BB Buggies, Inc. v. Leon, 2012-IA-01876-SCT

• Decision Date: 31 October 2012
• Docket Number: NO. 2012-IA-01876-SCT,2012-IA-01876-SCT
• Parties: BB BUGGIES, INC. d/b/a BAD BOY BUGGIES AND TEXTRON, INC. v. VINCENT LEON, INDIVIDUALLY, AS FATHER AND NEXT FRIEND, AND AS ADMINISTRATOR OF THE ESTATE OF HIS MINOR CHILD, JEAN-AH LEON, AND MANDI LEON
• Court: Mississippi Supreme Court

BB BUGGIES, INC. d/b/a BAD BOY BUGGIES AND TEXTRON, INC.
v.
VINCENT LEON, INDIVIDUALLY, AS FATHER AND NEXT FRIEND, AND
AS ADMINISTRATOR OF THE ESTATE OF HIS MINOR CHILD, JEAN-AH LEON, AND MANDI LEON

NO. 2012-IA-01876-SCT

SUPREME COURT OF MISSISSIPPI

October 31, 2012

DATE OF JUDGMENT: 10/31/2012

TRIAL JUDGE: HON. LILLIE BLACKMON SANDERS

COURT FROM WHICH APPEALED: ADAMS COUNTY CIRCUIT COURT

ATTORNEYS FOR APPELLANTS: LEANN W. NEALEY ROBERT A. MILLER WILLIAM P. THOMAS KYLE V. MILLER

ATTORNEYS FOR APPELLEES: JIM WARREN, III J. CHADWICK MASK JACOB T. E. STUTZMAN ANTHONY A. HEIDELBERG NICHOLAS J. GREENE

NATURE OF THE CASE: CIVIL - PERSONAL INJURY

DISPOSITION: REVERSED AND REMANDED - 07/31/2014

MOTION FOR REHEARING FILED:

MANDATE ISSUED:

EN BANC.

COLEMAN, JUSTICE, FOR THE COURT:

¶1. The instant interlocutory appeal arises from a default judgment entered against BB Buggies, Inc. and Textron, Inc. (the "Textron Parties"). The Textron Parties claim that the default judgment is void and should be set aside because they did not receive proper service of the amended complaint, they were not given notice of the default judgment, and the

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plaintiffs failed to state a claim against them. Additionally, the Textron Parties assert that the three-pronged balancing test for relief from default judgments requires that it be set aside because they have a colorable defense and the plaintiffs will not be prejudiced. We hold that the default judgment is not void, but it should be set aside under the three-pronged test.

Facts and Procedural History

¶2. In June 2011, fourteen-year-old Jean-ah Leon was seriously injured while operating a Bad Boy Buggy, an off-road vehicle used for hunting and outdoor recreation. One year later, in June 2012, Jean-ah's parents, Vincent and Mandi Leon, filed a products liability and personal injury lawsuit in Louisiana against the owner of the Bad Boy Buggy, who was a Louisiana resident. They also named the owner's insurer, the Textron Parties, and several other entities and individuals. Within a few days, the Leons dismissed all parties except the vehicle owner and his insurer from the Louisiana case.

¶3. On June 11, 2012, the Leons filed suit in Adams County, Mississippi, against the Textron Parties and the others previously named in the Louisiana suit,¹ seeking damages of "an amount not yet determined" but greater than $10,000,000. The Leons served the complaint and summonses on the Textron Parties through their registered agents in Mississippi on July 16, 2012. The Leons filed an amended complaint on July 25, 2012, adding claims for gross negligence and punitive damages. The Leons did not issue new summonses to the Textron Parties with the amended complaint; instead, they sent copies of the amended complaint to the Textron Parties' headquarters by certified mail with

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accompanying letters addressed "To Whom it May Concern." The Textron Parties' attorney in the Louisiana case also requested and received a copy of the amended complaint by email.

¶4. The Textron Parties' answer was due August 15, 2012, thirty days after they were served with the original complaint. They did not file an answer to the original complaint or the amended complaint. On August 23, 2012, the Leons sought a default judgment against the Textron Parties based on the amended complaint. An entry of default and default judgment were entered the same day. The judgment provided that damages would be determined at a subsequent hearing. Four days later, on August 27, the Textron Parties' insurance carrier learned of the default judgment and engaged counsel for the Textron Parties; the Textron Parties' attorney contacted the Leons' attorney that day. On August 31, 2012, the Textron Parties filed a motion to set aside the default judgment, a motion for leave to answer the original complaint, and a motion to dismiss the amended complaint or, in the alternative, for leave to answer the amended complaint. A few days later, the Textron Parties filed a motion to vacate or set aside the default judgment asserting that the Leons had failed to state a claim upon which relief could be granted. After a hearing, the trial court denied all the Textron Parties' motions. The Textron Parties filed the instant interlocutory appeal.

