Heineck v. Katz

• Decision Date: 26 April 2016
• Docket Number: No. ED 103557,ED 103557
• Citation: 509 S.W.3d 116
• Parties: Jamie HEINECK, Respondent, v. Daniel KATZ, Appellant.
• Court: Missouri Court of Appeals

509 S.W.3d 116

Jamie HEINECK, Respondent,

v.Daniel KATZ, Appellant.

No. ED 103557

Missouri Court of Appeals, Eastern District, DIVISION TWO .

Filed: April 26, 2016

For Appellant: Leonard Komen, Law Office of Leonard Komen, P.C., 16105 Swingley Ridge Road, #67, Chesterfield, Missouri 63006.

For Respondent: Scott L. Kolker, Defeo & Kolker, LLC, 7700 Carondelet, Suite 350, Clayton, Missouri 63105.

Philip M. Hess, Presiding Judge

Introduction

Daniel Katz (Appellant) appeals the default judgment of the Circuit Court of St. Louis County. The trial court ordered Appellant to pay Jamie Heineck (Respondent) damages in the amount of $12,000 for breach of contract. On appeal, Appellant argues that the trial court erred by granting Respondent's motion for default judgment because the trial court did not have personal jurisdiction over Appellant, and Appellant was never properly served with process. Additionally, Appellant argues that he was not required to file a motion to set aside the default judgment in order to confer jurisdiction upon this Court to hear the appeal. We vacate and remand.

Factual Background

In November 2013, Respondent filed suit against Appellant, alleging breach of an oral contract. Respondent alleged that, in July 2008, she entered into a contract with Appellant to wind up the business of Katz Mechanical Inc. in exchange for $60,000, paid in $1,000 monthly installments. Respondent claimed that Appellant stopped making $1,000 payments in September 2012. Respondent alleged that her acceptance of Appellant's offer "took place in the County of St. Louis, State of Missouri." Respondent sought money damages, court costs and attorney's fees.

Respondent attempted service on Appellant, first at an address in St. Charles County, Missouri. The process server was unable to serve Appellant at that address and attempted to serve Appellant at his parents' address. Appellant's father told the process server that Appellant no longer lived in the St. Louis area. Respondent then attempted to serve Appellant at an address in Zionsville, Indiana. Again, Respondent was unsuccessful. Respondent's third attempt was to serve Appellant at his parents' address in St. Louis County, Missouri. Appellant's father received the summons at the St. Louis County address.

In April 2015, after Appellant failed to file responsive pleadings, Respondent filed a motion for default judgment pursuant to Rule 74.05.¹ In her motion, Respondent requested that the trial court enter a judgment against Appellant in the amount of $12,000, as well as $5,000 in attorney's fees. Soon thereafter, Appellant filed his "Reply to Motion for Default Judgment" (hereinafter "reply"). In this reply, Appellant stated that he was appearing "specifically to object to the jurisdiction of this court[.]" Appellant argued that Respondent's petition failed to establish that the trial court had personal jurisdiction over Appellant because the petition: 1) did not state that Appellant was a resident of St. Louis County; 2) did not state that the cause of action arose out of a business transaction in Missouri; or 3) did not state that the cause of action arose out of a contract within Missouri. Furthermore, Appellant argued that Respondent's petition was insufficient because she failed to plead that Appellant was in the State of Missouri when he made the offer. Appellant also claimed that service of process was insufficient.²

On May 12, 2015, the trial court entered its order granting, in part, Respondent's motion for default judgment. The record does not reflect that the court ruled on Appellant's reply motion. On August 28, 2015, the court held an evidentiary hearing on damages. Respondent testified, and the court concluded that she was entitled to $12,000 in damages. The trial court also ordered Appellant to pay court costs. This appeal follows.

Discussion

Appellant raises three points on appeal. First, Appellant argues that the trial court erred by entering a default judgment because Respondent's petition failed to establish personal jurisdiction over Appellant. Second, Appellant claims that the trial court erred by entering default judgment because Appellant was not properly served with process. Third, Appellant contends that he was not required to file a motion to set aside or vacate the default judgment because his "Reply to Motion for Default Judgment" raised his legal claims and, therefore, such a motion "would have been redundant."

Respondent counters that this Court does not have jurisdiction to hear this appeal because Appellant was required to file a motion to vacate or set aside the default judgment. Moreover, Respondent argues that Appellant waived his right to challenge sufficiency of service of process and that the trial court did, in fact, have personal jurisdiction over Appellant.

