Flagstar Bank, FSB v. Danos
| Docket Number: | 2007-CA-00418-COA Linked Case(s): 2007-CA-00418-SCT2007-CT-00418-SCT2007-CA-00418-COA2007-CT-00418-SCT2007-CT-00418-SCT2007-CT-00418-SCT |
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| Oral Argument: | 08-19-2008 | |
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| Court of Appeals: |
Opinion Link Opinion Date: 12-02-2008 Opinion Author: KING, C.J. Holding: Reversed and Rendered |
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| Additional Case Information: |
Topic: Default judgment - Jurisdiction - M.R.C.P. 55 - Service of process on corporation - M.R.C.P. 4(c)(5) - M.R.C.P. 4(d)(4) Judge(s) Concurring: Chandler, Barnes, Ishee, Roberts, and Carlton, JJ. Dissenting Author : Irving, J., with separate written opinion. Dissent Joined By : Lee and Myers, P.JJ., and Griffis, J. Procedural History: Default Judgment Nature of the Case: CIVIL - OTHER |
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| Trial Court: |
Date of Trial Judgment: 03-12-2007 Appealed from: Lamar County Circuit Court Judge: R. I. Prichard, III Disposition: DEFAULT JUDGMENT ENTERED AGAINST FLAGSTAR AND DAMAGES AWARDED AGAINST IT IN THE AMOUNT OF $500,000 Case Number: 2004-108P |
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| Note: | This opinion was later reversed by the Supreme Court on 8/19/2010. The SCT reinstated the original trial court judgment. See the SCT opinion at: http://www.mssc.state.ms.us/Images/Opinions/CO63644.pdf | |
| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | FLAGSTAR BANK, FSB |
CAMILLE HENICK EVANS,
CHRISTOPHER PAUL PALMER,
CRAIG LAWSON SLAY |
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| Appellee: | CALVIN AND JAMIE DANOS, INDIVIDUALLY AND AS GUARDIANS AND NEXT OF FRIENDS OF LAURA MATHERNE, A MINOR, GAVIN DANOS, A MINOR AND MARISSA DANOS, A MINOR | CATHERINE H. JACOBS, MATTHEW G. MESTAYER |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Default judgment - Jurisdiction - M.R.C.P. 55 - Service of process on corporation - M.R.C.P. 4(c)(5) - M.R.C.P. 4(d)(4) |
| Summary of the Facts: | Flagstar Bank, FSB, is the last of two defendants in a suit filed by the Danos family who purchased a manufactured home only to discover after the sale that the structure had preexisting water damage, which they claim led to mold growth that harmed them. Flagstar is a Michigan-based banking and mortgage lending corporation that held the Danoses’ mortgage for a short period. Flagstar is alleged by the Danoses to be vicariously liable because its alleged agent, an employee of a Lamar County mortgage company, submitted false and erroneous information to his employer and to Allstate Property and Casualty Insurance Company. The trial judge entered a $500,000 judgment by default against Flagstar and against Michael H. Burks, the seller of the trailer home property, after he determined that neither party had ever appeared nor answered the complaint. Twelve days after the default judgment was entered, an attorney filed an appearance as counsel for Flagstar and timely filed a motion to set aside the default judgment. The trial court denied the motion, and Flagstar appeals. |
| Summary of Opinion Analysis: | The comment to M.R.C.P. 55 provides that before a default judgment can be entered, the court must have jurisdiction over the party against whom the judgment is sought, which also means that he must have been effectively served with process. If the court does not have jurisdiction, the default judgment is void. If a default judgment is void, then the trial court has no discretion and must set the judgment aside. Flagstar was a nonresident corporation not doing business in Mississippi. The Danoses attempted service of process by summons issued pursuant to M.R.C.P. 4(d)(4) by delivering a copy of the summons and complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process. Then the Danoses had Flagstar served pursuant to M.R.C.P. 4(c)(5) by sending a copy of the summons and the complaint to the person to be served by certified mail, return receipt requested. Flagstar argues that the default judgment against it should be set aside because the person receiving process by mail, signing the return receipt, and mailing it back to the circuit court was a mail clerk and not an officer, a managing or general agent, or other agent authorized by appointment or by law to receive service of process pursuant to Rule 4(d)(4). In support of its argument, Flagstar submitted the affidavit of its chief legal officer saying that he was familiar with the signature of the mail clerk who signed the return receipt and that it was the mail clerk’s signature on the return receipt, not the signature of the registered agent. In the face of this denial of proper service, the Danoses offered no counter-affidavits or other proof regarding the signature of the registered agent or as to its authenticity. Rule 4(c)(5), which allows out of state service of summons by certified mail, and Rule 4(d)(4), which identifies the person upon whom service must be made if the defendant is a foreign corporation, must be read jointly. If service is attempted by certified mail upon a corporation under Rule 4(c)(5), but is delivered to a person not designated to receive process under Rule 4(d)(4), then the process fails. A plaintiff, when faced with which procedural rule to follow in serving process pursuant to Rule 4(d), must specifically identify whether the defendant is a “person” and apply the attendant civil procedure rule and/or identify who is the “the actual defendant” and follow the appropriate civil procedure rule. Because Flagstar, the actual defendant, was a corporation then the civil procedure rule for serving an out-of-state corporation, Rule 4(d)(4), was to be followed. The Danoses attempted to follow Rule 4(d)(4) but failed because the authorized agent for service of process was not served. By affidavit, the attorney for Flagstar stated that the person who signed for the process was a mailroom clerk who was not the agent for service of process. The Danoses submitted no counteraffidavits. Therefore, the Flagstar affidavit from the Flagstar attorney must be taken as true, and the purported service of summons on Flagstar quashed. |
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