John W. Judge Co. v. USA Freight, L.L.C.John W. Judge Co. v. USA Freight, L.L.C.
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY
JOHN W. JUDGE COMPANY
Plaintiff-Appellant
v.
USA FREIGHT, LLC
Defendant-Appellee
: Appellate Case No. 27708
: Trial Court Case No. 2016-CVF-1286
: (Civil Appeal from Municipal Court)
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O P I N I O N
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RICHARD A. BOUCHER, Atty. Reg. No. 0033614 and JULIA C. KOLBER, Atty. Reg. No. 0078855, 12 West Monument Avenue, Suite 200, Dayton, Ohio 45402
Attorneys for Plaintiff-Appellant
NATHAN J. STUCKEY, Atty. Reg. No. 0086789, 735 North Limestone Street, Springfield, Ohio 45503
Attorney for Defendant-Appellee
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WELBAUM, P.J.
Facts and Course of Proceedings
{¶ 2} On March 21, 2016, Judge filed a complaint against USA Freight, LLC (“USA Freight”) for money damages arising from alleged unpaid engineering services in the amount of $4,405.05. Judge requested the complaint and summons be served to USA Freight via certified mail at the address of USA Freight’s registered statutory agent, Mukhabbat Vasfieva. On March 30, 2016, the trial court received the certified mail receipt, showing that the complaint and summons had been delivered and signed for by “Mukhabbat Koch” on March 24, 2016.
{¶ 3} USA Freight failed to file a response to Judge’s complaint within 28 days as required by Civ.R. 12. Accordingly, on June 22, 2016, Judge moved the trial court to enter a default judgment in its favor pursuant to Civ.R. 55. On June 29, 2016, the trial court granted Judge’s motion and entered a default judgment against USA Freight for the amount requested plus interest and costs. After obtaining a certificate of judgment, on January 18, 2017, Judge obtained a writ of execution ordering the court bailiff to levy on the goods and chattels owned by USA Freight.
{¶ 5} In addition to the affidavit, USA Freight attached several invoices from Judge and copies of checks that USA Freight made payable to Judge. USA Freight also attached a written description and map of the property on which Judge provided its engineering services, indicating that Garrett Day, LLC owned part of the property on which Judge’s services were rendered.
{¶ 6} Judge filed a response opposing the motion to vacate on grounds that USA Freight failed to establish the necessary elements for such relief under Civ.R. 60(B). The trial court then held an evidentiary hearing on the motion to vacate. At the hearing, the parties submitted no additional evidence, but simply gave oral arguments. During that time, USA Freight explained that the certified mail receipt was signed by the mother of USA Freight’s owner. USA Freight explained that the owner’s mother is not part of the
{¶ 7} At the close of the hearing, the trial court invited the parties to submit post-hearing memoranda in support of their positions. After receiving the parties’ memoranda, on June 14, 2017, the trial court issued a decision and entry granting USA Freight’s motion to vacate. In granting the motion, the trial court found excusable neglect, noting that USA Freight’s conduct was not willful and that it did not exhibit a disregard for the judicial system. The trial court further found that USA Freight had demonstrated that it had a meritorious defense to Judge’s claim for money damages.
{¶ 8} Judge now appeals from the trial court’s decision granting USA Freight’s motion to vacate, raising a single assignment of error for review.
Assignment of Error
{¶ 9} Judge’s sole assignment of error is as follows:
THE TRIAL COURT ERRED IN GRANTING DEFENDANT-APPELLEE’S CIV.R. 60(B) MOTION TO VACATE JUDGMENT.
