Northbrook Indem. Co. v. Westgate, Ltd.

• Decision Date: 21 April 2000
• Citation: 769 So.2d 890
• Parties: NORTHBROOK INDEMNITY COMPANY v. WESTGATE, LTD., a partnership, d/b/a Westgate Shopping Center.
• Court: Alabama Supreme Court

769 So.2d 890

NORTHBROOK INDEMNITY COMPANY v. WESTGATE, LTD., a partnership, d/b/a Westgate Shopping Center.

1980619.

Supreme Court of Alabama.

April 21, 2000.

Davis Carr, Paul V. Lagarde, and Kathleen Cobb Kaufman of Carr, Alford, Clausen & McDonald, L.L.C., Mobile; and Kenneth T. Fuller of Cassady, Fuller & Marsh, Enterprise, for appellant.

Bibb Allen, John M. Laney, Jr., and Deborah Alley Smith of Rives & Peterson, P.C., Birmingham, for appellee. On Application for Rehearing

SEE, Justice.

The opinion of November 24, 1999, is withdrawn, and the following is substituted therefor.

The defendant, Northbrook Indemnity Company ("Northbrook"), appeals from an order denying its Rule 60(b), Ala. R. Civ. P., motion for relief from a default judgment in favor of the plaintiff, Westgate, Ltd. ("Westgate"). Northbrook suffered a default judgment in the amount of $1,167,000, including $1 million in punitive damages, after it failed to answer Westgate's complaint. Northbrook argues that the judgment is void because, it says, Westgate did not properly serve process on Northbrook. We agree, and we reverse and remand.

I.

Westgate owns a shopping center in Enterprise. The shopping center was damaged by Hurricane Opal in October 1995. At the time, Westgate had in effect an insurance policy issued by Northbrook that covered the shopping center for the period June 1995 through June 1996.¹ Westgate filed claims based on property damage and loss of rent that resulted from the hurricane. Northbrook paid some of Westgate's claims, but refused to pay Westgate's claim for $2,000 for an air conditioner starter and its claim for $15,000 for lost rent. Westgate alleges that Northbrook's failure to pay the disputed $17,000 ruined Westgate's relationship with its lender and caused Westgate to have to refinance with another lender, an arrangement that Westgate alleges will cost it $150,000 more than the financing arrangement it says it lost. Westgate had outstanding debt that was secured by the shopping-center property, and its loss of rental income while the shopping center was undergoing repairs exacerbated preexisting cash-flow problems.

When Northbrook insured Westgate, Northbrook was a wholly owned subsidiary of Allstate Insurance Company ("Allstate"). Allstate's home office was at 51 West Higgins Road, South Barrington, Illinois. Northbrook's home office was also listed at this address in Westgate's 1995-96 insurance policy. Allstate had authorized a courier service, Amigo Delivery Service, to sign for and pick up, at the South Barrington post office, all mail addressed to 51 West Higgins Road and to deliver it to the mail room at 51 West Higgins Road.

Effective August 1, 1996, Allstate sold Northbrook to St. Paul Insurance Company ("St. Paul"). After the sale, Northbrook moved its activities from 51 West Higgins Road to other locations. After December 1997, Northbrook had no employees at 51 West Higgins Road and no longer conducted business at that address. Neither Allstate nor Northbrook changed the arrangement whereby Amigo Delivery Service employees would sign for and pick up all mail addressed to 51 West Higgins Road. However, Northbrook had arranged with Allstate for it to forward to St. Paul's home office in Minnesota all mail addressed to Northbrook at 51 West Higgins Road. St. Paul's company policy is that papers in any action against Northbrook filed in the United States and relating to a claim from Alabama are to be sent to St. Paul's regional claims office in Atlanta, Georgia. St. Paul's Atlanta regional claims office maintains a "suit log" and a "suit binder." St. Paul's policy is to list in the suit log all lawsuits for which the regional claims office receives process and to place a copy of those documents in the suit binder.

On February 6, 1998, Westgate sued Northbrook, asserting claims based on an alleged breach of an insurance contract and an alleged bad-faith failure to pay insurance claims, and seeking compensatory and punitive damages. Westgate requested the court to direct service of process on Northbrook by certified mail at the 51 West Higgins Road address. On February 12, 1998, Hector Ramon, an Amigo Delivery Service employee, signed the certified-mail receipt for Westgate's summons and complaint. Northbrook alleges that it does not know what happened to the summons and complaint after Ramon signed the receipt and apparently received the documents. There was no record of the summons and complaint in the suit log and no copy of those documents in the suit binder at the Atlanta regional claims office.

