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Pamela Gail Coiner v. Lonnie Carlon Cales, No. COA98-1355 (N.C. Ct. App. Oct. 19, 1999)

Factual and Procedural Background

On 2 October 1994, defendant Lonnie Carlon Cales, a South Carolina resident, allegedly injured plaintiff Pamela Gail Coiner, a West Virginia resident, in an automobile collision in Iredell County, North Carolina. At the scene defendant gave a Greenville, South Carolina address. On 1 October 1997 (one day before the three-year statute of limitations, N.C. Gen. Stat. § 1-52), plaintiff served the registered service agent for the North Carolina Commissioner of Motor Vehicles under N.C. Gen. Stat. § 1-105. The Commissioner accepted service on 2 October and forwarded the package by certified mail to the Greenville address on 3 October. The certified package was returned undelivered on 15 October 1997, marked "undeliverable as addressed — forwarding order expired." The Commissioner returned the package to the Commissioner’s office and later forwarded the returned package to plaintiff's counsel; plaintiff filed an affidavit of service under G.S. 1-105 on 24 October and notified the defendant's insurer on 30 October. On 2 December 1997 defendant moved to dismiss under Rule 12(b)(5) for insufficient service. The trial court granted dismissal on 20 July 1998 (order entered 27 July 1998). Plaintiff appealed; the Court of Appeals heard the case 23 August 1999.

Legal Issues Presented

  1. Whether plaintiff-appellant violated the Rules of Appellate Procedure by including and referring to an affidavit excluded from the record and whether sanctions were appropriate.
  2. Whether service on a non-resident defendant under N.C. Gen. Stat. § 1-105(2) was complete when the certified package forwarded by the Commissioner was returned undelivered because the defendant had moved and the forwarding order had expired.
  3. Whether plaintiff was required to exercise additional "due diligence" (beyond using the address in the accident report) to locate the non-resident defendant for purposes of G.S. 1-105 service.

Arguments of the Parties

Plaintiff-Appellant's Arguments

  • Plaintiff attached an affidavit by the Postmaster of Greenville describing postal forwarding/unclaimed-package procedure to the appellate brief to provide the information necessary for the Court to take judicial notice of postal regulations.
  • Plaintiff contended any party may request judicial notice at any stage and asserted she had requested the trial court to take judicial notice; she also argued inclusion of the affidavit was not prejudicial and not sufficiently "gross" or "wanton" to warrant dismissal.

