By Joel Carney and Elizabeth Lally
The process for getting a default judgment is important in the world of commercial and consumer collections.
In fact, the overwhelming majority of judgments in collections cases are received via default. In order to obtain a default judgment in Nebraska, the court must be provided with proof that a debtor was served with notice of the lawsuit and has had 30 days to respond to the Complaint. Accordingly, it is important to understand the proper process for service of a Complaint on the would-be defendant/debtor.
The process of service on a debtor can be complicated, however. It isn’t uncommon for debtors to evade service of summons by refusing to answer the door when a sheriff comes to deliver the summons. Oftentimes the debtor has moved to another address. One way to work around this problem is by asking the court to allow “constructive service.” One method of constructive service allows for a creditor to serve a copy of the complaint / summons by taping it to the debtor’s door and simultaneously sending a copy via U.S.P.S. First Class mail. Nebraska law allows parties to be served via certified mail. Neb. Rev. Stat. § 25-508.01 (Supp. 2014).
The process of obtaining constructive service by mail was recently addressed by the Nebraska Court of Appeals in Kountze v Domina Law Group, Case Nos. Nos. A-16-033, A-16-272. In the case, Domina sued Edward Kountze for unpaid legal bills totaling $103,548. Unsure of Kountze’s current residence, Domina obtained a Westlaw People Search that provided 15 possible addresses, 3 of which were post office boxes. Erroneously believing that service could not be obtained via a post office box, Domina sent a copy of the Complaint / Summons to the 12 residential addresses showed on the Westlaw search via certified mail.
Domina received a signed certified mail card from a residential address in Portland Place in Boulder, Colorado. Domina confirmed this address by obtaining a Vehicle Master Record from the Colorado Department of Revenue for a 1992 Honda. This vehicle was registered under the names of Kountze, as “Owner 1.” This record listed the Portland Place address as the legal address for the vehicle; however, it also listed a post office box in Boulder as the title and mail addresses. The record also indicated that the vehicle’s registration was current through February 1, 2016.
When no response to the lawsuit was filed, Domina moved for default judgment, and the court awarded Domina a judgment in the amount of $103,548 plus court costs of $82.50 in April 2014.
According to an affidavit signed by Kountze, he had no knowledge of the lawsuit or judgment until one of his attorneys brought it to his attention in June 2015. Kountze then filed a Complaint to vacate the default judgment. The district court granted the motion to dismiss the underlying lawsuit and Domina filed an appeal.
According to Kountze’s affidavit he did not reside in Colorado at the time Domina attempted service. Rather, Kountze lived in Florida. Regardless, the Court of Appeals noted, in particular, that Domina failed to send summons to the PO Box in Boulder Colorado that Domina had sent regular billing statements. Domina informed the court that it has sent statements to the PO Box address for approximately 6 years prior to filing the action and that it had never seemed to work and the invoices were never paid. Domina stated that it had no confidence that Kountze would actually receive any mail sent to that address, and further, its understanding was that service could not be perfected to a post office box.
Due process requires notice to be reasonably calculated to apprise the defendant of the pendency of the action and to afford him the opportunity to present his objections. Was service to this PO Box reasonably calculated to apprise the defendant of the pendency of the action given under the circumstances outlined by Domina?
The Court looked at the totality of the circumstances and found that the creditor’s failure to send the summons to the address provided to the creditor by the debtor was not reasonably calculated to apprise the defendant of the pendency of the action. Namely: (1) the Colorado PO Box was listed as a possible address for the debtor in the Westlaw People Search; (2) the Vehicle Master Record that Domina obtained from the Colorado Department of Revenue listed the Boulder PO Box as an addition title and mailing address for the vehicle that was registered in Kountze’s name; and (3) there was no evidence in the record to indicate that Kountze had not received the prior invoices, even if they were not subsequently paid. These factors, taken together, suggested to the Court that Kountze’s post office box was still an active address at which the Debtor could be served, and, therefore that Domina should have served the summons to the PO Box via certified mail.
Creditors beware!
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