Chilcote v. Kugelman , 2013 Ohio 1896 ( 2013 )

[Cite as Chilcote v. Kugelman, 2013-Ohio-1896.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 98873
LEE A. CHILCOTE, ET AL.
PLAINTIFFS-APPELLEES
vs.
SYLVIA KUGELMAN, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
REVERSED AND REMANDED
Civil Appeal from the
Cleveland Heights Municipal Court
Case No. CVF 1000668
BEFORE: Keough, J., Celebrezze, P.J., and Kilbane, J.
RELEASED AND JOURNALIZED: May 9, 2013
ATTORNEY FOR APPELLANTS
Harvey Kugelman
Harvey Kugelman Co., L.P.A.
450 Standard Building
1370 Ontario Street
Cleveland, Ohio 44113
ATTORNEYS FOR APPELLEES
Edgar H. Boles
Moriarty & Jaros, P.L.L.
30000 Chagrin Blvd., Suite 200
Pepper Pike, Ohio 44124-5721
Christian F. Moratschek
The Chilcote Law Firm, L.L.P.
12434 Cedar Road, Suite 3
Cleveland Hts., Ohio 44106
KATHLEEN ANN KEOUGH, J.:
{¶1} This cause came to be heard upon the accelerated calendar pursuant to
App.R. 11.1 and Loc.R. 11.1.
{¶2} Defendants-appellants, Sylvia Kugelman and K-Property Management, Inc.
(collectively “appellants”), appeal the trial court’s decision denying its motion to set aside
void judgment. For the reasons that follow, we reverse and remand.
{¶3} In July 2010, plaintiffs-appellees, attorney Lee A. Chilcote and The Chilcote
Law Firm, L.L.P. (collectively “Chilcote”), filed suit against appellants alleging that
appellants breached a contract to pay Chilcote for legal services provided to appellants.
According to the complaint, Chilcote was retained by appellants in February 2005 for
legal services in connection with real estate and business transactions in Cleveland
Heights, Ohio. The attorney-client relationship ended in March 2006.
{¶4} Service of process of the lawsuit on K-Property was attempted via certified
mail at the address on file with the Ohio Secretary of State. Kugelman was listed as
K-Property’s statutory agent; thus, service was also attempted on her at the address listed
with the Secretary of State. In September 2010, the certified mail was returned to the
trial court as “unclaimed” for both appellants. Thereafter, on September 27, 2010,
Chilcote requested service of process to be reissued to appellants by regular mail at the
same address on file with the secretary of state. Despite the one-year attorney-client
relationship between the parties, Chilcote did not attempt to serve appellants at any other
known address.
{¶5} After the responsive pleading deadline passed and appellants failed to answer
to the lawsuit, Chilcote moved for default judgment. In March 2011, the trial court
granted the motion and entered judgment against appellants.
{¶6} In October 2011, appellants filed a motion to set aside void judgment
contending that they did not receive notice of the lawsuit; thus, the trial court lacked
personal jurisdiction to issue a judgment against them. Chilcote opposed appellants’
motion arguing that service was properly issued in accordance with the civil rules. After
no action was taken on appellants’ motion for over six months, appellants filed a renewed
motion to set aside void judgment on July 25, 2012. Two days later, on July 27, the trial
court denied appellants’ motion, finding that Chilcote complied with Civ.R. 4 and that
appellants failed to satisfy the requirements of Civ.R. 60(B).
{¶7} Appellants appeal from this order, raising as their sole assignment of error
that the “trial court erred in granting a default judgment when service was attempted at an
invalid address, when plaintiff used an address not reasonably calculated to reach
defendants, and where defendant was not served with the lawsuit, never received any type
of notice of the lawsuit and was not aware of the existence of the lawsuit.” Although the
assignment of error challenges the trial court’s decision granting default, the issues and
arguments raised within the assignment of error challenge the trial court’s denial of
appellants’ motion to set aside void judgment. Accordingly, we will review the appeal
based on the arguments and issues raised.
