Court Opinion

ID: 2757623
Source: CourtListenerOpinion
Date Created: 2014-12-04 17:02:40.671096+00
Date Added: 2024-06-11T10:30:18.290124
License: Public Domain

Cite as 2014 Ark. 499

                SUPREME COURT OF ARKANSAS
                                       No.   CV-14-189

JAMES L. STEWARD, JR.                             Opinion Delivered   December 4, 2014
                               APPELLANT
                                                  APPEAL FROM THE BENTON
V.                                                COUNTY CIRCUIT COURT
                                                  [NO. CV-12-270]

ADAM KUETTEL                                      HONORABLE XOLLIE DUNCAN,
                                  APPELLEE        JUDGE

                                                  REVERSED.

                                 JIM HANNAH, Chief Justice

       Appellant, James L. Steward, Jr., appeals the order of the Benton County Circuit

Court denying his motion to set aside default judgment. On appeal, he contends that the

circuit court erred in denying his motion to set aside default judgment because the judgment

was void for insufficient service of process. Alternatively, Steward contends that the circuit

court abused its discretion in refusing to set aside the default judgment due to mistake or

excusable neglect on his part. Because we conclude that, under the facts of this case, the

alternative method of service crafted by the circuit court was not reasonably calculated to

give actual notice, we hold that the order granting default judgment was void, and we reverse

the circuit court’s order denying Steward’s motion to set aside default judgment.

       Following the February 13, 2009 death of his niece, Sarah Fennell, Steward launched

a website, http://justice4sarah.wordpress.com/ (“Justice4Sarah”), to express his dissatisfaction

with the investigation of Fennell’s cause of death. On February 16, 2012, appellee, Adam
                                    Cite as 2014 Ark. 499

Kuettel, filed suit against Steward, alleging that Steward had published numerous defamatory

statements about him concerning the death of Fennell on Justice4Sarah and other websites.

Kuettel stated that all of Steward’s statements about him were false and requested, inter alia,

an injunction ordering Steward to remove the Justice4Sarah website from the Internet and

to remove any other postings from the Internet he had made concerning Kuettel.

       Through a LexisNexis Accurint search, counsel for Kuettel determined that Steward’s

last known address was 5713 Paula Road, Knoxville, Tennessee, 37912-1914. Two attempts

to serve Steward were made at that address, but Steward no longer lived there. Counsel then

attempted to contact Steward, as well as potential associates and relatives of Steward, via

telephone, to ascertain Steward’s address, but she was unsuccessful.

       On April 13, 2012, Kuettel filed a “Motion for Service Under Rule 4(e)(5),”

requesting that the circuit court permit service of process by emailing the summons and

complaint to Steward at jameslsteward@gmail.com, the address listed on the Justice4Sarah

website. Kuettel averred that previous attempts at service were unsuccessful, and he stated

that, after he had filed the lawsuit in this case, a reporter from the Benton County Daily

Record emailed Steward at jameslsteward@gmail.com, and Steward responded to the email.

Kuettel stated that, in addition to serving the summons and complaint via email, he would

employ the use of Cyber Investigations Services, LLC, to ensure that the email and attached

summons and complaint were in fact received. Attached to Kuettel’s motion was an affidavit

from Bruce Anderson, a licensed private investigator and managing member of Cyber

Investigations. Anderson averred that, to ensure that Steward received the summons and

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complaint attached to the email, Cyber Investigations would include a tracking pixel in the

email sent to Steward that would transmit a confirmation to the sender when (1) the email

was opened by the recipient, and (2) the attachments, here, the summons and complaint,

were opened by the recipient.

       In an order entered April 17, 2012, the circuit court granted Kuettel’s motion for

alternative service, ruling that

       Plaintiff [Kuettel] be permitted to serve Defendant James L. Steward, Jr., with the
       Summons and Complaint in this action via email to the email address of:
       jameslsteward@gmail.com, and . . . that when Plaintiff receives confirmation via
       tracking pixel that the email giving notice of this lawsuit has been opened, sufficient
       service of process on the Defendant James L. Steward, Jr., will have occurred.

