Morgan v. Big Creek Farms of Hickory Flat, Inc.
2016 Ark. App. 121
| Ark. Ct. App. | 2016Background
- Big Creek contracted to build a log home for Raymond and Katie Morgan; at completion in Dec. 2009 the Morgans owed $25,147.76 and did not pay.
- Big Creek sued the Morgans on Sept. 26, 2011; multiple attempts at personal and mailed service at the Heigle Road address failed.
- Investigators discovered utility bills addressed to a Chester Morgan at a McCrory address; sheriff attempts there also failed and certified/first-class mailings to Heigle were returned.
- Big Creek obtained an extension to effect service, filed an affidavit recounting its efforts, secured issuance and publication of a warning order under Ark. R. Civ. P. 4(f), and mailed the warning materials to the Heigle address (mail returned).
- The Morgans never answered; the trial court entered default judgment in April 2012. The Morgans learned of the judgment in 2013 and moved in Nov. 2014 to set it aside; the trial court denied the motion and the Morgans appealed.
Issues
| Issue | Plaintiff's Argument (Morgans) | Defendant's Argument (Big Creek) | Held |
|---|---|---|---|
| Whether service by warning order under Ark. R. Civ. P. 4(f) was sufficient | Warning-order service was invalid because Big Creek did not conduct a diligent inquiry (knew Katie’s phone number, should have used it; should have used McCrory address) | Big Creek performed a diligent inquiry: multiple sheriff attempts, private investigator work, returned mail, and published warning order; Heigle was last known address | Service by warning order was valid; Heigle was last known address and Rule 4(f) satisfied |
| Whether the extension of time to serve was improperly granted | Extension was improper because Big Creek allegedly knew how to contact Morgans earlier; also the extension order lacks a proper judge’s signature | Extension was appropriate; no preserved ruling on good-cause challenge and no evidence the judge’s signature was forged | Trial court did not abuse discretion; issue of good cause not preserved and signature claim unsupported |
| Whether due process was violated by the method of service | Morgans contend they were denied constitutionally adequate notice | Big Creek contends warning-order service comported with due process because Rule 4(f) was followed | Due process satisfied by proper Rule 4(f) service |
| Whether Morgans demonstrated a meritorious defense sufficient to set aside default | Even if other grounds existed, Morgans claim they had a meritorious defense to Big Creek’s claim | Big Creek notes a meritorious defense alone is insufficient without satisfying Rule 55(c) grounds | Court need not reach meritorious-defense question because no Rule 55(c) ground for relief was shown |
Key Cases Cited
- Nucor Corp. v. Kilman, 358 Ark. 107 (establishes de novo review when judgment claimed void for insufficiency of service)
- Shotzman v. Berumen, 363 Ark. 215 (service of process necessary for personal jurisdiction; service rules strictly construed)
- Smith v. Sidney Moncrief Pontiac, Buick, GMC Co., 353 Ark. 701 (same principle on strict construction of service requirements)
- Carruth v. Design Interiors, Inc., 324 Ark. 373 (service rules in derogation of common law must be strictly complied with)
- Scott v. Wolfe, 384 S.W.3d 609 (mere recitation of diligent inquiry in affidavit insufficient; burden on plaintiff to show actual efforts)
- Smith v. Edwards, 648 S.W.2d 482 (party seeking constructive service bears burden to demonstrate attempts to locate defendant)
- McGraw v. Jones, 238 S.W.3d 15 (defendant must first establish an applicable Rule 55(c) ground before meritorious defense considered)
- West v. West, 288 S.W.3d 680 (same: meritorious defense alone does not justify setting aside default without Rule 55(c) grounds)