Richardson v. P.V., Inc., 26709.

• Decision Date: 24 August 2009
• Docket Number: No. 26709.,26709.
• Citation: 383 S.C. 610,682 S.E.2d 263
• Parties: Leola RICHARDSON as Personal Representative of the Estate of Dominick Richardson, Respondent, v. P.V., INC. and Harbor Inn, Inc., Appellants.
• Court: South Carolina Supreme Court

682 S.E.2d 263

383 S.C. 610

Leola RICHARDSON as Personal Representative of the Estate of Dominick Richardson, Respondent, v. P.V., INC. and Harbor Inn, Inc., Appellants.

No. 26709.

Supreme Court of South Carolina.

Heard May 28, 2009.

Decided August 24, 2009.

Rehearing Denied September 16, 2009.

J. Dwight Hudson and Mary A. Graham, both of Hudson Law Firm, of Myrtle Beach, for Appellants.

William Walker, Jr., of Walker & Morgan, of Lexington, for Respondent.

Chief Justice TOAL:

Respondent filed suit against Appellants following the drowning death of Respondent's son. Appellants failed to respond to the complaint and an entry of default was entered. The trial court denied Appellants' motion to lift the entry of default. This appeal follows.

FACTUAL/PROCEDURAL BACKGROUND

On June 19, 2004, Dominick Richardson drowned in the swimming pool at Harbor Inn, a hotel owned by Jay Patidar located in Georgetown, South Carolina. Respondent filed survival and wrongful death actions arising out of the drowning. On May 12, 2005, a process server, Bobby Asbill, arrived at the Harbor Inn to serve the summons and complaint and asked the employee working at the desk, Demetria Cruel, if he could speak with the manager. Cruel informed Asbill that Patidar¹ was out of town for several days.

In her deposition, Cruel testified that Asbill told her that he was not coming back to the hotel and asked if she would call Patidar. She complied and gave the phone to Asbill, but testified that she could not hear their conversation. Cruel testified that after the phone conversation was finished, Asbill left the papers and walked out of the hotel. She later spoke with Patidar and informed him that Asbill left the papers. Patidar instructed Cruel to fax the summons and complaint to his insurance agent.

Asbill testified that when he spoke to Patidar on the phone, he identified himself and the reason for his visit. Patidar told him that he could leave the papers with Cruel or that he could come back when Patidar was there. Asbill also testified that he asked Cruel if Patidar gave her permission to accept the papers and she said "yes."

Finally, Patidar testified that he told Asbill that he would be back in four or five days, but that Asbill told him that he (Asbill) was not coming back. Patidar then told Asbill it was up to Asbill whether or not to leave the papers.

Appellants failed to answer the complaint and an entry of default was entered on June 24, 2005. Appellants subsequently moved to set aside the entry of default. The trial court denied the motion finding that service was effective, thereby conferring personal jurisdiction on the court, and that Appellants failed to show good cause to set aside the entry of default. This Court certified the appeal pursuant to Rule 204(b), SCACR, and Appellants present the following issues for review:

I. Did the trial court err in ruling that service of process was effective and that the court therefore had personal jurisdiction over Appellants?

II. Did the trial court err in ruling that Appellants failed to show good cause to set aside the entry of default?

STANDARD OF REVIEW

The decision whether to set aside an entry of default or a default judgment lies solely within the sound discretion of the trial court. Roberson v. S. Fin. of South Carolina, Inc., 365 S.C. 6, 9, 615 S.E.2d 112, 114 (2005). The trial court's decision will not be disturbed on appeal absent a clear showing of an abuse of that discretion. Id.

LAW/ANALYSIS

I. Service of Process

Appellants argue the trial court erred in finding service of process was effective. We disagree.

Service upon a corporation may be made "by delivering a copy of the summons and complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process." Rule 4(d)(3), SCRCP. Rule 4 serves at least two purposes: it confers personal jurisdiction on the court and assures the defendant of reasonable notice of the action. Roche v. Young Bros., Inc. of Florence, 318 S.C. 207, 209, 456 S.E.2d 897, 899 (1995). Exacting compliance with the rules is not required to effect service of process. Id.

