1. Appeal and Error--writ of certiorari--timeliness of notice of appeal
Plaintiff's motion to dismiss defendant's appeal is denied and defendant's petition for
writ of certiorari under N.C. R. App. P. 21 is granted even though notice of appeal was filed with
the trial court outside the thirty-day time period within which an appeal from a judgment in a
civil action must be taken under N.C. R. App. P. 3, because notice was timely filed with the
Court of Appeals.
2. Process and Service--substitute service--limited liability company--personal
jurisdiction
The trial court did not err in an action to recover money owed on an account by refusing
to set aside a default judgment in favor of plaintiff even though defendant limited liability
company contends the judgment was void for lack of personal jurisdiction based on improper
service, because: (1) defendant failed to properly maintain a registered agent in the State of
North Carolina as required by N.C.G.S. § 55-30(a)(2) since its registered agent left the State and
defendant failed to appoint a new agent; (2) alternate service on the Secretary of State was
proper under N.C.G.S. § 57C-2-43; and (3) where the Secretary of State mailed the summons is
immaterial since service was effective when plaintiff served the Secretary of State.
3. Judgments_-default judgment--motion to set aside
The trial court did not abuse its discretion in an action to recover money owed on an
account by failing to grant defendant limited liability company relief under N.C.G.S. § 1A-1,
Rule 60(b) from entry of default judgment and by finding that defendant's neglect was
inexcusable, because: (1) the registered agent refused service and changed addresses; and (2) the
trial court's decision was not manifestly unsupported by reason when defendant failed to
properly maintain a registered agent in the State of North Carolina.
Turner & Yates, P.A., by David W. Yates for plaintiff-
appellee.
McElwee Firm, PLLC, by R. Tyson Ferrell for defendant-
appellant.
WYNN, Judge.
Defendant Highlande Builders, LLC, appeals from a default
judgment entered 1 October 2003. Defendant contends that the trial
court: (1) erred in denying its motion to set aside the default
judgment because the judgment was void for lack of personal
jurisdiction; and (2) abused its discretion in failing to grant
Defendant relief under Rule 60(b) of the North Carolina Rules of
Civil Procedure. For the reasons stated herein, we affirm.
Plaintiff filed a complaint on 16 January 2002 to recover
$15,140.82 owed on an account. Defendant's registered agent in
North Carolina was D. Michael Little. In December 2001, Mr. Little
went to Florida on an extended vacation. On 17 January 2002
Plaintiff filed service with the North Carolina Secretary of State.
The Secretary of State attempted to send notice to the registered
agent at the principal place of business address of record, but
notice was returned unclaimed. On 11 February 2002, Plaintiff
sent service to Defendant at its registered address by certified
mail; this came back unclaimed. On 11 February 2002, Plaintiff
sent a letter to Ashe County Sheriff's Department for service upon
Defendant at both the mailing address and the physical address,
however, the Sheriff was unable to locate the registered agent or
other company official. Upon discovering the registered agent had
gone to Florida for the winter, on 28 February 2002 Plaintiff sent
a letter to the Sheriff's Department in Naples, Florida for
service, however, the sheriff was unable to locate anyone at the
forwarded address.
Default judgment was entered 4 March 2002. Following
Defendant's motion to set aside the default judgment, the trialcourt entered final judgment on 1 October 2003, denying the motion
to set aside the default judgment. Defendant appealed.
____________________________________________
[1] We first note that notice of appeal was not filed with the
trial court until 5 November 2003, outside the thirty-day time
period within which an appeal from a judgment order in a civil
action must be taken pursuant to Rule 3 of the North Carolina Rules
of Appellate Procedure, although notice was timely filed with this
Court. However, we deny Plaintiff's motion to dismiss and grant
Defendant's Petition for Writ of Certiorari pursuant to Rule 21 of
the Rules of Appellate Procedure.
[2] On appeal, Defendant contends that the trial court erred
in denying its motion to set aside the default judgment because the
judgment was void for lack of personal jurisdiction due to improper
service. We disagree.
Section 57C-2-43 of the North Carolina General Statutes
provides rules for substituted service of process on limited
liability companies.
Whenever a limited liability company shall
fail to appoint or maintain a registered agent
in this State, or whenever its registered
agent cannot with due diligence be found at
the registered office, then the Secretary of
State shall be an agent of the limited
liability company upon whom any process,
notice, or demand may be served. Service on
the Secretary of State of any such process,
notice, or demand shall be made by delivering
to and leaving with the Secretary of State or
with any clerk authorized by the Secretary of
State to accept service of process, duplicate
copies of the process, notice, or demand and
the fee required by G.S. 57C-1-22(b). In the
event any such process, notice, or demand is
served on the Secretary of State in the manner
provided for in this section, the Secretary ofState shall immediately mail one of the copies
thereof, by registered or certified mail,
return receipt requested, to the limited
liability company at its principal office or,
if there is no mailing address for the
principal office on file, to the limited
liability company at its registered office.
Service on a limited liability company under
this subsection shall be effective for all
purposes from and after the date of the
service on the Secretary of State.
