Porter v. Wells Fargo Bank

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No. 103,323

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

WILLIAM S. PORTER and BURGER O'ROURKE, INC.,
d/b/a SERVPRO OF BARTLESVILLE/MIAMI,
Appellees,

v.

WELLS FARGO BANK, N.A.,
Appellant.

SYLLABUS BY THE COURT

1.
If service of process is not properly effected on a defendant, the district court
never acquires jurisdiction over the person of the defendant, and any subsequent
judgment against that defendant is void ab initio.

2.
Jurisdiction over the person of the defendant may be acquired only by issuance
and service of process in the methods prescribed by statute or by voluntary appearance.

3.
K.S.A. 60-304 makes clear that service on a foreign corporation must be directed
to an officer, manager, partner, resident agent, managing agent, general agent (K.S.A. 60-
304[e][1]), the person having charge of the business office (K.S.A. 60-304[e][2]), or the
registered agent for service of process (K.S.A. 60-304[e][3]).

4.
Substantial compliance under K.S.A. 60-204 is not met by serving a foreign
corporation by certified mail addressed generally to the corporation at a post office box
address.
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5.
Beck v. Atlantic Contracting Co., Inc., 157 F.R.D. 61 (D. Kan. 1994), is discussed
and distinguished.

Appeal from Montgomery District Court; ROGER L. GOSSARD, judge. Opinion filed May 20,
2011. Vacated and remanded.

Carrie E. Josserand, of Lathrop & Gage LLP, of Overland Park, and Amy E. Morgan, of
Polsinelli Shughart PC, of Overland Park, for appellant.

Jeffery A. Chubb, of Emert, Chubb, & Gettler, of Independence, for appellee Burger O'Rourke,
Inc., d/b/a/ Servpro, and William J. Fitzpatrick, of Fitzpatrick & Bass, of Independence, for appellee
William S. Porter.

Before GREENE, C.J., PIERRON and ARNOLD-BURGER, JJ.

GREENE, C.J.: Wells Fargo Bank, N.A., appeals the district court's denial of its
motion to set aside a default judgment for actual and punitive damages in favor of
William S. Porter and Burger O'Rourke, Inc., d/b/a Servpro of Bartlesville/Miami
(Servpro), arguing service of process was defective, notice of the default judgment was
not effected as required by K.S.A. 60-254(c), and the award of punitive damages was
improper. Concluding that service of process was never effected on Wells Fargo Bank,
the district court obtained no personal jurisdiction over Wells Fargo Bank and the
judgment was void and must be vacated.

FACTUAL AND PROCEDURAL BACKGROUND

When his home was damaged by fire in 2007, Porter's homeowners' insurer,
Upland Mutual Insurance Company, indemnified the claim and sent Porter a check for
$33,191.41 payable jointly to Porter and his mortgagee, Wells Fargo Bank. Porter mailed
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the check to Wells Fargo for endorsement in February 2008, requesting return of the
check so that proceeds could be used for payment of Porter's restoration contractor,
Servpro. The check was mailed by Porter to the address appearing in a Wells Fargo form
for "certification for completion of repairs," which directed that "all information
pertaining to your claim" should be directed to "Wells Fargo Home Mortgage, P.O. Box,
4455, Springfield, OH 45501-4455."

After repeated written and oral requests to Wells Fargo to endorse and return the
check, Porter and Servpro filed suit against Wells Fargo in October 2008. Service of
process was attempted in two ways: (1) Summons was sent via certified return receipt
mail addressed to a Wells Fargo office in Eagan, Minnesota; and (2) summons was sent
via certified return receipt mail addressed to the post office box in Springfield, Ohio,
consistent with the directions on the form referenced above. The summons sent to
Minnesota was never returned and was apparently lost or mishandled by the Post Office.
The summons sent to Ohio was delivered to the post office box address on October 14,
2008, and the return receipt was apparently signed by Harold D. Bowen (or Brown), but
the signature was in part illegible, with no agency or office indicated.

Notably, the record reflects that Wells Fargo had a registered agent in the state of
Kansas listed on the Secretary of State's website. The listing included a Sioux Falls,
South Dakota, mailing address for the company, and a Topeka, Kansas, mailing address
for its registered agent in Kansas.