Not every employee of a corporation is an agent of the corporation for the purposes of service of process. See Roberson, 365 S.C. at 11, 615 S.E.2d at 115 (holding that a clerical employee was not an agent authorized to accept service of process for the corporation). Whether an employee may accept service on behalf of a corporation depends on the authority the corporation conferred upon the employee. In order to determine whether an employee is an authorized agent, the court must look to the circumstances surrounding the relationship and find authority which is either express or implied from the type of relationship between the defendant and the alleged agent. Moore v. Simpson, 322 S.C. 518, 523, 473 S.E.2d 64, 67 (Ct.App.1996). While actual authority is expressly conferred upon the agent by the principal, apparent authority is when the principal knowingly permits the agent to exercise authority, or the principal holds the agent out as possessing such authority. Roberson, 365 S.C. at 10-11, 615 S.E.2d at 115.

In the instant case, even if Cruel did not have actual authority, we find that she had apparent authority to accept service of process. When Asbill initially entered the hotel's office, Cruel was the only employee present, which represented to third parties that she was in charge. Asbill testified that Patidar told him that he could leave the papers with Cruel or that he could come back. Patidar similarly testified that he told Asbill it was up to him whether to leave the papers. Under these facts, we find that Patidar knowingly permitted Cruel to exercise authority to accept service of process and further find that his manifestations to Asbill indicated that Cruel had such authority.

For these reasons, we hold that evidence in the record supports the trial court's finding that Cruel was authorized to accept service. Brown v. Carolina Emergency Physicians, P.A., 348 S.C. 569, 583, 560 S.E.2d 624, 631 (Ct.App.2001) (recognizing that the findings of the circuit court on factual issues arising on a motion to quash service of process for lack of jurisdiction are binding on the appellate court unless wholly unsupported by the evidence or controlled by error of law).

II. Rule 55(c)

Appellants argue that the trial court erred in ruling that they failed to show good cause to set aside the entry of default. Specifically, Appellants claim that the insurance company's failure to respond was inadvertent and constitutes good cause to justify setting aside the entry of default. We disagree.

The standard for granting relief from an entry of default is good cause under Rule 55(c), SCRCP, while the standard is more rigorous for granting relief from a default judgment under Rule 60(b), SCRCP. Sundown Operating Co., Inc. v. Intedge Indus., Inc., 681 S.E.2d 885 (S.C.2009). In deciding whether good cause exists, the trial court should consider the following factors: (1) the timing of the defendant's motion for relief, (2) whether the defendant has a meritorious defense, and (3) the degree of prejudice to the plaintiff if relief is granted. Wham v. Shearson Lehman Bros., 298 S.C. 462, 465, 381 S.E.2d 499, 502 (Ct.App.1989). The decision whether to set aside an entry of default or a default judgment lies solely within the sound discretion of the trial judge and will not be disturbed on appeal absent a clear showing of an abuse of that discretion. Harbor Island Owners' Ass'n v. Preferred Island Prop., Inc., 369 S.C. 540, 544, 633 S.E.2d 497, 499 (2006).

As a primary matter, Appellants argue that the trial court erred in ruling on the merits of this issue because they did not have the opportunity to be heard and present evidence of good cause. We disagree. In their written motion to set aside the entry of default filed prior to the hearing, Appellants maintained that the entry of default was void because service of process was defective. Additionally, Appellants requested that, if the trial court denied relief based on this ground, the trial court "schedule a subsequent hearing based upon the ground of mistake, inadvertence, surprise or excusable neglect"² because the insurance companies were still investigating the matter and they would "shortly have full information to support such a Motion." At the hearing, Respondent's counsel told the trial court that Appellants were moving to set aside the entry of default based on improper service and good cause and argued the merits of the good cause issue. Specifically, Respondent's counsel argued that there was nothing in the record from the insurance company explaining why it failed to answer the complaint and that, even if the failure to respond was due to negligent oversight, this did not constitute good cause. In rebuttal, Appellants' counsel argued that although the discovery process concerning the insurance company's failure to respond had not been completed, "we just really don't think we need to go that far."

A...