MCMAHAN v GRASSHOPPERMCMAHAN v GRASSHOPPER
Sean P. Healy, Kristian E. Nelson (argued), Joseph Hubble, Lewis Brisbois Bisgaard & Smith LLP, Phoenix, Attorneys for Grasshopper Trans, Inc.
David L. Abney (argued), Ahwatukee Legal Office, P.C., Phoenix; and Isidore Yetnikoff, Yetnikoff Law Offices, PLLC, Scottsdale, Attorneys for Brandon L. McMahan
CHIEF JUSTICE TIMMER, Opinion of the Court:
¶1 Brandon L. McMahan did not properly serve the summons and complaint in his personal injury action against Grasshopper Trans, Inc. (“Grasshopper”). Before Grasshopper appeared in the action, McMahan obtained an entry of default. We consider whether Grasshopper’s conduct after the default was entered waived the service defect as a basis for setting it aside. We hold that it did not.
BACKGROUND
¶2 In February 2023, a tractor trailer collided with safety barricades at a construction site and drove away. The barricades struck and injured McMahan, who was working at the site. The following year, McMаhan sued the tractor trailer’s owner, Grasshopper, an Illinois corporation, seeking damages for the driver’s negligence.
¶3 On March 6, 2024, McMahan attempted to serve Grasshopper’s Illinois-based statutory agent, Ljubisa Srejovic, by leaving a copy of the complaint with his assistant, Sladana Bojic, at Srejovic’s office. Bojic sent the complaint to Grasshopper that day. But Bojic was not authorized to accept service on Grasshopper’s behalf.
¶4 On April 15, 2024, McMahan applied for entry of default pursuant to
¶5 On May 21, McMahan moved for entry of default judgment. Several weeks later, on June 11, Grasshopper answered the complaint and denied owning the tractor trailer that hit the barricades. Grasshopper raised insufficiency of service of process as a potential affirmative defense, depending on further factual development.
¶6 On July 9 and again on August 21, Grasshoppеr unsuccessfully moved to set aside the entry of default under Rules 55(c) and 60(b)(1), respectively. See
¶7 On February 19, 2025, Grasshopper moved for reconsideration, arguing for the first time that McMahan’s failure to properly serve the complаint constituted good cause to set aside the entry of default under
¶8 The court of appeals accepted special action jurisdiction and granted relief, vacating the superior court’s order granting the
¶9 We granted Grasshopper’s petition for review to decide whether it waived the right to challenge the entry of default under the circumstances here, an issue of statewide importance. We have jurisdiction pursuant to
DISCUSSION
¶10 We review a ruling on a motion to set aside an entry of default for an abuse of discretion. See DeHoney v. Hernandez, 122 Ariz. 367, 371 (1979). But we review de novo all legal questions encompassed within that ruling, including whether the court acquired personal jurisdiction before entering the default, whether Grasshopper waived its objection concerning service of process, and whether the superior court’s entry of default constituted a void order. See 4QTKIDZ, LLC v. HNT Holdings, LLC, 253 Ariz. 382, 385 ¶ 5 (2022); Ruffino v. Lokosky, 245 Ariz. 165, 168 ¶¶ 9–10 (App. 2018); In re 2000 Peterbilt Tractor & Trailer, WA LIC: 19601RP, VIN: 1XPSD69X2YD479117, 240 Ariz. 450, 452 ¶ 6 (App. 2016). We accept the court’s factual findings unless they are clearly erroneous. See Ruffino, 245 Ariz. at 168 ¶ 9.
A. McMahan Did Not Properly Serve The Summons And Complaint On Grasshopper
¶11 McMahan was required to serve the summons and сomplaint on Grasshopper by delivering a copy to “a managing or general agent, or any other agent authorized by appointment or by law to receive service of process.” See
B. The Superior Court Lacked Personal Jurisdiction Over Grasshopper When The Default Became Effective, Making That Order Void From The Outset
¶13 The superior court acquired personal jurisdiction over Grasshopper only if McMahan properly served it, Grasshopper consented to jurisdiction, or it made a general appearance in the case—for example, by answering the complaint without raising an insuffiсient service defense. See Montano v. Scottsdale Baptist Hosp., Inc., 119 Ariz. 448, 452 (1978); State ex rel. Dep’t of Econ. Sec. v. Burton, 205 Ariz. 27, 29 ¶ 8 (App. 2003). “A general appearance is a waiver of notice and if a party appears in person or by attorney he submits himself to the jurisdiction of the court.” Montano, 119 Ariz. at 452 (quoting Lonning v. Lonning, 199 N.W.2d 60, 62 (Iowa 1972)).
