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KHATCHI v. LANDMARK RESTAURANT ASSOC
Case Summary: Rosie Khatchi v. Landmark Restaurant Associates, Inc., 45886 (Va. Jan. 13, 1989)
Factual and Procedural Background
In 1982 plaintiffs Rosie Khatchi and her husband owned a building at 4111 Duke Street, Alexandria, leased to principals of Landmark Restaurant Associates, Inc., a Virginia corporation that operated a restaurant there. Plaintiff sued the corporation alleging she tripped on a projecting metal strip in the restaurant on March 10, 1982. A deputy sheriff returned "not found" after attempting service on the registered agent at the restaurant, which was closed for remodeling. On December 1, 1983, plaintiff's attorney filed an affidavit stating the registered agent's last known address and that "after due diligence the petitioner...has been unable to obtain service," the affidavit being subscribed and sworn by the attorney, not the plaintiff. Service was then effected on the Secretary of the Commonwealth under the long-arm statute. The trial court entered a default judgment and an ex parte jury awarded plaintiff $283,000. Defendant later appeared, moved to vacate the default judgment alleging invalid service and fraud, and the trial court, finding the affidavit defective, vacated the default judgment and ordered a new trial. A second jury trial resulted in a verdict for the defendant. The plaintiff appealed the vacation of the default judgment.
Legal Issues Presented
- Whether the trial court was warranted in setting aside the default judgment on the ground that service of process under the long-arm statute was invalid.
Arguments of the Parties
Defendant's Arguments
- The long-arm statute was intended to subject nonresidents, persons who cannot be located, and foreign corporations to jurisdiction, and was not intended to supplant Code Sec. 8.01-299 as the method for obtaining service on a domestic corporation.
- The long-arm affidavit requirement was not satisfied and constructive service under the statute was therefore invalid.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Crockett v. Etter, 105 Va. 679, 54 S.E. 864, 865 (1906) | The principle that where a statute provides for constructive service, the statute's terms must be strictly followed or the service will be invalid. | Used to support that constructive (statutory) service must conform to statutory requirements and that failure renders a default judgment void. |
| Staunton Perpetual B. L. Co. v. Haden, 92 Va. 201, 23 S.E. 285, 286 (1895) | Same principle regarding strict compliance for constructive service under statute. | Applied with Crockett to emphasize that irregularity in constructive service defeats validity of default judgment when statutory terms are not met. |
| Luke v. Dalow Industries, Inc., 566 F. Supp. 1470 (E.D. Va. 1983) | Illustration that the long-arm affidavit seeks the knowledge of the plaintiff, not the plaintiff's counsel. | Cited by the trial court (and noted by this Court) to support the view that the affidavit requirement looks to the party's knowledge; the opinion also notes a 1987 amendment allowing affidavit by party or agent/attorney. |
Court's Reasoning and Analysis
The Court focused on Code § 8.01-329(A1), which requires an affidavit, filed with the court, stating either (i) the person to be served is a nonresident or (ii) that after exercising due diligence the party seeking service has been unable to locate the person to be served. The affidavit filed here, sworn by plaintiff's attorney, did not state either statutory alternative but instead said the petitioner had been "unable to obtain service." The Court emphasized that constructive service statutes must be strictly followed and that the difference between "unable to locate" (statutory language) and "unable to obtain service" (language used) was significant under these facts. The Court observed that facts (plaintiff's husband knew addresses of the registered agent and other officers) furnished a substantial basis to conclude plaintiff herself could likely have located the agent and that service could have been effected under Code § 8.01-299. Citing precedents, and a district court decision noting the affidavit seeks the plaintiff's knowledge, the Court concluded the affidavit was insufficient, the only purported service was invalid, and the default judgment was void. The trial court therefore correctly vacated the default judgment; the trial court did not reach the defendant's separate fraud allegations.
Holding and Implications
Affirmed.
Holding: The Supreme Court of Virginia affirmed the trial court's order vacating the default judgment because the affidavit supporting long-arm service did not comply with Code § 8.01-329(A1), rendering the constructive service invalid and the default judgment void.
Implications: The direct effect was vacation of the default judgment and remand/continuation to trial on the merits (which produced a verdict for the defendant). The opinion does not announce a new broader rule beyond enforcing strict compliance with the statutory affidavit requirement for constructive (long-arm) service.
