Previte v. Piunno
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[Cite as Previte v. Piunno, 2010-Ohio-1747.] Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA JOURNAL ENTRY AND OPINION Nos. 93196 and 93329 MYRNA PREVITE PLAINTIFF-APPELLEE vs. KEVIN M. PIUNNO, ET AL. DEFENDANTS [APPEAL BY: LLC] MIDWEST REAL ESTATE PARTNERS, DEFENDANT-APPELLANT JUDGMENT: REVERSED AND REMANDED Civil Appeals from the Cuyahoga County Common Pleas Court Case No. CV-670857 BEFORE: Sweeney, J., McMonagle, P.J., and Blackmon, J. RELEASED: April 22, 2010 JOURNALIZED: ATTORNEYS FOR APPELLANT MIDWEST REAL ESTATE PARTNERS, LLC Keith R. Kraus Grant J. Keating Dworken & Bernstein Co., L.P.A. 60 South Park Place Painesville, Ohio 44077 ATTORNEYS FOR APPELLEE MYRNA PREVITE Timothy J. Weyls, Jr. Robert J. Dubyak Webster, Dubyak & Weyls Co., L.P.A. 1220 West 6th Street, Suite 600 Cleveland, Ohio 44113 Matthew C. Steele Reisenfeld & Associates, L.P.A. 3962 Red Bank Road Cincinnati, Ohio 45227 N.B. This entry is an announcement of the court s decision. See App.R. 22(B) and 26(A); Loc.App.R. 22. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(C) unless a motion for reconsideration with supporting brief per App.R. 26(A), or a motion for consideration en banc with supporting brief per Loc.App.R. 25.1(B)(2), is filed within ten days of the announcement of the court s decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court s announcement of decision by the clerk per App.R. 22(C). See, also, S.Ct. Prac.R. 2.2(A)(1). JAMES J. SWEENEY, J.: {¶ 1} Defendant-appellant, Midwest Real Estate Partners, LLC ( Midwest ), appeals the trial court s judgments that granted plaintiff-appellee, Myrna Previte s ( Previte ), motion for default judgment and denied Midwest s motion for relief from judgment. For the reasons that follow, we reverse and remand. {¶ 2} Previte filed her complaint on September 17, 2008, naming three defendants: ( R&A ). 1 Kevin M. Piunno ( Piunno ), Midwest, and R&A Agents, Inc. The record reflects service of the summons and complaint on defendant R&A by certified mail in September 2008. Previte failed to obtain service on either defendant Midwest or Piunno at that time. On November 3, 2008, Previte attempted service of Midwest by certified mail to the Ohio Secretary 1 Although R&A was named as a party and not in its capacity as a statutory agent, the body of Previte s complaint contains an averment that Defendant R&A serves as Statutory Agent for Defendant-Midwest. Defendant Piunno denied this in his answer filed on March 19, 2009 and he is not a party to this appeal. Defendant Midwest never answered but has indicated that R&A was identified as its statutory agent on the records of the Ohio Secretary of State. In its motion to vacate, Midwest acknowledged that it failed to update the records maintained by the Ohio Secretary of State. Those records still identify Roeztel & Andress law firm s service corporation as Midwest s statutory agent. Midwest has not had a relationship with that law firm since they organized Midwest 10 years ago and Midwest should have, at some point, updated the Secretary of State records. of State. The record contains proof of service from the Ohio Secretary of State indicating that it served Midwest by certified mail to any available address of the company pursuant to R.C. 1705.06(H) and that service upon the company shall be deemed to have been made. (R.19.) {¶ 3} At the case management conference held in December 2008, the court indicated that if Midwest failed to answer or otherwise plead, the scheduled January pretrial would be converted to a default hearing. The matter was subsequently set for a default hearing on February 5, 2009. {¶ 4} On February 5, 2009, Previte filed her motion for default judgment against Midwest together with an affidavit for damages. On that same date, the trial court instructed Previte to obtain service on defendant Piunno by March 26, 2009 in order to avoid the potential dismissal of her claims against him. On February 6, 2009, the trial court granted Previte s motion for default judgment against Midwest in the amount of $210,970.45, plus interest and costs, based upon Previte s affidavit. According to Previte s affidavit, Midwest owed her $189,870.02 in commissions related to Fifth Third Commissions and $21,100.43 related to Questex Commisions. {¶ 5} Previte filed instructions for service on Piunno on February 19, 2009. {¶ 6} On February 26, 2009, counsel entered an appearance on behalf of Midwest and a