¶14 As explained, McMahan did not properly serve Grasshopper. And although Grasshopper eventually appeared in the case, it did not do so until June 11, 2024, when it filed its answer. Thus, when the default became effective on April 29, 2024, under
¶15 Because the superior court lacked personal jurisdiction over Grasshopper when the default became effective, the entry of default was void from the outset. See Shinn v. Ariz. Bd. of Exec. Clemency, 254 Ariz. 255, 262 ¶ 27 (2022) (explaining that a judgment or order is void, rather than merely voidable, when the court lacks jurisdiction over the affected persons); Lore v. Citizens Bank of Winslow, 51 Ariz. 191, 194 (1938) (“It being admitted that there was no service of process and no appearance by the defendant, the judgment was absolutely void.”); Gordon v. Gordon, 35 Ariz. 357, 368 (1929) (stating that when a court’s jurisdiction rests on defective service, later proceedings based on that service are void). A void judgment or order has no legal effect, and a court must vacate it when an affected party seeks relief. See Springfield Credit Union v. Johnson, 123 Ariz. 319, 323 n.5 (1979); Preston, 94 Ariz. at 219; Hughes v. Indus. Comm’n, 69 Ariz. 193, 197 (1949); Gordon, 35 Ariz. at 368; Ruffino, 245 Ariz. at 168–69 ¶ 10; Austin v. State ex rel. Herman, 10 Ariz. App. 474, 476 (1969). This is so even if the party unreasonably delays in asking for relief. See Ruffino, 245 Ariz. at 168–69 ¶ 10.
¶16 McMahan nevertheless argues that Grasshopper waived its right to challenge the entry of default by (1) failing to immediately raise the insufficient service defense in a
1. Grasshopper’s Actions And Inaction After Entry Of Default Could Not And Did Not Validate The Void Entry Of Default
¶17 Before addressing McMahan’s arguments individually, we identify a flaw common to each: the premise that an affected party’s later conduct or inaction can validate a previous default order that was void when entered. It cannot.
¶18 Our decision in Lore, which the court of appeals did not cite, is instructive. There, a judgment creditor obtained an order requiring a debtor, Lore, to appear for what is now referred to as a debtor’s examination
¶19 The Court also found that Lore generally appeared in the debtor’s examination proceeding by moving to quash the order for his examination, vacate the judgment, and dismiss the action. See id. at 196–97. Consequently, we concluded that Lore waived any challenges regarding possible defects in the creditor’s post-judgment affidavit, which avowed that a writ of execution on the debtor’s leviable property had issued but was returned as unsatisfied.1 See id. at 195. But importantly, Lore’s appearancе did not retroactively cure the void default judgment underlying that proceeding. See id. at 194. To the contrary, we explained that “[a]ppearance after such a judgment is entered against a party, whether general or special, will not cure a want of jurisdiction as to the judgment previously obtained.” Id. at 194 (adding that “[a] party does not waive the question of jurisdiction or validate a void judgment by a general appearance in support of a motion to set the judgement aside”).
¶20 McMahan misreads Lore’s discussion of Lore’s appearance in the debtor-examination proceedings as holding that a defendant’s later general appearance, whenever made, retroactively validates an earlier default entered without jurisdiction. But Lore forecloses, rather than supports, that conclusion. The waiver recognized in Lore operated prospectively, applying only to the affidavit and execution that remained before the cоurt in the debtor examination proceeding. See id. It did not—and, under Lore’s express holding, could not—supply the jurisdiction the court lacked when it entered the earlier judgment. See id. A general appearance submits a party to the court’s jurisdiction from that point
¶21 That principle governs here. The default against Grasshopper became effective on April 29, 2024. Grasshopper did not appear in any form until six weeks later, on June 11, 2024, when it filed its answer. Thereafter, it defended the complaint on its merits. Whatever legal effect Grasshopper’s answer and litigation defense had, it only operated from June 11 forward. It could not cure a default that was void the moment it was entered. We apply that principle to each of McMahan’s waiver arguments below.
