WARREN BROTHERS SASH & DOOR COMPANY v. SANTORO CUSTOM BUILDERS, INC. ( 2020 )

01/08/2020
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
November 6, 2019 Session
WARREN BROTHERS SASH & DOOR COMPANY v. SANTORO
CUSTOM BUILDERS, INC., ET AL.
Appeal from the Chancery Court for Williamson County
No. 34103 James G. Martin, III, Judge
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No. M2019-00374-COA-R3-CV
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Plaintiff filed a Tennessee Rule of Civil Procedure 69.04 motion to extend a 2008 default
judgment entered against Defendant’s company and Defendant in his personal capacity.
Defendant filed a Rule 60.02(3) motion to set aside the default judgment with respect to
himself in his individual capacity, asserting the judgment was void for lack of service.
The trial court determined 1) Defendant had been served in the underlying matter, 2) that
the judgment in the underlying case was not void, and 3) alternatively, if the judgment
was invalid, “exceptional circumstances” justified the court’s refusal to set it aside. We
find that the 2008 default judgment was not void for lack of service and affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
CARMA DENNIS MCGEE, J., delivered the opinion of the court, in which ANDY D.
BENNETT and W. NEAL MCBRAYER, JJ., joined.
Kathleen Robson Gordon, Chicago, Illinois, for the appellant, Stacy Santoro.
David O. Huff, Nashville, Tennessee, for the appellee, Warren Brothers Sash & Door
Company.
OPINION
I. FACTS AND PROCEDURAL HISTORY
This appeal arises from a Tennessee Rule of Civil Procedure 69.04 motion filed by
Plaintiff Warren Brothers Sash & Door Company (“Warren Brothers”) in September
2017 to extend a default judgment entered by the trial court against Defendants Santoro
Custom Builders, Inc. (“Santoro Builders”) and Stacy Santoro, individually (“Mr.
Santoro”; collectively, “Defendants”) in February 2008. The underlying facts are largely
undisputed. In November 2000, Santoro Builders, by and through its owner and agent,
Mr. Santoro, established a purchase account with Warren Brothers. The parties executed
a credit application which was also executed by Mr. Santoro as personal guarantor. Mr.
Santoro guaranteed payment of the account, and Warren Builders supplied building
materials on credit. The materials were used on eight job sites. Defendants did not pay
the balance, and Warren Brothers recorded eight separate liens in September 2007. On
November 5, 2007, Warren Brothers filed a complaint to enforce its liens and collect the
balance of the account. Warren Brothers sought a judgment in the amount of $72,142.07,
including the unpaid balance of $64,470.94, plus costs, attorneys’ fees, and interest.
In its complaint, Warren Brothers asserted that service could be made on Mr.
Santoro at his residence in Brentwood, Tennessee. Summons was issued on November 8,
2007. On December 4, a deputy of the Maury County Sheriff’s Office attempted service
on Mr. Santoro at Santoro Builders’ offices on Jim Warren Road in Spring Hill,
Tennessee (“the Jim Warren address”). The summons return stated, “read to and left a
copy at the business with Melissa Jackson.” On December 28, Mr. Santoro indicated by
email they were closing on homes and that “[t]he banks were working with [them]” to
“get through this tough time.”
Warren Brothers filed a motion for default judgment and default judgment
certificate in February 2008. The certificate states that the motion was served on Mr.
Santoro at his home address in Brentwood and on Santoro Builders at the Jim Warren
address. Defendants neither answered nor made an appearance in the matter. On
February 19, 2008, the trial court entered a default judgment in the amount of
$72,142.07, plus interest at the rate of 10 percent per annum (as provided by statute at
that time), against Santoro Builders and Mr. Santoro, jointly and severally. It also held
that Warren Brothers was entitled to enforcement of its materialmen’s liens against
Santoro Builders’ real property. In April 2008, the Williamson County Clerk and Master
issued an Execution on Mr. Santoro, which was served on Mr. Santoro’s attorney. The
return on Execution stated that the attorney held no money and that the attorney “advised
the Jim Warren address was best for service.”
Defendants were involved in three other lawsuits filed in 2007. Melissa Jackson
(“Ms. Jackson”) accepted service for Defendants at the Jim Warren address in
Williamson County case #34096; in a second matter, an alias summons was issued and
served on Mr. Santoro’s attorney because it was believed Mr. Santoro had relocated to
New York; in the third action, Lisa Martin accepted service for Defendants at the Jim
Warren address.
Warren Brothers filed its motion to extend the judgment in September 2017. The
motion was served on Defendants at the Jim Warren address, a Harrah Drive address in
Spring Hill, and a Pleasant Hill Road address in Franklin. In November 2017, Mr.
