that it had reason to request discovery until the August 31 order because the only evidence presented by respondents to support the associated motion was the second affidavit, which it views as only a broadened and embellished revision of the first affidavit that the trial court had found unreliable. Respondents cite Richardson v. P.V., Inc., supra , in support of their contention. In Richardson, at the hearing on the appellants' motion to set aside an entry of default, they argued only defective service, asking that the court schedule a later hearing to consider setting aside the default on grounds of mistake, inadvertence, surprise or excusable neglect if the court found that service was not defective. 383 S.C. at 616-17, 682 S.E.2d at 266. The appellants also indicated at the hearing that they did not believe they needed to present evidence on the good cause issue, and they did not seek a continuance to permit completion of discovery. Id. at 618, 682 S.E.2d at 267. Unlike the Richardson appellants, Graham did not bear the burden of production on this issue at this stage. [6] Further, the record in this case is replete with instances of the respondents' delay and receipt of additional time, [7] and it would be inequitable to hold Graham to a strict standard on this issue when the respondents have had both ample time and the opportunity to withdraw and amend their own scant evidentiary submissions to conform to the evidence presented by Graham. Also unlike the Richardson appellants, Graham fully explained to the trial court its need to conduct discovery and cross-examine witnesses. Moreover, no hearing was held in connection with the respondents' Rule 59(e) motion at which Graham could have cross-examined Makawi or other witnesses. On this record, it cannot be said that Graham had a full and fair opportunity to be heard on an issue that may be determinative of its legal rights. In light of this decision, we need not reach Graham's remaining arguments.