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Relational, LLC v. Hodges

September 29, 2009

RELATIONAL, LLC, PLAINTIFF,
v.
ROBERT A. HODGES, RICHARD J. HODGES, DEFENDANTS.



The opinion of the court was delivered by: Judge David H. Coar

MEMORANDUM OPINION AND ORDER

This case comes before the Court on a motion to vacate the default judgment entered against Defendant Robert A. Hodges ("Defendant Hodges") on August 17, 2007. Defendant Hodges seeks relief pursuant to Federal Rule of Civil Procedure 60(b)(4). For the reasons stated below, Defendant's motion is DENIED.

I. BACKGROUND

On September 21, 2005, Defendant Hodges and his brother Richard Hodges enteredinto a Personal Guaranty with Relational, LLC. Under the terms of the agreement, the Hodges brothers pledged to personally guarantee up to $750,000 of the financial obligations of Laminate, Kingdom, LLC, their struggling flooring business. By January 11, 2005, Laminate's creditors had filed an involuntary petition for bankruptcy relief in the Southern District of Florida, which the Florida court granted on January 25, 2007. At that point, Laminate owed Relational well over $750,000. On February 1, 2007, Relational filed an enforcement action with this Court, alleging a breach of the Guaranty.

Immediately after initiating this action, Relational attempted to serve process on Defendants pursuant to the terms agreed upon in the Guaranty. The Guaranty provides, in relevant part:

... service of summons or other process in any proceeding against Guarantor may be made upon Guarantor by registered or certified mail... to Guarantor at his primary residential address: to Robert A. Hodges at 280 Arvida Parkway, Miami, FL 33156 and Richard J. Hodges at 220 Leucadendra Drive, Miama, FL 33156 Pl. Br., Exhibit 1, Personal Guaranty at 1-2. Relational mailed the complaint, summons, and attachments to both Defendants' Florida addresses provided in the Guaranty, but mail carriers found the residences vacant and returned the packages to Relational's counsel.

Following its first failed attempt to effectuate service of process, Relational enlisted a process server to locate and personally serve Defendants in the United States. The process server could neither find nor serve either Defendant. However, through contacts with Florida bankruptcy counsel, Relational learned that Defendant Hodges had sold his Florida home and returned to the U.K. without providing Laminate's trustee or creditors-including Relational-with a forwarding address or any contact information. Throughout early 2007, Defendants could not be located by either the Florida Bankruptcy Court or their own bankruptcy counsel. Indeed, several months after filing an appearance in Defendants' bankruptcy proceeding, Defendants' counsel withdrew because they were unable to locate Defendants. The Florida Bankruptcy Judge then threatened both Defendants with civil contempt if they failed to appear for their Noticed Rule 2004 Depositions.

Despite its failed efforts to serve process in Florida, Relational hired an investigation firm, Nicholls Investigation Services, to locate Defendant Hodges in the U.K.*fn1 Relational's investigation revealed a residential address for Defendant Hodges at 20 Margaret Grove, Harborne, Birmingham, B18, 9JH. Accordingly, on May 10, 2007, Nicholls's process server, Karen Johns, tendered the complaint and attached documents to that address. On May 15, 2007, Johns signed a return of service and an affidavit swearing under oath that she served Defendant Hodges at 20 Margaret Grove, where he identified himself and thanked her. The Court received no response from Defendant Hodges or anyone representing him.

Several months later, Winston & Strawn's London office began to receive letters from two firms of English solicitors writing on behalf of Defendant Hodges's grandmother and aunt. The solicitors, R. McVeighty and attorneys from England, Strickland, & Neale, stated that 20 Margaret Grove was the residence of Defendant Hodges's grandmother, Joan Hodges, and that the complaint and documents had been either left on her doorstep or served upon an unknown individual. They stated further that Mrs. Hodges had no knowledge of Defendant's whereabouts, she had not seen him for at least two years, and she was unable to forward the documents to Defendant.

During a status conference on June 21, 2007, Relational's counsel informed the Court that, although U.K. solicitors sent them letters claiming that Defendant's grandmother received the process intended for Defendant, they believed he had been properly served. In response, the Court requested that Relational file a motion for default judgment as to Defendant Hodges. Accordingly, on July 12, 2007, Relational presented its motion to the Court, arguing that Defendant Hodges was personally served with process, that he failed to respond, and that his silence indicated "a willful disregard for this litigation and procedures of this Court." Mot. for Default Judgment, at 4. Although the motion for default judgment was sent by mail to Defendant Hodges' business address and by both mail and courier to 20 Margaret Grove, the Court received no response and entered a default judgment against Defendant Hodges in the amount of $750,000 on August 17, 2007.

On November 6, 2007, Relational served a Statutory Demand in the U.K. based on the $750,000 debt Defendant Hodges and his brother owed Relational under the Guaranty. Relational again faced difficulty serving Defendant; Defendant refused to accept personal service, forcing Relational to attempt substituted service before Defendant finally accepted service via his solicitor. After Relational struggled to effectuate process, and the Hodges sought several extensions, the U.K. Court was finally prepared to hear the merits of the Statutory Demand on October 31, 2008. In this hearing, the Hodges faced the burden of showing that their obligations under the Guaranty were the subject of a dispute of substance. The day before the hearing, Defendant Hodges filed the instant motion to vacate default judgment, claiming that he was never properly served, the Court never obtained personal jurisdiction over him, and therefore the judgment entered against him was void. This Court held an evidentiary hearing on Defendant's motion on February 2, 2009.

II. ANALYSIS

Under Federal Rule of Civil Procedure 60(b)(4), a party may obtain relief from a final judgment if the "judgment is void." Fed. R. Civ. P. 60(b)(4). A judgment is void for the purposes of Rule 60(b)(4) if the court that issued the judgment lacked personal jurisdiction over the defendant. Robinson Engineering Co. Pension Plan and Trust v. George, 223 F.3d 445, 448 (7th Cir. 2000). As the court obtains personal jurisdiction over parties though effective service of process, a judgment is void as to any party who was not adequately served. See Taft v. Donellan Jerome, Inc., 407 F.2d 807, 808 (7th Cir. 1969); Flowers v. Klatick, No. 93 C 6606, 2004 WL 2005814, at *1 (N.D. Ill. Sept. 1, 2004); Fleet Mortgage Corp. v. Wise, No. 92 C 1102, 1997 WL 305319, a *1 (N.D. Ill. May 29, 1997).

The Court's resolution of the instant motion hinges on whether Defendant Hodges was properly served with process. Courts consider a signed return of service or an affidavit of service prima facie evidence that service was properly effectuated. O'Brien v. R.J. O'Brien & Assocs., Inc., 998 F.2d 1394, 1398 (7th Cir. 1993); Fleet Mortgage Corp., 1997 WL 305319, at *2. Such prima facie evidence may be "overcome only by strong and convincing evidence." O'Brien, 998 F.2d at 1398 (internal quotations and citation omitted); see also Fleet Mortgage Corp., 1997 WL 305319, at *2; Winning Moves, Inc. v. Hi! Baby, Inc., 605 N.E.2d 1026, 1029 (Ill. App. Ct. 1992) (observing that prima facie proof ...


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