{¶ 10} Under its sole assignment of error, Judge contends that the trial court erred
Standard of Review
{¶ 11} “A motion for relief from judgment under Civ.R. 60(B) is addressed to the sound discretion of the trial court, and that court’s ruling will not be disturbed on appeal absent a showing of abuse of discretion.” Griffey v. Rajan, 33 Ohio St.3d 75, 77, 514 N.E.2d 1122 (1987). “ ‘Abuse of discretion’ has been defined as an attitude that is unreasonable, arbitrary or unconscionable.” AAAA Enterprises, Inc. v. River Place Community Urban Redevelopment Corp., 50 Ohio St.3d 157, 161, 553 N.E.2d 597 (1990), citing Huffman v. Hair Surgeon, Inc., 19 Ohio St.3d 83, 87, 482 N.E.2d 1248 (1985). “It is to be expected that most instances of abuse of discretion will result in decisions that are simply unreasonable, rather than decisions that are unconscionable or arbitrary.” Id. “A decision is unreasonable if there is no sound reasoning process that would support that decision.” Id. “It is not enough that the reviewing court, were it deciding the issue de novo, would not have found that reasoning process to be persuasive, perhaps in view of countervailing reasoning processes that would support a contrary result.” Id.
Civ.R. 60(B)
{¶ 12} In order to obtain relief from a final judgment under Civ.R. 60(B), the movant
{¶ 13} If a motion to vacate “ ‘contains allegations of operative facts which would warrant relief under [Civ.R. 60(B)], the trial court should grant a hearing to take evidence and verify these facts before it rules on the motion.’ ” Coulson v. Coulson, 5 Ohio St.3d 12, 16, 448 N.E.2d 809 (1983), quoting Adomeit v. Baltimore, 39 Ohio App.2d 97, 105, 316 N.E.2d 469 (8th Dist.1974). “Although a movant is not required to support its motion with evidentiary materials, the movant must do more than make bare allegations that he or she is entitled to relief.” Kay v. Marc Glassman, Inc., 76 Ohio St.3d 18, 20, 665 N.E.2d 1102 (1996), citing Rose Chevrolet, Inc. v. Adams, 36 Ohio St.3d 17, 20, 520 N.E.2d 564 (1988). “Thus, in order to convince the court that it is in the best interests of justice to set aside the judgment or to grant a hearing, the movant may decide to submit evidentiary materials in support of its motion.” Id. “ ‘[G]ood legal practice dictates that the movant must do all that he can to present allegations of operative facts to demonstrate that he is filing his motion within a reasonable period of time; that he is entitled to relief for one of the grounds specified in Civil Rule 60(B)(1) through (5); and that he has a valid defense.’ ”
{¶ 14} “Civ.R. 60(B) is a ‘remedial rule to be liberally construed so that the ends of justice may be served.’ ” Wilson v. Lee, 172 Ohio App.3d 791, 2007-Ohio-4542, 876 N.E.2d 1312, ¶ 15 (2d Dist.), quoting Kay at 20. Therefore, “[w]here timely relief is sought from a default judgment and the movant has a meritorious defense, doubt, if any, should be in favor of the motion so that cases may be decided on their merits.” GTE Automatic at paragraph three of the syllabus. “Indeed, the law does not favor judgments by default, and it is ‘a general tenet of Ohio jurisprudence * * * that cases should be decided on their merits whenever possible.’ ” Wilson at ¶ 15, quoting Hopkins v. Quality Chevrolet, Inc., 79 Ohio App.3d 578, 583, 607 N.E.2d 914 (4th Dist.1992).
Excusable Neglect – Civ.R. 60(B)(1)
{¶ 15} Because Judge does not dispute the existence of a meritorious defense or that USA Freight filed its motion to vacate within a reasonable time, the only issue before this court is whether it was an abuse of discretion for the trial court to conclude that USA Freight was entitled to relief under Civ.R. 60(B)(1) on grounds of “excusable neglect.”