Since the affidavit given in support of long-arm service on the defendant in this case was insufficient, and the only service of process purportedly made upon the defendant was invalid, the default judgment was void and the trial court correctly vacated the default judgment.
Practice and Procedure — Service of Process — Long Arm Service — Default Judgment
Plaintiff and her husband owned a building which they leased to the three individuals who where the principals in the defendant corporation. The corporation operated a restaurant business in the building. Plaintiff filed a motion for judgment against the corporation, alleging that she had fallen and sustained injuries while a patron in the restaurant. A deputy sheriff filed a "not found" return after attempting to serve the registered agent at the restaurant premises, which were closed for remodeling. Plaintiff's attorney signed and filed an affidavit stating that the last known address of the registered agent was the restaurant and that after due diligence the petitioner was unable to obtain service upon the defendant. Service of process was then made upon the Secretary of the Commonwealth pursuant to the long-arm statute. Counsel for the plaintiff secured entry of an order awarding judgment by default. A jury heard evidence ex parte and fixed plaintiff's damages at $283,000. The court entered judgment on the verdict. Defendant appeared and moved the court to vacate the default judgment, alleging that service of process was invalid and that the default had been procured by fraud. The court ruled that the affidavit for long-arm service had been defective and entered an order vacating the default judgment and continuing the case for jury trial on the merits. The case was tried to a jury, which gave a verdict for the defendant. The sole issue on appeal is whether the court was warranted in setting aside the default judgment on the ground of invalid service of process.
1. If the plaintiff was entitled to invoke long-arm jurisdiction over a domestic corporation, she failed to do so. Code Sec. 8.01-329(A1) provides that a party seeking to acquire long-arm jurisdiction through service upon the Secretary of the Commonwealth shall file an affidavit with the court stating either (i) that the person to be served is a nonresident or (ii) that, after exercising due diligence, the party seeking service has been unable to locate the person to be served. The affidavit filed by plaintiff's counsel stated that petitioner had been unable to obtain service against the defendant.
2. Where a defendant has received personal service of process, irregularity will not defeat the court's jurisdiction, but if a statute provides for constructive service, the terms of the statute authorizing it must be strictly followed or the service will be invalid and any default judgment based upon it will be void.
3. Here service could readily have been obtained under Code Sec. 8.01-299 since there was substantial basis for the conclusion that the plaintiff could probably not have given an affidavit that she was unable to locate the person to be served, as required by the long-arm statute.
4. Assuming the applicability of the long-arm statute, the affidavit given in support of long-arm service was insufficient The only service of process purportedly made upon the defendant was invalid and the default judgment was void. The trial court correctly vacated the default judgment.
RUSSELL, J., delivered the opinion of the Court.
This appeal turns upon Code Sec. 8.01-329(A1), which prescribes the affidavit requisite for long-arm service of process.
In 1982, Rosie Khatchi and her husband owned a building at 4111 Duke Street, in Alexandria. They leased the property to three individuals who were principals in Landmark Restaurant Associates, Inc., a Virginia corporation. The corporation operated a restaurant business in the building.
In November 1983, Mrs. Khatchi (the plaintiff) filed a motion for judgment against the corporation (the defendant), alleging that on March 10, 1982, as a patron of the restaurant, she had tripped on a projecting metal strip, fallen, and sustained injuries. The caption of the motion for judgment contained the words
"SERVE: William L. Roberts
Registered Agent
4111 Duke Street
Alexandria, Virginia 22304."
A deputy sheriff filed a "not found" return on November 9, 1983, to which was appended a note to the effect that the premises were closed for remodeling. On December 1, 1983, D. Brian Costello, the plaintiff's attorney, filed an affidavit to the effect that the "last known address of the registered agent" was at 4111 Duke Street, Alexandria, and that "after due diligence the petitioner in this cause has been unable to obtain service against the above named defendant." The affidavit was subscribed and sworn to by Mr. Costello, not by the plaintiff.
Counsel thereafter arranged for service of process upon the Secretary of the Commonwealth pursuant to the long-arm statute. Such service was made by the Sheriff of the City of Richmond on December 12, 1983, pursuant to Code Sec. 8.01-329(B). On January 11, 1984, counsel for the plaintiff secured entry of an order awarding judgment by default and continuing the case for ex parte determination of damages by a jury. On February 6, 1984, a jury heard evidence ex parte and fixed the plaintiff's damages at $283,000.00. The court entered an order of judgment on the verdict.