Defendant-Appellee's Arguments

  • Defendant moved for sanctions and/or dismissal of the appeal because plaintiff disobeyed the trial court's order excluding the affidavit and violated N.C. R. App. P. 9(a), 28(b),(d), and 37 by referring to non-record material without a Rule 37 motion.
  • On service, defendant argued that strict construction of G.S. 1-105 requires that a defendant be afforded an opportunity to claim forwarded mail; because defendant had moved and the forwarding order had expired, he was not given that opportunity and the mail could not be deemed "unclaimed."
  • Defendant argued plaintiff failed to exercise due diligence in locating him by using a three-year-old address from the accident report instead of making further inquiries (e.g., directory assistance, insurer inquiry).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Horton v. New South Ins. Co., 122 N.C. App. 265, 267, 468 S.E.2d 856, 857 (1996) Where trial court refuses to include material in settled record the exclusion may be challenged on appeal; request that appellate court take judicial notice of material must be by motion under N.C. R. App. P. 37. Used to conclude plaintiff violated appellate rules by including excluded affidavit and to state that no Rule 37 motion was filed to obtain judicial notice.
Craver v. Craver, 298 N.C. 231, 236-237, 258 S.E.2d 357, 361-62 (1979) Authority cited regarding challenging a trial court's exclusion of material from the record. Cited via Horton as supporting the principle that excluded material must be challenged on appeal.
Morris v. Morris, 92 N.C. App. 359, 361, 374 S.E.2d 441, 442 (1988) Support for requirement that requests for judicial notice to appellate court be made by motion under Rule 37. Cited to reinforce that a Rule 37 motion was required and none was filed.
State v. Johnson, 298 N.C. 355, 372, 259 S.E.2d 752, 763 (1976) Appellate court may not take judicial notice of matters excluded from the record; order settling the record is final except on certiorari. Applied to hold the Court could not consider the excluded affidavit and that plaintiff's failure to move for certiorari or Rule 37 relief precluded its consideration.
Steingress v. Steingress, 350 N.C. 64, 511 S.E.2d 298 (1999) Authority permitting imposition of sanctions/costs under the Rules of Appellate Procedure (N.C. R. App. P. 25, 34). Relied upon as authority to tax the costs of the appeal personally against plaintiff's attorneys.
Hassell v. Wilson, 301 N.C. 307, 314, 272 S.E.2d 77, 82 (1980) Constructive-service statutes must be strictly construed. Referenced as defendant's basis for arguing strict construction should preclude deeming returned forwarded mail "unclaimed."
Humphrey v. Sinnott, 84 N.C. App. 263, 267, 352 S.E.2d 443, 446 (1987) G.S. 1-105(2) is in derogation of the common law and must be strictly construed; requires "sufficient assurance" of actual notice to satisfy due process. Used to explain the limited purpose of G.S. 1-105 and that only "sufficient compliance" with the statute is required.
Hart v. Queen City Coach Co., 241 N.C. 389, 391, 85 S.E.2d 319, 320 (1955) Purpose of constructive service is to enable suits against non-resident motorists who cause in-state accidents but are beyond the court's jurisdiction when suit is filed. Applied to support refusal to add a condition guaranteeing the defendant an opportunity to claim forwarded mail beyond statutory text.
Ridge v. Wright, 35 N.C. App. 643, 645, 242 S.E.2d 389, 391 (1978) Forwarded mail returned marked "moved, not forwardable" can be treated as "unclaimed" under G.S. 1-105(2). Applied to conclude the returned package here was "not forwardable" and therefore "unclaimed," making service complete under G.S. 1-105(2).
Fountain v. Patrick, 44 N.C. App. 584, 586-87, 261 S.E.2d 514, 516 (1980) Example of cases discussing due diligence requirements in contexts such as service by publication. Referenced by defendant to argue plaintiff lacked due diligence; Court distinguished service under G.S. 1-105 and concluded no due diligence requirement applies there.
Kennedy v. Starr, 62 N.C. App. 182, 302 S.E.2d 497 (1983) Cited in secondary authority discussing G.S. 1-105 and due diligence. Referenced via secondary source to support the view that G.S. 1-105 does not impose a due diligence requirement like that for publication.
Davis v. St. Paul-Mercury Indem. Co., 294 F.2d 641 (4th Cir. 1961) Federal case cited in secondary authority concerning constructive-service principles. Referenced via a treatise to support the statutory purpose of enabling suits against non-resident motorists; used as supporting authority in the discussion.

Court's Reasoning and Analysis

The Court addressed two principal matters.

Appellate-procedure/sanctions: The trial court had expressly excluded from the settled record an affidavit (Postmaster of Greenville) that plaintiff's counsel nevertheless attached and referred to in appellate briefs. The Court relied on N.C. R. App. P. 11(c) (settling the record), Rule 37 (motions for judicial notice), and its precedent in Horton and Morris to conclude that a party seeking judicial notice of material outside the record must file a Rule 37 motion. Citing State v. Johnson, the Court held it could not take notice of material excluded from the settled record; plaintiff filed no Rule 37 motion and did not assign error to the trial court's exclusion. The inclusion of excluded material violated N.C. R. App. P. 9(a) and 28(b),(d). Although the misconduct did not warrant dismissal, the Court imposed monetary sanctions: costs of the appeal were taxed personally against plaintiff's attorneys pursuant to N.C. R. App. P. 25 and 34 and Steingress.

