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Turfstore.Com, Inc. v. Hall

Court of Appeals of Georgia, Fifth Division

January 15, 2019

HALL et al.

          MCFADDEN, P. J., RICKMAN and MARKLE, JJ.

          McFadden, Presiding Judge.

         This appeal is from the denial of a motion to set aside a default judgment. The trial court entered the default judgment against Turfstore.Com, Inc., over Turfstore's objection. Turfstore contends that it was not properly served and so the judgment against it is unsustainable. We agree that the default judgment cannot stand.

         The purported service was undertaken in reliance on OCGA § 14-2-1510 (b), which is for out-of-state corporations without a registered agent. That purported service was delivery of the summons and complaint by UPS to one of Turfstore's competitors, which forwared them to Turfstore more than three months later. Turfstore filed its verified answer seven days after receiving them.

         We assume without deciding that Turfstore did not have a registered agent and so that the OCGA § 14-2-1510 (b) procedure was available. Having made that assumption we turn to OCGA § 14-2-1510 (c), which specifies three possible occasions when service under subsection (b) is deemed perfected. Two of those possibilities are plainly foreclosed. There is no "return receipt . . . signed on behalf of [Turfstore.]" See OCGA § 14-2-1510 (c) (2). And Turfstore was not served by United States mail. See OCGA § 14-2-1510 (c) (3). The remaining possibility is "[t]he date [Turfstore] receive[d]" the summons and complaint. OCGA § 14-2-1510 (c) (1). But Turfstore answered seven days after that date. So it did not default.

         1. Facts and procedural history.

         The facts are undisputed - although the parties disagree about whether Turfstore had a registered agent. The underlying dispute is about two commercial leases under which Turfstore was a tenant. Plaintiffs, Shelley Hall (in her role as administrator with will annexed of John Wayne Hall) and Wilma Jean Erwin, were the landlords. Turfstore notified Hall and Erwin that it would be ending the leases as of June 30, 2017, leading to a dispute between the parties about the terms of the leases. Turfstore ultimately vacated the properties and stopped paying rent. Turfstore had listed those premises with the Secretary of State as the address for its registered agent, and it apparently did not update that listing.

         On September 13, 2017, Hall and Erwin filed a verified complaint alleging that Turfstore breached the terms of the leases and seeking over $1.8 million in liquidated damages. Taking the position that Turfstore, a Delaware corporation, lacked a registered agent in Georgia, Hall and Erwin stated in their complaint that they would serve Turfstore under OCGA § 14-2-1510 (b), which provides a means of service upon a foreign corporation if the corporation either "has no registered agent or its registered agent cannot with reasonable diligence be served[.]" Id.

         Hall and Erwin attempted to serve Turfstore with the summons and complaint using a commercial firm, UPS. See OCGA § 14-2-1510 (b) (permitting service by statutory overnight delivery, among other methods). See also OCGA § 9-10-12 (b) (1) (statutory overnight delivery includes delivery through certain commercial firms). The UPS package was shipped on September 15, 2017, to the premises at issue, which was the address listed as Turfstore's principal office address on its January 2017 annual registration filed with the Georgia Secretary of State. So Hall and Erwin, and their counsel, apparently were aware that Turfstore was no longer at that address.

         Because Turfstore was no longer at that address, UPS was unable to deliver the package to it. Instead, UPS delivered the package to a different business at a different address. That business, TurfNation, was not affiliated with Turfstore. A TurfNation employee received the package on September 19, 2017, and forwarded it to Turfstore on January 4, 2018.

         On January 3, 2018, the day before Turfstore received that package containing the summons and complaint from TurfNation, Hall and Erwin filed a motion asking the trial court to grant them a default judgment on the ground that they had perfected service upon Turfstore on September 15, 2017, when UPS took custody of the summons and complaint, and that Turfstore had not filed either an answer or other responsive pleading. On January 11, Turfstore filed both a verified answer and a brief opposing the entry of a default judgment. Among other things, Turfstore denied that it had breached the leases, argued that it had not been properly served with the complaint, and contested the plaintiffs' assertion that it lacked a registered agent.

         The trial court entered a default judgment against Turfstore on February 15, 2018, reasoning that Turfstore had "made no appearance or defense in the [case] and [that] service ha[d] been perfected according to law, more than forty-five days ha[d] elapsed[, ] and the case [was] in default[.]" The trial court made no express finding about whether Turfstore had a registered agent in the order. The trial court also did not refer either to Turfstore's answer or to its filing opposing the default judgment in the order. Turfstore appeals from the entry of the default judgment, arguing that the ruling was error because Turfstore was not properly served and, alternatively, that the trial court should have opened default.

         2. Service of process.

         As for the argument that the trial court should have opened default, Hall and Erwin correctly note that the issue would need to be addressed by the trial court in the first ...

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