{¶ 16} In considering whether neglect is excusable under Civ.R. 60(B)(1), a court must consider “all the surrounding facts and circumstances.” UBS Real Estate Securities, Inc. v. Teague, 191 Ohio App.3d 189, 2010-Ohio-5634, 945 N.E.2d 573, ¶ 28 (2d Dist.), citing Griffey, 33 Ohio St.3d at 79, 514 N.E.2d 1122. “The phrase ‘excusable neglect’ in Civ.R. 60(B)(1) ‘is an elusive concept which has been difficult to define and to apply.’ ” Id., quoting Kay, 76 Ohio St.3d at 20, 665 N.E.2d 1102. The Supreme Court
{¶ 17} This court has held that “ ‘[e]xcusable neglect’ in the context of a Civ.R. 60(B)(1) motion generally means the failure to take the proper steps at the proper time, not in consequence of the party’s own carelessness, inattention, or willful disregard of the processes of the court, but in consequence of some unavoidable or unexpected hindrance or accident, or reliance on the care and vigilance of his counsel or on promises made by the adverse party.” Federal Nat. Mtge. Assn. v. Banks, 2d Dist. Montgomery No. 12692, 1991 WL 254652, *2 (Dec. 6, 1991). Accord Griffin v. Dream House Mtge. Corp., 2d Dist. Greene No. 08-CA-45, 2009-Ohio-2178, ¶ 29. Therefore “ ‘[c]ourts generally find excusable neglect in those instances where there are “unusual or special circumstances” that justify the neglect of a party or [the party’s] attorney.’ ” Griffin at ¶ 30, quoting Hai v. Flower Hosp., 6th Dist. Lucas No. L-07-1423, 2008-Ohio-5295, ¶ 21, quoting Vanest v. Pillsbury Co., 124 Ohio App.3d 525, 536, 706 N.E.2d 825 (4th Dist.1997).
{¶ 18} That said, “the concept of ‘excusable neglect’ must be construed in keeping with the proposition that Civ.R. 60(B)(1) is a remedial rule to be liberally construed, while bearing in mind that Civ.R. 60(B) constitutes an attempt to ‘strike a proper balance between the conflicting principles that litigation must be brought to an end and justice should be done.’ ” Colley v. Bazell, 64 Ohio St.2d 243, 248, 416 N.E.2d 605 (1980), quoting Doddridge v. Fitzpatrick, 53 Ohio St.2d 9, 12, 371 N.E.2d 214 (1978).
{¶ 19} In this case, the supporting affidavit signed by USA Freight’s General
{¶ 20} It was not until the hearing on the motion to vacate that USA Freight explained, through counsel, that service of the complaint and summons was signed for by the mother of the owner of USA Freight. USA Freight explained that the owner’s mother has no role within the company and that she happened to be present when the complaint was delivered by certified mail. USA Freight further explained that the owner’s mother understands and speaks very little English and that she did not provide the complaint to any of the family members who are involved in USA Freight’s business operations. Although no testimony or affidavits were submitted to verify this information, the trial court found USA Freight’s explanation credible and that it constituted excusable neglect under Civ.R. 60(B)(1).
{¶ 21} Judge argues that the trial court’s decision was an abuse of discretion because USA Freight failed to provide any evidence establishing that the person who received and signed for the complaint was the non-English speaking mother of USA Freight’s owner. The owner’s mother did not appear at the hearing and her name was never disclosed on the record. USA Freight also never disclosed what the owner’s
{¶ 22} Judge further argues that it was USA Freight’s responsibility to maintain a valid statutory agent who is designated to receive service of process at the agent’s listed address. Judge claims that it was indeed neglectful for USA Freight to use an address where certified mail could be received and mishandled by a non-English-speaking individual who is not affiliated with USA Freight’s business; however, Judge contends that such conduct does not constitute excusable neglect. In support of this claim, Judge cites various cases providing that “[i]nsufficient or negligent internal procedures in an organization may not compromise excusable neglect and, therefore, they may not support the vacation of a default judgment.” See, e.g., Middleton v. Luna’s Restaurant & Deli, L.L.C., 5th Dist. Stark No. 2011 CA 00004, 2011-Ohio-4388, ¶ 31, citing LaKing Trucking, Inc. v. Coastal Tank Lines, Inc., 3d Dist. Allen No. 1-83-3, 1984 WL 6241 (Feb. 9, 1984) (summons received in a corporate mail room but lost before being brought to the attention of the proper office does not rise to excusable neglect) and Miller v. Sybert, 3d Dist. Auglaize No. 2-84-13, 1985 WL 7351 (July 25, 1985) (ordinary mail delivered to defendant when mail is accessible to other persons and where it was never picked up by defendant’s friends while he was out of state does not constitute excusable neglect). Accord Andrew Bihl Sons, Inc. v. Trembly, 67 Ohio App.3d 664, 667, 588 N.E.2d 172 (4th Dist.1990) (ignoring mail for more than three months due to illness and failing to delegate a
{¶ 23} Judge further argues that the mother’s ignorance of the legal process does not amount to excusable neglect. Boling v. DiMeche & Vlado, Inc., 10th Dist. Franklin No. 07AP-146, 2007-Ohio-5795, ¶ 15, quoting United Bank & Trust v. Kaufman, 6th Dist. Wood No. WD-05-074, 2006-Ohio-2346, ¶ 12, citing Buckeye Supply Co. v. Northeast Drilling Co., 24 Ohio App.3d 134, 137, 493 N.E.2d 964 (9th Dist.1985) (“ ‘ignorance of legal requirements or inexperience with legal matters does not constitute excusable neglect’ ”).
