Foremost Ins. Co. v. Whitaker, 93-CA-000021-MR

• Decision Date: 03 February 1995
• Docket Number: No. 93-CA-000021-MR,93-CA-000021-MR
• Citation: 892 S.W.2d 607
• Parties: FOREMOST INSURANCE COMPANY, Appellant, v. Lyndell WHITAKER, Appellee.
• Court: Kentucky Court of Appeals

Page 607

892 S.W.2d 607

FOREMOST INSURANCE COMPANY, Appellant, v. Lyndell WHITAKER, Appellee.

No. 93-CA-000021-MR.

Court of Appeals of Kentucky.

Feb. 3, 1995.

Susan D. Phillips and William P. Swain, Boehl, Stopher & Graves, Louisville, for appellant.

Victor E. Tackett, Louisville, for appellee.

Before EMBERTON, JOHNSON and MILLER, JJ.

JOHNSON, Judge:

Foremost Insurance Company (Foremost), a Michigan corporation licensed to do business in Kentucky, appeals from a decision by the Jefferson Circuit Court denying its motion to set aside a default judgment entered against it for $431,930.00 plus pre-judgment and post-judgment interest arising from Foremost's alleged breach of contract. Finding that the trial court lacked personal jurisdiction over Foremost due to insufficient service of process thereby rendering the judgment void, we reverse.

On August 7, 1991, Lyndell Whitaker (Whitaker) sued Foremost in the Jefferson Circuit Court for recovery of commissions allegedly due him for his services as a countersignature agent for Foremost in Kentucky. Because of Foremost's status as a foreign insurer, process was forwarded to the Kentucky Secretary of State for service by certified mail.

At the time the Secretary of State received the service and summons, Foremost had on file with that office a form entitled "Kentucky Designation of Person to Receive Legal Process" designating "John H. Blue, Senior Vice-President of Foremost Insurance Company, 5253-36th Street, S.E., P.O. Box 2450 Grand Rapids, Michigan 49501" as the person to receive lawful process for suits filed against Foremost in Kentucky.

The return of the Secretary of State to the Jefferson Circuit Court indicates that on August 9, 1991, a copy of the summons and complaint was mailed to Foremost addressed as follows:

FOREMOST INSURANCE COMPANY

P.O. Box 2450

Grand Rapids, MI 49501

The process was not directed to the attention of the individual designated to receive it. The return receipt indicates that on August 12, 1991, the documents forwarded by the Secretary of State were signed for by Tom Bridges, discovered later by Foremost to be an employee of a mail delivery service that picked up mail from approximately 15 post office boxes belonging to Foremost for delivery to its offices.

After its apparent receipt by Mr. Bridges, Foremost never acquired possession of the certified letter or its contents, nor did it learn of the pendency of Whitaker's suit. To date, Foremost has not discovered the whereabouts of the process received by Mr. Bridges.

On August 21, 1991, the Secretary of State advised the Jefferson Circuit Clerk of its service of process upon Foremost. That notification was received and recorded by the Clerk on August 22, 1991. Because of Foremost's failure to answer, Whitaker moved for default judgment, which was entered September 11, 1991, 21 days after the Clerk's receipt of the Secretary of State's notification pertaining to the alleged service upon Foremost. After a hearing to determine damages conducted in Foremost's absence, the trial court entered judgment on October 17, 1991, against Foremost in the amount of $381,930.00 plus $50,000.00 in punitive damages and prejudgment and post-judgment interest at 12 percent.

Foremost received its first notification of these proceedings in a letter from Whitaker's counsel demanding payment dated October 20, 1992, a period of one year and three days after entry of final judgment. Immediately upon receipt of this letter, Foremost retained counsel and moved to set aside the default judgment. The motion was denied on December 9, 1992, and this appeal followed.

On appeal, Foremost argues that the trial court erred for three reasons. First, Foremost argues that the default judgment is void as a matter of law under CR 60.02(e) in view of the Secretary of State's failure to follow statutory mandates in effecting service of process. Second, Foremost argues alternatively that the judgment is voidable under CR 60.02(f) for other reasons of an extraordinary nature and that the trial court abused its discretion in failing to grant relief. Finally, Foremost argues that the judgment should be set aside because Foremost was denied due process of law. Because Foremost's first contention is dispositive of this appeal, we shall direct our discussion to that argument alone.

CR 55.02 provides: "For good cause shown the court may set aside a judgment by default in accordance with Rule 60.02." CR 60.02 provides in relevant part: "On motion, a court may, upon such terms as are just, relieve a party or his legal representative from its final judgment, order, or proceeding upon the following grounds: ... (e) the judgment is void...."

The sole question for determination is whether the default judgment entered by the trial court is void because it lacked personal jurisdiction over Foremost due to insufficient service of process as a result of the Secretary of State's failure to adhere to specific statutory procedures in effecting service upon Foremost.

One of the requirements that a foreign insurer such as Foremost must meet to obtain a certificate of authority from the Commissioner of Insurance to do business in Kentucky is the furnishing of the name and address of the person to whom the Secretary of State should forward lawful process served upon him. KRS 304.3-150(7). As indicated earlier, Foremost had on file with the Secretary of State a form designating John H. Blue, Senior Vice-President, as the person to receive process at Foremost's address.

KRS 304.3-230 designates the Secretary of State as attorney for service of process on foreign insurers. In pertinent part, that statute provides:

(1) Upon issuance of a certificate of authority to do business in this state, the...