Nelson v. NCO Financial Systems Inc et al

Filing 9

MEMORANDUM OPINION AND ORDER re 3 MOTION to Quash filed by Northland Insurance Company: Based upon what the court has before it, the court finds that Northland has failed to show good cause why the conditional judgment of December 19, 2013, should not be made final; motion to quash is DENIED. A final judgment in the amount of the conditional judgment will be entered unless by 4:30 p.m., March 10, 2014, Northland files a formal answer to the writ of garnishment denying that, as of December 19, 2013, it owed National Finance Systems, Inc., any money or a sum less than the amount of the conditional judgment. Signed by Judge William M Acker, Jr on 2/28/14. (Attachments: # 1 Exhibit A)(SAC )

FILED
2014 Feb-28 PM 02:39
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
HENRY NELSON,
Plaintiff,
v.
NORTHLAND INSURANCE COMPANY,
Garnishee.

}
}
}
}
}
}
}
}
}

CIVIL ACTION NO.
14-AR-0112-S

MEMORANDUM OPINION AND ORDER
More

than

eleven

years

ago,

plaintiff,

Henry

Nelson

(hereinafter “Nelson”), obtained a money judgment against National
Financial Systems. Inc. from the Circuit Court of Jefferson County,
Alabama (hereinafter “Circuit Court”).

On or about September 12,

2013, in an effort to collect said judgment, plus accrued interest,
Nelson obtained from the Circuit Court a writ of garnishment
against the above-named garnishee, Northland Insurance Company
(hereinafter “Northland”), in the amount of $174,583.

On the same

date, the writ, addressed to “Northland Insurance Company, One
Tower Square, Mail Code MNO4A, Hartford, CT 06183-3004", was mailed
by certified mail, return receipt requested, and in due course
arrived at Northland.

Receipt of the writ was acknowledged by a

person signing his name “Jeremiah Lewis”.

The signature of Mr.

Lewis is clear and strong. He also identified himself with printed
block letters spelling his name.

The duties and responsibilities

of Mr. Lewis for Northland have not been described.

Instead, the

motion now before this court in which Northland seeks to quash the

said writ contains as an attachment the affidavit of John Taft, a
“Senior Technical Specialist”, swearing that “Jeremiah Lewis has
never been an agent authorized by appointment or by law to receive
service

of

process

(emphasis added).

for

Northland

in

the

state

of

Alabama”.

Glaringly conspicuous by its absence is any

assertion or proof by Northland that Mr. Lewis was “not authorized
by

appointment

or

by

law

to

receive

service

of

process

for

Northland in the state of Connecticut”. For aught appearing in the
record before this court, Mr. Lewis was Northland’s vice president
in charge of receiving legal process on behalf of the corporation
at its home office in Hartford and/or that Mr. Lewis had receipted
for certified legal mail a thousand times before this event without
his authority to do so being questioned.
Northland’s present motion reached this court through the
following series of events.

On November 20, 2013, after the

Circuit Court had received no response to its writ of garnishment,
Nelson filed a motion with the Circuit Court for a conditional
judgment.

The motion contained a certification that it had been

mailed by certified mail to Northland using the same address used
in the mailing of the writ of garnishment. Whether this motion for
conditional judgment was actually received by someone at Northland
does not appear in the record.
As expressly mandated by 28 U.S.C. § 1446(a) a notice of
removal must contain the complete record of the filings and actions

2

that occurred in the state court as they bear on the removing
party.

Northland filed its notice of removal on January 17, 2014.

A procedural deficiency in the removal notice will be discussed
infra.

In neither its said notice of removal, nor in its motion to

quash, does Northland deny that someone at Northland received a
copy of Nelson’s motion for a conditional judgment and/or a copy of
the conditional judgment thereafter entered by the Circuit Court.
On December 19, 2013, because Northland had not responded to the
motion for conditional judgment, Judge Blankenship of the Circuit
Court entered a conditional judgment in the amount of $174,583, and
ordered Northland to show cause within 30 days why the conditional
judgment should not be made final.

