Unknown Heirs of Warbington v. First Cmty. Bank

• Decision Date: 23 June 2011
• Docket Number: No. 10–1093.,10–1093.
• Citation: 383 S.W.3d 384,2011 Ark. 280
• Parties: The UNKNOWN HEIRS OF Catherine M. WARBINGTON, and Bert John Warbington, Trustee of the Warbington Family Trust and the Catherine M. Warbington Marital Trust, Appellant, v. FIRST COMMUNITY BANK and John Best and Paula Best, Appellees.
• Court: Arkansas Supreme Court

2011 Ark. 280

383 S.W.3d 384

The UNKNOWN HEIRS OF Catherine M. WARBINGTON, and Bert John Warbington, Trustee of the Warbington Family Trust and the Catherine M. Warbington Marital Trust, Appellant,

v.FIRST COMMUNITY BANK and John Best and Paula Best, Appellees.

No. 10–1093.

Supreme Court of Arkansas.

June 23, 2011.

Ralph M. Clifton, Brinkley, for appellant.

Lyons & Cone, P.L.C., by: Jim Lyons and Zac Baker, Jonesboro, for appellees John and Paula Best.

Marshall & Owens, P.A., by: W. Lance Owens, Jonesboro, and James F. Gramling, Jr., for appellee First Community Bank.

KAREN R. BAKER, Justice.

Appellants, the unknown heirs of Catherine M. Warbington, and Bert John Warbington, Trustee of the Warbington Family Trust and Catherine M. Warbington Marital Trust, appeal from an order of the Poinsett County Circuit Court denying their motion to vacate a foreclosure decree. Appellants argue that appellees' failure to perfect service of process rendered the foreclosure decree void and that no meritorious defense was required. We affirm.

Bert Warbington Sr. owned approximately 320 acres in Poinsett County, Arkansas. He died in 1984, leaving the property to his wife, Catherine Warbington, the Warbington Family Trust, and the Catherine M. Warbington Marital Trust (sometimes referred to as “trusts”). The trustee of the trusts was Bert John Warbington (“Bert Warbington” or “trustee”).

In December 2002, separate appellee First Community Bank (“Bank”) ¹ loaned $175,000 to Catherine Warbington and the trusts, listing the real property as security. Bert Warbington executed a promissory note and mortgage on behalf of Catherine Warbington as her attorney-in-fact and on behalf of the trusts as trustee. Catherine Warbington died on May 26, 2004.

The Bank filed its foreclosure complaint on March 16, 2006, and named as defendants the unknown heirs of Catherine Warbington; the Warbington Family Trust; the Catherine M. Warbington Marital Trust; Bert John Warbington, trustee of the Warbington Family Trust and Catherine M. Warbington Marital Trust; Kenny Walker; and Gary Walker.² The complaint asserted that no payments had been made on the loan since January 24, 2005, leaving a principal balance of $122,272.39. The complaint asked that a special administrator be appointed to represent the interests of the estate of Catherine Warbington. Chris Gardner (“Gardner”) was appointed as special administrator and an amended complaint was filed adding him as a defendant.

On April 25, 2006, summonses were issued to the Catherine M. Warbington Marital Trust, Bert Warbington, trustee, 2026 Castleman Drive, Nashville, Tennessee, 37125; the Warbington Family Trust, Bert Warbington, trustee, 2026 Castleman Drive, Nashville, Tennessee, 37125; and Chris Gardner, special administrator for the Unknown Heirs of Catherine Warbington. Process server Charles Scott (“Scott”) executed two affidavits of service reflecting that he personally served Bert Warbington at his residence on May 17, 2006. Gardner filed an answer on behalf of the unknown heirs of Catherine Warbington, but Bert Warbington failed to file an answer on behalf of the trusts.

Gardner sent certified, restricted letters to Bert Warbington at 2026 Castleman Drive, Nashville, Tennessee, with notices of the special administration and the foreclosure action. Despite the restricted delivery, the postal service released the two notices to Lynda Warbington, Bert Warbington's wife. Gardner then had Bert Warbington personally served with the notice of foreclosure action and the notice of probate. A warning order was published in the Modern News ³ on July 13 and 20, 2006, notifying the unknown heirs of Catherine Warbington of the foreclosure action. A notice of his appointment as special administrator of the estate of Catherine Warbington was published by Gardner in the Modern News on those same dates.

A hearing was held on the foreclosure complaint on November 29, 2006, during which, Gardner consented to judgment on behalf of the unknown heirs. On December 8, 2006, based on the affidavit of Ben Massey, vice president of the Bank, a foreclosure judgment was entered finding that the parties before the court had consented to the judgment and were indebted to the Bank in the principal amount of $122,272.39, plus interest, costs, and fees.

Separate appellees John and Paula Best bought the real property at the foreclosure sale, and on January 18, 2007, the circuit court entered an order confirming the sale. On February 8, 2007, the circuit court closed the estate and discharged the special administrator.

On March 21, 2007, appellants filed a motion to vacate the foreclosure. They asserted that the judgment was void by operation of law because Bert Warbington had not been personally served as trustee. They further argued that Bert Warbington was not named individually though he was a known heir, and thus the court did not have personal jurisdiction over him and that Bert Warbington, the trusts, and Kathleen Warbington ⁴ were essential and necessary parties to the action. Appellants asserted that the attempted service by Gardner upon Bert Warbington was defective and asked that the judgment be set aside, that the sale of the property be repealed, and that the property be returned to its rightful and legal owners.

On January 26, 2010, following a hearing on the motion to vacate, the circuit court denied the motion, finding that Bert and Kathleen Warbington were unknown heirs and that Gardner had filed an answer on their behalf and had effectuated service of the foreclosure action by publication of the warning order. The court further found that Gardner provided notice of his appointment and the pendency of the foreclosure action to Bert Warbington by certified mail and that Scott had personally served him with notice of the foreclosure action and the appointment of Gardner. The court found that Gardner's consent to the judgment of foreclosure was binding on the heirs and that the trustee was personally served by Scott and failed to respond. This appeal followed.

Appellants argue that the circuit court erred in denying the motion to vacate the foreclosure decree as void because Bert Warbington was not personally served. If a party claims that the judgment is void, then the matter is a question of law, which we review de novo. Nucor Corp. v. Kilman, 358 Ark. 107, 186 S.W.3d 720 (2004). De novo review means that the entire case is open for review. ConAgra, Inc. v. Tyson Foods, Inc., 342 Ark. 672, 30 S.W.3d 725 (2000). We do not, however, reverse the circuit court's findings of fact unless they are clearly erroneous. Id.

Service of valid process is necessary to give a court jurisdiction over a defendant. Patsy Simmons Ltd. P'ship v. Finch, 2010 Ark. 451, 370 S.W.3d 257. Service requirements, being in derogation of common-law rights, must be strictly construed and compliance with them must be exact. Id.

Appellants admit that the location listed in the summons was Bert Warbington's residence; however, they contend that he was not personally served by Scott. At the hearing on the motion to vacate, Bert Warbington testified that he was not in the State of Tennessee at the time the process server stated that he served him. Lynda Warbington testified that on May 17, 2006, she was in the yard when the process server handed her an envelope and asked her to sign for it. To rebut this evidence, the deposition of Scott was introduced wherein he specifically stated that he personally served Bert Warbington on the date and with the documents reflected in the return of service. The return of service reflected that a summons, complaint, notice of lis pendens, amended complaint, and amended notice of lis pendens were served upon the Trustee on May 17,...