Doherty & Associates, Inc. v. People First Insurance, Inc.

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
DOHERTY & ASSOCIATES, INC., a
Delaware corporation,
Plaintiff,
V. C.A. N0. N12C-12-145 FWW
DelaWare corporation, T & D INSURANCE,
INC., a Delaware corporation, THGMAS
WISELEY INSURANCE, INC., a
Pennsylvania foreign corporation, and
THOMAS WISELEY,
)
)
)
)
)
§
PEOPLE FIRST lNSURANCE, INC., a )
)
)
)
)
)
)
Defendants. )
Submitted: January 16, 2018
Decided: March 22, 2018
Upon Defendant People First Insurance, Inc.’s Motion to Vacate Default Judgment
and Allow the Filing of an AnsWer,
DENIED.
Upon Defendant T & D Insurance, Inc.’s Motion to Vacate Default Judgment and
Allow the Filing of an Answer,
DENIED.
Upon Defendant Thomas E. Wiseley Insurance, Inc.’s Motion to Vacate Default
Judgment and Allow the Filing of an Answer,
DENIED.
Upon Defendant Thomas Wiseley’s Motion to Vacate Default Judgrnent as to
Thomas Wiseley and AIIOW the Filing of an Answer,
DENIED.
M
Brian J. Ferry, Esquire, Ferry Joseph, P.A., 824 N. Market Street, Suite 1000,
Wilmington, Delaware 19801, attorney for Plaintiff Doherty & Associates, Inc.
Arthur D. Kuhl, Esquire, Reger Rizzo & Darnall, LLP, 1523 Concord Pike, Suite
200, Brandywine Plaza East, Wilrnington, DelaWare 19803, attorney for Defendants
People First Insurance, Inc., T & D Insurance, Inc., Thomas Wiseley Insurance, Inc.,
and Thomas Wiseley.
WHARTON, J.
This 22nd day of March, 2018, upon consideration of each Defendant’s
Motion to Vacate Default Judgment and AlloW the Filing of an Ansvver, Plaintiff
Doherty & Associates, Inc.’s answers to the motions, the Defendants’ replies, the
evidence elicited at an evidentiary hearing, the arguments of counsel and the record
in this case, it appears to the Court that:
l. On February 9, 2015, Plaintiff Doherty & Associates, Inc. (“Doherty”)
obtained default judgments against each defendant at the direction of its then
attorney, John V. Work, Esquire.l The complaint upon Which the default judgments
Were entered Was filed on December l7, 2012.2 lt alleges that each corporate
defendant breached a contract it had With Doherty for bookkeeping and accounting
services by failing to pay invoices When due.3 lt further alleges that Defendant
Thomas Wiseley (“Mr. Wiseley”) breached his contractual obligations to Doherty
by failing to pay the amounts due under the corporate contracts, Which he had
personally guaranteed to pay.4 Prior to the entry of the default judgments, Dougherty
had sought and received three extensions of time to serve the defendants5
2. On February 15, 2017, Doherty, represented by new (and present)
counsel, sought to attach l\/Ir. Wiseley’s Wages from Defendant People First
'D.l. 24-27.
2 D.I. l.
3Id.
4]a'.
5D.I. 7, 13, l6.
lnsurance, Inc. (“People First.”)6 A Writ Was issued on July l3, 20177 and a levy
served on People First on Julyli§th.8 The issuance of the Wage attachment levy
apparently generated the motions to vacate the default judgments Those motions
Were filed on August 2, 2017.9 The parties stipulated to staying execution of all
judgments pending resolution of the motions to vacate.lo
3. The Defendants bring their motions under Superior Court Civil Rule
60(b).ll As a general proposition, the party seeking relief under Rule 60 must
establish that: l) it acted in a reasonably prudent fashion; 2) there is the possibility
of a meritorious defense; and 3) there is a lack of substantial prejudice to the non-
moving party.12 In addressing motions under Rule 60(b), the Court must consider
Whether a moving defendant acted in a reasonably prudent fashion, in other Words
Whether there is excusable neglect, first.13 The Court Will only consider Whether
there is the possibility of a meritorious defense and Whether a plaintiff Would suffer
substantial prejudice if a moving defendant acted in a reasonably prudent fashion.14
6D.I. 32.