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Santoro filed a motion to quash service and to vacate the 2008 default judgment pursuant
to Tennessee Rule of Civil Procedure 60.02(3). In his motion, Ms. Santoro asserted that
he was never personally served with the complaint in the 2007 action. In the affidavit
attached to his complaint, Mr. Santoro asserted that he had never resided at the Jim
Warren address and that Ms. Jackson “is not and never has been an agent by appointment
or by law to receive service on behalf of [him], individually.” Mr. Santoro asserted that
the 2008 default judgment against him, individually, accordingly was void.
Warren Brothers responded to Mr. Santoro’s motion in January 2018. In its
response, Warren Brothers asserted that service of process had been made where the
complaint was served by the Maury County Sheriff at the Jim Warren address in
December 2007. Warren Brothers asserted that the return of summons indicated that it
had been “read to and left a copy at the business with Melissa Jackson.”1 It further
asserted that Ms. Jackson had signed the summons return and that, in April 2008, Mr.
Santoro’s attorney had advised that the Jim Warren address was best for service. Warren
Brothers asserted that, if Ms. Jackson was authorized to accept service, service was
proper under Rule 4.04 of the Tennessee Rules of Civil Procedure. It sought continuance
of Mr. Santoro’s motion to conduct discovery. Warren Brothers further asserted that the
exceptional circumstances of the case precluded Mr. Santoro “from using Rule 60.03(3)
offensively to avoid the final judgment against him.”
Discovery ensued and, in August 2018, Warren Brothers filed a supplemental
response to Mr. Santoro’s motion to quash service and vacate the judgment. Warren
Brothers asserted that it had deposed Ms. Jackson, who affirmed that she was employed
by Santoro Brothers for five years, from 2003 through 2008. In her deposition, Ms.
Jackson stated that she worked at Santoro Brothers at the Jim Warren address “until the
doors shut on the company” in June 2008. She stated that she was one of “just a few”
employees; that she was the office manager; and that she handled accounts payable,
accounts receivable, and payroll. Ms. Jackson stated that she opened the mail and
delivered it to whomever “it [went] to.”
Ms. Jackson stated that she had no recollection of the summonses served in 2007 -
neither the summons on Santoro Builders nor the one on Mr. Santoro personally - but
acknowledged her signature on them. Ms. Jackson stated that she would have given the
summons to Mr. Santoro had she received it, and that she did not recall having had a
conversation with him about accepting summonses. She additionally stated that she
would not have accepted summonses for Mr. Santoro if he had instructed her not to do so.
Ms. Jackson stated that Mr. Santoro was traveling between Tennessee and New York
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Service on Santoro Builders, which was dissolved in 2008, is not disputed. It also is not
disputed that Mr. Santoro did not appear in the matter. Mr. Santoro was served with Warren Brothers’
motion for default judgment and with the default judgment at his home address in Brentwood in 2008. It
is not disputed that Mr. Santoro took no action to have the judgment set aside prior to November 2017.
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during December 2007, but that she was able to communicate with him by phone and that
the doors “weren’t closed yet.” She stated that Mr. Santoro was the only owner of the
business that she was aware of, and that she would have given any summons received to
him “[b]ecause it has his name on it. It’s his company.” Ms. Jackson did not recall Lisa
Martin, but stated that she had set-up appointments for Mr. Santoro with his attorney.
Mr. Santoro also was deposed in June 2018. Mr. Santoro confirmed that Ms.
Jackson worked for Santoro Builders and stated that he ran three companies out of the
Jim Warren office: Santoro Custom Builders, Tri-Star Mechanical Systems, and Santoro
Development. He stated that the number of employees working at the Jim Warren office
varied from 6 to 14. Mr. Santoro stated that he could not remember what dates he had
lived at the Brentwood address, but that he and his family lived there until “it got
repossessed[,]” which was in late summer of 2008. He stated that the family moved to
Cooperstown, New York, where he was originally from, but that he did not recall how
long he lived there. He stated that he had relocated back to Middle Tennessee about three
years prior to the deposition date, but could not recall the address of the rental home in
which he had lived for the last year and a half. Mr. Santoro confirmed that Santoro
Builders was located on Jim Warren Road in Spring Hill, but could not recall the street
number or how long the office had been at that address. He confirmed that the business
was located on Jim Warren until “the bank repossessed everything and . . . everybody
left.”