N.C. Gen. Stat. § 57C-2-43(b) (2003) (emphasis added). It is the
duty of limited liability companies to maintain a registered agent
in the State of North Carolina. N.C. Gen. Stat. § 55D-30(a)(2)
(2003). Since Defendant's registered agent left the State and
Defendant failed to appoint a new agent, alternative service on the
Secretary of State was proper. N.C. Gen. Stat. § 57C-2-43.
Defendant contends that service was improper because the
Secretary of State mailed the summons to the principal address
instead of the registered office mailing address. Where the
Secretary of State mailed the summons is immaterial because service
was effective when Plaintiff served the Secretary of State. N.C.
Gen. Stat. § 57C-2-43; see Royal Bus. Funds Corp. v. S. E. Dev.
Corp., 32 N.C. App. 362, 366, 232 S.E.2d 215, 217 (1977) (where
statute had similar language service on foreign corporation
complete when Secretary of State served). [T]here is nothing in
[the statute's] language to indicate that the registered mail must
be either accepted or rejected in order for service to be complete.
Such an interpretation would be contrary to the clear legislative
intent . . . that service is complete when the Secretary of State
is served. Id., 232 S.E.2d at 218.
As Defendant's registered agent had left the state, servicewas effective when served upon the Secretary of State. Therefore,
the trial court had personal jurisdiction and entry of default
judgment was proper.
[3] On appeal, Defendant also contends that the trial court
abused its discretion in failing to grant Defendant relief under
Rule 60(b) of the North Carolina Rules of Civil Procedure and
finding that Defendant's neglect was inexcusable. We disagree.
On motion and upon such terms as are just, the court may
relieve a party or his legal representative from a final judgment,
order, or proceeding for the following reasons: (1) [m]istake,
inadvertence, surprise, or excusable neglect; . . . or; (6) [a]ny
other reason justifying relief from the operation of the judgment.
N.C. Gen. Stat. § 1A-1, Rule 60(b) (2003). The decision whether to
set aside a default judgment under Rule 60(b) is left to the sound
discretion of the trial judge, and will not be overturned on appeal
absent a clear showing of abuse of discretion. Thomas M. McInnis
& Assocs., Inc. v. Hall, 318 N.C. 421, 425, 349 S.E.2d 552, 554
(1986).
Whether neglect is excusable or inexcusable is a question
of law which depends upon what, under all the surrounding
circumstances, may be reasonably expected of a party to
litigation. Id., 349 S.E.2d at 555. The trial judge's conclusion
in this regard will not be disturbed on appeal if competent
evidence supports the judge's findings, and those findings support
the conclusion. In re Hall, 89 N.C. App. 685, 687, 366 S.E.2d 882,
884, disc. review denied, 322 N.C. 835, 371 S.E.2d 277 (1988).
Once excusable neglect has been shown as a matter of law, whetherthe judge shall then set aside the judgment or not rests 'in his
discretion . . ..' Morris v. Liverpool, London & Globe Ins. Co.,
131 N.C. 212, 213, 42 S.E. 577, 578 (1902); accord McInnis, 318
N.C. at 425, 349 S.E.2d at 554.
In the case before us, the trial court found that the
registered agent refused service and changed addresses, also that
service upon the Secretary of State was proper. The trial court
concluded that the Defendant's neglect was inexcusable. We hold
that the evidence and findings support that conclusion.
A default judgment may be set aside under Rule 60(b)(6) only
upon a showing that: (1) extraordinary circumstances were
responsible for the failure to appear, and (2) justice demands that
relief. See Huggins v. Hallmark Enters., Inc., 84 N.C. App. 15,
24-25, 351 S.E.2d 779, 785 (1987). The decision to grant this
rule's exceptional relief is within the trial court's discretion.
Id. at 25, 351 S.E.2d at 785. Because this court cannot substitute
'what it consider[s] to be its own better judgment' for a
discretionary ruling of a trial court, we may not overturn the
judge's ruling unless it was 'manifestly unsupported by reason.'
Id. (citations omitted).
While the law does not favor default, preferring instead that
controversies be resolved on their merits, it is also true that
rules which require responsive pleadings within a limited time
serve important social goals, and a party should not be permitted
to flout them with impunity. Howell v. Haliburton, 22 N.C. App.
40, 42, 205 S.E.2d 617, 619 (1974). Likewise, courts justifiably
disapprove of a limited liability company's failure to properlymaintain a registered agent because that requirement is designed
to inform potential litigants of necessary information, Huggins,
84 N.C. App. at 25, 351 S.E.2d at 785, thereby protecting the
company's interests and guarding against judgment by default, as
well as reducing the chance that the company will avoid paying a
judgment by evading service of process. See Anderson Trucking
Serv., Inc. v. Key Way Transp., Inc., 94 N.C. App. 36, 43, 379
S.E.2d 665, 669 (1989).
As Defendant failed to properly maintain a registered agent in
the State of North Carolina, the trial court's decision was not
manifestly unsupported by reason. Huggins, 84 N.C. App. at 25,
351 S.E.2d 785. The trial court committed no error in refusing to
set aside the default judgment under Rule 60(b)(6).
Affirmed.
Judges HUNTER and THORNBURG concur.
*** Converted from WordPerfect ***