7D.I. 38.
8D.I. 39.
9D.l. 40-43.
10D.I. 52.
11 D.l. 66.
12 PNC chk v. Sills, 2006 WL 3587247 (Del. Super. Ct. Nov. 30, 2006) at *5.
13Perry v. Wilson, 2009 WL 1964787 at *l (Del. Super. Ct. Jul. 8, 2009).
l‘*Ia’.
4
Further, it is a defendant’s burden to prove that it acted in a reasonably prudent
fashion.15
4. The motions of People First,16 T & D Insurance, Inc.17 (“T&D”),
Thomas Wiseley Insurance, Inc.18 (“TWI”), and Mr. Wiseley19 raise identical
arguments of excusable neglect, although with some variation in the factual
underpinnings supporting each defendant’s motion. Each motion questions the
history of the extensions of time obtained by Doherty within which to effect service
and each motion purports to explain why such extensions were unnecessary and how
each defendant easily could have been served with the complaint However, the
motions of the corporate defendants also acknowledge that “the method of service
upon [the defendants] may not be technically incorrect.”20 Each motion, asserts a
statute of limitation defense as well as a suggestion that any debt owed to Doherty
may have been paid. No argument was made in any motion regarding substantial
prejudice to Doherty.
5. The Court held an evidentiary hearing on January l6, 2018. At that
hearing, the parties offered the witness testimony oer. Work, Mr. Wiseley and his
15 Id_
16D.I. 43.
17D.l. 42.
'SD.I. 4l.
l"D.I. 40.
2013.1.41-43 ami 19.
wife Debra Wiseley (“Mrs. Wiseley”.) The bulk of the testimony at the hearing
focused on whether Mr. Wiseley had been served with the complaint pursuant to 10
Del. C. § 3104, Delaware’s Long-arm Statute.
6. Relevant to the motions are § 3104 (d)(3) which addresses methods of
service, and § 3104(e) which addresses proof of service. Section 3104(d)(3)
authorizes service “By any form of mail addressed to the person to be served and
requiring a signed receipt.” Section 3104(e) provides: “When service is made by
mail, proof of service shall include a receipt signed by the addressee or other
evidence of personal delivery to the addressee satisfactory to the court.” It is
undisputed here that no signed receipt was obtained by Doherty in its attempts to
serve Mr. Wiseley at his home by mail. Nonetheless, Doherty claims that Mr.
Wisely had actual knowledge of the lawsuit and did, in fact, receive service of the
complaint.
7. ln Maldanado v. Matthews, the court addressed the question of what
constituted evidence of service by mail “satisfactory to the court.” 21 The Maldanaa’o
court reviewed the history and purpose of § 3104 and determined that, in the absence
of a signed receipt, evidence of a voicemail message from the defendant
acknowledging receipt of service was evidence satisfactory to the court sufficient to
212010 WL 663723 at *3 (Del. Super. Ct. Feb. 23, 2010)
6
defeat a motion to dismiss based on ineffective service under § 3104.22 In other
words, evidence that the defendant in fact received service of the complaint could
be sufficient to overcome a failure to obtain a signed receipt for a mailed complaint.
The Court agrees with this interpretation of § 3104 and reviews the evidence
presented at the evidentiary hearing in light of Mala'anado.
8. Mr. Work testified that he is a solo practitioner and employs no office
staff in his practice. On July, 9, 2014, he sent a copy of the complaint by FedEx
addressed to Mr. Wiseley at his home address in Glen Mills, Pennsylvania.23 Mr.
Work accepts responsibility for the fact that two delivery signature options were
checked by mistake _ “No Signature Required” and “Direct Signature.”24 The
FedEx delivery receipt reads on July 11, 2014 at 9:55 a.m.: “Delivered. Left at front
door. Package delivered to recipient address - release authorized.”25 No signature
was obtained.26 Mr. Work further testified that on September 2, 2014, Mr. Wiseley
called him and said that he had received the complaint, that he had documents to
prove that he did not owe the money that the complaint alleged he owed, and that he
would send Mr. Work the documents Mr. Work testified that he never received any
22la’. at *3-5.
