Volunteer Transport, Inc. v. House

• Decision Date: 29 April 2004
• Docket Number: No. 03-1010.,03-1010.
• Citation: 162 S.W.3d 456,357 Ark. 95
• Parties: VOLUNTEER TRANSPORT, INC. v. William HOUSE.
• Court: Arkansas Supreme Court

Page 456

162 S.W.3d 456

357 Ark. 95

VOLUNTEER TRANSPORT, INC. v. William HOUSE.

No. 03-1010.

Supreme Court of Arkansas.

April 29, 2004.

Mercy, Carter, Tidwell & Elliott, L.L.P., by: W. David Carter, Texarkana, TX, for appellant.

Eubanks, Welch, Baker & Schulze, by: J.G. "Gerry" Schulze, Little Rock, for appellee.

BETTY C. DICKEY, Chief Justice.

On August 7, 2001, William House, an Arkansas resident, was involved in a motor-vehicle accident in Florida with Volunteer Transport, Inc., a Tennessee corporation. House sued Volunteer Transport in Miller County, Arkansas, and a copy of the complaint and summons was served on Vivian L. Crandall, registered agent and attorney for Volunteer Transport. On that same day, Crandall purportedly sent a letter to House's attorney, Nicholas Patton, acknowledging the receipt of the pleadings and advising that she would forward the same to Volunteer Transport. That letter stated:

This letter will confirm that we are in receipt of the SUMMONS, PETITION, PLAINTIFF'S REQUEST FOR PRODUCTION OF DOCUMENTS, PLAINTIFF'S FIRST INTERROGATORIES and REQUEST FOR ADMISSIONS, which were filed in the Circuit County for Miller County, Arkansas, against Volunteer Transport.

We have forwarded the same to Volunteer Transport, Inc., and advised them to transmit these documents to their liability insurance carrier.

In light of these transmissions, we are requesting an extension of time within which to respond. Unless we hear otherwise from you we will assume this is acceptable. We appreciate your consideration and thank you for your attention in this matter. If you have any questions, please do not hesitate to contact my office.

House's attorney never communicated to Crandall that an extension of time to answer was unacceptable; in fact, there was no evidence to indicate that either House's attorney or Volunteer Transport actually received this letter.

On January 3, 2002, House filed a motion for default judgment against Volunteer Transport. On that same day, the trial court in Miller County, in a brief hearing, entered a default judgment against Volunteer Transport in the amount of $4,835,000.00. The default judgment included damages in the amount of $500,000.00 for the "nature, extent and permanency" of House's alleged back injury, $135,000.00 for past and future medical expenses, $2,000,000.00 for past and future pain, suffering, and mental anguish, and $2,200,000.00 for past and future lost earnings. However, there was no expert medical testimony presented and House was the sole witness regarding damages.

On February 4, 2002, Volunteer Transport filed a motion to set aside the default judgment and on October 23, 2002, House moved to strike Volunteer Transport's motion. On November 6, 2002, Volunteer Transport filed a supplemental motion to set aside default judgment and on December 17, 2002, a hearing was held on the motions. The trial court issued a letter opinion on April 3, 2002 and followed with a final order denying Volunteer Transport's motion to set aside the judgment filed on May 14, 2003. Volunteer Transport appeals arguing (1) the trial court erred in finding an Arkansas court could exercise jurisdiction over Volunteer Transport, and (2) the trial court abused its discretion in denying Volunteer Transport's motion to set aside the default judgment.

Standard of Review

The standard by which we review the granting of a default judgment and the denial of a motion to set aside the default judgment is whether the trial court abused its discretion. NCS Healthcare, Ark., Inc., v. W.P. Malone, Inc., 350 Ark. 520, 88 S.W.3d 852 (2002); Southeast Foods, Inc. v. Keener, 335 Ark. 209, 979 S.W.2d 885 (1998); Arnold & Arnold v. Williams, 315 Ark. 632, 870 S.W.2d 365 (1994). Default judgments are not favorites of the law and should be avoided when possible. B & F Engineering, Inc. v. Cotroneo, 309 Ark. 175, 830 S.W.2d 835 (1992). In fact, the purpose for the 1990 amendment to Ark. R. Civ. P. 55 was to liberalize Arkansas practice regarding default judgments, and the revised rule reflects a preference for deciding cases on the merits rather than on technicalities. Id.; See Addition to Reporter's Notes to Rule 55, 1990 Amendment. Arkansas R. Civ. P. 55(c) provides that a court may set aside a default judgment previously entered if it finds that the default was due to mistake, inadvertence, surprise, or excusable neglect.