Service under G.S. 1-105: The Court examined G.S. 1-105(2), which deems service complete where certified or registered mail served on the Commissioner is not delivered because it is unclaimed, because the defendant has removed himself from his last known address and left no forwarding address, or because the defendant is unknown at his last known address; service is deemed completed on the date the letter is returned to the plaintiff or the Commissioner. The defendant urged strict construction (citing Hassell and Humphrey) and argued that a defendant must be afforded an opportunity to claim forwarded mail before it can be characterized as "unclaimed." The Court concluded the plain language of G.S. 1-105(2) does not impose such a condition precedent and declined to add one. The Court explained that G.S. 1-105's purpose is to provide "sufficient assurance" of notice to satisfy due process and to allow suits against non-resident motorists; guaranteeing an additional opportunity to claim would undermine that purpose (citing Humphrey and Hart). Prior decisions treating forwarded mail returned undelivered or marked "moved, not forwardable" as "unclaimed" (e.g., Humphrey, Ridge) were applied. Because defendant admitted the package was undeliverable due to his move and that the forwarding order had expired, the Court concluded the package was "not forwardable" and "unclaimed" under G.S. 1-105(2), and thus service was complete on the date the package was returned to the Commissioner.

Holding and Implications

REVERSED AND REMANDED

Holding: The trial court erred in granting defendant's Rule 12(b)(5) motion; the Court of Appeals held service on defendant was complete under N.C. Gen. Stat. § 1-105(2) when the certified package forwarded by the Commissioner was returned undelivered (the opinion states service was complete on 15 October 1998). The Court reversed the dismissal and remanded the case to the trial court.

Implications: The direct effects are (1) the trial court's dismissal for insufficient service is reversed and the case is remanded for further proceedings, and (2) the costs of this appeal are taxed personally against plaintiff's attorneys as sanctions for including excluded material in the appellate submissions.

PAMELA GAIL COINER, Plaintiff, v. LONNIE CARLON CALES, Defendant

1 . Appeal and Error — appellate rules violated — affidavit not in record on appeal — no motion to take judicial notice — sanctions appropriate

In a case involving a motor vehicle collision in North Carolina with out-of-state parties, plaintiff's attorney is assessed sanctions for violating Rules 9(a) and 28(b) and (d) of the Rules of Appellate Procedure because: (1) the attorney inappropriately included and referred to an affidavit in his brief that was explicitly excluded from the appellate record by the trial court; (2) the attorney did not contest the order settling the record in the appeal under Rule 11(c); (3) the appellate court cannot take judicial notice of matters excluded from the record; and (4) the attorney did not file a motion under Rule 37 for the appellate court to take judicial notice of the material.
2 . Process and Service — motor vehicle collision — out-of-state parties — service complete when returned to Commissioner of Motor Vehicles
In a case involving a motor vehicle collision in North Carolina with out-of-state parties, the trial court erred in allowing defendant's motion to dismiss under Rule 12(b)(5) for insufficient service because the service on defendant was complete under N.C.G.S. § 1-105(2) on the date the package was returned to the Commissioner of Motor Vehicles since defendant had moved and the forwarding order had expired.
3 . Process and Service — motor vehicle collision — out-of-state parties — address from accident report sufficient — due diligence not required
In a case involving a motor vehicle collision in North Carolina with out-of-state parties, plaintiff's use of defendant's three-year-old address from the accident report in an effort to locate defendant was sufficient because N.C.G.S. § 1-105 does not have a due diligence requirement.

EAGLES, Chief Judge.

[1] In her original appellate brief and in her reply brief, plaintiff-appellant inappropriately refers to an affidavit by the Postmaster of Greenville, South Carolina, which sets out Post Office procedure for forwarding unclaimed packages. The trial court explicitly excluded this document from the appellate record in its 31 October 1998 Order Settling the Record on Appeal. Plaintiff did not assign error on appeal based on the trial court's exclusion of the affidavit.

Defendant moved for sanctions and/or dismissal of plaintiff's appeal on grounds that by disobeying the order of the trial court, plaintiff violated the North Carolina Rules of Appellate Procedure. We grant defendant's motion for sanctions, but decline to dismiss the appeal.

