Sauder v. Ferguson

• Decision Date: 16 April 2015
• Docket Number: Record No. 140805.
• Citation: 289 Va. 449,771 S.E.2d 664
• Parties: Susan M. SAUDER v. Dennie Lee FERGUSON, Jr.
• Court: Virginia Supreme Court

289 Va. 449

771 S.E.2d 664

Susan M. SAUDER

v.Dennie Lee FERGUSON, Jr.

Record No. 140805.

Supreme Court of Virginia.

April 16, 2015.

Mark S. Lindensmith (Gregory S. Hooe, Eric D. Yost, Marks & Harrison, Staunton, Roger T. Creager, Creager Law Firm, Richmond, on briefs), for appellant.

Jason A. Blanton (J. Jay Litten ; Litten & Sipe, on brief), Harrisonburg, for appellee.

Present: All the Justices.

Opinion

Opinion by Justice ELIZABETH A. McCLANAHAN.

Susan M. Sauder appeals from the final order of the circuit court denying her motion to set aside the default judgment entered in her favor against Dennie Lee Ferguson, Jr. Sauder argues the circuit court had no discretion to deny her motion because the default judgment was void ab initio as a result of her failure to obtain valid service upon Ferguson. In the alternative, she contends the circuit court abused its discretion in failing to set aside a default judgment that was void ab initio. We will affirm the judgment of the circuit court.

I. BACKGROUND

On October 15, 2009, Sauder and Ferguson were involved in an automobile accident in which the vehicles being operated by each of them collided with one another. Subsequently, Progressive Gulf Insurance Company (“Progressive”), which provided coverage on the vehicle Ferguson was operating at the time of the accident, filed a declaratory judgment action seeking a determination that it was not obligated to provide coverage for the accident because Ferguson was not a permissive user of the vehicle. Progressive named as defendants, Rockingham Mutual Insurance Company (“Rockingham Mutual”), Rockingham Casualty Company (“Rockingham Casualty”), Sauder and Ferguson. Because Rockingham Mutual does not provide automobile insurance coverage, it was dismissed from the action by order of nonsuit. Rockingham Casualty remained in the action due to potential liability under an uninsured motorist policy covering Sauder at the time of the accident.

During the pendency of the declaratory judgment action, Ferguson testified in a deposition taken on August 23, 2010, that he was currently residing with his mother at 2210 John Wayland Highway in Harrisonburg and was living at that address at the time of the accident. He also testified he was employed in his mother's business and provided both his and his mother's current cellular telephone numbers. Sauder was represented by counsel who conducted examination of Ferguson on Sauder's behalf.

At the trial of the declaratory judgment action, which took place on May 19, 2011, Ferguson again testified that he was residing with his mother and employed in her business. Sauder was represented by counsel who was also present at the trial. At the conclusion of the trial, the circuit court ruled that Ferguson was an uninsured motorist at the time of the accident. Thus, Rockingham Casualty's policy of uninsured motorist insurance provides coverage for the first $100,000 of any judgment that Sauder is legally entitled to recover against Ferguson for damages arising from the accident.

On June 10, 2011, Sauder filed, by different counsel, a complaint against Ferguson seeking damages arising from the automobile accident. On June 29, 2011, Sauder served Ferguson by posting at 1460 West Market Street in Harrisonburg, the address that was listed for Ferguson on the police report of the accident, instead of the address given by Ferguson in his deposition and at trial in the declaratory judgment action. On the same date, Sauder served Rockingham Mutual, by personal service on its registered agent, instead of Rockingham Casualty, which provides the uninsured motorist coverage for the accident.¹

On August 29, 2012, Sauder filed a motion for entry of default judgment on the grounds that no pleadings in response to Sauder's complaint had been filed on behalf of Ferguson. Sauder filed a subsequent motion for entry of default judgment on September 24, 2012. In this motion, Sauder stated that the second motion for entry of default judgment was filed because Sauder was required to notify Ferguson of the implications of not appearing at the hearing scheduled on October 17, 2012. On October 2, 2012, Sauder attempted to serve Ferguson at the 1460 West Market Street address with the motion, notice of motion for entry of default judgment on October 17, 2012, and proposed order entering judgment by default. She also mailed the motion, notice, and proposed order to the 1460 West Market Street address as well as an address in Ashland, Kentucky. The proof of service was returned showing that Ferguson was “Not Found” and with a notation of “Moved.”