{¶ 24} Having reviewed the record, we find that Judge has presented strong arguments in support of its position that the trial court abused its discretion in finding excusable neglect, especially in regards to USA Freight’s responsibility to maintain a valid statutory agent. “Each limited liability company [such as USA Freight] shall maintain continuously in this state an agent for service of process on the company.”
{¶ 25} Civ.R. 4.2(G) provides that, to serve a limited liability company, a plaintiff may direct service of process to “the agent authorized by appointment or by law to receive service of process[.]” “Certified mail service upon such an agent is effective upon
{¶ 26} Here, Judge served its complaint on USA Freight’s statutory agent via certified mail at the address on record with the Ohio Secretary of State. The certified mail was received at the address of USA Freight’s statutory agent and signed for by the mother of the owner of USA Freight. Under these circumstances, service of the complaint was valid. However, USA Freight did not receive notice of the complaint because the mother of USA Freight’s owner mishandled the complaint. This type of scenario has not been found to constitute excusable neglect. See, e.g., Chicago Sweeteners, Inc. v. Kantner Group, Inc., N.D.Ohio No. 3:08 CV 1928, 2009 WL 1707927 (June 17, 2009) (finding no excusable neglect where a defendant company was properly served with a complaint via certified mail to its statutory agent’s address, the certified mail was received and signed for by an administrative assistant of the defendant company, who was also the mother of the defendant company’s president, and the mother thereafter mishandled the complaint so that the defendant company never received notice of it).
{¶ 27} We agree that “[i]nsufficient or negligent internal procedures in an organization may not compromise excusable neglect and, therefore, they may not support the vacation of a default judgment.” Middleton, 5th Dist. No. 2011 CA 00004, 2011-Ohio-
{¶ 28} As previously noted, excusable neglect does not result from the party’s own carelessness, inattention, or willful disregard of the processes of the court, but in consequence of some unavoidable or unexpected hindrance or accident. Federal Nat. Mtge. Assn., 2d Dist. Montgomery No. 12692, 1991 WL 254652 at *2. Had USA Freight chosen a better statutory agent, or had better procedures been in place for receiving service of process at the statutory agent’s address, the mishandling of the complaint would likely have been avoided. Accordingly, the circumstances here do not constitute an unavoidable or unexpected hindrance or accident.
{¶ 29} While abuse of discretion is an extremely high standard of review that requires us to find the trial court’s excusable neglect decision unreasonable, we nevertheless reach that conclusion here. The trial court’s decision was unreasonable because the mishandling of the complaint was the result of USA Freight’s own negligence. When a company, such as USA Freight, designates a statutory agent to
{¶ 30} Judge’s sole assignment of error is sustained.
Conclusion
{¶ 31} Having sustained Judge’s sole assignment of error, the judgment of the trial court is reversed.
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HALL, J. and TUCKER, J., concur.
Copies mailed to:
Richard A. Boucher
Julia C. Kolber
Nathan J. Stuckey
Hon. Mia Wortham Spells