{¶8} An appellate court reviews the denial of a motion to vacate for an abuse of
discretion. See, e.g., Linquist v. Drossel, 5th Dist. No. 2006-CA-00119,
2006-Ohio-5712. “Abuse of discretion” indicates the trial court’s attitude in issuing its
decision was arbitrary, unreasonable, or otherwise unconscionable. Blakemore v.
Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983). Thus, even though there is a
preference in the law for deciding matters upon their merits, a court’s decision denying a
defendant’s motion to vacate a default judgment will not be overturned unless it neither
comports with the record nor reason. In re Wiley, 11th Dist. No. 2007-P-0013,
2007-Ohio-7123, ¶ 17.
{¶9} In this case, the appellants moved to void the default judgment based on lack
of personal jurisdiction asserting that they were not served with the lawsuit. Chilcote
opposed the motion, arguing that it complied with Civ.R. 4 when serving appellants with
the lawsuit by serving appellants at the address listed with the Ohio Secretary of State;
thus, jurisdiction was proper.
It is well accepted that in order to render a valid personal judgment, a court
must have personal jurisdiction over the defendant. Personal jurisdiction
may only be acquired by service of process upon the defendant, the
voluntary appearance and submission of the defendant or his legal
representative, or by an appearance that waives of [sic] certain affirmative
defenses, including jurisdiction over the person under the Rules of Civil
Procedure.
Abuhilwa v. O’Brien, 2d Dist. No. 21603, 2007-Ohio-4328, ¶ 14, citing Maryhew v. Yova,
11 Ohio St.3d 154, 464 N.E.2d 538 (1984).
{¶10} “‘Service of process must be made in a manner reasonably calculated to
apprise interested parties of the action and to afford them an opportunity to respond.’”
Akron-Canton Regional Airport Auth. v. Swinehart, 62 Ohio St.2d 403, 406, 406 N.E.2d
811 (1980), quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70
S.Ct. 652, 94 L.Ed. 865 (1950). The plaintiff bears the burden of obtaining proper
service on a defendant. Cincinnati Ins. Co. v. Emge, 124 Ohio App.3d 61, 63, 705
N.E.2d 408 (1st Dist.1997). “Where the plaintiff follows the Civil Rules governing
service of process, courts presume that service is proper unless the defendant rebuts this
presumption with sufficient evidence of non-service.” Carter-Jones Lumber Co. v.
Meyers, 2d Dist. No. 2005 CA 97, 2006-Ohio-5380, ¶ 11.
{¶11} Under Civ.R. 4.1(A), service may be made by certified or express mail,
personal service, or residential service. If certified or express mail service is attempted
and the envelope “is returned with an endorsement showing that the envelope was
unclaimed,” the party requesting service must be notified and that party may then request
service by ordinary mail. Civ.R. 4.6(D).
[T]he clerk shall send by ordinary mail a copy of the summons and
complaint or other document to be served to the defendant at the address set
forth in the caption, or at the address set forth in written instructions
furnished to the clerk. The mailing shall be evidenced by a certificate of
mailing which shall be completed and filed by the clerk. * * * Service
shall be deemed complete when the fact of mailing is entered of record,
provided that the ordinary mail envelope is not returned by the postal
authorities with an endorsement showing failure of delivery.
Id.{¶12} Where service of process is not made in accordance with the Rules of Civil
Procedure, the trial court lacks jurisdiction to consider the complaint, and any judgment
on that complaint is void ab initio. Rite Rug Co., Inc. v. Wilson, 106 Ohio App.3d 59,
62, 665 N.E.2d 260 (10th Dist.1995). Because a court has the inherent authority to
vacate a void judgment, a party who asserts that the trial court lacks personal jurisdiction
over him or her due to ineffective service of process need not satisfy the requirements of
Civ.R. 60(B). Carter-Jones Lumber Co. at ¶ 10; United Home Fed. v. Rhonehouse, 76
Ohio App.3d 115, 123, 601 N.E.2d 138 (6th Dist.1991). Only lack of proper service
must be established. Id.{¶13} In Rafalski v. Oates, 17 Ohio App.3d 65, 477 N.E.2d 1212 (8th Dist.1984),
this court held that
Where a defendant seeking a motion to vacate [a void judgment] makes an
uncontradicted sworn statement that she never received service of the
complaint, she is entitled to have the judgment against her vacated even if
her opponent complied with Civ.R. 4.6 and had service made at an address
where it could reasonably be anticipated that the defendant would receive it.