Analysis

¶5. The Textron Parties claim that the trial court erred by refusing to set aside the default judgment against them. They claim that the default judgment is void and should be set aside because: the amended complaint was not properly served; the Textron Parties were not given notice of the entry of default; and the Leons failed to state a claim against the Textron Parties in the amended complaint. Additionally, the Textron Parties assert that the three-pronged

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balancing test under Mississippi Rules of Civil Procedure 55(c) and 60(b) requires that the default judgment be set aside because the Textron Parties have a colorable defense to the lawsuit, and the Leons failed to show they would be prejudiced by allowing the Textron Parties to file an answer.

¶6. Sufficiency of service of process is a jurisdictional issue, which is reviewed de novo. Fletcher v. Limeco Corp., 996 So. 2d 773, 776 (¶ 8) (Miss. 2008). "A court must have jurisdiction, proper service of process, in order to enter a default judgment against a party. . . . Otherwise, the default judgment is void. . . . If a default judgment is void, the trial court has no discretion and must set the judgment aside." McCain v. Dauzat, 791 So. 2d 839, 842 (¶ 7) (Miss. 2001) (citations omitted). Once the procedural issues are satisfied, we apply an abuse of discretion standard of review to the circuit court's decision on a motion to set aside a default judgment. American States Ins. Co. v. Rogillio, 10 So. 3d 463, 467 (¶ 8) (Miss. 2009). Where there is reasonable doubt as to whether "a default judgment should be vacated, the doubt should be resolved in favor of opening the judgment and hearing the case on its merits." Id. (quoting McCain, 791 So. 2d at 843).

I. Whether the default judgment against the Textron Parties is void as a matter of law due to improper service of the amended complaint.

¶7. The Textron Parties assert that the Leons failed to comply with the service requirements of Rule 4 of the Mississippi Rules of Civil Procedure because they did not include summonses with the amended complaint and did not address the certified mailing to any officer or agent of the Textron Parties. The Leons contend that new summonses were not required because the service provisions of Rule 5(a) and (b)(1) control.

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¶8. When a complaint is filed, the clerk issues a summons, and both the complaint and summons must be served on the defendant in accordance with Rule 4. Miss. R. Civ. P. 4(a)-(d). Rule 5 pertains to subsequent pleadings and provides, in pertinent part:

(a) Service: When Required. Except as otherwise provided in these rules . . . every pleading subsequent to the original complaint unless the court otherwise orders because of numerous defendants . . . shall be served upon each of the parties. No service need be made on parties in default for failure to appear except that pleadings asserting new or additional claims for relief against them shall be served upon them in the manner provided in Rule 4 for service of summons. . . .

(b)(1) Service: How Made. . . . Service upon the attorney or upon a party shall be made by delivering a copy to him; or by transmitting it to him by electronic means; or by mailing it to him at his last known address, or if no address is known, by leaving it with the clerk of the court, or by transmitting it to the clerk by electronic means. Delivery of a copy within this rule means: handing it to the attorney or to the party; or leaving it at his office with his clerk or other person in charge thereof; or, if there is no on one in charge [sic], leaving it in a conspicuous place therein; or, if the office is closed or the person to be served has no office, leaving it at his dwelling house or usual place of abode with some person of suitable age and discretion then residing therein. . . . . Service by mail is complete upon mailing.

Miss. R. Civ. P. 5(a), (b)(1). An amended complaint is a pleading. Miss. R. Civ. P. 7(a); Miss. R. Civ. P. 15(a). Because it is a pleading "subsequent to the original complaint," its service falls squarely within the scope of Rule 5 with one exception - if an amended complaint adds new or additional claims and the new claims are against a party who is in default, then service must be made under Rule 4. In the instant case, the Textron Parties were not in default when the Leons served their amended complaint fifteen days after the Textron Parties were properly served with the summons and original complaint, so the one exception to Rule 5(a) did not apply.

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¶9. The circuit court could exercise personal jurisdiction over the Textron Parties because the first complaint and summons had been properly served. "The existence of personal jurisdiction depends upon reasonable notice to the defendant." Mansour v. Charmax Indus., Inc., 680 So. 2d 852, 854 (Miss. 1996) (citing Noble v. Noble, 502 So. 2d 317, 320 (Miss. 1987)). "The principal purpose of process is to give to the party to whom it is addressed notice of...