Wells Fargo never responded to Porter's lawsuit, so Porter filed a motion for
default judgment. Porter's motion was filed November 19, 2008, and requested a hearing
for December 1, 2008. The default motion was again served on Wells Fargo at the
Springfield post office box address. Porter's default motion also included a claim for
exemplary damages.

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The district court granted default judgment in favor of Porter, finding that (1)
Wells Fargo was properly served, (2) punitive damages should be allowed, and (3)
$50,000 in punitive damages should be awarded. Wells Fargo did not learn of the default
judgment until one of its "outside attorneys—who was litigating a separate foreclosure
action (Case No. 09 CV 38 I) against plaintiff William S. Porter and his wife Barbara A.
Porter—alerted them that the Porters' answer in that action references a judgment
obtained against Wells Fargo" in this case. Wells Fargo then moved to set aside the
default judgment, claiming it was not properly served.

The district court declined to set aside the default judgment against Wells Fargo.
The court again determined that service on Wells Fargo was proper, noting that service to
the post office box address satisfied service requirements because the summons and
petition were left "at any business office of the defendant with the person having charge
thereof." The district court also determined that the award of damages was proper.

WAS SERVICE OF PROCESS PROPERLY EFFECTED ON WELLS FARGO BANK?

Although Wells Fargo argues on appeal that the district court proceedings were
defective in numerous regards, we focus first on the question of proper service of
process. Obviously, if service of process was never properly effected on Wells Fargo, the
district court never acquired jurisdiction over the person of the defendant, and the
subsequent judgment is void ab initio. See Hopkins v. State, 237 Kan. 601, 604-05, 702
P.2d 311 (1985); Wallace v. Microsoft Credit Corp., 563 F. Supp. 2d 1197, 1202 (D.
Kan. 2008), rev'd in part on other grounds 596 F.3d 703 (10th Cir. 2010).

Jurisdiction over the person of the defendant may be acquired only by issuance
and service of process in the methods prescribed by statute or by voluntary appearance,
and a review of jurisdiction is de novo. Kansas Bd. of Regents v. Skinner, 267 Kan. 808,
812, 987 P.2d 1096 (1999).
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Statutory Overview

We begin by examining the statutes governing service of process at the time of the
attempted service on Wells Fargo. Service on a corporation was governed by K.S.A. 60-
304(e), which provided:

"Corporations, domestic or foreign limited liability company, domestic or foreign
limited partnership, domestic or foreign limited liability partnership, and partnerships.
Upon a domestic or foreign corporation, domestic or foreign limited liability company,
domestic or foreign limited partnership, domestic or foreign limited liability partnership
or upon a partnership or other unincorporated association, when by law it may be sued as
such, (1) by serving an officer, manager, partner or a resident, managing or general
agent, or (2) by leaving a copy of the summons and petition at any business office of the
defendant with the person having charge thereof, or (3) by serving any agent authorized
by appointment or required by law to receive service of process, and if the agent is one
authorized by law to receive service and the law so requires, by also mailing a copy to the
defendant. Service by return receipt delivery on an officer, partner or agent shall be
addressed to such person at the person's usual place of business." (Emphasis added.)

Service outside the state by return receipt delivery was governed by K.S.A. 2008
Supp. 60-308(d), which provided:

"Service by return receipt delivery. (1) Service of any out-of-state process by
return receipt delivery shall include service effected by certified mail, priority mail,
commercial courier service, overnight delivery service, or other reliable personal delivery
service to the party addressed, in each instance evidenced by a written or electronic
receipt showing to whom delivered, date of delivery, address where delivered, and person
or entity effecting delivery. (2) The party or party's attorney shall cause a copy of the
process and petition or other document to be placed in a sealed envelope addressed to the
person to be served in accordance with K.S.A. 60-304, and amendments thereto, with
postage or other delivery fees prepaid, and the sealed envelope place in the custody of the
person or entity effecting delivery. (3) Service of process shall be considered obtained
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under K.S.A. 60-203, and amendments thereto, upon the delivery of the sealed envelope.
(4) After service and return of the return receipt, the party or party's attorney shall
execute a return on service stating the nature of the process, to whom delivered, the date,
the address where delivered and the person or entity effecting delivery. The original
return of service shall be filed with the clerk, along with a copy of the return receipt
evidencing such delivery. (5) If the sealed envelope is returned with an endorsement
showing refusal to accept delivery, the party or the party's attorney may send a copy of
the process and petition or other document by first-class mail addressed to the party to be
served, or may elect other methods of service. If mailed, service shall be considered
obtained three days after the mailing by first-class mail, postage prepaid, which shall be
evidenced by a certificate of service filed with the clerk. If the unopened envelope sent
first-class mail is returned as undelivered for any reason, the party or party's attorney
shall file an amended certificate of service by such mailing shall not be considered
obtained. Mere failure to claim return receipt delivery is not refusal is not refusal of
service within the meaning of this subsection." (Emphasis added.)