The notice of removal does not

contain a copy of the “Notice of Court Action” that was executed
and entered by the Circuit Court on December 19, 2013, and that
stated a copy of the conditional judgment was being transmitted to
Northland by regular United States mail using its Hartford address.
This court has obtained from the Clerk of the Circuit Court a copy
of the said “Notice of Court Action”.
EXHIBIT “A”.

It is attached hereto as

This constitutes proof satisfactory to this court

that the notice of the entry of the conditional judgment was
forwarded by the Clerk of the Circuit Court by United States mail
to Northland, appropriately designated by the Circuit Court as a
“pro se” party, and using the same Hartford address that had been
used in the earlier mailings.

The invariable procedure in the

3

Circuit Court was and is to notify unrepresented parties of any
court action by regular United States mail.

Regular United States

mail is, by law, presumed to have been received by the addressee
unless the United States Postal Service returns the mail to the
sender as undeliverable.

The Circuit Court’s notice of December

19, 2013, was not returned as undeliverable. If the Circuit Court,
subsequent to the removal, received any response from Northland to
its show cause order, 28 U.S.C. § 1446(a) does not require that it
be included in the notice of removal.

The Circuit Court’s action

of December 19, 2013, however, was a matter of record in the
Circuit Court when the notice of removal was filed.

Its absence

from the notice of removal was a fatal procedural defect.

If

Nelson had timely moved for a remand because the record notice of
December 19, 2013, was not included as required by 28 U.S.C. §
1446(a), the garnishment proceeding would have been remanded.
However, with no motion to remand having been filed, the said
procedural defect has been waived.
In its notice of removal, Northland avers that it first
“became aware of” (emphasis added) the garnishment proceeding on
January 6, 2014.
aware”.

It fails to inform the court how it “became

In whose head and under what circumstances did the light

bulb begin to shine at Northland?

In any event, Northland did not

respond to the Circuit Court’s show cause order, except by removing
the proceeding to this court and filing its motion to quash in this

4

court.

Using January 6, 2014, its day of enlightenment as the

trigger for the 30-day period for a removal, Northland removed the
garnishment proceeding to this court on January 17, 2014.

This

removal carried with it the Circuit Court’s conditional judgment,
including the show cause order. Northland is now asking this court
to avoid a facially valid order of a state court and to quash the
state court’s previously issued writ of garnishment.
Northland points out that the writ of garnishment could have
been properly served by mailing it c/o CSC Lawyers Incorporation
Services,

Inc.,

Northland’s

registered

agent

for

service

in

Alabama, but that method for perfecting service is not the only
method for perfecting service of process issued by an Alabama court
on a foreign corporation.

Rule 4(c)(6) and Rule 4(i)(2)(C),

Alabama Rules of Civil Procedure, set forth the procedure for
obtaining

service issued

corporation

using

by

certified

an

Alabama

mail.

court upon

Inter

alia,

a

foreign

Rule

4(c)(6)

recognizes effective service on a corporation if it is received by
“an agent authorized by appointment or by law to receive service of
process”. (emphasis added). The rule does not delineate the “law”
as the law of the location where the receipt occurs, or the law of
Alabama, the state from which the process emanates.

Neither does

it describe how a corporation goes about “appointing” a particular
person to receive service of process for it.
cite

authority

for

the

well

understood

5

There is no need to

proposition

that

the

appointment of an agent can be effectuated by pattern or practice.
Such an appointment, as a matter of “law” in Alabama, can be
accomplished by applying the concepts of estoppel and apparent or
ostensible authority to the raw facts.

Research into the law of

Alabama does not reveal any statutory “law” that sets forth a
particular internal corporate procedure for appointing an agent to
qualify

him

or

her

to

accept

service.

Such

an

appointment

certainly does not require a formal resolution by the Board of
Directors.

There

is

no

evidence

in

this

record

revealing

Northland’s pattern or practice with respect to the handling of
legal mail by Mr. Lewis.