On May 4, 1998, Westgate applied for an entry of default against Northbrook. The court clerk entered a default that day. Westgate mailed a copy of its application for entry of default to Northbrook at the 51 West Higgins Road address. On June 18, 1998, Westgate applied for a judgment based on the default. Westgate mailed a copy of its application for entry of judgment to Northbrook at the 51 West Higgins Road address. On July 10, the trial court held an evidentiary hearing, at which Westgate offered evidence to support its claims. At the conclusion of that hearing, the court entered against Northbrook a default judgment in the amount of $1,167,000. The court clerk, by certified mail addressed to 51 West Higgins Road, attempted to serve Northbrook with a copy of the default judgment. On July 30, Hector Ramon signed a certified-mail receipt for that copy.

On September 16, 1998, Northbrook moved the court for Rule 60(b), Ala. R. Civ.P., relief from the default judgment. The trial court denied the motion, holding that Northbrook had offered no evidence to support a finding that its failure to answer the complaint was due to excusable neglect.² On January 6, 1999, Northbrook filed a notice of appeal from the trial court's order denying its motion to set aside the default judgment.

II.

Northbrook argues that the trial court erred in denying its motion for relief from the default judgment, because, it argues, the judgment is void. See Rule 60(b)(4), Ala. R. Civ.P.³ Specifically, Northbrook argues that Westgate did not serve process on it in accordance with Rule 4(c)(6), Ala. R. Civ.P. Rule 4(c) provides:

"Service of process ... shall be made as follow:

". . . .

"(6) ... Upon a corporation, either domestic or foreign, by serving the agent authorized by appointment or by law to receive service of process or by serving the corporation by certified mail at any of its usual places of business or by serving an officer or an agent of the corporation...."

Northbrook asserts that Hector Ramon was not authorized by appointment or by law to receive service of process for Northbrook, that Ramon was not an officer or agent of Northbrook, and that 51 West Higgins Road was not one of Northbrook's usual places of business at the time Ramon signed for Westgate's summons and complaint.

This Court has held that "[t]he review applicable to a Rule 60(b)(4) motion is de novo." Greene v. Connelly, 628 So.2d 346, 351 (Ala.1993); accord Insurance Management & Admin., Inc. v. Palomar Ins. Corp., 590 So.2d 209, 212 (Ala.1991).

"When the grant or denial of relief turns on the validity of the judgment, as under Rule 60(b)(4), discretion has no place. If the judgment is valid, it must stand; if it is void, it must be set aside. A judgment is void only if the court rendering it lacked jurisdiction of the subject matter or of the parties, or if it acted in a manner inconsistent with due process."

Palomar Ins., 590 So.2d at 212. "Failure of proper service under Rule 4 deprives a court of jurisdiction and renders its judgment void." Ex parte Pate, 673 So.2d 427, 428-29 (Ala.1995).

Westgate does not contend that Ramon was "authorized by appointment or by law to receive service of process" for Northbrook, or that Ramon was "an officer or an agent" of Northbrook. Therefore, we do not address those issues. See Jackson v. Reed, 438 So.2d 750, 753 (Ala.1983) (stating that this Court should not act sua sponte in addressing and deciding an issue not framed by the pleadings, where the issue is not of great public importance or of any great jurisprudential importance). Westgate does, however, argue that 51 West Higgins Road was one of Northbrook's "usual places of business." Rule 4(c)(6), Ala. R. Civ.P. Northbrook denies that 51 West Higgins Road was one of its usual places of business at the time Ramon signed for the summons and complaint.⁴

This Court has not addressed the issue of what constitutes a corporation's "usual place[] of business" for purposes of Rule 4. However, we are not without guidance from other jurisdictions on this issue. In Paramount Packaging Corp. v. H.B. Fuller Co., 190 F.Supp. 178 (E.D.Pa.1960), a federal district court held that the office of a telephone-answering service that answered calls for a particular corporation was not the corporation's usual place of business, even though the corporation had represented that it had an office at the address of the answering service and even though it received mail at that address. 190 F.Supp. at 180-81. The court reasoned that because the defendant had no employees at the answering service's office and none of the answering service's employees was authorized to act for the defendant, other than to receive its mail and answer its telephone calls, the corporation was not doing business at that office. Id. at 180.

Westgate argues that LSJ Investment Co. v. O.L.D., Inc., 167 F.3d 320 (6th Cir. 1999), and Blackhawk Heating & Plumbing Co. v. Turner, 50 F.R.D. 144 (D.Ariz. 1970), are analogous to this case. In LSJ Investment, as in this case, the parties disputed whether the address at which service on a corporate defendant was attempted was the usual place of business for the corporation. See 167 F.3d at 323. The plaintiff attempted to serve the corporation at an address that a corporate officer repeatedly gave as the corporation's business address. See id. at 323....