v. Johnston
2018 COA 44
Colo. Ct. App.2018Background
- Plaintiffs Richard and Vicky Minshall sued Aries Staffing LLC and David K. Johnston, alleging Aries owed loans and that Johnston was liable as Aries’ alter ego and via other tort theories. Johnston was not an obligor on the loans.
- Plaintiffs served Aries via its registered agent, Incorp Services, Inc. (Incorp); Aries defaulted and a default judgment was entered and not appealed.
- Plaintiffs could not personally serve Johnston after multiple attempts and moved for substituted service under C.R.C.P. 4(f); the district court initially required identification of a person and then authorized substituted service on Incorp.
- Incorp was handed process (a second time) and plaintiffs also mailed process to Johnston’s last known address; Johnston did not respond and the court entered default judgment against him.
- Months later Johnston, proceeding pro se, moved to set aside the default judgment asserting lack of proper service; the district court denied the motion and Johnston appealed.
- The Court of Appeals agreed plaintiffs showed due diligence under Rule 4(f) but found the record insufficient to determine whether service on Incorp was "reasonably calculated to give actual notice" to Johnston, a required predicate for substituted service; the case was remanded for that determination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs exercised due diligence before seeking substituted service under C.R.C.P. 4(f) | Minshalls: investigators tried multiple addresses, workplaces, and contacts; due diligence satisfied | Johnston: Minshalls knew his location/that he wasn’t affiliated with Aries, so they lacked due diligence | Court: Due diligence requirement satisfied on this record |
| Whether the designated "person" for substituted service (Incorp) was proper under Rule 4(f) | Minshalls: Incorp was Aries’ registered agent and Johnston was a co-owner/co-founder, so Incorp was appropriate | Johnston: Serving Incorp was improper because he had ended affiliation with Aries (and thus Incorp would not reasonably notify him) | Court: Argument not preserved below; not decided on appeal |
| Whether service on Incorp was "reasonably calculated to give actual notice" to Johnston (Rule 4(f) central requirement) | Minshalls: Johnston’s co-ownership of Aries made service on Incorp reasonably calculated to give him notice | Johnston: Co-ownership did not make Incorp an appropriate conduit and he received no notice | Court: Record insufficient to determine; remanded for district court to decide with possible evidentiary supplementation or hearing |
| Effect if substituted service was improper | Minshalls: substituted service was proper; judgment stands | Johnston: judgment void for lack of personal jurisdiction and must be set aside | Court: If district court finds Incorp was not proper, vacate judgment and allow defense; if proper, judgment stands (subject to appeal) |
Key Cases Cited
- In re Phillips, 139 P.3d 639 (Colo. 2006) (corporation and shareholder distinct; alter ego analysis)
- First Nat’l Bank of Telluride v. Fleisher, 2 P.3d 706 (Colo. 2000) (Rule 60(b) authority on void judgments)
- Goodman Assocs., LLC v. WP Mountain Props., LLC, 222 P.3d 310 (Colo. 2009) (burden and standard for proving a judgment is void)
- People v. Bergerud, 223 P.3d 686 (Colo. 2010) (liberal construction of pro se filings guidance)
- Estate of Stevenson v. Hollywood Bar & Cafe, Inc., 832 P.2d 718 (Colo. 1992) (issues raised first on appeal generally not considered)
- Silverview at Overlook, LLC v. Overlook at Mt. Crested Butte Ltd. Liab. Co., 97 P.3d 252 (Colo. App. 2004) (same)