Mr. Santoro stated that he did not recall receiving the summons for Santoro
Builders in 2007, and that he could not recall whether or not Ms. Jackson had given it to
him. He stated that he similarly did not recall whether Ms. Jackson gave him the
summons for himself, individually. Mr. Santoro confirmed that several actions were filed
against him and Santoro Builders during the same time period, but could not recall how
many. He stated that he and Ms. Jackson “never had a discussion about her accepting
anything on [his] behalf.” Mr. Santoro stated that he had no memory of the summonses,
did not know who Lisa Martin was, and did not recall entering into an agreed judgment in
another lawsuit.
Mr. Santoro further stated that he did not recall the February 2008 motions for
default judgment against him or Santoro Builders, but confirmed the respective addresses
recited on them were correct. When asked whether there was any reason he would not
have seen the motion if it came to his address, Mr. Santoro replied, “there is no reason
why I wouldn’t have seen it.” Mr. Santoro also stated that he did not recall having seen
the default judgment sent to his home in Brentwood.
The trial court heard oral argument by counsel in the matter in October 2018. The
trial court found that Ms. Jackson had acted with authority when she accepted service of
process on Mr. Santoro’s behalf in 2007. The trial court therefore determined that the
default judgment was not void for lack of service. The trial court also held that, if the
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default judgment was void, Mr. Santoro’s motion for relief should be denied under the
“exceptional circumstances” rule established by the Tennessee Supreme Court in Turner
v. Turner, 473 S.W.3d 257 (Tenn. 2015). The trial court denied Mr. Santoro’s motion to
quash service and vacate the default judgment. It granted Warren Brothers’ motion to
extend the judgment for ten years by order entered January 25, 2019, and Mr. Santoro
filed a timely notice of appeal to this Court.
II. ISSUES PRESENTED
In his brief, Mr. Santoro presents the following two issues for our review:
I. Whether the trial court’s finding that Appellant Stacy Santoro was
properly served with notice of the lawsuit was against the preponderance of
the evidence.
II. Whether the default judgment entered against Appellant Stacy Santoro is
void.
In its posture as appellee, Warren Brothers raises the following additional
issue:
Whether the trial court correctly determined that relief under Rule 60.02(3)
of the Tennessee Rules of Civil Procedure should be denied because of the
exceptional circumstances present in this case.
III. STANDARD OF REVIEW
Although we generally review a trial court’s ruling on a Tennessee Rule of Civil
Procedure Rule 60.02 motion for relief from a final judgment under the abuse of
discretion standard, our review is de novo, with no presumption of correctness, with
respect to a judgment on a Rule 60.02(3) motion to set aside the judgment as void.
Turner v. Turner, 473 S.W.3d 257, 268-69 (Tenn. 2015). We review the trial court’s
findings of fact in the matter de novo upon the record, presuming them to be correct
unless the evidence preponderates otherwise. Id. at 269.
IV. DISCUSSION
A. Service of Process on Mr. Santoro
We first turn to whether the evidence preponderates against the trial court’s
finding that Mr. Santoro was properly served with notice in 2007. It is well-settled that:
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A court obtains personal jurisdiction over a party defendant by service of
process. Ramsay v. Custer, 387 S.W.3d 566, 568 (Tenn. Ct. App.2012);
see also Johnson v. McKinney, 32 Tenn. App. 484, 222 S.W.2d 879, 883
(1948) (“The general rule is that notice by service of process or in some
other manner provided by law is essential to give the court jurisdiction of
the parties; and judgment rendered without such jurisdiction is void and
subject to attack from any angle.” (emphasis added)). “The record must
establish that the plaintiff complied with the requisite procedural rules, and
the fact that the defendant had actual knowledge of attempted service does
not render the service effectual if the plaintiff did not serve process in
accordance with the rules.” Ramsay, 387 S.W.3d at 568; see also Overby v.
Overby, 224 Tenn. 523, 457 S.W.2d 851, 852 (1970) (“That a judgment [i]n
personam against a defendant who is not before the court either by service
of process or by entry of appearance is void there can be no question. It is
well settled that a judgment rendered against a defendant in any kind of a
case, when process has never been served on him ... in the way provided by
law ...; and where there has been no voluntary appearance of the defendant,
is clearly void.” (emphasis added) (citation and internal quotation marks
omitted)). A court “without personal jurisdiction of the defendant” is
wholly “without power to proceed to an adjudication” binding on that
defendant, regardless of the specific reason such jurisdiction is lacking.
Employers Reinsurance Corp. v. Bryant, 299 U.S. 374, 381, 57 S. Ct. 273,
81 L. Ed. 289 (1937).
Turner, 473 S.W.3d at 271.