N.C. R. App. P. 11(c) provides that absent agreement by the parties, one or both of the parties may request that the trial judge settle the record on appeal. This Court has held that where the trial court refuses to include material in its order, the party whose material has been excluded may challenge the ruling on appeal. Horton v. New South Ins. Co., 122 N.C. App. 265, 267, 468 S.E.2d 856, 857 (1996) ( citing Craver v. Craver, 298 N.C. 231, 236-237, 258 S.E.2d 357, 361-62 (1979)). Here, plaintiff did not contest the order settling the record in her appeal. By including the excluded affidavit and referring to it in her briefs, plaintiff has violated our Rules of Appellate Procedure.

However, plaintiff argues that the inclusion of the affidavit is not prejudicial to defendant since any party may request that any court take judicial notice of evidence at any stage of a case. Plaintiff argues that she attached the affidavit in order to provide the court with the necessary information to take judicial notice of the postal regulations. We first note plaintiff's inconsistent statements on the issue of judicial notice. While her reply brief states that she had in fact "requested that the [trial] Court take judicial notice of Postal Regulations," in her response to defendant's motion for dismissal/sanctions, plaintiff states that "the trial court . . . did not consider the issue of taking judicial notice of the Regulations." Yet we know from the record that the trial court both considered and refused plaintiff's request because the order settling the record explicitly excluded the material at issue.

We held in Horton that a request that this Court take judicial notice of certain material must be made by motion pursuant to N.C. R. App. P. 37. Horton at 268, 468 S.E.2d at 858 ( citing Morris v. Morris, 92 N.C. App. 359, 361, 374 S.E.2d 441, 442 (1988)). Yet no motion was filed here. But while a party can ask this Court to take judicial notice of matters outside the record, the Court may not take notice of matters excluded from the record, since the order settling the record on appeal is final and cannot be reviewed on appeal except on motion for certiorari. State v. Johnson, 298 N.C. 355, 372, 259 S.E.2d 752, 763 (1976). Again, no motion was filed. Any improper reference to non-record material in appellate briefs or appendices violates N.C. R. App. P. 9(a) and 28(b), (d). Horton at 268, 468 S.E.2d at 858. Plaintiff's attachment of the excluded affidavit to her brief violates the North Carolina Rules of Appellate Procedure.

Plaintiff argues that even if error, the inclusion of the excluded material was not sufficiently "gross" and "wanton" a violation to warrant dismissal. We agree, but given plaintiff's attorneys' willful disobedience of the trial court's explicit order and their substantial noncompliance with Rules 9, 28, and 37, we impose sanctions against plaintiff's attorneys in the form of costs associated with this appeal. N.C. R. App. P. 25, 34; Steingress v. Steingress, 350 N.C. 64, 511 S.E.2d 298 (1999). The costs of this appeal shall be taxed personally against plaintiff's attorneys.

[2] We next consider whether the trial court erred in granting defendant-appellee's motion to dismiss under Rule 12b(5). We hold that service on defendant was complete under N.C. Gen. Stat. § 1-105(2) and reverse the order of the trial court.

G.S. 1-105 provides that constructive service on the Commissioner is sufficient to gain personal jurisdiction over a non-resident defendant in an action arising out of an auto accident which occurred in North Carolina. Assuming that the defendant has neither received actual notice nor refused service, G.S. 1-105(2) provides that service may nevertheless be complete if

the certified or registered [package served on the Commissioner] is not delivered to the defendant [(1)] because it is unclaimed, or [(2)] because he has removed himself from his last known address and has left no forwarding address, or [(3)] because the defendant] is unknown at his last known address, service on the defendant shall be deemed completed on the date that the . . . letter is returned to the plaintiff or [the Commissioner].

N.C. Gen. Stat. § 1-105.

