Real Good Technologies, LLC v. Victory Solutions, LLC

Filing 133

Memorandum Opinion and Order. The motion for reconsideration of the Court's 12/18/2018 non-document order is GRANTED. The court VACATES the 12/18/2018 non-document order permitting a special examination. Plaintiff must properly serve the garnishment order pursuant to O.R.C. § 2716.13(B) to the extent it may still do so within the restrictions of Victory Solutions, LLC's bankruptcy case. Magistrate Judge Thomas M. Parker on 4/4/2018. (Related document 121]) (O,K)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
REAL GOOD TECHNOLOGIES, LLC,
Plaintiff,
v.
VICTORY SOLUTIONS, LLC,
Defendant

I.

)
)
)
)
)
)
)
)
)
)

Case No. 1:17-cv-0149
JUDGE DONALD C. NUGENT
MAGISTRATE JUDGE
THOMAS M. PARKER

MEMORANDUM OF OPINION
AND ORDER

Introduction
Currently before the court is the December 26, 2017 motion for reconsideration (ECF

Doc. 121) of the Court’s December 18th non-document order for special examination filed by
garnishee, Murphy, Nasica & Associates, LLC (“MNA”). This matter is before the undersigned
pursuant to an order of reference entered by Judge Donald C. Nugent on March 7, 2018. ECF
Doc. 128. Because MNA was not properly served with the Court’s May 26, 2017 order of
garnishment (ECF Doc. 23), the December 18th order permitting a special examination is hereby
VACATED. Plaintiff, Real Good Technologies, LLC (“RGT”) must properly serve MNA with a
notice of garnishment pursuant to O.R.C. § 2716.13(B) before it may proceed with the relevant
garnishment. 1

1

RGT may only proceed with the garnishment if not otherwise precluded by the bankruptcy filing of Victory
Solutions.

II.

Brief Statement of Facts
RGT filed this lawsuit to enforce a settlement agreement with Defendant Victory

Solutions, LLC (“Victory Solutions”). RGT obtained a default judgment against Victory
Solutions on April 19, 2017 (ECF Doc. 16) and took steps to collect on the judgment.
MNA is one of many garnishees named in this lawsuit. The Court issued an order and
notice of garnishment to MNA on May 26, 2017. ECF Doc. 23. However, nothing on the
docket shows that MNA was properly served with the order of garnishment, and MNA attests
that it wasn’t. ECF Doc. 121-2 at Ex. B, Page ID# 597-598. In fact, MNA represents that it
“had no knowledge whatsoever of this garnishment proceeding until Murphy Nasica received
notice of the Plaintiff’s Motion for a Special Examination.” Id.
RGT does not argue that MNA was properly served. Rather, it argues that its failure to
comply with the technical requirements of Fed. R. Civ. P. 4 should be excused in this matter
because MNA had actual notice of the Court’s order. In support of its representation that MNA
was aware of the order, RGT submits various correspondence it sent to Attorney Matt
Brownfield, one of the attorneys working at MNA, including nearly illegible text messages
seeming to show a personal friendship between Mr. Brownfield and Tony Gius, the president of
RGT, as well as e-mail correspondence to MNA’s local attorney. ECF Doc.122-1 through 3,
Page ID# 608-632. None of these documents shows that MNA was properly served with the
May 26th order.
III.

Law & Analysis
Fed. R. Civ. P. 69 (a)(1) provides in relevant part:
Money Judgment. Applicable Procedure. A money judgment is enforced by a
writ of execution, unless the court directs otherwise. The procedure on execution
2

