Bludworth Bond Shipyard, Inc. v. M/V Caribbean Wind

• Decision Date: 08 April 1988
• Docket Number: No. 86-2577,86-2577
• Citation: 841 F.2d 646
• Parties: BLUDWORTH BOND SHIPYARD, INC., Plaintiff-Appellee, v. M/V CARIBBEAN WIND, Her Engines, Tackle, Etc., In Rem, et al., Defendants, Rolf Westerstrom, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 646

841 F.2d 646

10 Fed.R.Serv.3d 1147

BLUDWORTH BOND SHIPYARD, INC., Plaintiff-Appellee, v. M/V CARIBBEAN WIND, Her Engines, Tackle, Etc., In Rem, et al., Defendants Rolf Westerstrom, Defendant-Appellant.

No. 86-2577.

United States Court of Appeals, Fifth Circuit.

April 8, 1988.

Malinda G. York, Houston, Tex., for defendant-appellant.

James A. Newsom, Dan H. Hinds, Hinds & Meyer, Houston, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before THORNBERRY, GARWOOD, and HIGGINBOTHAM, Circuit Judges.

PER CURIAM:

Defendant-appellant Rolf Westerstrom (Westerstrom) appeals the district court's denial of his motion to set aside a default judgment entered in favor of plaintiff-appellee Bludworth Bond Shipyard, Inc. (Bludworth). Westerstrom contends that the default judgment is void for want of personal jurisdiction because (1) service of process did not comply with the Texas long-arm statute and (2) he did not have sufficient minimum contacts with Texas to be subject to long-arm jurisdiction and therefore amenable to service. We agree that Westerstrom was not properly served, and accordingly we reverse and remand.

I.

On September 12, 1983, Bludworth filed this action in the United States District Court for the Southern District of Texas against the M/V CARIBBEAN WIND, in rem, and Westerstrom and Contrast Shipping, Ltd., in personam, to recover an unpaid balance of $12,497.53 for repairs performed on the vessel during September 1982 at Bludworth's Houston, Texas shipyard. Bludworth alleged that it had performed the repairs pursuant to a contract with Westerstrom and Contrast Shipping, Ltd. Jurisdiction was predicated on 28 U.S.C. Sec. 1333(1) (admiralty). The complaint alleges that Westerstrom is a resident of Florida and does not have an office, place of business, or agent for service in Texas, but entered into a contract with plaintiff to be performed in Texas, and that the suit arises out of Westerstrom's breach of contract.

As allowed by Fed.R.Civ.P. 4(c)(2)(C)(i), Bludworth attempted to serve defendants in accordance with the now recodified Texas long-arm statute, Tex.Rev.Civ.Stat.Ann. art. 2031b (Vernon 1984). ¹ Bludworth served the Texas Secretary of State in September 1983. The Secretary of State forwarded to each defendant a copy of the citation and petition. The copies were sent certified mail, return receipt requested, to the Miami, Florida address alleged in the complaint as being the office address of each defendant; these citations were each returned "Unclaimed" on October 13, 1983. In November, Bludworth again served the Secretary and provided a different, new address, the same for each defendant. The Secretary forwarded process for each defendant to this new address and, on December 1, 1983, the envelopes were each again returned. Westerstrom's envelope bore the notation "Moved, Left No Address." The district court entered a judgment of default against defendants in September 1984. ²

On April 29, 1986, after Bludworth noticed a deposition of Westerstrom in aid of execution of the judgment, Westerstrom filed an answer and a motion to set aside the default judgment. The answer denies that Westerstrom entered into a contract with plaintiff, and alleges that whatever Westerstrom did in that connection was only as an agent for a disclosed principal. In the motion to set aside, Westerstrom clearly asserted that Bludworth had not served him and that the court therefore lacked personal jurisdiction over him. We will treat these concurrently filed papers as properly raising the issue of personal jurisdiction. ³

In his affidavit accompanying the motion to set aside, Westerstrom claimed that:

(1) Contrast Maritime, Ltd., not Contrast Shipping, Ltd., owned the M/V CARIBBEAN WIND;

(2) he was a minority shareholder in Contrast Maritime, Ltd.;

(3) he ordered the repairs on behalf of Contrast Maritime, Ltd. ⁴ ;

(4) the first address at which Bludworth attempted to serve him was the office of Contrast Maritime, Ltd., which was closed in August 1983;

(5) he had not lived at the second address at which Bludworth attempted to serve him since 1981; and

(6) he had no notice of the judgment until July 1985 when he was served with a notice of the deposition in aid of execution.

Bludworth disputed Westerstrom's assertion that he first learned of the suit in July 1985 and filed an affidavit of its Florida attorney stating that the attorney first contacted Westerstrom in November 1984 and again in February 1985. Westerstrom's attorney then filed an affidavit stating that Westerstrom may have spoken with the Florida attorney prior to July 1985, but "was under the impression that the matter against him personally would no longer be pursued." Bludworth did not contest Westerstrom's claim that when suit was filed and service was attempted he did not live or office at any of the addresses that Bludworth gave the Texas Secretary of State and did not have notice of this suit until after the default judgment was entered.