motion to vacate the judgment against it was filed on March 3, 2009. Among other evidence, Midwest submitted an affidavit from its sole Manager, (Piunno) and numerous emails purporting to be from Previte, f.k.a. Myrna Rodriguez, which made demands for various balances and expenses allegedly due her, including [a]n outstanding balance 5/3 & bonus $30.000 and [a]n estimated 50% transactions in progress split which will vary based on if they are executed in a timely matter. There are no itemized amounts in the emails that would seemingly correspond to the damages set forth in the affidavit submitted in support of the motion for default judgment. {¶ 7} Midwest appealed the default judgment in March 2009, but the case was dismissed pursuant to Civ.R. 54(B). On April 15, 2009, the trial court denied Midwest s motion to vacate and Previte voluntarily dismissed her claims against defendant Piunno. Midwest appeals both the default judgment as well as the denial of its motion to vacate, which appeals have been consolidated, and presents two assignments of error for our review. {¶ 8} I. The default judgment entered against appellant was void for insufficient service of process. {¶ 9} As an initial matter, this Court has previously observed, default judgments are not favored where large sums of money are involved. Kucbel v. Graham (Jan. 14, 1982), Cuyahoga App. No. 43571, citing Colley v. Bazell (1980), 64 Ohio St.2d 243, 249, 416 N.E.2d 605. Cases should be decided upon their merits rather than technicalities. Bank One Cincinnati v. Wells (Sept. 18, 1996), Hamilton App. No. C-950279, citing Rice v. Gen. Dynamics Land Systems (1993), 86 Ohio App.3d 841, 844, 621 N.E.2d 1304, other citation omitted. {¶ 10} A trial court is without jurisdiction to render judgment or to make findings against a person who was not served a summons, did not appear, and was not a party in the court proceedings. A person against whom such judgment and findings are made is entitled to have the judgment vacated. State ex rel. Ballard v. O'Donnell (1990), 50 Ohio St.3d 182, 553 N.E.2d 650, paragraph one of the syllabus. Service of process must comply with both the Civil Rules and the requirements of due process. Akron-Canton Regional Airport Auth. v. Swinehart (1980), 62 Ohio St.2d 403, 405-06, 406 N.E.2d 811. {¶ 11} Midwest maintains that the default judgment is void due to insufficiency of service. 2 Specifically, Midwest asserts that Previte failed to perfect service as provided in Civ.R. 4.2 because Previte did not serve it through its statutory agent R&A. Instead, Previte named and served R&A as a party defendant. {¶ 12} Civ.R. 4.2(F) provides: {¶ 13} Service of process * * * pursuant to Civ.R. 4 through 4.6 shall be made as follows: 2 A motion to vacate judgment on jurisdictional grounds is a direct attack upon a judgment authorized by common law, and constitutes an allegation that the judgment is void. Lincoln Tavern v. Snader (1956), 165 Ohio St. 61, 133 N.E.2d 606. {¶ 14} (F) Upon a corporation either domestic or foreign: by serving the agent authorized by appointment or by law to receive service of process; or by serving the corporation by certified or express mail at any of its usual places of business; or by serving an officer or a managing or general agent of the corporation. {¶ 15} There is no dispute that R&A was identified as Midwest s statutory agent on the records of the Secretary of State. Therefore, had Previte actually served Midwest through R&A, we could readily ascertain sufficiency of service of process on Midwest upon the statutory agent s receipt, regardless of Midwest s proffered excuses. Specifically, we expressly reject Midwest s efforts to create an exception for effective service based upon its own neglect and failure to update its agent for service of process with the Ohio Secretary of State. The law mandates each LLC to maintain continuously in this state an agent for service of process on the company. R.C. 1705.06(A). That, however, is not the situation presented here. {¶ 16} Previte did not serve Midwest with the complaint through, or care of, its agent R&A. Instead, Previte attempted to serve Midwest by certified mail to 600 Superior Avenue East, Cleveland, Ohio 44114. When that failed, Previte still did not attempt to serve Midwest through R&A but instead sought to achieve service through the Ohio Secretary of State, pursuant to R.C. 1705.06(H). That statute provides for service of process through the Secretary of State under specified circumstances that