Tenants of 1974 Lakeland Acres Rd., Drasco, Ark. v. U.S. Bank
2017 Ark. App. 362
| Ark. Ct. App. | 2017Background
- Thomas Kelso executed a mortgage in 2006; U.S. Bank later acquired the mortgage and sued to foreclose in October 2012 for payments default since 2008.
- U.S. Bank attempted mailed service to a P.O. Box in Searcy and to the mortgaged property; those mailings were unsuccessful.
- On December 6, 2012, U.S. Bank filed an affidavit requesting a Rule 4(f) warning order, attaching USPS receipts and a green card; the affidavit stated a ‘‘diligent inquiry’’ and an internet search had been performed.
- The trial court issued a warning order the same day, U.S. Bank published the order twice and mailed a copy to the P.O. Box (returned Unclaimed); Kelso did not appear and a default judgment and foreclosure decree were entered in May 2013.
- Kelso moved (amended) to set aside the default judgment in 2014, arguing service was defective because the affidavit did not show the required diligent inquiry; the trial court denied relief and Kelso appealed.
Issues
| Issue | Plaintiff's Argument (Kelso) | Defendant's Argument (U.S. Bank) | Held |
|---|---|---|---|
| Whether Rule 4(f) service by warning order was valid | Affidavit failed to show specific steps of diligent inquiry; thus constructive service was invalid | Affidavit and attached USPS documents plus later-discovered evidence (P.O. Box mailings; prior correspondence) show reasonable attempts and justified warning order | Reversed: affidavit at time of warning order did not demonstrate diligent inquiry; strict compliance required |
| Whether after-acquired evidence (later mail receipts, borrower correspondence) cures initial deficiency | Later evidence cannot retroactively validate warning order; inquiry must be shown when the order issues | Later-discovered documents prove actual attempts and knowledge of P.O. Box address | Held for Kelso: court limited to materials presented when warning order issued; later evidence irrelevant |
| Whether contractual notice provision or borrower’s failure to update address estops challenge | Contractual duty to notify mortgage servicer irrelevant to due-process service requirements | Reliance on mortgage notice clause and discovery refusals should bar challenge | Rejected: not raised below and legally irrelevant to Rule 4(f) diligent-inquiry requirement |
| Whether default judgment is void for lack of jurisdiction due to defective service | Void because constructive service did not comply with Rule 4(f) requiring demonstrated diligent inquiry | Judgment should be valid because service and publication occurred | Held: default judgment void for lack of jurisdiction; trial court erred in denying motion to set aside |
Key Cases Cited
- McGraw v. Jones, 367 Ark. 138 (court disfavors defaults; strict compliance required)
- Nucor Corp. v. Kilman, 358 Ark. 107 (questions whether default judgment is void reviewed de novo)
- Scott v. Wolfe, 2011 Ark. App. 438 (diligent-inquiry requirement for warning orders; mere conclusory affidavit insufficient)
- XTO Energy, Inc. v. Thacker, 2015 Ark. App. 203 (affidavit must describe steps taken to locate defendant)
- Billings v. U.S. Bank Nat’l Ass’n, 2016 Ark. App. 134 (diligent-inquiry must be shown before warning order issues)