2. Grasshopper Did Not Waive Its Challenge To The Entry Of Default By Failing To First Raise It In A Rule 12(b)(5) Motion Or Its Answer
¶22
¶23 The court of appeals concluded that Grasshopper waived its insufficient service defense because it neither filed a
¶24 We need not decide whether Grasshopper properly preserved its insufficient-service defense in its June 11, 2024 answer under
3. Grasshopper’s General Appearance Did Not Waive The Jurisdictional Defect
¶25 McMahan alternatively argues that, even if
¶26 The common law doctrine, like
¶28 Other federal courts have applied a more categorical standard. See, e.g., Textile Banking Co. v. Rentschler, 657 F.2d 844, 850 (7th Cir. 1981) (holding that a trial court lacks discretion to vacate a default judgment under
¶29 Arizona’s rule tracks the categorical approach: once an order is shown void for lack of jurisdiction, “the court has no such discretion but must vacate the judgment.” Preston, 94 Ariz. at 219; see also Gordon, 35 Ariz. at 368; Springfield Credit Union, 123 Ariz. at 323 n.5; Hughes, 69 Ariz. at 197; Ruffino, 245 Ariz. at 168–69 ¶ 10; Austin, 10 Ariz. App. at 476. Although Arizona courts give weight to federal interpretations of analogous procedural rules, see Sholem v. Gass, 248 Ariz. 281, 286 ¶ 19 (2020), federal authority cannot override controlling Arizona Supreme Court precedent, see Sell v. Gama, 231 Ariz. 323, 330 ¶ 31 (2013); Weatherford ex rel. Michael L. v. State, 206 Ariz. 529, 532–33 ¶¶ 8–9 (2003) (“[S]tate courts are not bound by decisions of federal circuit courts . . . .”).
¶30 McMahan argues, and the court of appeals agreed, that Grasshopper waived its challenge by telling the court several times that it had been served process. See McMahan, 260 Ariz. at 527 ¶ 28. The court distinguished Preston, which held that even after a final judgment a party may “challenge a judgment on the ground that it is void for lack of jurisdiction of the parties.” See id. ¶ 29 (quoting Preston, 94 Ariz. at 219). It reasoned that the entry of default was not void in the first place, because Grasshopper had held Bojic out to McMahan and the superior court as authorized to accept service. Id. at 527–28 ¶¶ 29–31. Under that view, Grasshopper had no valid jurisdictional objection for Preston to protect. See id. ¶ 31.
¶31 Although the court of appeals did not usе the term, its holding depends on the doctrine of apparent authority. But that doctrine, properly applied, does not support the court’s conclusion. Courts measure apparent authority, like actual authority, at the time of the alleged reliance. See Koven, 128 Ariz. at 322 (explaining that apparent authority requires both a representation by the principal that another is its agent and justifiable reliance on that representation). The relevant moment here was March 6, 2024, when McMahan attempted service. Nothing in the record shows that Grasshopper had represented to McMahan, his process server, or the public by that date that Bojic was authorized to accept service on its behalf. Grasshopper’s later statements to the superior court that it had been “served” on March 6 came months afterward and after the default had become effective. Those statements, therefore, could not have induced McMahan or his process server to rely on Bojic’s apparent authority on a day that had already passed. Whatever else they show, they cannot retroactively create an appearance of authority that did not exist when service was attempted.
¶32 Because Grasshopper never held Bojic out as authorized to accept service at the only time that could matter, the entry of default was void for the same reason explained above, see supra ¶¶ 13–21, and Grasshopper’s later statements do not change that. The court of appeals’ contrary conclusion depends entirely on treating those later statements as if they operated retroactively, which is the same error addressed throughout this opinion. See supra ¶¶ 17–21, 25–26.
¶34 In sum, whether the default was valid depends on the jurisdictional facts аs they existed when it became effective on April 29, 2024, not on anything Grasshopper did or said afterward. The superior court correctly set aside the default because it lacked personal jurisdiction over Grasshopper at the time of entry.2
¶35 The court of appeals erred by reversing the superior court’s order setting aside the entry of default. Thus, we vacate the court of appeals’ opinion and reinstate the superior court’s order granting Grasshоpper’s motion to vacate the entry of default.