Knight Adjustment Bureau v. Funaro
| Decision Date | 24 June 2021 |
| Docket Number | No. 20190779-CA,20190779-CA |
| Citation | 495 P.3d 221 |
| Parties | KNIGHT ADJUSTMENT BUREAU, Appellee, v. Michael FUNARO, Appellant. |
| Court | Utah Court of Appeals |
Ronald Ady, Salt Lake City, Attorney for Appellant
Jay V. Barney, Attorney for Appellee
Opinion
¶1 Michael Funaro successfully moved to set aside a default judgment obtained against him by Knight Adjustment Bureau (Knight) on the grounds that he was never properly served with the complaint. Knight ultimately chose not to serve Funaro and voluntarily dismissed the case. Although the judgment was set aside and the case dismissed, Funaro now appeals, arguing that the district court should have gone further by dismissing the case with prejudice and awarding him attorney fees. We conclude that the court correctly denied Funaro's request to dismiss the case with prejudice. However, we conclude that the court had jurisdiction to entertain Funaro's motion for attorney fees, and we remand for the court to determine whether Funaro is entitled to those fees as the prevailing party.
¶2 In 2009, Funaro co-signed an auto loan for his wife's friend (the friend). The friend defaulted on the loan, and Knight, the assignee of the loan financer, filed suit against Funaro and the friend.
¶3 Knight filed the complaint, summons, and a proof of service with the district court in mid-April 2012. The process server affirmed that he had personally served Funaro with a copy of the complaint and summons on April 4, but he noted the following "Additional Information Pertaining to this Service":
4/4/2012 11:45 am Man answered door, was upset, I asked if he was Michael Funaro, he said he didn't need to tell me. I asked for ID, he said I am not a cop and shut the door. Spoke with the neighbors who said a man & woman live[ ] there. I felt it is [Funaro] & [the friend]. I left serv[ice] at the door.
¶4 Neither Funaro nor the friend filed an answer or otherwise appeared in the matter. Consequently, the district court entered default judgments against both of them.
¶5 Funaro first learned of the judgment six years later when his wages were garnished. Shortly thereafter, Funaro filed a motion pursuant to rule 60(b)(4) of the Utah Rules of Civil Procedure, asking the court to set aside the default judgment against him. In support of the motion, Funaro declared that he had not lived at the listed address since 2010 and never received the complaint and summons. Funaro argued that the service of process was "facially insufficient because it asserts only that the summons and complaint were served upon an unidentified man without ever determining whether the address where service was effected was Mr. Funaro's residence or usual place of abode." Because the purported service was defective, Funaro argued that the district court never acquired personal jurisdiction over him and was required to set aside the default judgment as void. In connection with the rule 60(b)(4) motion, Funaro further argued that the entire case should be dismissed with prejudice because Knight never properly commenced the action and because the applicable statute of limitations had since run. Funaro also requested an award of attorney fees as the prevailing party.
¶6 The district court scheduled an evidentiary hearing, but before Funaro called his first witness, Knight conceded that the evidence would show that Funaro had not been personally served. Accordingly, the court set aside the default judgment as void. However, it denied Funaro's motion to dismiss with prejudice, explaining that "failure to serve a defendant ... doesn't result in dismissal" but "just means [the court does not] have jurisdiction over that defendant" until he is properly served. The court recognized that once service was accomplished, Funaro could proceed to raise his untimeliness arguments along with any other defenses. The court also declined to rule on Funaro's request for attorney fees on the ground that the case was still ongoing and Funaro had not yet prevailed.
¶7 Knight ultimately chose not to serve Funaro. Instead, it filed a notice of voluntary dismissal without prejudice pursuant to rule 41(a) of the Utah Rules of Civil Procedure.
¶8 Funaro responded by filing a motion for attorney fees, arguing that he was the prevailing party because the applicable statute of limitations had run and Knight would not be able to refile the lawsuit. Funaro argued that because Knight never served the summons and complaint on Funaro, it never properly commenced the action under rule 3(a)(2) of the Utah Rules of Civil Procedure and could not avail itself of the savings statute, which allows a plaintiff to commence a new action within one year when a "timely filed" action fails "otherwise than upon the merits." See Utah Code Ann. § 78B-2-111(1) (LexisNexis 2018). Therefore, Funaro argued, Knight's voluntary dismissal was "effectively a dismissal with prejudice due to the intervening statute of limitations." And because he defeated Knight's claim, Funaro asserted that he was the prevailing party and entitled to attorney fees pursuant to Utah's reciprocal fee statute. See id. § 78B-5-826.