Id., paragraph one of the syllabus.
{¶14} We recognize that other appellate districts have limited this court’s holding
and the effect of a defendant’s affidavit in these circumstances. See Cincinnati Ins. Co. v
Lafitte, 2d Dist. No. 21055, 2006-Ohio-1806; United Home Fed.; Redfoot v. Mikouis,
11th Dist. No. 96-T-5398, 1996 Ohio App. LEXIS 5415 (Nov. 29, 1996) (when process
is sent to a defendant at the defendant’s correct address and the defendant has only his
self-serving testimony that he did not receive service of process, the court must hold a
hearing to determine whether service was proper).
{¶15} In this case, and unlike in the cases cited above including Rafalski,
appellants attached to their motion more than an uncontroverted affidavit from Kugelman.
Appellants attached to their motion an affidavit from Kugelman asserting that (1) service
was not received by either her or K-Property, (2) she moved from her prior address
(which is the address listed with the secretary of state) in 1999, and (3) K-Property’s
offices at all times during its professional relationship with Chilcote were located at
“2669 Euclid Heights Boulevard, Cleveland, Ohio.” Appellants also attached to their
motion (1) a letter dated October 21, 2009, that was faxed from their attorney to
Chilcote’s attorney (who also filed the instant complaint against appellants) regarding the
attorney fee dispute and return of property, and (2) an email from their attorney to
Chilcote’s attorney confirming the return of property to K-Property and providing its
address — 2669 Euclid Heights Boulevard.
{¶16} The evidence attached to appellants’ motion is sufficient to rebut the
presumption that service was proper. At the very least, the evidence was sufficient for
the trial court to hold a hearing or engage in a determination whether the evidence was
competent and credible to rebut the presumption of proper service. See United Home
Fed., 76 Ohio App.3d at 123, 601 N.E.2d 138. While service at the address listed with
the secretary of state may be “reasonably calculated” in most cases, a court should not
discount evidence when presented that the serving party has knowledge of another, and
possibly, more appropriate address.
{¶17} In Madorsky v. Radiant Telecom, 8th Dist. No. 87231, 2006-Ohio-6409,
this court considered a similar case and upheld the trial court’s decision that the plaintiff
failed to demonstrate that service had been perfected on the defendant. This court made
specific reference to the fact that nine months prior to filing the lawsuit, the plaintiff sent
defendant a letter to a Florida address threatening litigation if payment was not made. Id.
at ¶ 8. Despite serving the letter at this Florida address, plaintiff made no attempt to
serve the defendant with the complaint at this address, and the plaintiff made no
explanation for his failure to do so. Id. Accordingly, this court held that insufficient
evidence was presented that service was “reasonably calculated” to apprise the defendant
of the lawsuit. Id.
{¶18} Much like the plaintiff in Madorsky, counsel for Chilcote received an email
from K-Property’s counsel on October 23, 2009, stating K-Property’s address. This
email was received approximately nine months prior to Chilcote filing the within lawsuit.
Despite receiving this email with a different address than listed with the secretary of
state, Chilcote did not attempt to send any service of process to this address. This is even
more troubling considering that notice was received that the certified mail to the address
listed with the secretary of state was returned as “unclaimed.”
