Ex parte LERETA, LLC: Under Alabama Rule of Civil Procedure 4, service on a corporation or business entity cannot be perfected by certified mail addressed merely to the entity itself, and ineffective service will result in a void default judgment for lack of personal jurisdiction.

The Facts of the Matter

In September 2012, Fronia Warhurst’s house flooded during a rainstorm. In July 2014, Warhurst sued the City of Tuscumbia, JP Morgan Chase Bank, N.A. (“Chase”), and LERETA, LLC. She alleged (1) that Tuscumbia negligently or wantonly maintained a storm drain, which resulted in the flooding; (2) that Chase wrongfully terminated her flood insurance; and (3) LERETA, who provides flood-zone determination reports and certifications, negligently informed Chase that Warhurst’s house was not in a flood zone.

Warhurst attempted to serve LERETA by certified mail but did not address the envelop to any individual. An employee of LERETA, who was neither an officer, partner, or agent, received and signed for the certified mail. That employee did not check on “agent” box on the certified mail return receipt. Thereafter, LERETA did not file an answer.

On September 15, 2014, Warhurst filed an application for entry of default against LERETA and requested that judgment be entered against LERETA in the amount of $250,000.00. Three weeks later the circuit court entered default judgment against LERETA in the requested amount. On March 25, 2016, LERETA filed a motion to set aside the default judgment, purporting that the judgment was not a final order, as the remaining claims against the other defendants remained pending. LERETA further contended that Warhurst had not perfected service on it because the certified mail was not addressed to an individual authorized to receive service of process. LERETA presented evidence that it was unaware of the action against it until March 2016.

The circuit court denied LERETA’s motion to set aside the default judgment, and LERETA filed a writ of mandamus, requesting that the Supreme Court of Alabama set aside the default judgment. Ex parte LERETA, LLC [Ms. 1151054, Dec. 2, 2016], — So.3d — (Ala. 2016).

We’ve Got Issues

The first question before the Alabama Supreme Court was whether the default judgment entered against LERETA was a final order, which would affect its determination of whether a writ of mandamus was the appropriate vehicle for appeal. The court found that because the default judgment in this matter did not adjudicate all claims as to all parties and the circuit court did not certify the judgment as final pursuant to Alabama Rule of Civil Procedure 54(b), the default judgment order is interlocutory rather than final.[1] Therefore, a writ of mandamus was the appropriate remedy for LERETA.[2]

The second question on appeal was whether the circuit court had personal jurisdiction over LERETA. LERETA contended that it did not because it was not served in accordance with Alabama Rule of Civil Procedure 4, which requires certified mail to a corporation to be addressed to an individual who is an officer, partner, managing or general agent, or any agent authorized by appointment of by law to received service of process.[3] The Alabama Supreme Court agreed, and determined therefore that the failure to perfect service rendered the default judgment void.[4] Under Alabama Rule of Civil Procedure 4, service on a corporation or business entity cannot be perfected by certified mail addressed merely to the entity itself, but rather to be effective, it must be addressed and delivered to an individual prescribed in Ala. R. Civ. P. 4.

As a result, the Supreme Court of Alabama ordered that the circuit court set aside the default judgment entered against LERETA.

[1] See Progress Indus., Inc. v. Wilson, 52 So.3d 500, 505 (Ala. 2010); Hallman v. Marion Corp., 411 So.2d 130, 132 (Ala. 1982).

[2] See Ex parte Family Dollar Stores of Alabama, Inc., 906 So.2d 892 (Ala. 1995).

[3] Alabama Rule of Civil Procedure 4(c).

[4] See Boudreaux v. Kemp, 49 so.3d 1190, 1194 (Ala. 2010) (holding, “The failure to effect proper service under Rule 4, Ala. R. Civ. P., deprives the trial court of personal jurisdiction over the defendant and renders a default judgment void.”); see also Nichols v. Pate, 992 So.2d 734, 736 (Ala.Civ.App. 2008).

Photo by Tony Webster.