Court Opinion

ID: 1079832
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:35:39.809313+00
Date Added: 2024-06-11T12:05:43.864642
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                   AT NASHVILLE
                                               FILED
                                                February 13, 1998
MAURICE KARR and               )
MAURICE KARR, Trustee,         )               Cecil W. Crowson
                               )              Appellate Court Clerk
       Plaintiffs/Appellees,   )   Davidson Chancery
                               )   No. 95-2473-I
VS.                            )
                               )   Appeal No.
PAUL C. GIBSON a/k/a           )   01A01-9605-CH-00220
PAUL CALVIN GIBSON,            )
                               )
       Defendant/Appellant.    )

      APPEAL FROM THE DAVIDSON COUNTY CHANCERY COURT
                   AT NASHVILLE, TENNESSEE

      THE HONORABLE IRVIN H. KILCREASE, JR., CHANCELLOR

For Plaintiffs/Appellees:          For Defendant/Appellant:

Robert J. Notestine, III           Ramsey B. Leathers, Jr.
Nashville, Tennessee               Blackburn, Slobby, Freeman & Happell
                                   Nashville, Tennessee

                    VACATED AND REMANDED

                                   WILLIAM C. KOCH, JR., JUDGE
                                    OPINION

       This appeal involves a deficiency judgment obtained against a Canadian
resident following service by publication. The Canadian resident filed a Tenn. R.
Civ. P. 60.02 motion in the Chancery Court for Davidson County seeking to set aside
the default judgment obtained against him on the grounds that service by publication
was ineffective and that he received no notice of the lawsuit before the trial court
granted the default judgment. The trial court denied the motion, and the Canadian
resident has appealed. We have determined that the judgment must be set aside
because a personal judgment cannot be rendered against a nonresident defendant who
is served only by publication.

                                              I.

       In September 1989, Paul Gibson executed a $109,000 installment note payable
to Maurice Karr of Nashville. The note was secured by a condominium unit in
Nashville. Mr. Gibson later defaulted on the note, and Mr. Karr, as trustee on the
installment deed, sold the unit in June 1994 for $83,100. In August 1995, Mr. Karr
sued Mr. Gibson in the Chancery Court for Davidson County seeking a judgment for
the $37,810.14 deficiency. Mr. Karr’s complaint alleged that he was unaware of Mr.
Gibson’s mailing address but that Mr. Gibson was presently residing in the Canadian
province of Ontario. The complaint also requested that Mr. Gibson be served by
publication.

       Evidently, the trial court entered an order allowing service by publication on
Mr. Gibson.1 Notice of the lawsuit was published in The Nashville Record on four
different occasions during August and September of 1995. In accordance with Tenn.
Code Ann. § 21-1-205(a) (1994), the clerk and master also mailed a copy of the
notice of publication to Mr. Gibson at his last known address in Nashville. Mr.
Gibson never received the notice of publication, and the mailed notice of publication
was never returned to the clerk and master marked refused.

       1
        See Tenn. Code Ann. § 21-1-204(a) - (c) (1994). The order for publication is not in the
appellate record.

                                             -2-
       Mr. Karr moved for a default judgment against Mr. Gibson in October 1995 but
did not serve a copy of the motion on Mr. Gibson because his “exact mailing address”
was unknown. On November 20, 1995, the trial court entered a default judgment
against Mr. Gibson for $48,992.87 plus court costs.2 During a January 9, 1996
telephone conversation, Mr. Karr informed Mr. Gibson’s attorney that he had
obtained a deficiency judgment against Mr. Gibson. After talking with Mr. Karr, Mr.
Gibson’s attorney immediately telephoned Mr. Gibson to tell him about the lawsuit
and the judgment. Prior to this conversation, Mr. Gibson, so his uncontradicted
affidavit states, had no knowledge of Mr. Karr’s lawsuit.

