Genoff Farms Inc. v. Seven Oaks South Llc

• Decision Date: 31 January 2011
• Docket Number: No. 107,746.,107,746.
• Citation: 249 P.3d 526,2011 OK CIV APP 29
• Parties: GENOFF FARMS, INC., Plaintiff/Appellee,v.SEVEN OAKS SOUTH, LLC, Defendant/Appellant,andConsolidated Construction Co., Inc., Defendant.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

249 P.3d 526

2011 OK CIV APP 29

GENOFF FARMS, INC., Plaintiff/Appellee,

v.SEVEN OAKS SOUTH, LLC, Defendant/Appellant,andConsolidated Construction Co., Inc., Defendant.

No. 107,746.

Court of Civil Appeals of Oklahoma, Division No. 2.

Jan. 31, 2011.

Released for Publication by Order of the Court

of Civil Appeals of Oklahoma, Division No. 2.

Appeal from the District Court of Tulsa County, Oklahoma; Honorable Russell P. Hass, Trial Judge.REVERSED AND REMANDED FOR FURTHER PROCEEDINGS.John W. Anderson, Jr., John W. Anderson Jr., PC, Tulsa, OK, for Plaintiff/Appellee.Jessie V. Pilgrim, Levinson, Smith & Huffman, PC, Tulsa, OK, for Defendant/Appellant.JANE P. WISEMAN, Judge.

¶ 1 Seven Oaks South, LLC (Defendant) appeals from the trial court's order denying its motion to vacate default judgment. Based on our review of the facts and applicable law, we reverse and remand for further proceedings.

FACT AND PROCEDURAL BACKGROUND

¶ 2 On November 7, 2008, Plaintiff Genoff Farms, Inc., initiated this lawsuit against Defendant asserting claims for breach of contract and unjust enrichment for an alleged failure to pay Plaintiff $9,432 for labor and materials in providing grass sod “for the common areas of the Seven Oaks South subdivision” ¹ in Broken Arrow, Oklahoma.

¶ 3 On January 16, 2009, Plaintiff filed a “notice of intent to proceed after refusal of service” and mailed a copy to Defendant's registered service agent in which it is stated that if Defendant made no appearance within 10 days, a default judgment would be rendered. On March 6, 2009, Plaintiff filed an application for default judgment against Defendant for failing to answer or respond to the petition. On March 17, 2009, the trial court granted Plaintiff's motion and entered judgment against Defendant for $9,432 for failing to pay for the sod, its installation, and related services. The trial court also granted Plaintiff attorney fees in the amount of $2,000 and costs in the amount of $222.30 for a total judgment of $11,654.30, “all of which shall bear interest at the statutory judgment rate of 5.25%” as stated in the Journal Entry of Default Judgment filed on March 30, 2009.

¶ 4 On July 24, 2009, Defendant filed a motion to vacate the default judgment asserting that because the summons and petition were not served on Seven Oaks, it had no notice of the existing lawsuit. Defendant asserts (1) the default judgment is void and should be vacated pursuant to 12 O.S.2001 § 1038, (2) the default judgment should be vacated pursuant to 12 O.S.2001 § 1031(3) due to irregularities in obtaining the judgment, and (3) the default judgment should be vacated pursuant to 12 O.S. Supp.2008 § 2004(C)(2)(c) because “any refusal of the delivery of process was by an unauthorized person.”

¶ 5 Plaintiff responded contending Defendant's failure to comply with the provisions of “Oklahoma's Corporation Act does not constitute an ‘irregularity’ within the meaning of § 1031(3) sufficient to vacate [Plaintiff's] judgment.” Plaintiff also argued Defendant's proceeding to vacate should have been filed pursuant to 12 O.S.2001 § 1033 as a “petition to vacate, verified, and served upon [Plaintiff] as in the commencement of a civil action.”

¶ 6 In an order filed November 12, 2009, the trial court denied Defendant's motion to vacate the default judgment.

¶ 7 Defendant appeals.

STANDARD OF REVIEW

¶ 8 “The standard of review of a trial court's ruling either vacating or refusing to vacate a judgment is abuse of discretion.” Ferguson Enters., Inc. v. H. Webb Enters., Inc., 2000 OK 78, ¶ 5, 13 P.3d 480, 482. The Oklahoma Supreme Court has stated in Hassell v. Texaco, Inc., 1962 OK 136, ¶ 14, 372 P.2d 233, 235, “[a]n application to vacate a judgment is addressed to the sound legal discretion of the trial court and the order made thereon will not be disturbed on appeal unless it clearly appears that the trial court has abused its discretion.”

¶ 9 When reviewing a trial court's refusal to vacate a default judgment, we consider the following:

1) default judgments are not favored; 2) vacation of a default judgment is different from vacation of a judgment where the parties have had at least one opportunity to be heard on the merits; 3) judicial discretion to vacate a default judgment should always be exercised so as to promote the ends of justice; 4) a much stronger showing of abuse of discretion must be made where a judgment has been set aside than where it has not.

