Bage, LLC v. Southeastern Roofing

• Decision Date: 23 April 2007
• Docket Number: No. 4240.,4240.
• Citation: 646 S.E.2d 153
• Parties: BAGE, LLC, Respondent, v. SOUTHEASTERN ROOFING CO. OF SPARTANBURG, INC., a/k/a Southeastern Roofing Company n/k/a Orvis, Inc., Appellant.
• Court: South Carolina Court of Appeals

646 S.E.2d 153

BAGE, LLC, Respondent, v. SOUTHEASTERN ROOFING CO. OF SPARTANBURG, INC., a/k/a Southeastern Roofing Company n/k/a Orvis, Inc., Appellant.

No. 4240.

Court of Appeals of South Carolina.

Submitted April 2, 2007.

Decided April 23, 2007.

Rehearing Denied June 28, 2007.

Robert T. King, of Florence, for Appellant.

Thomas B. Jackson, III, of Columbia, for Respondent.

ANDERSON, J.

Southeastern Roofing appeals the circuit court's order finding the company was properly served by service of process on its employee, Debbie Green, and determining that it failed to show good cause to allow relief from an entry of default under Rule 55(c), SCRCP. We affirm.¹

FACTUAL/PROCEDURAL BACKGROUND

In August 2003, BAGE, L.L.C. ("BAGE") entered into a written contract with Southeastern Roofing Company of Spartanburg, Inc. ("Southeastern Roofing"). Under the agreement, Southeastern Roofing was to perform re-roofing work on a commercial office building BAGE owned. More specifically, the company was to remove the outer layers of the existing roof system and install of a new, modified bitumen roof on the structure. Southeastern Roofing was to immediately commence the project after the contract was signed and to complete the job within approximately six weeks. Work on the roof, however, did not begin until the end of October 2003 and continued only sporadically through the winter and into the spring of 2004.

From almost the moment Southeastern Roofing started operations on BAGE's building, significant leaks in the roof began to occur. These leaks resulted in interior water infiltration, manifested by falling ceiling tiles water gushing down interior walls, light fixtures filling with water, and the growth of mold and mildew. BAGE repeatedly contacted Southeastern Roofing, demanding the leaks be stopped. Despite BAGE's requests, the necessary repairs were never made and water continued to infiltrate and further damage the building. BAGE ultimately filed suit, claiming breach of contract, breach of express and implied warranties, and negligence.

At the fledgling stages of the litigation, BAGE's counsel spoke with Southeastern Roofing's general manager, Jamie Cubitt, who initially agreed to accept service of process by mail. When Cubitt failed to return the summons and complaint, BAGE sought to serve the company through its registered agent. After discovering that the agent listed with the Secretary of State was no longer affiliated with Southeastern Roofing, BAGE pursued service via a private process server.

On July 9, 2004, the process server arrived at Southeastern Roofing's office with the intendment of serving Cubitt with BAGE's summons and complaint. Cubitt was not in the office at that time, and the server was instead met by Debbie Green, another Southeastern Roofing employee. Green was able to reach Cubitt by telephone. After being informed someone was in the office with papers to serve, Cubitt instructed Green to accept the documents. This communication with Cubitt was relayed to the process server. Green signed for the service of process. An affidavit of service was filed on July 13, 2004.

Upon returning to the office, Cubitt instructed another employee, Cheri Barnette, to send a copy of the summons and complaint to Southeastern Roofing's insurance agency. These documents were faxed to the insurance company on July 13, 2004. No cover letter was included in this facsimile nor was any follow-up with its insurance carrier ever taken by Southeastern Roofing.

Southeastern Roofing never responded to the complaint. BAGE filed an affidavit of default and motion for an entry of default on September 7, 2004. That same day, an entry of default was dated and filed with the court. By a motion filed on September 20, 2004, Southeastern Roofing moved to set aside the order granting the entry of default.

A hearing on the motion to set aside the entry of default was held before the circuit court on December 8, 2004. Southeastern Roofing argued (1) the service of process had been improper and thus deprived the court of personal jurisdiction and (2) "good cause" existed to set aside the entry of default under SCRCP Rule 55(c).

By an order dated April 28, 2005, the judge denied Southeastern Roofing's motion to set aside the entry of default. In regard to service of process, the order specifically found (1) Green was an office manager at Southeastern Roofing for the purposes relevant to service of process and (2) Green had Cubitt's specific authorization to accept service of process. With respect to the Rule 55(c) motion, the judge found Southeastern Roofing had failed to show good cause as to allow relief from the entry of default. Southeastern Roofing timely moved for reconsideration of the order denying its motion to set aside default. This motion was denied.

On April 27, 2006, following a damages hearing before the Richland County master-in-equity, BAGE obtained a default judgment against Southeastern Roofing in the amount of $1,151,888.84. This judgment was properly filed with the court on May 3, 2006.