Rule 4.04 of the Tennessee Rules of Civil Procedure sets forth the proper methods
for service of process, stating in pertinent part:
The plaintiff shall furnish the person making the service with such copies of
the summons and complaint as are necessary. Service shall be made as
follows:
(1) Upon an individual other than an unmarried infant or an incompetent
person, by delivering a copy of the summons and of the complaint to the
individual personally, or if he or she evades or attempts to evade service, by
leaving copies thereof at the individual's dwelling house or usual place of
abode with some person of suitable age and discretion then residing therein,
whose name shall appear on the proof of service, or by delivering the
copies to an agent authorized by appointment or by law to receive service
on behalf of the individual served.
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Tenn. R. Civ. P. 4.04. Actual notice of an action is not sufficient when service of process
is required under the Rules of Civil Procedure. Hall v. Haynes, 319 S.W.3d 564, 572
(Tenn. 2010). Tennessee courts have noted that “‘the preferred method of service upon
an individual . . . is clearly by delivery of the summons and complaint to the defendant
personally.’” Id. (quoting Robert Banks, Jr. & June F. Entman, Tennessee Civil
Procedure § 2–3(d), at 2–26 (2d ed.2004)). However, personal service may be made
through an authorized agent. Id.
In the current case, the trial court found that Ms. Jackson acted with authority
when she accepted service of process on behalf of Mr. Santoro. Mr. Santoro appears to
recall very little with respect to the various lawsuits filed against him and his companies
in late 2007. However, the trial court found that Ms. Jackson accepted service on behalf
of Mr. Santoro in an unrelated action filed against Tri-Star Mechanical Systems (“Tri-
Star”) and Mr. Santoro, individually, approximately one month before Warren Brothers
filed its complaint. This appears undisputed. The trial court further found that service in
that case was not contested, that a judgment was entered against Tri-Star and Mr.
Santoro, and that Mr. Santoro “offered no evidence distinguishing this case from the
circumstances” in Tri-Star. The trial court further found that Ms. Jackson testified that
she would have refused to receive service of process on Mr. Santoro’s behalf had he so
instructed her. The trial court noted Mr. Santoro’s inability to recall any details regarding
service of process in three separate matters, and “question[ed]” Mr. Santoro’s credibility.
The evidence in the record does not preponderate against the trial court’s findings.
An individual may appoint an agent for the purpose of receiving service of
process, giving that agent either actual or implied authority. Implied authority “embraces
all powers which are necessary to carry into effect the granted power, in order to make
effectual the purposes of the agency.” Hall, 319 S.W.3d at 573. Implied authority can be
“circumstantially established through conduct or a course of dealing between the
principal and agent.’” Id. (citation omitted). However, the existence of implied authority
is determined by the “‘act or acquiescence of the principal,’” rather than the actions of the
agent.” Id. (quoting Bells Banking Co. v. Jackson Ctr., Inc., 938 S.W.2d 421, 424 (Tenn.
Ct. App. 1996) (quoting 2A C.J.S. Agency § 153 (1972))). With respect to service of
process, “the record must contain ‘evidence that the defendant intended to confer upon
[the] agent the specific authority to receive and accept service of process for the
defendant.’” Id. (quoting Arthur v. Litton Loan Servicing LP, 249 F. Supp. 2d 924, 929
(E.D. Tenn. 2002)). The Court emphasized that an alleged agent’s actions alone are not
sufficient to establish implied authority, “[n]or is the mere fact of acceptance of process
sufficient to establish agency by appointment.” Id. (citation omitted).
Upon review of the record before us, we agree with the trial court’s finding that
Ms. Jackson had implied authority to accept service of process on behalf of Mr. Santoro.
It is undisputed that Ms. Jackson accepted service of process on Mr. Santoro’s behalf in
prior, unrelated actions; that Mr. Santoro acquiesced to Ms. Jackson’s actions in those
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instances; and that Mr. Santoro conferred implied authority on Ms. Jackson to act as his
agent for service of process. We agree with the trial court that Mr. Santoro “cannot
selectively determine after the fact when Ms. Jackson has the authority to accept service
on his behalf and when she does not.”
B. Validity of the Judgment Entered Against Mr. Santoro
Mr. Santoro argues that the judgment against him is void as a result of him not
being properly served with process. Having found that Mr. Santoro was properly served,
we accordingly find that the trial court did not err by determining that the 2008 default
judgment in favor of Warren Brothers was not void.
Based upon this ruling, all other issues raised by Appellee regarding the denial of
Appellant’s requested relief under Tennessee Rule of Civil Procedure 60.02(3) are
pretermitted.
V. CONCLUSION
In light of the foregoing, the trial court’s judgment is affirmed. Costs of this
appeal are taxed to the appellant, Stacy Santoro, and his surety, for which execution may
issue if necessary.
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CARMA DENNIS MCGEE, JUDGE
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