       Mr. Gibson filed a Tenn. R. Civ. P. 60.02 motion on February 16, 1996,
requesting the trial court to set aside the default judgment on the grounds that the
service of process by publication was defective and that he had no notice of the
lawsuit against him before the trial court entered the default judgment. The trial court
denied Mr. Gibson’s motion on March 18, 1996.

                                              II.

       The sole issue before us is whether Mr. Gibson was entitled to relief from the
default judgment because he had no notice of the lawsuit before the entry of the
default judgment. Mr. Karr asserts that he obtained service of process by mailing a
copy of the order of publication to Mr. Gibson’s last known address in Nashville.
Mr. Karr’s position lacks legal support.

       The law does not favor default judgments because the interests of justice are
ordinarily best served by trials on the merits. See Tennessee Dep’t of Human Servs.
v. Barbee, 689 S.W.2d 863, 866 (Tenn. 1985); Coin Automatic Co., Inc. v. Estate of
Dixon, 213 Tenn. 311, 321, 375 S.W.2d 858, 862 (1963). Accordingly, Tenn. R. Civ.
P. 55.02, permits trial courts, for good cause shown, to set aside default judgments
in accordance with Tenn. R. Civ. P. 60.02. Rule 60.02 permits trial courts to relieve
parties from final judgments for mistake, inadvertence, surprise or excusable neglect,
fraud or other misconduct, where the judgment is void or has been satisfied, or for
any other reason justifying relief. The courts must construe Tenn. R. Civ. P. 60.02's

       2
        The judgment consisted of the $37,810.14 deficiency; $3,017.25 in prejudgment interest;
and $8,165.48 in attorney’s fees.

                                             -3-
requirements liberally in the context of granting relief from default judgments. See
Tennessee Dep’t of Human Services v. Barbee, 689 S.W.2d at 867; Nelson v.
Simpson, 826 S.W.2d 483, 485 (Tenn. Ct. App. 1991).

       One of the bedrock principles of this nation’s due process jurisprudence is the
right to notice and an opportunity to be heard before an impartial trier-of-fact. See
United States v. James Daniel Good Real Prop., 510 U.S. 43, 53, 114 S. Ct. 492, 500
(1993); Phillips v. State Bd. of Regents, 863 S.W.2d 45, 50 (Tenn. 1993). Thus, due
process requires plaintiffs to give defendants notice that is reasonably calculated,
under all the circumstances, to inform the defendants of the pending action. See
Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S. Ct. 652, 657
(1950); McClellan v. Board of Regents, 921 S.W.2d 684, 688 (Tenn. 1996). As the
United States Supreme Court has made clear, "[t]he means employed must be such
as one desirous of actually informing the absentee might reasonably adopt to
accomplish it." Mullane v. Central Hanover Bank & Trust Co., 339 U.S. at 315, 70
S. Ct. at 657.

       Prior to obtaining his default judgment, Mr. Karr did nothing reasonably
calculated to notify Mr. Gibson of the pending suit seeking a deficiency judgment.
Rather than undertaking personal service, Mr. Karr simply placed notices in a
Nashville legal newspaper and mailed a notice to a Nashville address he knew to be
outdated. Under the circumstances known to Mr. Karr, placing a notice in a legal
newspaper was not reasonably calculated to inform a Canadian resident of a pending
Tennessee lawsuit.

       Mr. Karr’s formalistic compliance with Tenn. Code Ann. § 21-1-205(a) (1994)
is equally inadequate. Mr. Karr knew that Mr. Gibson was no longer living at 137
Harpeth Trace Drive, Nashville when he directed the clerk and master to mail a copy
of the published notice to that address.3 Going through these empty motions not
reasonably calculated to actually bring a lawsuit to a nonresident defendant’s
attention cannot satisfy the requirements of due process.

       3
        Approximately one month before Mr. Karr filed his complaint, he had closed the sale on Mr.
Gibson’s condominium and had received the proceeds of the transaction. Mr. Karr knew full well
that someone else was living at Mr. Gibson’s former address.