Jurisdiction

Appellant argues that "House has not satisfied his burden to prove that an Arkansas court may exercise either specific or general personal jurisdiction over Volunteer Transport for claims resulting from the Florida car accident, and accordingly, the default judgment violates the `traditional notions of fair play and substantial justice' that are fundamental to the due process clause of the Constitution." We disagree.

In Davis v. St. John's Health System, Inc., 348 Ark. 17, 71 S.W.3d 55 (2002), this court identified two types of personal jurisdiction, general and specific:

Since International Shoe, [326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945)] the Court has had occasion to revisit the personal jurisdiction question. A few of those cases are relevant to our inquiry and have set out further principles governing state court jurisdiction. A nonresident defendant's contacts with a forum state, for example, must be sufficient to cause the defendant to "reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297[, 100 S.Ct. 559, 62 L.Ed.2d 490] (1980). The Court has also identified two types of personal jurisdiction: general and specific. When a cause of action arises out of or is related to a defendant's contacts with the forum state, the exercise of personal jurisdiction is one of specific jurisdiction. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). However, if the exercise of jurisdiction arises in a case not stemming from the defendant's contacts with the forum state, the exercise of personal jurisdiction is one of general jurisdiction. Burger King Corp. v. Rudzewicz, supra; Perkins v. Benguet [Consol] Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952); International Shoe Co v. Washington, supra. When general jurisdiction is in question, a defendant may be subject to the forum state's exercise of personal jurisdiction if contacts with the state are continuous, systematic, and substantial. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984).

Here, the trial court heard evidence that Volunteer Transport trucks were cited for approximately twenty violations for various trucking or traffic incidents in the state of Arkansas as recently as January 2002. On the Driver/Vehicle Inspection Reports, the officer who completes the report states the specific violation and inquires into the destination of the driver and/or vehicle. The following contacts established "continuous, systematic, and substantial" conduct within the State, where Volunteer Transport's vehicles were cited:

June 6, 1995, driver cited for duty status record not being current, destination Bentonville;

September 8, 1995, driver cited for violation of the "10 hour rule," destination Springdale;

February 12, 1996, driver cited for violation of the "60/70 hour rule," destination Rogers; and,

October 30, 2001, driver cited for "Axle # 4 tire-cut exposing ply and belt material," destination Fayetteville.

Furthermore, John Albert, a controller for Volunteer Transport, testified that he "had a computer data base which would have given him information about Volunteer Transport's activities in the State of Arkansas, [but when testifying] he chose instead to rely on his memory to testify that the did not believe that Volunteer Transport did substantial business in the state." Albert could have produced these documents, International Fuel Tax Agreement return and a billing report from its computer system, that would have shown how many customers appellant had in Arkansas; however, he chose to rely solely on his memory and failed to produce the documents. We have said that where relevant evidence is within the control of the party whose interest it would naturally be to produce it, and that party fails to do so without satisfactory explanation, the fact-finder may draw an inference that such evidence would have been unfavorable to that party. Cox v. Farrell, 292 Ark. 177, 728 S.W.2d 954 (1987).

Jurisdictions differ over the issue of whether an agent, standing alone, allows a forum state to assume general jurisdiction over a nonresident defendant. Davis, 348 Ark. at 26, 71 S.W.3d 55. In Wenche Siemer v. Learjet Acquisition Corp., 966 F.2d 179 (5th Cir.1992), the Fifth Circuit Court of Appeals concluded that an agent for service, by itself, was not enough. But see Knowlton v. Allied Van Lines, Inc., 900 F.2d 1196 (8th Cir.1990)(nonresident corporation's designation of agent for service of process in forum state amounted to consent to personal jurisdiction). The instant case differs from Wenche Siemer in that, here, as in Davis, the trial court found contacts in addition to the presence of an agent for service of process in Arkansas. Thus, we need not decide this issue based solely on the presence of an agent for service in this state. Davis, supra. We affirm the trial court on the issue of jurisdiction.

Motion to Set Aside the Default Judgment

Appellant, next, argues that there was adequate evidence of mistake, inadvertence, surprise or excusable neglect to set aside the default judgment. We disagree.

Arkansas Rule of Civil Procedure 55 was amended in 1990 to liberalize Arkansas practice regarding default judgment, and the revised rule reflects a preference for deciding cases on the merits rather than on technicalities. B & F Engineering, Inc. v. Cotroneo, 309 Ark. 175, 830 S.W.2d 835 (1992). One of the changes was to make the grant of default judgment...