       On June 21, 2012, Kuettel filed a motion for default judgment against Steward,

requesting that the circuit court issue a declaratory judgment that Steward’s statements about

Kuettel were false and that the circuit court issue a permanent injunction prohibiting Steward

and his agents, servants, representatives, employees, attorneys, successors and assigns, and all

others in active concert or participation with Steward (“Restrained Parties”) from making

any false statements that defame or disparage Kuettel and mandating that the Restrained

Parties take all action necessary to request removal from Internet search engines all

defamatory, disparaging, libelous, and false statements about Kuettel that Steward had posted

on the Internet. Kuettel contended that he was entitled to default judgment pursuant to

Arkansas Rule of Civil Procedure 55(a)(1) (2014) because he had successfully served Steward

by email on April 27, 2012, and because the deadline to file an answer or otherwise

respond—May 29, 2012—had passed with no response filed by Steward. In support of his

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assertion that he had successfully served Steward, Kuettel submitted a document containing

the following information:

      Your email message Case No. CV2012-270-5 sent on Friday, April 27, 2012 12:41:23
      PM successfully read by jameslsteward@gmail.com on Friday, April 27, 2012 3:27:00
      PM.

                             Recipient Tracking Information:

      Times Read:                        2

      Read duration:                     More than 3 minutes

      Times Forwarded:                   This Email Hasn’t Been Forwarded Yet

      Recipient IP Address:              71.236.33.165

      Browser:                           Chrome 18.0.1025.162, Google Inc

      Operating System:                  Windows Vista, Microsoft Corporation.

      Supported Applications:            */*

      Referred From:                     Not Available

      Accessed Via:                      Not Available

      Recipient Language:                en US,en;q=0.8

      Recipient Location and ISP:        US, TN, Knoxville, “Comcast Cable,” “Comcast
                                         Cable” Show Map

      On June 28, 2012, the circuit court entered a default judgment in favor of Kuettel,

declared that Steward’s statements about Kuettel on the internet are false, and issued a

permanent injunction granting Kuettel’s requested relief.

      Steward filed a motion to set aside default judgment on June 17, 2013, arguing that

it should be set aside, pursuant to Rule 55(c)(2) because the judgment was void for

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insufficient service of process, or alternatively, it should be set aside pursuant to Rule 55(c)(1)

due to mistake or excusable neglect. In an affidavit attached to his motion, Steward stated

that, since launching the Justice4Sarah website, he had received thousands of emails, and that

often those emails are spam and relegated to his spam folder. He stated that he vaguely

remembered receiving an email from someone in Ohio claiming to be a lawyer and that he

attempted to open the email but could not, so he discarded it. He also stated that he

remembered that the email had attachments, but he was unable to open them. Steward said

that, because he had received emails from individuals “often claiming to be lawyers, this one

wasn’t special, with the exception that I was unable to read the attachments. I just assumed

this was another fraud attempt and disregarded it.”

       Kuettel responded that service was valid because his former attorney had emailed

copies of the summons and complaint to jameslsteward@gmail.com on April 27, 2012 and

that the tracking pixel confirmed that the email was successfully read by

jameslsteward@gmail.com on April 27, 2012. Attached to Kuettel’s response was the

“Recipient Tracking Information” he had submitted with his motion for default judgment

and a screenshot of an email that he alleged had been sent to jameslsteward@gmail.com. The

undated email depicted in the screenshot contained the following subject line: “Case No.

CV2012-270-5.” The email stated, “Attached please find the Summons and Complaint in

the above-referenced matter.” The email included an attached file, which was named Case

No. CV2012-270-5.pdf.

       At a hearing on the motion to set aside default judgment, Steward argued that the

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alternative method of service permitted by the circuit court did not afford him his due-

process rights of notice and an opportunity to be heard. He pointed out that, although

Anderson, the private investigator, stated in his affidavit that the tracking pixel would return

confirmation when both the email and the attachments were opened, the report attached to

the motion for default judgment mentioned nothing about attachments having been opened.

As such, Steward contended, there was no proof that he had ever received service of process.

Kuettel responded that the service of process by email was proper because it was reasonably

calculated to give actual notice. In addition, Kuettel contended that service was valid because

he had fully complied with the requirements of the circuit court’s order granting his motion

for alternative service under Rule 4(e)(5) of the Arkansas Rules of Civil Procedure. After the

arguments, the circuit court asked Kuettel if Anderson could verify whether the attachments

had been opened. Kuettel was uncertain, so the circuit court left the record open for ten days

to allow Kuettel to supplement the record with a response. Thereafter, Kuettel submitted an

affidavit from Anderson stating that the email had been opened twice and that the person

opening the email “spent more than 3 minutes with the email before closing it, but the

attachments were not opened.” According to Anderson, “[t]he attachments were standard

.pdf documents, so if someone attempted to open them at all, even if they could not read

them, it would have triggered the tracking pixel. Therefore, it is my belief based on review

of the tracking pixel that the recipient of the email did not try to open the attachments.”

       In an order entered on October 31, 2013, the circuit court denied the motion to set

aside default judgment. Steward appeals.

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                                   Cite as 2014 Ark. 499

       Default judgments are governed by Rule 55 of the Arkansas Rules of Civil Procedure.