After reviewing the record and the procedural history of the case, we agree with Appellant that the trial court erred in granting default judgment. However, we do not reach the merits of Appellant's arguments. Here, granting a default judgment was simply inappropriate.

Default Judgment under Rule 74.05(a)

In the present case, the trial court entered a default judgment against Appellant, after Appellant failed to file an answer. Pursuant to Rule 74.05(a), a trial court may enter default judgment against a defendant under the following circumstances:

When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules, upon proof of damages or entitlement to other relief, a judgment may be entered against the defaulting party. (Emphasis added).

Here, Appellant did not file a timely responsive pleading. However, Appellant did file his reply, raising the issues of personal jurisdiction and insufficient service of process, before the trial court entered default judgment. Rule 74.05(a) requires us to determine whether Appellant's reply amounts to Appellant otherwise defending the lawsuit. We conclude that it does.

Missouri courts have noted that Rule 74.05(d) "provides the procedure for setting aside a judgment that has been entered when a timely response to a petition has not been filed." Everest Reinsurance Co. v. Kerr, 253 S.W.3d 100, 104 (Mo.App.W.D. 2008). However, the Rule does not "contemplate the circumstances where a judgment is improvidently entered after a timely response to a petition has been filed" or the defendant "otherwise defended" the suit. O'Neill v. O'Neill, 460 S.W.3d 51, 57 (Mo.App.E.D. 2015).

In order to "otherwise defend," the defendant must take "some affirmative action ... which would operate as a bar to the satisfaction of the moving party's claim." Id. at 57.

Our review of Missouri precedent reveals that most cases in which courts have determined that a party "otherwise defended" a lawsuit involve defendants who timely filed some document with the court. See Rule 55.25(a) (providing that "[a] defendant shall file an answer within thirty days after the service of the summons and petition ..."). In Kerr, the defendant, within the time limits provided under Rule 55.25(a), filed a letter with the court clerk, stating he was "not guilty." 253 S.W.3d at 101. The Court, after considering the "crude and nonprofessional" nature of the letter, concluded that the trial court should have allowed the defendant to amend his answer because the defendant attempted to defend the lawsuit. Id. at 106. Accordingly, the Court concluded that the entry of default judgment against the defendant was error. Id.

In Beeman v. Beeman, the defendant filed a pro se motion for additional time to file her response, which the trial court neither granted nor denied. 296 S.W.3d 514, 516 (Mo.App.W.D. 2009). The trial court then entered a default judgment against the defendant. Id. The defendant filed a motion to set aside or vacate the judgment, which the trial court granted. Id. The plaintiff appealed. Id. The Court concluded that the trial court should not have entered the default judgment because the defendant "otherwise defended" the suit by filing a motion for additional time. Id. at 518. In so holding, the Court emphasized that the defendant took "affirmative action to deny [the plaintiff's] claim," and, therefore, the defendant did not default. Id.

In O'Neill v. O'Neill, this Court concluded that the defendant did not default when she sought to file her answer with the trial court at the dissolution hearing. 460 S.W.3d at 57. After receiving a copy of the petition and summons, the defendant did not file a responsive pleading. Id. at 54. The defendant appeared at the first scheduled hearing on the petition for dissolution. Id. The trial court continued the case "to allow [the defendant] opportunity to file responsive pleadings and/or hire an attorney." Id. On the day of the second scheduled hearing, the defendant attempted to file her answer with the trial court; however, the court refused to accept the pleading and entered a default judgment against the defendant. Id. On appeal, this Court concluded that a default judgment under Rule 74.05(a) was improper because the defendant had "otherwise defended" by attempting to file her answer, in accordance with the trial court's order, at the second scheduled hearing. Id. at 57.

In the present case, Appellant presented the trial court with his reply before the trial court entered default judgment. In this reply, Appellant raised the issues of personal jurisdiction and insufficient service of process, albeit unartfully so, and both defenses "operate as a bar to the satisfaction of the moving party's claim." O'Neill, 460 S.W.3d at 57. We conclude that this filing fulfilled Appellant's duty to "otherwise defend" the lawsuit pursuant to Rule 74.05(a).³

Waiver

Next, we must address whether Appellant waived the defenses of lack of personal jurisdiction and invalid service of process.⁴ Unlike in Kerr, Beeman, and O'Neill, Appellant did not raise these defenses within the thirty day time limit...