Northland makes no mention of any

employee who, as a matter of “law” or “appointment”, was authorized
to receive legal process. Neither is there any evidence that there
was, in fact, some human being other than an officer who met the
description in Rule 4(c)(6), and/or evidence showing how Northland
went about appointing him or her.
Rule

4(i)(2)(C)

defines

“agent”

as

“a

person

or

entity

specifically authorized by the addressee to receive addressee’s
mail and to deliver that mail to the addressee”.

Whether Mr. Lewis

met this definition when he receipted for the writ in question
cannot be ascertained from the record, that is, unless by indulging
the presumption indulged by Judge Blankenship when he entered the
conditional judgment.
A pregnant sentence in Rule 4(i)(2)(C) reads:

6

Such agent’s authority shall be conclusively established
when the court determines that the evidence proves the
addressee did actually receive the summons and complaint
in time to avoid a default.
This language furnishes a basis for an after-the-fact finding of
authority by the “actually receiving” person if his or her employer
“actually received” the certified legal mail in time to react to it
appropriately.

But, what do the words “actually received” mean?

Does the answer to this question require a finding of fact or a
finding of law or a little of both?

The above-quoted sentence

implies a need for an evidentiary hearing if there are legitimate
questions about the agent’s authority and/or about whether and when
the process was “actual received”. This court notes that the words
“summons and complaint” in Rule 4(i)(2)(C) do not fit the scenario
sub judice, which does not involve a summons and complaint.

The

court will assume, however, that the writ of garnishment in this
case qualifies as a “summons and complaint” for the purposes of
Rule 4.
In this case, Northland denies that it “actually received” the
garnishment writ until January 6, 2014, after the conditional
judgment had been entered.

It does acknowledge, however, as it

must, that it did “actually receive” the conditional judgment
itself, or, even if by some undisclosed means, on January 6, 2014.
During the oral argument conducted on February 5, 2014,
Northland bravely argued that service of legal process from an
Alabama court on a foreign corporation cannot be accomplished
7

unless by an agent registered in Alabama, without that service
being specifically directed to, and received by, some named human
being who has been expressly authorized by the corporation to
receive

service

of

legal

process

on

its

behalf.

Rule

4,

Fed.R.Civ.P., is virtually identical to Rule 4, Ala.R.Civ.P., with
respect to this critical language.

It would take a lengthy and

expensive search to ascertain whether any process has ever been
issued from an Alabama court, or from a federal court in Alabama,
directed to a foreign corporation such as Northland, and addressed
in the following strained and stilted manner:
John Doe, the expressly
authorized agent of
Northland Insurance Company
for the receipt of legal process
on its behalf
One Town Square, Mail Code MNO4A
Hartford, CT 06183-3004
Of course, if the particular writ of garnishment here under review
had been addressed in such an unusual manner, Northland could later
assert that Mr. Doe was not authorized by “law” or by “appointment”
to receive process, and/or that Northland itself was not even the
addressee, as it would have been if it had been addressed c/o its
registered agent in Alabama.

In either event, Northland arguably

could ignore the writ with impunity, that is, if the writ was not
somehow otherwise “actually received”, whatever “actually received”
means.
When the receipt for certified mail addressed to Northland at

8

its principal place of business, was returned to the Circuit Court
showing the signature of the human being who actually received it
at Northland’s business address, the Circuit Court did not pause to
conduct an investigation into Mr. Lewis’s authority.

Such an

investigation of a signatory’s authority before the issuing court
can proceed with the litigation before it was certainly never
contemplated by the drafters of Rule 4.
From a consideration of the entire record before this court,
all of which, except for EXHIBIT “A”, was furnished by Northland,
there is no proof that Mr. Lewis was, in truth, not authorized by
law and/or by appointment to receive process on behalf of Northland
in Connecticut.

If Mr. Lewis was in fact or by law so authorized,

Northland was, of course, effectively served, whether or not Mr.
Lewis “actually” delivered the writ into the hands of Northland’s
general

counsel

or

responding to it.

other

corporate

personage

responsible

for

While Rule 4 is a rule calling for strict

enforcement, it was not designed to make it virtually impossible
for an Alabama litigant to perfect service on a foreign corporation
at that corporation’s home office.

