Steese v. SML Relocation LLC, 5:15-cv-02681

Plaintiffs (Ohio residents) sued SML Relocation, LLC (Texas LLC) in Ohio state court after their household goods allegedly were delivered "destroyed" following an interstate move; complaint sought >$25,000 and declaratory and tort relief.
Initial service to SML’s Texas registered agent failed; plaintiffs then served the Ohio Secretary of State under Ohio Rev. Code § 1705.58, and the secretary “claimed” the summons on June 30, 2015.
Plaintiffs obtained a default judgment in state court on November 25, 2015 for $102,569.75; SML first received notice of the suit and the default judgment on December 4, 2015.
SML removed the action to federal court on December 23, 2015 asserting federal-question and diversity jurisdiction; plaintiffs moved to remand solely arguing untimely removal.
SML moved to vacate the state-court default judgment under Fed. R. Civ. P. 60(b)(4), arguing the state court lacked personal jurisdiction because service under § 1705.58 was improper.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Timeliness of removal	Removal deadline began June 30, 2015 when secretary of state claimed service; removal therefore untimely	Removal deadline began upon SML’s receipt of the default judgment and complaint on Dec. 4, 2015; removal within 30 days	Removal was timely (filed Dec. 23, 2015) because SML did not receive proper service until Dec. 4
Validity of service via Ohio secretary of state (§ 1705.58)	Service on secretary of state was effective when claimed	SML does not "transact business" in Ohio and was not subject to § 1705.58 service	Court found SML’s unrefuted evidence compelling and concluded § 1705.58 service was not effective against SML
Effect of improper service on default judgment	Default judgment should stand	If service was improper, default judgment is void and must be vacated under Rule 60(b)(4)	Default judgment void for lack of personal jurisdiction; vacated under Rule 60(b)(4)
Appropriate forum for Rule 60 relief after removal	Rule 60 relief must be sought in state court	Federal court may consider Rule 60 motion after timely removal	Federal court may decide Rule 60 motion after timely removal; SML’s Rule 60(b)(4) motion granted

Jalapeno Prop. Mgmt., L.L.C. v. Dukas, 265 F.3d 506 (6th Cir. 2001) (a default judgment must be set aside if service of process was improper)
United Student Aid Funds, Inc. v. Espinosa, 130 S. Ct. 1367 (U.S. 2010) (a court must vacate a judgment that is void)
State ex rel. Physicians Comm. for Responsible Medicine v. Ohio Dept. of Commerce, 843 N.E.2d 174 (Ohio 2006) (foreign corporation must have permanent, continuous, and regular activities to be "doing business" in Ohio for service purposes)