¶9 Knight opposed Funaro's motion for attorney fees, arguing that its voluntary dismissal deprived the court of jurisdiction to take any further action. Knight further argued that, if Funaro's arguments were correct, then the court lacked jurisdiction to consider the motion because Funaro was never served, and thus the court never obtained personal jurisdiction over him.
¶10 After full briefing, the district court denied Funaro's motion for attorney fees. The court explained that if it assumed, without deciding, "that Funaro is correct and that neither [Funaro nor the friend] was served with process and, therefore, no action was ever commenced, then the Court never acquired jurisdiction over the instant action." And if it never acquired jurisdiction, the court reasoned, it lacked the power to take any action beyond dismissing the case. The court summarized its decision by stating, "Whether [Knight] never commenced an action, whether it was deemed dismissed back in 2012, or whether it was voluntarily dismissed by [Knight] this year, it is clear that nothing remains pending before the Court at this time."
¶11 Funaro now appeals, challenging the court's ruling on multiple grounds. First, he argues that the district court should have dismissed the case with prejudice for lack of subject matter jurisdiction because Knight never properly commenced the action by serving him with the summons and complaint. Second, Funaro argues that the district court should have dismissed the case with prejudice because the statute of limitations had run. Third, Funaro argues that the district court erred in ruling that it lacked jurisdiction to entertain his motion for attorney fees. Although Funaro maintains that the court lacked subject matter jurisdiction over the action generally, he contends that the court obtained "separate subject matter jurisdiction" over his motion for attorney fees pursuant to his rule 60(b) motion.
¶12 The first and third issues involve jurisdictional questions. "Whether a district court has subject matter jurisdiction over a proceeding is a matter of law, which we review for correctness." In re adoption of B.B. , 2017 UT 59, ¶ 16, 417 P.3d 1. As to the second issue, whether the district court properly declined to rule on the statute of limitations defense involves interpretation of the rules of civil procedure and questions of ripeness, both of which we also review for correctness. See Ghidotti v. Waldron , 2019 UT App 67, ¶ 8, 442 P.3d 1237 (); Heughs Land, LLC v. Holladay City , 2005 UT App 202, ¶ 5, 113 P.3d 1024 (ripeness).
¶13 On appeal, both parties take the position that the district court never acquired subject matter jurisdiction over this case because the action was never commenced by service of the summons and complaint as contemplated by rule 3(a)(2) of the Utah Rules of Civil Procedure. Funaro maintains that by failing to properly serve him or the friend, Knight "also failed to invoke the district court's subject matter jurisdiction over [its] claims." As a result, Funaro contends, Knight could not voluntarily dismiss the case without prejudice.1 For its part, Knight maintains that the lack of subject matter jurisdiction means that the district court did not have authority to entertain Funaro's request to dismiss the case with prejudice or to award attorney fees.
¶14 Rule 3 of the Utah Rules of Civil Procedure governs the commencement of a civil action. That rule provides, in relevant part, as follows:
¶15 Funaro argues that because he was never properly served, the action was never "commenced" under rule 3(a)(2) and therefore the district court never obtained jurisdiction under rule 3(b). Alternatively, he argues that because the proof of service was insufficient on its face, the action was "deemed dismissed on April 14, 2012, ten days after the date of the alleged service," and...
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Am. United Family of Credit Unions v. Murray
...P.3d 171 ; Sanders v. Sanders , 2021 UT App 122, ¶¶ 11–12, 502 P.3d 1230 ; Knight Adjustment Bureau v. Funaro , 2021 UT App 65, ¶¶ 20–21, 495 P.3d 221. ¶29 Murray has not suggested that the court lacked personal jurisdiction over him. And as for subject matter jurisdiction, Murray has provi......
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Am. United Family of Credit Unions v. Murray
...391 P.3d 171; Sanders v. Sanders, 2021 UT App 122, ¶¶ 11-12, 502 P.3d 1230; Knight Adjustment Bureau v. Funaro, 2021 UT App 65, ¶¶ 20-21, 495 P.3d 221. Murray has not suggested that the court lacked personal jurisdiction over him. And as for subject matter jurisdiction, Murray has provided ......
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