On March 21, 1984, the defendant appeared by counsel and moved the court to vacate the default judgment, alleging that service of process was invalid and that the default had been procured by fraud. The court heard evidence on the motion and, by letter opinion, ruled that the affidavit for long-arm service had been defective. Consequently, the court did not reach the defendant's allegations of fraud.
The court entered an order vacating the default judgment and continuing the case for jury trial on the merits. The case was tried to a jury in September 1985, resulting in a verdict for the defendant. We awarded the plaintiff an appeal from a final order of judgment on this second verdict. The sole issue on appeal is whether the court was warranted in setting aside the default judgment on the ground of invalid service of process. The plaintiff assigned no error with regard to the second trial.
The court acted pursuant to Code Sec. 8.01-428(A), which authorizes the court to set aside a default judgment "upon the following grounds: (i) fraud on the court, (ii) a void judgment, (iii) on proof of an accord and satisfaction."
On appeal, as in the trial court, the defendant contends that the long-arm statute was designed to subject nonresidents, individuals who cannot be located, and foreign corporations to personal jurisdiction in a proper case, but that it was never intended to supplant Code Sec. 8.01-299 as the method for obtaining service upon a domestic corporation. The trial court found it unnecessary to decide this question because the court determined that the plaintiff had not followed the steps prerequisite to obtaining long-arm jurisdiction even if the long-arm statute were applicable.
We agree with the trial court's analysis. If we assume, without deciding, that the plaintiff was entitled to invoke long-arm jurisdiction over a domestic corporation, she nevertheless failed to do so. Code Sec. 8.01-329(A1) provides that a party seeking to acquire long-arm jurisdiction through service upon the Secretary of the Commonwealth "shall file an affidavit with the court, stating either (i) that the person to be served is a nonresident or (ii) that, after exercising due diligence, the party seeking service has been unable to locate the person to be served" (emphasis added). The affidavit filed by plaintiff's counsel stated neither of these alternatives, but instead stated that "petitioner in this cause has been unable to obtain service against the above named defendant" (emphasis added).
Where a defendant has received personal service of process, irregularity will not defeat the court's jurisdiction, but if a statute provides for constructive service, the terms of the statute authorizing it must be strictly followed or the service will be invalid and any default judgment based upon it will be void. Crockett v. Etter, 105 Va. 679, 681, 54 S.E. 864, 865 (1906); Staunton Perpetual B. L. Co. v. Haden, 92 Va. 201, 204, 23 S.E. 285, 286 (1895). Under the facts of this case, the difference between the affidavit filed and the statutory requirement was significant.
At the time the suit was filed and service upon the registered agent was attempted, the restaurant in the building the plaintiff owned was closed for remodeling. The address of the restaurant was the registered office of the defendant corporation. The plaintiff's husband admitted that he knew the residence address of the registered agent, who was a principal in the defendant corporation, and that he also knew where other officers and directors lived. Therefore, service could readily have been obtained under Code Sec. 8.01-299. There is no evidence that plaintiff's counsel had this information, but there existed a substantial basis for the conclusion that the plaintiff herself could probably not have given an affidavit that she was "unable to locate" the person to be served, as required by the long-arm statute. The affidavit given by her counsel fell significantly short of the mark.
The trial court, citing Luke v. Dalow Industries, Inc., 566 F. Supp. 1470 (E.D. Va. 1983), noted that the statute did not seek the knowledge of plaintiff's counsel, but sought the knowledge of the plaintiff personally. The two could be, and in this case might well have been, quite different. In 1987, the General Assembly amended Code Sec. 8.01-329(A1) to provide that the requisite affidavit may be filed by "the party or his agent or attorney." Acts 1987, cc. 449 and 459.
Assuming the applicability of the long-arm statute, we think the affidavit given in support of long-arm service was insufficient. The only service of process purportedly made upon the defendant was invalid and the default judgment was void. The trial court, therefore, correctly vacated the default judgment and set the case down for a new trial. Accordingly, the judgment will be
Affirmed.
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