– and in proceedings supplementary to and in aid of judgment or execution – must
accord with the procedure of the state where the court is located…
Here, RGT has moved for a special examination in accordance with applicable sections of
Ohio’s garnishment statute, specifically Ohio Rev. Code § 2716.21. Regarding service, Ohio
Rev. Code § 2716.13(B) provides:
The copies of the order and of the notice shall be served upon the garnishee in the
same manner as a summons is served and the clerk shall also mail a copy of the
order and notice of garnishment to the garnishee by ordinary or regular mail
service. The copies of the order and of the notice shall not be served later than
seven days prior to the date on which the hearing is scheduled.
Under Ohio Rule of Civil Procedure 4.3(B) out of state service of process may be served
in the same manner as provided by Civ. R. 4.1(A)(1) through Civ. R. 4.1(A)(3). Civil Rule
4.1(A)(1) provides that service may be by United States certified or express mail or by
commercial carrier service and, for either method, the carrier is required to return a signed
receipt showing to whom the copy was delivered, the date delivered, and the address where
delivered. No such return receipt appears on the docket evidencing that MNA was served in
accordance with Ohio R. Civ. P. 4.1-4.3.
Ohio courts have determined that proceedings related to garnishments are void when the
garnishee was given defective notice or not served in accordance with Civil Rule 4.3. See
Broadmoor Ctr., LLC v. Dallin, 2016-Ohio-8541, 79 N.E.3d 1250, 2016 Ohio App. LEXIS 5370
(10th Dist., 2016); Haley v. Nomad Press, Inc., 2013-Ohio-86, 2013 Ohio App. LEXIS 48 (9th
Dist. 2013).
RGT argues that it should not be held to the technical requirements of O.R.C.P. 4 because
MNA had actual notice of the garnishment proceedings and the court’s order. However, it is
questionable whether MNA was actually aware of the Court’s order. Both parties have
submitted correspondence from Tony Gius (RGT’s president) and Matt Brownfield (an attorney
3

at MNA). However, Mr. Brownfield appears to be a friend or acquaintance of Mr. Gius; some of
the correspondence predates the Court’s May 26th order; and Craig Murphy, Registered Agent of
MNA, has declared that he had no knowledge of the garnishment proceeding until MNA
received notice of the plaintiff’s motion for special examination. ECF Doc. 121-2, at Ex. B, ¶ 5,
Page ID# 597.
RGT also contends that MNA forfeited the defense of insufficient service. RGT relies on
cases involving parties to lawsuits that entered into settlement discussions but later argued that
they had not been properly served. These cases are inapposite. 2 MNA is not one of the primary
parties to this lawsuit and was not required to assert insufficient service in a pleading responding
to the garnishment order. Moreover, it appears likely that MNA has or had a business
relationship with the defendant, Victory Solutions. The correspondence submitted by RGT
seems to show that MNA was attempting to balance potential duties owed to Victory Solutions
with the fact that RGT was trying to collect a judgment against Victory Solutions. ECF Docs.
122-4, Page ID# 619, 122-6, Page ID# 623. In light of these competing interests, MNA can
hardly be faulted for questioning whether it had been properly served before acting on the
Court’s order, particularly when the court’s docket does not show that service was perfected on
MNA.
Fed. R. Civ. P. 60 permits the court to relieve a party or its legal representative from an
order for any reason that justifies relief. Here, the Court’s May 26th garnishment order was not
properly served on MNA. RGT requested to conduct a special examination of MNA pursuant to
Ohio’s garnishment statute, O.R.C. § 2716.21, because MNA had failed to comply with the

2

King v. Taylor, 694 F.3d 650, 660 (6th Cir. 2012) involved service of the primary defendant; H.F. Livermore Corp.
v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 690-692 (D.C. Cir. 1970) involved correspondence between
the primary parties to the lawsuit and their attorneys.

4

Court’s order. However, I conclude that RGT did not comply with O.R.C. § 2716.13 when it
failed to ensure that the garnishment order was properly served on MNA. As indicated above,
Ohio courts applying Ohio’s garnishment statute have held that improperly served garnishment
orders should be quashed. See Haley, 2013 Ohio App. LEXIS at *7-8. Now that MNA has
notified the court that it was not properly served with the garnishment order, the court will vacate
the December 18th order granting a special examination.
IV.

Conclusion
The motion for reconsideration of the Court’s December 18th order is GRANTED. The

court VACATES the December 18th order permitting a special examination. Plaintiff must
properly serve the garnishment order pursuant to O.R.C. § 2716.13(B) to the extent it may still
do so within the restrictions of Victory Solutions, LLC’s bankruptcy case.

Dated: April 4, 2018
Thomas M. Parker
United States Magistrate Judge

5