If Rule 4 is to be interpreted

as Northland would interpret it, Alabama’s poor litigants will face
carefully erected stumbling blocks in futile attempts to serve
process on a foreign corporation, that is, unless the corporation
has a statutory agent in Alabama.

Rule 4 was not designed to

punish Alabama litigants in order to guarantee “due process” to

9

foreign corporations.
Northland argues that simply because it is challenging the
effectiveness of the service, Nelson has the burden of proving that
the service was effective.

Northland would be correct but for the

fact that Judge Blankenship entered a conditional judgment based on
the presumption that the service of the writ was valid.

In his

conditional judgment order, he called upon Northland to show cause,
if it could do so, why the conditional judgment should not be made
final.

This order to show cause had the effect of shifting the

burden to Northland, or putting the ball in its court.

It was

thereupon called upon to prove that the service on it was not
effective.

It has not done so.

And, even if the burden were still

on Nelson to prove effective service, that burden has been met
based on the entire record and reasonable inferences therefrom..
When the garnishment proceeding was removed to this court,
this court inherited both the conditional judgment and the show
cause order.

It thereby inherited the duties that flow from the

state court’s actions.

This court can, of course, waive or extend

the 30-day time limit imposed by Judge Blankenship for showing good
cause.

This

is

only

fair

under

these

unique

circumstances.

Accordingly, this court treats the motion to quash as a timely
response to the show cause order.
Hypothetically, a truthful response to the show cause order
might have read something like this:

10

The only person authorized by Northland in December,
2013, and January, 2014, to receive legal process for
Northland at its home office in Hartford, Connecticut was
John Doe. Mr. Doe received his said authorization in the
following manner: [description in detail]. Northland has
never in its history allowed an employee other than its
president to execute receipts for certified legal mail
addressed to Northland at its home office.
Jeremiah
Lewis was never so authorized and never purported to act
in such manner until he, without authority, purportedly
receipted for the writ of garnishment here under review.
The notice that a conditional judgment had been entered
against Northland was received by regular United States
Mail some time between December 20, 2013, and January 6,
2014, but was not recognized as an order requiring any
action by Northland until it was recognized as such by
[name and office] on January 6, 2014.
Where the
conditional order physically reposed between its receipt
and January 6, 2014, is still a matter under
investigation.
Because corporations cannot think or act except through human
instrumentalities, the concept of “actual receipt” may very well
require a fact finder to decide on oral testimony whether, for
instance, a paper placed on the desk of the president of a
corporation constitutes “actual receipt” by the corporation, even
if the president is out-of-town on an extended vacation when the
paper is placed on his desk.
There is another interesting feature to Northland’s response
to Judge Blankenship’s show cause order now being considered by
this court in the form of Northland’s motion to quash.

In an

early paragraph of its last brief filed in response to Nelson’s
brief, Northland argues:
Plaintiff did not address the Writ of Garnishment to any
particular person or department within Northland, but
simply addressed it generally to “Northland Insurance
11

Co.”
(emphasis added).
By this language, Northland seems to suggest that if the writ had
been addressed to a particular “department” in Northland (for
instance, the legal department?), the service would have been good.
How so, in light of Northland’s argument that the process must be
directed to some properly authorized human being by name?

CONCLUSION
Based upon what the court has before it, the court finds that
Northland
judgment

has failed
of

December

to

show

19,

good

2013,

cause why

should

Accordingly, its motion to quash is DENIED.

not

the
be

conditional
made

final.

A final judgment in

the amount of the conditional judgment will be entered unless by
4:30 p.m., March 10, 2014, Northland files a formal answer to the
writ of garnishment denying that, as of December 19, 2013, it owed
National Finance Systems, Inc., any money or a sum less than the
amount of the conditional judgment.
DONE this 28th day of February, 2014.

_____________________________
WILLIAM M. ACKER, JR.
UNITED STATES DISTRICT JUDGE

12