Revenant Capital, LLC v. Iowa Cash Buyers, LLC and R.C. Homes, LLC ( 2021 )

IN THE COURT OF APPEALS OF IOWA
No. 20-0948
Filed April 14, 2021
REVENANT CAPITAL, LLC,
Plaintiff-Appellee,
vs.
IOWA CASH BUYERS, LLC and R.C. HOMES, LLC,
Defendants-Appellants.
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Appeal from the Iowa District Court for Jasper County, Martha Mertz, Judge.
Iowa Cash Buyers, LLC and R.C. Homes, LLC appeal the district court’s
refusal to set aside the default judgment against them. AFFIRMED.
J. Mason Bump of Sullivan & Ward, P.C., West Des Moines, for appellant.
Benjamin G. Arato of Wandro & Associates, PC, Des Moines, for appellee.
Considered by Vaitheswaran, P.J., and Tabor and Ahlers, JJ.
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VAITHESWARAN, Presiding Judge.
Revenant Capital, LLC sued Iowa Cash Buyers, LLC, R.C. Homes, LLC,
and Ryan Arguello for damages arising from its financing of home renovation
projects. Arguello was the registered agent for Iowa Cash Buyers and R.C. Homes
(collectively, the companies). Revenant served all three defendants with the
petition and original notice at Arguello’s home address, authorizing his wife to
accept service. When the defendants failed to file timely answers to the petition,
Revenant mailed them a notice of intent to file a default judgment. The notice was
not mailed to Arguello’s home address but to the address disclosed on the
Secretary of State’s website for the registered agent of the companies. Revenant
followed up with a motion for default judgment. The district court granted the
motion, held a hearing to assess damages, and entered a joint and several
judgment for compensatory and punitive damages against all three defendants.
The defendants moved to set aside the default judgment. The district court
granted the set-aside motion with respect to Arguello but denied the motion with
respect to the companies. The companies appealed.
Iowa Rule of Civil Procedure 1.972(3)(a) states “notice of intent to file written
application for default shall be sent by ordinary mail to the last known address of
the party claimed to be in default.” The statute governing limited liability companies
states, “A . . . registered agent is the company’s agent for service of process,
notice, or demand required or permitted by law to be served on the company.”
Iowa Code § 489.116(1) (2019). The name of the registered agent and the street
address of the office must be included in the certificate of organization. See id.§ 489.201(2)(b).
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The companies argue, “Revenant failed to abide by the procedural
requirements for an entry of default judgment by using an address different from
the last known address used in their original notice when they filed their notice of
intent to apply for default with the clerk of court.” Revenant responds that “when
a corporate entity provides an address to the Iowa Secretary of State for a
registered agent or reserving party, that address may be relied on as a ‘last known
address’ for purposes of [rule] 1.972(3).”
At the hearing on the defendants’ motion to set aside the default judgment,
their attorney stipulated that “at the time of service [of the petition], . . . per the
Secretary of State’s office, that the registered agent [of the two company
defendants] was Ryan Arguello and the registered office was” a different address
than the address at which the defendants were served with process. We conclude
the address listed with the Secretary of State was the “last known address” of the
companies, within the meaning of Rule 1.972(3). Revenant did not breach the
procedural requirements of Rule 1.972(3) by mailing the companies notice of its
intent to enter a default at the address for the registered agent listed on the
Secretary of State’s website. See Elliot v. Hughbis & The Kernel, Inc., No. 11-
0983, 2012 WL 666747, at *1 (Iowa Ct. App. Feb. 29, 2012) (noting registered
agent of a corporation was personally served with process but was mailed notice
of default).
We reach that conclusion notwithstanding Arguello’s willingness to have his
wife accept service of process for the companies at his home address. As
Revenant notes, “[o]riginal notices are ‘served’ by delivering a copy to the proper
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person.” Iowa R. Civ. P. 1.305. For limited liability companies, delivery would be
made to
any present or acting or last known officer thereof, or any general or
managing agent, or any agent or person now authorized by
appointment or by law to receive service of original notice, or on the
general partner of a partnership.
Iowa R. Civ. P. 1.305(6); see also Iowa R. Civ. P. 1.306 (“Service may be made
on any such corporation, individual, personal representative, partnership or
association as provided in rule 1.305 within or without the state . . . .”). Although
that was the last known address for Arguello and the court accordingly granted the
motion to set aside the default as to him, Revenant could reasonably have
determined that the official last known address for the companies was the one
listed with the Secretary of State.
The companies next argue “good cause existed to set aside default and
default judgment against” them. See Iowa R. Civ. P. 1.977 (“On motion and for
good cause shown . . . the court may set aside a default or the judgment thereon,
for mistake, inadvertence, surprise, excusable neglect or unavoidable casualty.”).
The district court concluded the companies “failed to establish ‘good cause’ to set
aside the default judgment.” The court reasoned that “Arguello did not update the
information on the Secretary of State’s office nor provide that office with a current
address” and “[t]hat failure” was “attributable to Defendants, not Plaintiff.”
“Good cause is a sound, effective, and truthful reason. It is something more
than an excuse, a plea, apology, extenuation, or some justification, for the resulting
effect.” No Boundry, LLC v. Hoosman, 953 N.W.2d 696, 700 (Iowa 2021) (quoting
Cent. Nat’l Ins. Co. of Omaha v. Ins. Co. of N. Am., 513 N.W.2d 750, 754 (Iowa
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1994)). We are to liberally construe rule 1.977 “to afford an opportunity for
adjudication on the merits.” Id. At the same time, we will not vacate a judgment
“when the movant has ignored the rules of procedure with ample opportunity to
abide by them.” Sheeder v. Boyette, 764 N.W.2d 778, 780 (Iowa Ct. App. 2009).
That is the case here.
Arguello was the only principal of both companies and the only person listed
as registered agent of the companies. Arguello did not file an answer on behalf of
the companies because he hoped “to work this out” with Revenant.1 He
acknowledged having read both the original notice, which set forth the answer
deadline, and the petition. He also admitted he knew how to complete a statement
of change of registered office and/or registered agent because he had done so in
2016. He provided no reason for failing to update his registered agent address on
the Secretary of State’s website. On this record, we conclude the companies’
motion to set aside the default judgment amounted to no more “than an excuse, a
plea, apology, extenuation, or some justification, for the resulting effect” and the
district court did not err in concluding they failed to establish good cause. See
Hoosman, 953 N.W.2d at 700.
We affirm the district court’s refusal to set aside the default judgment
against the companies.
AFFIRMED.
1 Arguello reached out to the principal of Revenant after the petition was filed but
before he was served with process. Several days later, Revenant offered to settle
the matter “by way of monthly payments, as well as signing a confession
judgment.” Arguello did not provide Revenant with a substantive response to the
offer.