Leedo Cabinetry v. James Sales & Distribution, Inc.

• Decision Date: 19 October 1998
• Docket Number: No. 97-20820,97-20820
• Citation: 157 F.3d 410
• Parties: LEEDO CABINETRY, Plaintiff-Appellee, v. JAMES SALES & DISTRIBUTION, INC., et al., Defendants, American Kitchen & Bath Inc. and James Lange, Individually, Defendants-Appellants. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 410

157 F.3d 410

41 Fed.R.Serv.3d 1624

LEEDO CABINETRY, Plaintiff-Appellee, v. JAMES SALES & DISTRIBUTION, INC., et al., Defendants American Kitchen & Bath Inc. and James Lange, Individually Defendants-Appellants.

No. 97-20820

Summary Calendar.

United States Court of Appeals Fifth Circuit.

Oct. 19, 1998.

Lonny Jacob Hoffman, Schlanger, Mills, Mayer & Grossberg, Houston, TX, for Plaintiff-Appellee.

Mark A. Sanders, McGlinchey, Stafford & Lang, Houston, TX, for Defendants-Appellants.

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

Before DAVIS, BENAVIDES and PARKER, Circuit Judges.

ROBERT M. PARKER, Circuit Judge:

Appellants American Kitchen & Bath (AKB) and James Lange appeal from an entry of default judgment and order denying a motion to vacate default judgment. We affirm in part, vacate in part, and remand.

BACKGROUND

Leedo Cabinetry ("Leedo") sold cabinets to James Sales & Distribution, Inc., ("James Sales"), a wholesale distributor of cabinets and other items. James Sales sold cabinetry to AKB, a retailer with multiple retail outlets in Chicago and surrounding areas. James Lange is the Chief Executive Officer of James Sales and AKB. AKB's home office and principal place of business is located at 2211 North Elston, Chicago, Illinois.

Leedo sold cabinets to James Sales and shipped them to James Sales' warehouse at 15535 South Lathrop, Harvey, Illinois 60426, but was never paid. On July 21, 1997, Leedo filed suit against AKB, Lange, and James Sales seeking preliminary and permanent injunctive relief and a writ of sequestration. On July 29, 1997, James Sales filed for bankruptcy. Through the bankruptcy proceedings, Southwest Financial Bank & Trust Co. obtained possession of the cabinets as collateral for a loan to James Sales. Thus, Leedo abandoned its attempt to sequester the cabinets from James Sales.

Leedo served process on AKB and Lange by serving the Texas Secretary of State under the Texas Long Arm Statute. The address given by Leedo for AKB was for one of the satellite retail locations at 2450 Sibley Blvd., Posen, Illinois 60469. Lange was listed with the Illinois Secretary of State as being the registered agent for service of process for AKB at the Sibley Blvd, Posen address. However, AKB claims that Leedo knew that AKB's home office was at the North Elston, Chicago address.

The Texas Secretary of State issued a certification of service which indicated that return receipt was received by "Addressee's Agent"; nothing in the record showed that Lange was served with process. Lange filed a sworn affidavit stating that he never received service on behalf of AKB.

Leedo attempted service upon Lange, individually, by requesting the Texas Secretary of State to forward process to the James Sales location on North Lathrop in Harvey, Illinois. As a result of the James Sales bankruptcy, the Harvey location was vacated and locked before July 24, 1997. Thus, the Secretary of State's certification for Lange reflected the return receipt as having the notation, "Forwarding Order Expired." Lange's home address during this entire period of time was 17809 Park, Lansing, Illinois 60438. Lange was never served at his home address.

Leedo obtained a default judgment against AKB and Lange, individually. Without conducting

an evidentiary hearing, the district court awarded Leedo $171,713.49. AKB and Lange moved to set aside the default on the grounds that Leedo failed to perfect service of process and challenging the amount awarded without the court holding an evidentiary hearing. The district court denied the motion to vacate default judgment in a one-sentence order. AKB and Lange timely appeal.

ANALYSIS

I. Denial of Motion to Set Aside Default

The district court denied AKB and Lange's motion to set aside the default judgment under Federal Rule of Civil Procedure 60(b). 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." Bludworth Bond Shipyard, Inc. v. M/V Caribbean Wind, 841 F.2d 646, 649 (5th Cir.1988). However, when a district court lacks jurisdiction over a defendant because of lack of service of process, the default judgment is void and must be set aside under Rule 60(b)(4). Id.

