Viking Electric Supply, Inc., Respondent, vs. WCNJ Enterprises, Inc., d/b/a Eagle Electric Enterprises, Inc., et al., Appellants.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C5-02-1749

 

Viking Electric Supply, Inc.,

Respondent,

 

vs.

 

WCNJ Enterprises, Inc., d/b/a Eagle Electric Enterprises, Inc., et al.,

Appellants.

 

Filed July 8, 2003

Reversed and remanded

Halbrooks, Judge

 

 

St. Louis County District Court

File No. CX02602115

 

Michael P. Coaty, John A. Markert, Coleman, Hull & Van Vliet, PLLP, 8500 Normandale Lake Blvd., Suite 2110, Minneapolis, MN 55437 (for respondent)

 

William D. Paul, 1217 East 1st Street, Duluth, MN 55805 (for appellants)

 

 

            Considered and decided by Anderson, Presiding Judge, Peterson, Judge, and Halbrooks, Judge.

U N P U B L I S H E D   O P I N I O N

HALBROOKS, Judge

Appellant argues that the district court erred by (1) finding that service of process was effective under Minn. R. Civ. P. 4.03 and (2) permitting inadmissible hearsay into evidence.  Because we conclude that the record is not sufficient for a determination of the issues, we reverse and remand.

FACTS

Appellant William Pollard (Pollard) is an officer of appellant WCNJ Enterprises, Inc., d/b/a Eagle Electric Enterprises, Inc. (Eagle).  Pollard is alleged to have executed and delivered to respondent Viking Electric Supply (Viking) a personal guarantee pursuant to which he unconditionally promised to pay Viking all payments Eagle owed Viking for any extension of credit to Eagle.  When Viking was not paid, it commenced a civil action against Pollard and Eagle.  

Process server E.J. Anderson-Dahl certified by affidavit that on May 9, 2002, she served Pollard and Eagle by personally delivering a copy of the summons and complaint to John Hedtke, an attorney authorized by Pollard to accept service of process.  Because Pollard did not serve an answer on Viking within the proper time limit, the district court ordered default judgment against Pollard and Eagle on August 5, 2002.  Pollard moved to vacate the judgment, and the district court ordered a stay of execution of the default judgment until Pollard's motion could be heard.  Pollard's pro se motion requested vacation of the judgment against him, personally, but did not reference the judgment against Eagle.  In addition, the motion did not cite any legal or factual basis to vacate the default judgment. 

A hearing on Pollard's motion took place on September 9, 2002.  Pollard conceded that he had authorized service on his attorney but denied that Hedtke is his attorney.  Pollard testified that his attorney is William Paul and that Hedtke is a co-tenant in the same office.  The court then stated:

The problem for the Court isthere are a number of problems, Mr. Pollard, for the Court.  Number one, you've asked for the vacating of the default Judgment, but you've stated no reason why.  All I have is a Notice of Motion and Motion to Vacate, but there's no Affidavits, there's no explanation, there's no legal arguments as to why it should be vacated.

 

* * * *

 

* * *  That has to be filed with the documents so that [Viking] can then come to Court prepared and ready to argue.  He can't come in and argue against something he doesn't know is existing.

 

Despite Pollard's failure to cite a written legal basis in support of his motion, Viking anticipated the need for testimony from Anderson-Dahl.  She was present for the hearing, and the court heard her testimony.

Anderson-Dahl testified that Viking hired her to serve both Pollard and Eagle.  From March 25 through April 17, Anderson-Dahl attempted service upon Pollard at several different addresses.  On one occasion, Anderson-Dahl saw Pollard in a public location and told him that she had papers to serve on him.  After first suggesting that she serve his wife, Pollard then stated that he would call her or that she should call him.  They attempted to call each other several times.  On May 9, Pollard said on the phone, "E.J., I've been out of town; just bring the documents over to my attorney."  Anderson-Dahl testified:

I knew [his attorney was] an attorney in the office where his wife works as a paralegal * * * .  In my mind his attorney was William Paul, but when I asked him he said, leave them with John Hedtke.

 

Anderson-Dahl then testified:

He's looking at me funny, so I'm hoping that I'm remembering correctly.  The reason I'm saying that is because in my mind William Paul was his attorney, and when I went into the office, I know that William Paul is over here and John Hedtke is over here, and I was going to John Hedtke.

 

* * * *

 

I went up to [Hedtke] and I stated that I had legal documents to be served on Mr. Pollard and on the business; that he and I had been playing phone tag; I had spoken to [Pollard] and [he] had authorized me to leave the documents with his attorney.  Mr. Hedtke stated to me, well, I can't take these.  I said, well, I just got off the phone with [Pollard]; why don't you give him a call and get authorization.  He said, well, what have you got there.  So I handed him the documents.  He leafed through them.  He said, oh, I can take these. 