On June 23, 1986, the district court held a conference and denied without explanation Westerstrom's motion to set aside the judgment. This appeal followed.

II.

The issue before us on appeal is whether the district court erred in denying Westerstrom's motion to set aside the default judgment for want of personal jurisdiction. Rule 60(b)(4), Fed.R.Civ.P., authorizes the relief that Westerstrom seeks. ⁵ Bludworth argues that we may reverse a district court's decision under Rule 60(b) only for an abuse of discretion. Bludworth contends that the district court had jurisdiction over Westerstrom and that Westerstrom's delay in seeking relief precludes our finding an abuse of discretion.

Generally, we will not disturb a district court's decision to deny relief under Rule 60(b) unless the denial is "so unwarranted as to constitute an abuse of discretion." Seven Elves, Inc. v. Eskenazi, 635 F.2d 396, 402 (5th Cir.1981) (emphasis in original). When, however, a district court lacks jurisdiction over the defendant because of lack of service of process, the judgment is void and, under Rule 60(b)(4), the district court must set it aside, Recreational Properties v. Southwest Mortg. Service, 804 F.2d 311, 314 (5th Cir.1986), regardless of whether the movant has a meritorious defense, Broadcast Music, Inc. v. M.T.S. Enterprises, 811 F.2d 278, 280 (5th Cir.1987); see also Peralta v. Heights Medical Center, Inc., --- U.S. ----, 108 S.Ct. 896, 99 L.Ed.2d 75 (1988); Miner v. Punch, 838 F.2d 1407, 1410 (5th Cir.1987). Furthermore, there is generally no timeliness requirement applicable to a Rule 60(b)(4) motion. See generally 11 C. Wright & A. Miller, Federal Practice and Procedure Sec. 2862 at 197 (1973). ⁶

Thus, our inquiry in this case focuses on Bludworth's attempts to serve Westerstrom with process pursuant to the Texas long-arm statute. There are two separate prongs to this inquiry: (1) whether Westerstrom was amenable to service and (2) whether Westerstrom "was, in fact, served in the manner required by statute." Whitney v. L & L Realty Corp., 500 S.W.2d 94, 95-96 (Tex.1973); U.N.L., Inc. v. Oak Hill Photo Finishing, 733 S.W.2d 402, 404 (Tex.App.--San Antonio 1987, no writ). See also Holt Oil & Gas Corp. v. Harvey, 801 F.2d 773, 777-78 (5th Cir.1986) (discussing due process limitation on long-arm jurisdiction), cert. denied, --- U.S. ----, 107 S.Ct. 1892, 95 L.Ed.2d 499 (1987). ⁷ We begin with the service requirements under article 2031b.

A. Service of Process

Article 2031b, section 5, requires a "statement of the name and address of the home or home office of the non-resident." Westerstrom's uncontradicted affidavit established that Bludworth twice provided the Secretary of State with an address for Westerstrom which was then out of date, and had been so ever since a time prior to the filing of the suit. These incorrect addresses were those used by the Secretary of State in mailing the citations. Westerstrom never received either citation; and, he did not receive actual notice of the suit until after the district court entered the default judgment. We must decide whether such service complied with article 2031b, section 5.

In Texas, service of process under the long-arm statute must be in strict compliance with the statute. See, e.g., U.N.L., Inc., 733 S.W.2d at 404; C.W. Bollinger Ins. Co. v. Fish, 699 S.W.2d 645, 647 (Tex.App.--Austin 1985, no writ); Verges v. Lomas & Nettleton Financial Corp., 642 S.W.2d 820, 821 (Tex.App.--Dallas 1982, no writ). Thus, providing the Secretary with the "last known address" of a defendant, for example, does not strictly comply with article 2031b, section 5 ("name and address of the home or home office of the non-resident"). Verges, 642 S.W.2d at 821-23 (process mailed to defendant and returned "unclaimed"). See also Lynn McGuffy Co. v. Perfected Indus. Prod., 683 S.W.2d 781, 782 (Tex.App.--Houston [14th Dist.] 1984, writ ref'd n.r.e.); Fish, 699 S.W.2d at 647-50, 656 (long-arm statute requiring service by mail to the "last known principal place of business" not strictly complied with when citation mailed to the "last known address"). This rule effectuates the state's "strong policy that defendants ought not to be cast in personal judgment without notice." Whitney, 500 S.W.2d at 97. ⁸ It also is in accord with the requirement under Rule 60(b) that, because courts prefer adjudication on the merits, there "must be strict compliance with the legal prerequisites establishing the court's power to render the [default] judgment." Varnes v. Local 91, Glass Blowers, Etc., 674 F.2d 1365, 1369 (11th Cir.1982).

In light of this rule of strict compliance, we see little difference between service by mail to an allegedly "last known" address that is no longer a current address and service by mail to an alleged "address" that is in fact then (and at all relevant times) an out-of-date address. Accordingly, we hold...