Ferguson, 2000 OK 78 at ¶ 5, 13 P.3d at 482. “We also consider whether substantial hardship would result from granting or refusing to grant the motion to vacate.” Id.

¶ 10 However, we review whether a default judgment is void from the face of the judgment roll as a legal question subject to de novo review. See Booth v. McKnight, 2003 OK 49, ¶ 12, 70 P.3d 855, 860.

ANALYSIS

¶ 11 The trial court's reason for its denial is unstated in its order, but the docket Entry of October 27, 2009, states that the “motion to vacate default judgment is denied. [Defendant] Seven Oaks to proceed by petition to vacate.” Plaintiff states in its appellate brief that the trial court denied Defendant's “motion on procedural grounds.” We must first address Plaintiff's argument that Defendant's motion to vacate was procedurally deficient.

¶ 12 Pursuant to 12 O.S.2001 § 1031.1, a trial court has discretion to open, modify, or vacate a default judgment on its own initiative or by motion not later than thirty days after the rendition of the judgment, decree, or appealable order. When more than thirty days have passed since the entry of the order, 12 O.S.2001 § 1031.1(C) requires that certain proceedings to vacate conform to 12 O.S.2001 § 1033, which provides:

If more than thirty (30) days after a judgment, decree, or appealable order has been filed, proceedings to vacate or modify the judgment, decree, or appealable order, on the grounds mentioned in paragraphs 2, 4, 5, 6, 7, 8, and 9 of Section 1031 of this title, shall be by petition, verified by affidavit, setting forth the judgment, decree, or appealable order, the grounds to vacate or modify it, and the defense to the action, if the party applying was defendant. On this petition, a summons shall issue and be served as in the commencement of a civil action. ¶ 13 The Journal Entry of Judgment by default was filed on March 30, 2009. Defendant filed its motion to vacate default judgment almost four months later on July 24, 2009, asserting as grounds for vacation both 12 O.S.2001 § 1038 (vacation of a void judgment) and 12 O.S.2001 § 1031(3) (irregularity in obtaining the judgment). Contrary to Plaintiff's contention, Defendant may, as a matter of procedure, seek to vacate the judgment by motion on either of these two stated grounds, rather than by petition. Both § 1038 and 12 O.S.2001 § 1032 ² provide for proceedings by motion, and we reject Plaintiff's argument to the contrary.

¶ 14 Section 1038 provides in part that “[a] void judgment, decree or order may be vacated at any time, on motion of a party, or any person affected thereby.” 12 O.S.2001 § 1038.³ “A judgment or order is facially void when the face of the record reveals one of the three elements of jurisdiction was absent, i.e., jurisdiction over the parties, jurisdiction over the subject matter, or jurisdictional power to pronounce the particular decision that was entered, is shown to have been absent.” In re Estate of Davis, 2006 OK CIV APP 31, ¶ 21, 132 P.3d 609, 613. However, this provision only applies when the “invalidity appears on the face of the judgment roll, i.e., when the record affirmatively shows the trial court lacked jurisdiction.” Id. As stated in Graff v. Kelly, 1991 OK 71, ¶ 7, 814 P.2d 489, 492, “[t]he judgment roll is the same as the ‘record’ and is made up of the petition, the process, return, the pleadings subsequent thereto, reports, verdicts, orders, judgments, and all material acts and proceedings of the court.” Accordingly, we must examine the judgment roll and determine whether the trial court's order is void on its face and subject to vacation under § 1038.

¶ 15 Defendant asserts the default judgment is void on its face because there was no valid service of process. See Graff, 1991 OK 71, 814 P.2d 489 (finding that the default judgment was void on its face for lack of in personam jurisdiction because the record established that default judgment was entered without valid service of process); see also Ferguson, 2000 OK 78 at ¶ 11, 13 P.3d 480 at 484 (“If the record does not reflect that personal service has been made on the defendant, the court lacks in personam jurisdiction over the defendant and any default judgment rendered thereon is void and subject to vacation.”)

¶ 16 The applicable provisions of the service of process statute, 12 O.S. Supp.2008 § 2004(C)(2), provide the following:

a. At the election of the plaintiff, a summons and petition may be served by mail by the plaintiff's attorney, any person authorized to serve process pursuant to subparagraph a of paragraph 1 of this subsection, or by the court clerk upon a defendant of any class referred to in division (1), (3), or (5) of subparagraph c of paragraph 1 of this subsection. Service by mail shall be effective on the date of receipt or if refused, on the date of refusal of the summons and petition by the defendant.

....

c. Service by mail shall not be the basis for the entry of a default or a judgment by default unless the record contains a return receipt showing acceptance by the defendant or a returned envelope showing refusal of the process by the defendant .... In the case of an entity described in division (3) of subparagraph c of paragraph 1 of this subsection, acceptance or refusal by any officer or by any employee of the registered office or principal place of business who is authorized to or who regularly receives certified mail shall constitute acceptance or refusal by the party addressed.... If delivery of the process is refused, upon the...