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Delta Aliraq, Inc. v. Arcturus International, LLC

Court of Appeals of Georgia, Second Division

May 16, 2018



          Beasley, Senior Appellate Judge.

         Plaintiff Delta Aliraq, Inc. ("Delta") appeals the trial court's order granting the motion filed by defendants Arcturus International, LLC ("Arcturus") and Delta Alpha X-Ray, LLC ("DAX") to set aside a default judgment previously entered against the defendants. The trial court granted the motion on three independent grounds, each of which Delta challenges. We conclude that the trial court did not err when it aside the default judgment on grounds that it lacked personal jurisdiction over DAX and that Delta failed to prove damages as to Arcturus. We therefore affirm the trial court's judgment.

         In 2015, Delta obtained a judgment against DAX and two other parties (neither of whom is a party to this action), jointly and severally, in the amount of $1, 000, 000, in a California court. In June 2016, Delta filed the instant complaint in Fulton County against Arcturus and DAX. In its complaint, Delta (i) sought to domesticate the California judgment against DAX and (ii) asserted a fraudulent conveyance claim against both defendants. In its fraudulent conveyance claim, Delta alleged that Arcturus had acquired real property in Roswell with funds supplied by DAX as part of a scheme to shelter DAX's assets from Delta. As relief, Delta asked the trial court, in relevant part, to enter the $1, 000, 000 California judgment against DAX as a judgment of the Fulton County trial court and to grant Delta a lien against the Roswell property in the amount of all sums allegedly transferred by DAX. In September 2016, Delta moved for a default judgment on the ground that neither defendant had filed a responsive pleading. Later that month, the trial court granted Delta's motion, entered a $1, 000, 000 judgment against DAX, and granted Delta a lien against Arcturus's property in Roswell "to secure [Delta]'s judgment lien."

         In January 2017, Arcturus filed a motion to open default under OCGA § 9-11-55 (b).[1] The trial court denied the motion, and we subsequently denied Arcturus's application for discretionary appeal from that ruling. See Arcturus Intl. LLC v. Delta Aliraq, Inc. et al., No. A17D0362 (Apr. 13, 2017).

         In March 2017, the defendants moved to set aside the default judgment under OCGA § 9-11-60 (d) on multiple grounds. The trial court granted the defendants' motion, concluding that: (i) Delta had assigned to a third party its interest in the California judgment, as a result of which it lacked standing to bring the instant action; (ii) Delta failed to perfect service on DAX, as a result of which the trial court could not exercise personal jurisdiction over DAX in this action; and (iii) Delta failed to prove damages in the amount of the lien against Arcturus, which, the court found, constitutes a nonamendable defect on the face of the record. The trial court subsequently certified its order for immediate review, and we granted Delta's application for interlocutory appeal. See OCGA § 5-6-34 (b).

         OCGA § 9-11-60 (d) authorizes a trial court to set aside its judgment on certain limited bases:

(1) Lack of jurisdiction over the person or the subject matter;
(2) Fraud, accident, or mistake or the acts of the adverse party unmixed with the negligence or fault of the movant; or
(3) A nonamendable defect which appears upon the face of the record or pleadings. Under this paragraph, it is not sufficient that the complaint or other pleading fails to state a claim upon which relief can be granted, but the pleadings must affirmatively show no claim in fact existed.

         "Default judgment is a drastic sanction that should be invoked only in extreme situations. Whenever possible, cases should be decided on their merits, for default judgment is not favored in law." (Citation and punctuation omitted.) Feazell v. Gregg, 270 Ga.App. 651, 653 (1) (b) (607 S.E.2d 253) (2004). "We review a ruling on a motion to set aside for abuse of discretion and affirm if there is any evidence to support it. Factual disputes regarding service are to be resolved by the trial court, and the court's findings will be upheld if there is any evidence to support them." (Citations and punctuation omitted; emphasis in original.) Vasile v. Addo, 341 Ga.App. 236, 240 (2) (800 S.E.2d 1) (2017). We review questions of law de novo. Id.

         1. Delta raises several challenges to the trial court's conclusion that it lacked personal jurisdiction over DAX due to deficient service of process. The trial court ruled that Delta's purported service on "a defunct registered agent [of DAX] in North Carolina, " a "state unconnected to the nexus of the claims" in this action, was insufficient for the court to exercise personal jurisdiction over DAX. We affirm the trial court's ruling that Delta failed to properly serve DAX, although not for the explicit reason stated in the trial court's order.[2]

         In its complaint, Delta alleged that DAX, a nonresident, is subject to the trial court's jurisdiction under OCGA § 9-10-91 - Georgia's long-arm statute - on grounds that DAX is a "joint tortfeasor" and possesses an interest in real estate in Fulton County. See OCGA § 9-10-91 (2), (4). Under OCGA § 9-10-94, a party subject to the jurisdiction of Georgia courts pursuant to OCGA § 9-10-91 "may be served with a summons outside the state in the same manner as service is made within the state. . . ." Foreign limited liability companies, such as DAX, generally are governed by OCGA § 14-11-701 et seq. However, because the record appears to contain no indication that DAX is authorized to transact business in Georgia, none of the service provisions in OCGA § 14-11-701 et seq. apply. Service in this case thus is governed by the catchall provision in OCGA § 9-11-4 (e) (7), under which service may be made by delivering a copy of the summons attached to a copy of the complaint "to an agent authorized by appointment or by law to receive service of process."

         Delta sought to establish service upon DAX by submitting a "Sheriff's Entry of Service" form dated July 20, 2016, identifying the name and ...

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