 

Pollard was the only other witness to testify.  At the conclusion of the hearing, the court lifted the stay of execution on the default judgment stating

that the testimony of Ms. E.J. Anderson-Dahl is credible.  The Court notes that Mr. Hedtke would be the likely and logical person for you to direct the service of the documents to since Mr. Hedtke is a bankruptcy expert.  Testimony was provided by Ms. Anderson-Dahl that there was a contemplation of bankruptcy, and therefore on that basis and on the basis that the documents filed by you (Pollard) do not indicate any defense or any reason why the Court should vacate the default Judgment beyond an allegation of improper service the Court sustains the service and the default Judgment stands.

 

The court also filed a written order September 12, 2002.  This appeal follows.

D E C I S I O N

 

Pollard seeks to vacate the default judgment against him, personally, and against Eagle on the ground that the substituted service under Minn. R. Civ. P. 4.03 was ineffective.  Because service was ineffective, Pollard argues, the judgment is void for lack of jurisdiction.  "If service of process is invalid, the district court lacks jurisdiction to consider the case, and it is properly dismissed."  Leek v. Am. Express Prop. Cas., 591 N.W.2d 507, 509 (Minn. App. 1999) (citations omitted), review denied (Minn. July 7, 1999).  Appellate courts will not disturb a district court's decision on a motion to vacate a default judgment absent an abuse of discretion.  Imperial Premium Fin., Inc. v. GK Cab Co., 603 N.W.2d 853, 856-57 (Minn. App. 2000).  When there is conflicting evidence, the question whether service was made is one of fact, and the court's findings on that question shall not be set aside unless clearly erroneous.  See Minn. R. Civ. P. 52.01 (stating that findings of fact shall not be set aside unless clearly erroneous).  But the question whether the service of a summons and complaint was effective is a question of law, subject to de novo review.  Amdahl v. Stonewall Ins. Co., 484 N.W.2d 811, 814 (Minn. App. 1992), review denied (Minn. July 16, 1992). 

            Minn. R. Civ. P. 4.03 sets forth the manner of effective service of process and the persons who may receive service of process.  Under Minn. R. Civ. P. 4.03(a), service is proper

[u]pon an individual by delivering a copy to the individual personally or by leaving a copy at the individual's usual place of abode with some person of suitable age and discretion then residing therein.

 

In the alternative, service is proper "[i]f the individual has, pursuant to statute, consented to any other method of service or appointed an agent to receive service of summons."  Minn. R. Civ. P. 4.03(a).  "Under both rule 4.03(a) and rule 4.05, service on a party's attorney is ineffective unless the party has previously appointed the attorney to accept service."  Allstate Ins. Co. v. Allen, 590 N.W.2d 820, 823 (Minn. App. 1999) (citation omitted).  Substantial compliance with Minn. R. Civ. P. 4.03 combined with actual notice of a lawsuit will subject a defendant to personal jurisdiction.  Thiele v. Stich, 425 N.W.2d 580, 584 (Minn. 1988); see Amdahl, 484 N.W.2d at 814 (applying this rule to service on a corporation).  But the "actual notice" exception has been recognized only in cases involving substitute service at a defendant's residence.  Turek v. A.S.P. of Moorhead, Inc., 618 N.W.2d 609, 612 (Minn. App. 2000) (citing Thiele, 425 N.W.2d at 584) (other citation omitted), review denied (Minn. Jan. 26, 2001).

Here, Pollard does not dispute that he expressly authorized his attorney to receive service.  But he testified that Hedtke is not his attorney.  The court heard testimony from Anderson-Dahl that she served Hedtke, the person she believed Pollard authorized her to serve.  Unfortunately, Hedtke, perhaps the most significant witness in this matter, did not testify or appear by affidavit. 

Where there is a conflict of evidence, it is for the district court to determine the facts, and we will not disturb findings where evidence reasonably supports the facts.  Peterson v. Johnston, 254 N.W.2d 360, 362 (Minn. 1977).  But this record does not present a question of credibility because Anderson-Dahl's testimony did not conflict with Pollard's.  Both agreed that Pollard expressly authorized Anderson-Dahl to serve his attorney.  The conflict remains over who Pollard's attorney is, but Anderson-Dahl's testimony, even if more credible, cannot alone support the conclusion that service of process on Pollard was proper.  On the unique circumstances of this case, we conclude that the court had insufficient evidence before it that reasonably supported the conclusion that service of process was proper. 

We, therefore, reverse and remand for an additional hearing where both parties can present evidence to the court.  As a result, we do not reach Pollard's argument that the district court improperly considered hearsay evidence or Viking's claim that Eagle cannot raise for the first time on appeal the issue of whether the corporation was properly served.

Reversed and remanded.