{¶19} The Ohio Supreme Court held that courts are to “examine each case upon
its particularized facts to determine if notice was reasonably calculated to reach the
interested party.” Akron-Canton Regional Airport Auth., 62 Ohio St.2d at 406-407, 406
N.E.2d 811. In this case, the trial court’s decision did not examine any facts regarding
notice. Importantly, it did not analyze or even mention any of the exhibits attached to
appellants’ motion. The evidence attached is sufficient to overcome the presumption that
service was perfected or, at the very least, sufficient for the trial court to engage in a
discussion in its judgment entry or conduct a hearing on the motion. The trial court did
neither; thus, we find its decision arbitrary and unreasonable.
{¶20} Accordingly, we find the trial court abused its discretion in denying
appellants’ motion to set aside void judgment because sufficient evidence existed to rebut
the presumption that service was proper. Moreover, the trial court’s reliance on Civ.R.
60(B) as a basis for denying appellants’ motion to set aside a void judgment was
unreasonable; thus, it was also an abuse of discretion.
{¶21} Judgment reversed and remanded for the trial court to vacate the default
judgment.
It is ordered that appellants recover from appellees costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into
execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
KATHLEEN ANN KEOUGH, JUDGE
FRANK D. CELEBREZZE, JR., P.J., CONCURS;
MARY EILEEN KILBANE, J., DISSENTS (SEE ATTACHED DISSENTING
OPINION)
MARY EILEEN KILBANE, J., DISSENTING:
{¶22} I respectfully dissent. I would affirm the trial court’s decision denying
appellants’ motion to set aside a void judgment.
{¶23} As the majority notes, service of process must be made in a manner
reasonably calculated to apprise interested parties of the action and to afford them an
opportunity to respond. Akron-Canton Regional Airport Auth., 62 Ohio St.2d at 406, 406
N.E.2d 811, citing Cent. Hanover Bank & Trust Co. (1950), 339 U.S. at 314, 70 S.Ct.
652, 94 L.Ed. 865. “[I]t is not necessary that service be attempted through the most
likely means of success — * * * it is sufficient that the method adopted be ‘reasonably
calculated’ to reach its intended recipient.” Id. at 406.
{¶24} In support of its decision, the majority cites to Madorsky, 8th Dist. No.
87231, 2006-Ohio-6409. The facts in this case, however, are distinguishable. In
Madorsky, the trial court found that the plaintiff presented no evidence to demonstrate the
entity it served the complaint upon was, in fact, the defendant’s statutory agent authorized
to receive service on its behalf. Id. at ¶ 8. In footnote 1, this court noted:
[a]lthough not relevant to our review of the trial court’s determination
regarding service, the record on appeal includes a letter dated March 13,
2006[,] from Wayne Rafanelli, Manager, Registered Agent Services, for
National Corporate Research, Ltd., 615 South DuPont Highway, Dover,
Delaware 19901, informing this court that he was returning a notice of
motion the court had attempted to serve in this case, because neither TCS
Corporate Services, Inc. nor National Corporate Research, Ltd. are listed as
the registered agent for [the defendant] in the State of Ohio and, therefore,
cannot accept service on its behalf. Id.
{¶25} Unlike Madorsky, in the instant case the record is clear that Chilcote served
the appellants under Civ.R. 4 when it served the lawsuit via certified mail at the address
on file with the secretary of state. Under Civ.R. 4.2(F), service of process may be made
[u]pon a corporation either domestic or foreign: by serving the agent
authorized by appointment or by law to receive service of process; or by
serving the corporation at any of its usual places of business by a method
authorized under Civ.R. 4.1(A)(1); or by serving an officer or a managing
or general agent of the corporation[.]
{¶26} It is difficult to contemplate a method that is more “reasonably calculated”
to reach the intended recipient than the method outlined by the rules of civil procedure.
On appeal, we review the denial of a motion to vacate for an abuse of discretion.
Linquist, 5th Dist. No. 2006-CA-00119, 2006-Ohio-5712, ¶ 8. Based on the facts of this
case, I would find that the trial court’s decision denying appellants’ motion, without
conducting a hearing, was not arbitrary, unreasonable, or unconscionable.
{¶27} Accordingly, I would affirm the trial court’s decision.