23 There is no dispute that the address on the FedEx address label correctly lists Mr.
Wiseley’s home address.
24Hrg., Jan. 16, 2018, Pltf.’s Ex 1.
25101.
26 Id_
such documents from Mr. Wiseley. Mr. Work identified a five minute telephone
call listed on his office telephone records from telephone number XXX-XXX-2656
as the call he received from Mr. Wiseley.27
9. Both Wiseleys testified Mrs. Wiseley testified mostly about the
various corporate entities, their places of business, registered agents, and Mr.
Wiseley’s positions with respect to them. She was somewhat imprecise regarding
Mr. Wiseley’s positions with the corporations as well as their registered agents. She
was clear, however, that the Wiseley’s did not receive a copy of the complaint at any
of their companies or at home. Mr. Wiseley covered much of the same ground as
his wife, but added his version of the context of the telephone call about which Mr.
Work testified ln Mr. Wiseley’s telling, he had received calls from different people
concerning the money Doherty it claimed was owed. He told each of the callers the
same thing - the matter had been handled already. He did not have a particular
memory of speaking to Mr. Work, but he did recall making a telephone call to
someone around that time (September 2, 2014) from his cell phone, which was the
same number - XXX-XXX-2656 - that Mr. Work identified lmportantly, though,
Mr. Wiseley said that this call was in response to a message he had received, possibly
from Mr. Work. Mr. Wiseley also denied ever receiving a copy of the complaint
10. All three witnesses submitted affidavits in connection with the parties’
27Hrg., Jan. 16, 2018, Pltf.’s Ex. 2.
respective filings. Both of the Wiseleys’ affidavits were attached to each
defendant’s motion. Mrs. Wiseley’s affidavit states that she is the registered agent
for T&D, resided at 5 Minshall Circle, Glen Mills, Pennsylvania at all relevant times,
received no documents related to this action at any time, and was unaware of this
litigation until around the time People First was served with a wage attachment28
Mr. Wiseley states in his affidavit that he is an “authorized representative” of People
First, T&D, and TWI.29 He further states that an address in Lansdowne,
Pennsylvania that Doherty claimed was listed with the Pennsylvania Secretary of
State as TWI’s registered address was his late mother’s home address.30 He denied
receiving any materials related to this litigation, including the complaint and notices
of default judgment, at any address or through his former attorney, and only became
aware of this matter around the time the wage attachment was filed against him with
People First.?’l Finally, the only other activity he recalled regarding the matter after
October 24, 2011,32 was receiving a “communication” from someone he believed
was a debt collector, whom he did not believe was an attorney.33 He “might” have
28D.I. 40-43 at Ex. I.
331d.
3°Id.
31 Id.
33 October 24, 2011 is the date when Michael Arrington, Esquire, acting for Mr.
Wiseley and the corporate entities, responded to a demand letter from Doherty’s
initial attorneys, Ciconte, Wasserman & Scerba, LLC., D.I. 40-43 at EXS. A, B.
33 D.I. 40-43.
9
forwarded a letter from his previous attorney, Michael Arrington, Esquire to that
person, who never responded34 Mr. Wiseley did not believe that the communication
involved a lawsuit.35
11. Mr. Work’s affidavit is attached to Doherty’s answer to each of the
motions.36 ln it he detailed his efforts to serve each of the defendants. With respect
to People First and T&D, he said that Mr. Wiseley was listed as the registered agent
for each company, but since he did not live in Delaware contrary to Delaware’s
requirement for registered agents, he could not be served as the registered agent in
Delaware.37 Further, the registered address for each company was not the
company’s actual business address, resulting in multiple unsuccessful attempts at
service by the Sheriff.E’8 According to the Delaware Secretary of State, TWl is not a
registered Delaware corporation39 Nonetheless, it is listed with the Pennsylvania
Secretary of State as a foreign corporation from Delaware with Thomas Wiseley
serving as an officer and a business address in Delaware.40 lt also had as its
registered address the address in Lansdowne, Pennsylvania that Mr. Wiseley
341d.
331d.