are: if the agent * * * cannot be found or no longer has the address that is stated in the records of the Secretary of State or the limited liability company has failed to maintain an agent as required by this section and if the party or the agent or representative of the party that desires service of the process, notice, or demand files with the secretary of state an affidavit that states that one of those circumstances exists and states that the most recent address of the company that the party who desires service has been able to ascertain after diligent search * * *. Because R&A was the record statutory agent of Midwest and was located at the address stated in the records of the Secretary of State, the provisions of R.C. 1705.06(H) would not apply. {¶ 17} Previte would have us deem service of process was effective on Midwest by virtue of the fact that she named and independently served R&A as a party defendant. Yet, it is improper to name the statutory agent as a party defendant where the plaintiff fails to state a claim against this party. See Civ.R. 12(B)(6). Previte provides no precedent or authority that would deem service of process effective upon an Ohio limited liability company by naming the statutory agent separately as a party defendant, at the same time attempting certified mail service at the company s business address. Furthermore, we believe that a finding to that effect is both unjustified and procedurally unsound. Such a practice could led to collateral and negative impacts on statutory agents and impede judicial economy by including, as nominal parties, persons or entities against whom the plaintiff is not advancing any claims. {¶ 18} This pleading irregularity has ultimately created an issue as to whether Midwest ever received notice of the lawsuit. The only evidence submitted on this point was the affidavit of Piunno, who is Midwest s sole manager, averring that R&A never notified Midwest of Previte s complaint. R&A itself never entered an appearance in this matter or responded to the complaint and remains a nominal party to this day. {¶ 19} It is also noted from the record that Midwest's attorney corresponded with Previte directly concerning the matters involved in this litigation as early as 2006, and also with an attorney from Roetzel & Andress, who was apparently representing Previte in 2007. The record suggests that R&A is affiliated with the Roetzel & Andress law firm. There is some authority, albeit limited, that a statutory agent with an interest antagonistic to the defendant corporation, such as representing plaintiff in her claims against the defendant corporation, would render service on the statutory agent ineffectual in conferring jurisdiction over the corporate defendant even though the statute expressly provides for service on one in such relation. See Walsh v. Commercial Vehicle Motors Co. (1917), 28 Ohio Dec. 603, 20 Ohio N.P. (N.S.) 159. {¶ 20} The purpose of process is to notify the defendant of proceedings and afford the defendant the opportunity to appear and defend and is therefore valid when the defendant is accorded a fair opportunity to be apprised of the proceedings. Thomas Steel, Inc. v. Am. Fabricators (Dec. 6, 1984), Cuyahoga App. No. 48184, citing Krabill v. Gibbs (1968), 14 Ohio St.2d 1, 235 N.E.2d 514. On this record, it can only be determined that service of process was perfected on R&A as a party defendant. Service on a statutory agent in its capacity as a named defendant cannot be logically extended to constitute effective service of process on a separate defendant (here a limited liability company), especially where the plaintiff never attempted service of process on the company defendant through its statutory agent. {¶ 21} Accordingly, Assignment of Error I is sustained. The default judgment is reversed and the matter is remanded for further proceedings. {¶ 22} II. The trial court erred and abused its discretion by denying the motion for relief from judgment filed by appellant. {¶ 23} The disposition of Assignment of Error I renders the second assignment of error moot. App.R.12(A)(1)(c). Judgment reversed and remanded. It is ordered that appellant recover from appellee its costs herein taxed. The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this Court directing the Court of Common Pleas to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. JAMES J. SWEENEY, JUDGE CHRISTINE T. McMONAGLE, P.J., and PATRICIA A. BLACKMON, J., CONCUR
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