On October 12, 2012, Sauder served the motion, notice of motion, and proposed order on Ferguson at the 2210 John Wayland Highway address in Harrisonburg by delivery to his mother. Neither Ferguson nor anyone on his behalf appeared, and an order of default judgment was entered by the circuit court on November 29, 2012. The order instructed that a copy be served upon Ferguson at 220 (instead of 2210) John Wayland Highway in Harrisonburg. A proof of service shows that Ferguson was personally served with the order entering judgment by default on December 10, 2012.

Various papers were also served on the secretary to W. Neal Menefee as registered agent for “Rockingham Group Insurance” on January 8, 2013.

On January 9, 2013, the circuit court entered an order setting a bench trial on damages for March 4, 2013. Sauder personally served the scheduling order on Ferguson at the 2210 John Wayland Highway address. Menefee was also personally served with this order. On March 4, 2013, Sauder presented evidence of her damages and neither Ferguson nor anyone on his behalf appeared. On March 14, 2013, the circuit court entered an order awarding Sauder $300,000 in damages. The order provided that “Rockingham Mutual is liable for its contractual portion of Ms. Sauder's Uninsured Motorist Policy” based upon the following grounds:

Rockingham Mutual Insurance Company and/or Rockingham Casualty Company (“Rockingham Mutual”)—same name, both entities of the Rockingham Group with the same address, registered agent, payer of her medical expense coverage, corresponded with Plaintiff's attorney, and party in the Declaratory Action participated in the Declaratory Action and cooperated with Plaintiff's counsel prior to the Court's ruling. Ms. Sauder was insured by a policy with Rockingham Mutual Insurance Company and/or Rockingham Casualty Company (“Rockingham Mutual”) due to its Uninsured Motorist Coverage Policy with coverage limits of $100,000[.]

On April 5, 2013, Rockingham Casualty filed a complaint for declaratory judgment seeking a determination that Sauder was not legally entitled to collect the judgment rendered on March 14, 2013, because Ferguson was never served with the summons or complaint and Rockingham Casualty was never served as required by Code § 38.2–2206(F).² Thereafter, on May 14, 2013, Sauder filed a motion to set aside the default judgment pursuant to Code § 8.01–428(A). She averred that there “existed some question” regarding whether Ferguson was validly served with process. Sauder asserted that it is “[Sauder's] position that Ferguson was validly and properly served, that [Sauder] and her counsel used due diligence in attempting to locate and serve Ferguson, and that Ferguson's due process rights have not been violated by entry of the default judgment.” Nevertheless, Sauder requested that the circuit court enter an order setting aside the March 14, 2013, order as void ab initio “out of an abundance of caution” and “in order to serve substantial justice.”

Sauder contended in her motion that if the default judgment against Ferguson was obtained without adequate and valid service of process, “then that [March 14, 2013 o]rder must be set aside as void ab initio, and Sauder's suit and the parties to that action (Sauder and Ferguson) must be restored to their status prior to entry of the [o]rder on judgment,” after which Sauder will “be entitled to exercise a non-suit as a matter of right” and “have six months within which to re-file her suit against Ferguson.”

Rockingham Mutual filed a response asserting that Sauder's motion to set aside was fatally deficient because she alleged in her motion that “Ferguson was validly and properly served,” and therefore, failed to acknowledge any deficiency that would render the judgment void. Subsequently, Sauder filed an amended motion to set aside the default judgment on the grounds that “substantial evidence exists” that Ferguson was not properly served with process, and therefore, “substantial evidence exists that the default judgment and [o]rder of March 14, 2013 is and was void ab initio.”

Rockingham Mutual filed a memorandum in opposition to the motion to set aside the default judgment. Sauder objected to Rockingham's participation in the proceedings and argued that Rockingham Mutual had no standing to oppose Sauder's motion. The circuit court requested briefing from the parties and conducted a hearing during which the parties presented evidence, including testimony from Ferguson, who was called as a witness by Sauder.³ Ferguson testified that although he lived at the 1460 West Market Street address in 2008, he was living with his mother at the 2210 John Wayland Highway address when Sauder's complaint was filed. Ferguson further testified he was never served with a complaint or summons.

Upon consideration of the evidence, briefs, and arguments of counsel, the circuit court denied Sauder's motion to set aside the default judgment. As an initial matter, the court ruled that Rockingham Mutual had standing to participate and present evidence at the hearing. The court further ruled that it would not exercise its discretion to set aside the default judgment.

The circuit court found that based on Ferguson's testimony in the prior declaratory judgment action providing his address as 2210 John Wayland Highway, Sauder had “knowledge” of Ferguson's current address but used the 1460...