My December, 2010 post “Service Of Process” Fundamental For The Plaintiff Lender addressed the matter of inadequate service of process, which can result in defective judgments. The subsequent decision in Norris v. Personal Finance, 957 N.E.2d 1002 (Ind. Ct. App. 2011) allows me to supply a complementary post. Since “do overs” should be avoided, secured lenders and their foreclosure counsel need to have a good grasp on how to initiate a suit against someone.
How service occurred. In Norris, a borrower failed to make payments on the subject loan, and the lender filed a collection action. The sheriff delivered the complaint to the address of the parents of the borrower and sent another copy to that address by first class mail. Since the borrower failed to appear at the trial, the court entered a default judgment against him. In a post-judgment hearing, the borrower argued that service of process at his parents’ address was insufficient and that the default judgment should be set aside. The trial court denied the requested relief, and the borrower appealed.
The lender’s argument. The promissory note identified the borrower’s parents as references and gave their home address. Two emails involving the lender’s lawyer’s secretary and the borrower indicated that the borrower had knowledge of the suit and the trial date. Previous phone conversations between the borrower and the lender’s representative occurred in which the borrower stated that he was living with his parents due to the loss of his home. At one point the lender’s representative called the parents’ home, and the borrower answered the phone. In short, the evidence was overwhelming that the borrower knew about the suit.
The borrower’s argument. The borrower claimed that he did not reside at his parents’ address when the complaint was served and, as such, the court did not have personal jurisdiction over him when it entered the default judgment. The borrower had not appointed his parents as his agents or otherwise authorized them to accept service on his behalf.
Rule 4.1. This trial rule governs service on an individual, and section (A)(3) provides service may be made by “leaving a copy of the summons and complaint at his dwelling house or usual place of abode.” The Court held that the record in Norris was devoid of such evidence. In footnote 4 of its opinion, the Court provided a nice summary of Indiana law on the “extremely fact-sensitive” question of whether an address is a party’s “dwelling house or usual place of abode.”
Rule 4.16. Instead of focusing on Rule 4.1(A), the trial court based its decision upon this trial rule, which essentially states that one who accepts service for another is under a duty to notify that person. The trial court presupposed that the parents either did or could accept service for their son. Since it was undisputed the parents received the complaint, the trial court reasoned that the parents had a duty to inform their son of the suit or to inform the court that the borrower did not live with them. The borrower asserted that this rule only applies to those with authority to accept service for another, and the Court agreed. Parents of competent adults are not, under Indiana law, persons having authority to accept service. And there was no evidence in Norris establishing that the parents in fact did not have such authority.
Rule 4.15(F). This trial rule basically provides that service shall not be deemed insufficient when it “is reasonably calculated to inform the person to be served that an action has been instituted against him.” Although this somewhat nebulous rule had the potential to save the lender, the Court rejected its application because the purpose of the rule is only to cure “technical defects in service of process, not a total failure to serve process,” which was the situation in Norris.
Actual knowledge not the test. The evidence established that the borrower in Norris had actual notice of the collection action and the trial. Nevertheless, Indiana law is well settled that the mere fact that the defendant had knowledge of the action will not grant the court personal jurisdiction. Plaintiffs must follow the guidelines in the Rule 4 series and constitutional due process.
In Indiana, the seemingly simple step of serving a defendant borrower with a summons and complaint can sometimes become a frustrating obstacle to overcome. One of the lessons of Norris, together with the Elliott and Yoder cases I discussed in my December, 2010 post, is to get service right the first time. An expedient default judgment based on questionable service may, in the end, prove to be a waste of time and money. Ultimately, the foolproof method of service upon an individual is to deliver a copy of the summons and complaint to him personally. See, T.R. 4.1(A)(2).