That Rule provides, in pertinent part,

       (a) When Entitled. When a party against whom a judgment for affirmative relief is
       sought has failed to plead or otherwise defend as provided by these rules, judgment
       by default may be entered by the court.

       ....

       (c) Setting Aside Default Judgments. The court may, upon motion, set aside a default
       judgment previously entered for the following reasons: (1) mistake, inadvertence,
       surprise, or excusable neglect; (2) the judgment is void; (3) fraud (whether heretofore
       denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an
       adverse party; or (4) any other reason justifying relief from the operation of the
       judgment. The party seeking to have the judgment set aside must demonstrate a
       meritorious defense to the action; however, if the judgment is void, no other defense
       to the action need be shown.

       This court has recognized that default judgments are not favored by the law and

should be avoided when possible. See, e.g., Se. Foods, Inc. v. Keener, 335 Ark. 209, 213, 979
S.W.2d 885, 887 (1998). Because of its harsh and drastic nature, which can result in the

deprivation of substantial rights, a default judgment should be granted only when strictly

authorized and when the party affected should clearly know he is subject to default if he does

not act in a required manner. Id., 979 S.W.2d at 887.

       Our standard of review for an order denying a motion to set aside default judgment

depends on the grounds upon which the appellant claims the default judgment should be set

aside. In cases in which the appellant claims that the default judgment is void, our review is

de novo, and we give no deference to the circuit court’s ruling. See, e.g., Nationwide Ins.

Enter. v. Ibanez, 368 Ark. 432, 435, 246 S.W.3d 883, 886 (2007). In all other cases, we

review an order denying a motion to set aside default for abuse of discretion. Id., 246 S.W.3d

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at 886.

          Steward contends that the circuit court erred in denying his motion to set aside default

judgment because the judgment was void for insufficient service of process. Service of

process is necessary in order to satisfy the due-process requirements of the United States

Constitution. See, e.g., Meeks v. Stevens, 301 Ark. 464, 466, 785 S.W.2d 18, 20 (1990).

Therefore, when sufficient notice of an action has not been given, and a default judgment

has followed, a motion to set aside the judgment must be granted. Id. at 466–67, 785 S.W.2d

at 20.

          Arkansas law is long settled that service of valid process is necessary to give a court

jurisdiction over a defendant. E.g., Smith v. Sidney Moncrief Pontiac, Buick, GMC Co., 353
Ark. 701, 709, 120 S.W.3d 525, 530 (2003). Our case law is equally well settled that service

requirements imposed by rules of this court, being in derogation of common-law rights, must

be strictly construed and compliance with them must be exact. See id., 120 S.W.3d at 530.

          In this case, the circuit court granted a motion for alternative service pursuant to Rule

4(e)(5), permitting Kuettel to serve Steward with the summons and complaint in this action

via email to the email address listed for Steward on Justice4Sarah. Rule 4(e)(5) states that,

“[w]henever the law of this state authorizes service outside this state, the service, when

reasonably calculated to give actual notice, may be made [a]s directed by the court.” As

indicated by the rule, alternative methods of service directed by the court must comport with

due-process requirements. To meet this requirement, the method of service crafted by the

court must be “reasonably calculated, under all the circumstances, to apprise interested parties

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of the pendency of the action and afford them an opportunity to present their objections.”

Mullane v. Cent. Hanover Bank & Trust, 339 U.S. 306, 314 (1950). “[W]hen notice is a

person’s due, process which is a mere gesture is not due process. The means employed must

be such as one desirous of actually informing the absentee might reasonably adopt to

accomplish it.” Id. at 315.

       Assuming, without deciding, that service of process by email may be allowed under

Rule 4(e)(5), we cannot say that, under the facts of this case, the alternative method of

service crafted by the circuit court was reasonably calculated to give actual notice of the

lawsuit. Here, the circuit court ruled that when Kuettel received a confirmation via tracking

pixel that the email giving notice of this lawsuit had been opened, sufficient service of

process on Steward would have occurred. The circuit court’s order did not contain any

requirements to better ensure the effectiveness of the notice.

       The alternative service of process in this case was insufficient because it was not

reasonably calculated to give actual notice to Steward. A default judgment is void under Rule

55(c)(2) if the defendant was improperly served under Rule 4. E.g., S. Transit Co. v. Collums,

333 Ark. 170, 175, 966 S.W.2d 906, 908 (1998). Because the default judgment was void

because of insufficient service of process, the circuit court erred in denying Steward’s motion

to set aside default judgment.

       Reversed.

       Huffman Butler, PLLC, by: Bryan R. Huffman, for appellant.

       Nick Churchill, for appellee.

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