AKB and Lange argue that Leedo failed to comply with the Texas Long Arm Statute which provides in pertinent part:

§ 17.045. Notice to Nonresident

(a) If the secretary of state is served with duplicate copies of process for a nonresident, he shall require a statement of the name and address of the nonresident's home or home office and shall immediately mail a copy of the process to the nonresident.

Tex. Civ. Prac. & Rem.Code § 17.045(a).

A. American Kitchen & Bath

Under the Texas Long Arm Statute, Leedo had to provide the Secretary of State the home office address of AKB. AKB maintains that its home office is located at 2211 North Elston, Chicago, Illinois, and that Leedo was aware of this address due to prior dealings between Leedo's representatives and Lange. However, Leedo provided the Texas Secretary of State with one of AKB's satellite retail locations address at Sibley Blvd., Posen, Illinois. Leedo chose this address because AKB listed the Sibley Blvd-Posen address with the Illinois Secretary of State as the correct address for service of process. Additionally, the sales agreement between Leedo and James Sales and AKB had the Sibley Blvd-Posen address. See Plaintiff's Original Petition, Exhibit A. Regarding service on AKB, the Texas Secretary of State's certificate reflected that the certified mail return receipt bore the signature of "Addressee's Agent" at the Sibley Blvd-Posen address.

The Texas Long Arm Statute provides no definition for "home" or "home office." See Tex. Civ. Prac. & Rem.Code §§ 17.044, 17.045 (Vernon 1997). See also Mahon v. Caldwell, Haddad, Skaggs, Inc., 783 S.W.2d 769 (Tex.App.-Fort Worth 1990, no writ). Although no Texas case addresses the precise issue before the court, Mahon ¹ offers some guidance. In Mahon, the court held inter alia that "where only one address is given in a contract as the business address it is the 'home office' of the party using such address." Id. at 771. The actual address of the home office was much clearer in Mahon as that address was the only address to appear in all documents in the record. In this case, the Sibley Blvd-Posen address appears in the sales contract, the Harvey, Illinois address appears in various invoices throughout the record as the cabinets were shipped to that address, and two Leedo representatives met Lange at the actual home office (the North Elston-Chicago address). Nonetheless, the Mahon court singled out the only address given in the contract as being the "home office" for purposes of the Long Arm Statute.

In this case, we need not rely solely on the argument that the Sibley Blvd-Posen address was the only address to appear in the sales agreement, because it also was the address provided by AKB to the Illinois Secretary of State as the correct address for service of process. We conclude that Leedo provided AKB's home office address for purposes of the Long Arm Statute. Even if the Sibley Blvd-Posen address was not in fact the home office of AKB, AKB held out the Sibley Blvd-Posen address as its home office by registering that address with the Illinois Secretary of State and by placing it as the only address in the sales agreement. We find it disingenuous for AKB to argue otherwise. The objective of the Texas Long Arm Statute is to provide reasonable notice of the suit and an opportunity to be heard. See Barnes v. Frost National Bank, 840 S.W.2d 747, 750 (Tex.App.--San Antonio 1992, no writ). That objective has been satisfied.

Alternatively, AKB argues that this court should set aside the default judgment under Fed.R.Civ.P. 60(b) for good cause. See CJC Holdings, Inc. v. Wright & Lato, Inc., 979 F.2d 60 (5th Cir.1992). AKB maintains that good cause exists because it did not expect that Leedo had a viable claim against it and upon receipt of the Original Petition, Lange could have been confused as to which company was alleged to be liable on the debt for cabinets in the possession of James Sales. We fail to see how this establishes good cause. Finally, AKB argues that it has a meritorious defense because the documents appended to the Original Petition fall short of even raising an inference that a debt was owed to Leedo by AKB. We disagree. AKB signed the Security Agreement. Further, AKB failed to cite any authority on appeal or below to support the argument that it had a meritorious defense. We find that the district court did not abuse its discretion.

Accordingly, the denial of the motion to set aside default judgment against AKB is affirmed.

B. James Lange

Under the Texas Long Arm Statute, Leedo had to provide the Secretary of State with Lange's home address which was 17809 Park, Lansing, Illinois 60438. Lange was never served at this address. Leedo attempted service upon Lange, individually, by requesting the Texas Secretary of State to forward process to the James Sales location on North Lathrop in Harvey, Illinois. As a result of the James Sales bankruptcy, the...