STANDARD OF REVIEW

"Questions of fact arising on a motion to quash service of process for lack of jurisdiction over the defendant are to be determined by the court." Brown v. Carolina Emergency Physicians, P.A., 348 S.C. 569, 583, 560 S.E.2d 624, 631 (Ct.App.2001); accord Lawson v. Jeter, 243 S.C. 103, 106, 132 S.E.2d 276, 277 (1963); Moore v. Simpson, 322 S.C. 518, 524, 473 S.E.2d 64, 67 (Ct.App. 1996). The findings of the circuit court on such issues are binding on this court, unless wholly unsupported by the evidence or manifestly influenced or controlled by error of law. Id.

"The decision of whether to grant relief from an entry of default is solely within the sound discretion of the trial court." Wham v. Shearson Lehman Bros., Inc., 298 S.C. 462, 465, 381 S.E.2d 499, 501 (Ct.App. 1989) (citing Ricks v. Weinrauch, 293 S.C. 372, 360 S.E.2d 535 (Ct.App.1987)); accord In re Estate of Weeks, 329 S.C. 251, 259, 495 S.E.2d 454, 459 (Ct.App.1997). "This court cannot substitute its judgment for that of the trial judge and will not disturb the trial court's decision absent a clear showing of abuse of discretion." Ricks, 293 S.C. at 374, 360 S.E.2d at 536; Ammons v. Hood, 288 S.C. 278, 279, 341 S.E.2d 816, 818 (Ct.App. 1986). In reviewing a trial judge's exercise of discretion, the issue before an appellate court is not whether it believes good cause existed to set aside the entry of default, but whether the trial judge's determination is supported by the evidence and not controlled by an error of law. Pilgrim v. Miller, 350 S.C. 637, 640-41, 567 S.E.2d 527, 528 (Ct. App.2002).

LAW/ANALYSIS

I. Service of Process

Southeastern Roofing argues the delivery of process to Green was insufficient as a matter of law. We disagree.

Rule 4(d), SCRCP addresses service of process and states:

Summons: Personal Service. The summons and complaint must be served together. The plaintiff shall furnish the person making service with such copies as are necessary. Voluntary appearance by defendant is equivalent to personal service; and written notice of appearance by a party or his attorney shall be effective upon mailing, or may be served as provided in this rule. Service shall be made as follows:

...

(3) Corporations and Partnerships ....

The rule provides service of the summons and complaint may be made upon a corporation 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 ...." Rule 4(d)(3), SCRCP. Service on a managing or general agent is sufficient even though the corporation has a registered agent. Renney v. Dobbs House, Inc., 275 S.C. 562, 274 S.E.2d 290 (1981).

The rule permits service on two types of agents: an agent authorized by appointment and an agent authorized by law. Evidence of an actual appointment by the defendant for the specific purpose of receiving service is normally required to show the authority of the agent. The courts look at the circumstances to find express or implied authority to accept the service. Agency for accepting process is not necessarily established by the act of accepting the process, statements by the person served, or the existence of another agency relationship.

James F. Flanagan, South Carolina Civil Procedure 20 (2nd ed.1996).

Our supreme court has enunciated:

Service on a corporation may be made by hand delivering a copy of the summons and complaint to an officer of the corporation or to an authorized agent of the corporation. Rule 4(d)(3), SCRCP. The rule "presupposes that an officer of the corporation will know what to do with the papers served and will see that the corporation takes steps to defend the action." 62B Am.Jur.2d, Process § 268 (1990). Once papers have been served on an officer of the corporation, the corporation then has actual notice of the action. Pioneer Util. Corp. v. Scott-Newcomb, Inc., 26 F.Supp. 616 (E.D.N.Y.1939).

Roche v. Young Bros., Inc. of Florence, 318 S.C. 207, 210, 456 S.E.2d 897, 899-900 (1995). "Rule 4, SCRCP serves at least two purposes. It confers personal jurisdiction on the court and assures the defendant of reasonable notice of the action." Roche, 318 S.C. at 209, 456 S.E.2d at 899; Moore, 322 S.C. at 523, 473 S.E.2d at 66.

"The plaintiff has the burden to establish that the court has personal jurisdiction over the defendant." Moore, 322 S.C. at 523, 473 S.E.2d at 66 (citing Jensen v. Doe, 292 S.C. 592, 358 S.E.2d 148 (Ct.App.1987)). However, exacting compliance with the rules is not required to effect service of process. Roche, 318 S.C. at 209-10, 456 S.E.2d at 899 (citing Foster v. Crawford, 57 S.C. 551, 36 S.E. 5 (1900) (when officer's return defective as to time and place of service, it can be amended to state facts); Saunders v. Bobo, 2 Bailey 492 (1831) (sheriff's incomplete return that was not sworn to may be...