36D.l. 53-56 at Ex. A.
33Ia’.
331¢1’.
391d_
4°1d.
10
identified as his later mother’s address41 For those reasons service was made on the
three corporations through the Delaware Secretary of State pursuant to 8 Del. C. §
321(b).42 Mr. Work stated he was certain the Mr. Wiseley received service of the
complaint because Mr. Wiseley would not have called him unless he had received
and reviewed the complaint since Mr. Wiseley would not have had his name and
telephone number otherwise.43 Finally, he stated that he also sent Mr. Wiseley the
Direction for Entry of Default Judgment at his home address on February 9, 2015,
which was not returned as undeliverable.44
12. The Court first turns to the question of whether the evidence presented
at the hearing together with the affidavits constitute evidence “satisfactory to the
court” of service by mail. lt does. ln answering this question, the Court is mindful
that, because of the posture of the case - defense motions to vacate default judgments
under Rule 60(b) _ the burden is on the defendants to show that they acted in a
reasonably prudent fashion, in other words, that any neglect was excusable.45
Nevertheless, even if the burden were reversed, the Court’s holding would remain
the same.
13. The starting point of the Court’s analysis is the FedEx package
4' Id.
421@"
431¢2'.
44101'.
43 Perry at *1.
11
containing the complaint and the FedEx delivery statement On a certainty of
delivery scale, the Court finds that the FedEx delivery falls somewhere between the
experience based, common sense presumption of delivery to which ordinary mail is
entitled and the certainty that a signed receipt provides. The Court accepts the logic
of Mr. Work’s argument that Mr. Wiseley would not have known to call him if he
had not received the complaint Mr. Work was not Doherty’s attorney when this
dispute arose and, but for Mr. Work’s representation of Doherty in this case, there is
no evidence in the record that Mr. Wiseley even knew Mr. Work existed. Further,
it strains logic to believe that the September 2nd telephone call from Mr. Wiseley to
Mr. Work, which both parties agree occurred and is confirmed by Mr. Work’s
telephone records, did not include a discussion of the complaint The complaint
initiating this lawsuit undoubtedly would have been the single most significant topic
of conversation between the two men. lt is inconceivable to the Court that it was
not discussed Thus, the Court finds Mr. Wiseley’s testimony that when he called
Mr. Work he was returning a call from some unknown person, did not know if he
was talking to Mr. Work or not, and did not discuss the complaint with whomever
he called not credible. Additionally, the Court notes that, although Mr. Work’s
telephone records cover only the period from August 23, 2014 to September 22,
2014, no attempt was made to have l\/lr. Wiseley identify any call from Mr. Work’s
business telephone to any Wiseley associated telephone number from those
12
records.46 Certainly, the records do not show any call from Mr. Work to the XXX-
XXX-2656 number.47 There is simply no evidence that Mr. Work called Mr.
Wiseley first Accordingly, the Courts finds that there is evidence “satisfactory to
the court” that Mr. Wiseley did receive personal delivery of the complaint
14. The Court, having found that Mr. Wiseley received personal delivery
of the complaint, further finds that in doing nothing in response to the complaint he
did not act with reasonable diligence. His conduct was not that of a reasonably
prudent person under the circumstances so as to excuse his neglect For that reason,
the Court does not address whether there is an arguably meritorious defense and
whether Doherty would suffer substantial prejudice by granting the motions.48
15. With respect to the corporate defendants, the Court finds that they were
properly served under the law and that the Wiseleys failure to maintaining current,
legally qualified registered agents and/or properly registered addresses for their
companies does not constitute excusable neglect The Court finds this neglect
particularly inexcusable in light of Mr. Wiseley’s role with the various companies.
43Hrg., Jan. 16, 2018 at Pltf.’s Ex. 1.
43Ia'.
43 Perry at *1.
13
THEREFORE, the Motions of People First lnsurance, Inc., T & D lnsurance,
Inc., Thomas Wiseley lnsurance, Inc., and Thomas Wiseley to Vacate Default
Judgment and Allow the Filing of an Answer each are DENIED.
IT IS SO ORDERED. q
Fe{ris w. wh``§iioh, J.
14