                                               -4-
       Mr. Karr’s reliance on the service by publication statutes is misplaced because
these statutes do not displace the long-standing principle that a personal judgment
cannot be rendered against a nonresident defendant who has been served only by
publication. See Turnblazer v. Smith, 214 Tenn. 277, 281-82, 379 S.W.2d 772, 774
(1964). Since Mr. Karr’s complaint sought a personal judgment against Mr. Gibson,
Mr. Gibson was entitled to notice either by personal service or by service upon
someone designated by law as his representative for service. See Continental Ins. Co.
v. Masters, App. No. 01A01-9206-CH-00254, 1993 WL 4856, at *2 (Tenn. Ct. App.
Jan. 13, 1993) (No Tenn. R. App. P. 11 filed).

       Tenn. Code Ann. § 21-1-205(a) permits a trial court to consider independent
proof that a nonresident defendant had actual notice of the suit. Mr. Karr’s brief
suggests that “[t]he possibility exists that additional evidence was available to the
Chancellor at the hearing on Gibson’s Motion which he relied upon in making his
decision to deny Gibson’s motion.” This evidence, if it exists, is not before us. Both
parties share the responsibility to make sure that the record on appeal contains a “fair,
accurate and complete account of what transpired with respect to those issues that are
the bases of appeal.” See Tenn. R. App. P. 24(a)-(c). Thus, if this evidence exists,
Mr. Karr should have taken steps to make sure it was included in the appellate record.
We rest our decision strictly on the appellate record, and nothing before this court
indicates that Mr. Gibson knew about this lawsuit prior to January 9, 1996.

       Mr. Karr also argues that Mr. Gibson has not denied owing a deficiency and
that Mr. Gibson has not asserted any meritorious defense to the deficiency suit.4
Ordinarily, courts will not set aside default judgments absent a showing that the
defendant has a colorably meritorious defense. See Patterson v. Rockwell Int’l, 665
S.W.2d 96, 100 (Tenn. 1984); In re Estate of Mayes, 843 S.W.2d 418, 425-26 (Tenn.
Ct. App. 1992). However, the general rule requiring the proffer of a meritorious
defense does not apply when a defendant is seeking to set aside a default judgment
that is legally void. See Patterson v. Rockwell Int’l, 665 S.W.2d at 101; Terminix
Int’l Co., L.P. v. Tapley, App. No. 02A01-9701-CH-00028, 1997 WL 437222, at *3
(Tenn. Ct. App. Aug. 4, 1997) (No Tenn. R. App. P. 11 filed). A personal judgment

       4
        Mr. Gibson argues here that the condominium was worth $142,000 and that it sold at
foreclosure for approximately forty percent below that value. He maintains that the sale price is
inadequate enough to raise the possibility of fraud. Mr. Gibson also disputes the amount of
attorney’s fees claimed by Mr. Karr.

                                              -5-
against a defendant who was never before the court by proper service or voluntary
appearance is void. See Overby v. Overby, 224 Tenn. 523, 525-26, 457 S.W.2d 851,
852 (1970); Dickson v. Simpson, 172 Tenn. 680, 694, 113 S.W.2d 1190, 1195 (1938).
Without opining on Mr. Gibson’s complaints about the commercial reasonableness
of the foreclosure sale or Mr. Karr’s claimed attorney’s fees, we find that Mr. Gibson
was entitled to relief from the default judgment under Tenn. R. Civ. P. 60.02(3)
because it was void.

                                         III.

      We vacate the denial of Mr. Gibson’s motion to set aside the default judgment
and remand the case to the trial court for further proceedings consistent with this
opinion. We also tax the costs of this appeal to Maurice Karr for which execution,
if necessary, may issue.

                                                ______________________________
                                                WILLIAM C. KOCH, JR., JUDGE

CONCUR:

__________________________________
HENRY F. TODD, PRESIDING JUDGE
MIDDLE SECTION

__________________________________
SAMUEL L. LEWIS, JUDGE

                                         -6-