Because defendant relocated prior to the delivery of the forwarded package and his forwarding address had expired, defendant argues that a strict construction of G.S. 1-105 is appropriate. Hassell v. Wilson, 301 N.C. 307, 314, 272 S.E.2d 77, 82 (1980) (requiring strict construction of constructive service statutes); Humphrey v. Sinnott, 84 N.C. App. 263, 267, 352 S.E.2d 443, 446 (1987) (G.S. 1-105(2) is "in derogation of the common law" and must be strictly construed). Accordingly, defendant argues that he was improperly denied an "opportunity" to claim the forwarded package. Absent this opportunity, defendant argues that the package could not be "unclaimed." Defendant therefore contends that service was incomplete under the first of the three tests stated in G.S. 1-105(2).

The plain language of G.S. 1-105(2) does not expressly predicate the classification of a forwarded package as "unclaimed" on non-resident defendants' first being afforded an opportunity to claim it. Strict construction precludes this Court from adding this condition precedent to the statute. We will not expand the rights of non-resident tortfeasors without express statutory authority.

G.S. 1-105 merely provides non-resident defendants with " sufficient assurance of actual notice " to meet "minimum" due process and personal jurisdiction requirements. Humphrey at 268, 352 S.E.2d at 446-47 (emphasis added). To guarantee defendant the opportunity he seeks would undermine the purpose of constructive service under G.S. 1-105: to enable suits against non-resident motorists who cause in-state accidents but are beyond the jurisdiction of our courts when suit is filed. Hart v. Queen City Coach Co., 241 N.C. 389, 391, 85 S.E.2d 319, 320 (1955). See also G. Gray Wilson, North Carolina Civil Procedure § 4-27 (2d ed. 1995) ( citing Davis v. St. Paul-Mercury Indem. Co., 294 F.2d 641 (4th cir. 1961)).

Accordingly, this Court has held that forwarded mail which was returned undelivered to the Commissioner was "unclaimed," and service was therefore proper under G.S. 1-105(2), even if the mail "is not delivered . . . because [defendant] has moved," Humphrey, 84 N.C. App. at 268, 352 S.E.2d at 446, or if the mail is returned to the Commissioner marked "moved, not forwardable." Ridge v. Wright, 35 N.C. App. 643, 645, 242 S.E.2d 389, 391 (1978). Here, defendant admits that the package was undelivered because he had moved. He also admits that "the certified mail was undelivered due to a notation on the envelope stating that the forwarding order had expired." In light of these admissions, we conclude that the package was "not forwardable," Ridge, 35 N.C. App. 643, 242 S.E.2d 389, and was "unclaimed" under G.S. 1-105(2). Accordingly, we hold that service was complete on 15 October 1998, the date the package was returned to the Commissioner.

Finally, defendant argues that by using three-year-old address information in the accident report to locate defendant, plaintiff failed to meet his duty to exercise due diligence in locating defendant for purposes of service (for example, by use of directory assistance or query to defendant's insurance carrier). Fountain v. Patrick, 44 N.C. App. 584, 586-87, 261 S.E.2d 514, 516 (1980). However, unlike service by publication, there appears to be no due diligence requirement under G.S. 1-105. Wilson, supra, at § 4-27 ( citing Kennedy v. Starr, 62 N.C. App. 182, 302 S.E.2d 497 (1983)); but see Id. at 187-190, 302 S.E.2d at 500-502 (Whichard, concurring). For complete service under G.S. 1-105, all that is required is "sufficient compliance" with the statute. Humphrey, 84 N.C. App. at 267, 352 S.E.2d at 446-47. We conclude that using the address on the accident report was sufficient. An additional "due diligence" requirement imposes a new condition precedent to the operation of G.S. 1-105 which is not contemplated by the plain language of the statute.

Because we conclude that plaintiff complied with G.S. 1-105, and for that reason reverse the trial court's order of dismissal, we need not discuss defendant's remaining challenges. However, given plaintiff's noncompliance with the Rules of Appellate Procedure, we tax the costs of this appeal personally against plaintiff's attorneys.

Reversed and remanded.

Judges WALKER and McGEE concur.

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COINER v. CALES
(Oct 1, 1999)