We Apply These Statutory Requirements to the Undisputed Facts

K.S.A. 60-304 makes clear that service on a foreign corporation must be directed
to an officer, manager, partner, resident agent, managing agent, general agent (K.S.A. 60-
304[e][1]), the person having charge of the business office (K.S.A. 60-304[e][2]), or the
registered agent for service of process (K.S.A. 60-304[e][3]). K.S.A. 2008 Supp. 60-
308(d) does not dilute these requirements in providing for service "to the party
addressed." Here, Porter and Servpro did not direct their certified mail to any person
whatsoever—both of their certified mail attempts were addressed to Wells Fargo
generally at an office or a post office box address.

Porter and Servpro argue that there must have been someone in charge of the
office that had been designated by Wells Fargo for contact about the insurance claim
form, and the return receipt was indeed signed by a person. We are not persuaded that
this procedure complies with the statutory requirements. Unless the return receipt
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voluntarily indicates that the person who received the package was the "person in charge
of a business office" of the corporation, this cannot be deemed sufficient. As noted by
Wells Fargo, the person who is sent to pick up mail at a corporate post office box address
is rarely the person in charge of the business office. There has been no showing to the
contrary here.

A panel of our court has recently addressed a nearly identical scenario in Taylor v.
Medicalodges, Inc., No. 102,539, unpublished opinion filed August 20, 2010 pet. for rev.
filed September 20, 2010 (pending). In holding that service to the corporation's post
office box address was insufficient, the panel noted that a certified letter to the
corporation but not to any individual does not meet the requirements of the statute for
valid service of process. We agree and embrace the panel's logic and outcome for
application here.

Although "substantial compliance" with the statute was urged by Porter in oral
argument, we do not find any indication in the record that this argument was preserved in
the district court or in Porter's briefs on appeal. In any event, here we again agree with the
panel in Taylor, which held that substantial compliance with service of process
requirements under K.S.A. 60-204 was not met by serving a foreign corporation by
certified mail addressed generally to the corporation at a post office box address. See also
Thompson-Kilgariff General Insurance Agency, Inc. v. Haskell, 206 Kan. 465, 467-68,
479 P.2d 900 (1971); Briscoe v. Getto, 204 Kan. 254, 256-57, 462 P.2d 127 (1969);
Marshall v. Wendt, No. 97,405, unpublished opinion filed November 30, 2007, rev.
denied 286 Kan. 1178 (2008).

Porter also argues that a federal court has found service of this nature acceptable
under Kansas law. He directs us to Beck v. Atlantic Contracting Co., Inc., 157 F.R.D. 61
(D. Kan. 1994). In Beck, the summons was mailed to a Virginia business and accepted by
a secretary at the business office. The summons, however, was clearly addressed to the
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business' registered agent. The federal district court determined that service was proper,
noting that service by certified mail "must be addressed to 'the person to be served in
accordance with K.S.A. 60-304,' but there is no requirement that the mail be delivered to
that person." 157 F.R.D. at 62-64.

Porter is correct that the Beck court held that service by "certified mail accepted by
an employee at the defendant's place of business is sufficient" under K.S.A. 60-304(e)(1).
See 157 F.R.D. 63-64 (noting that "the certified mail was correctly addressed to a person
authorized under K.S.A. 60-304 to accept service" [emphasis added], and that sending
the mail to a named agent was valid service). However, Beck is inapplicable here because
the service in this case did not include the name of any "officer, manager, partner or a
resident, managing or general agent," nor was it left at any business office with any
"person having charge thereof," nor was it addressed to the registered agent in Kansas.

We recognize that Porter and Servpro were genuinely frustrated with the conduct
of Wells Fargo, which apparently ignored repeated good-faith attempts to garner some
corporate attention to the need for endorsement of the insurance check. We certainly do
not condone Wells Fargo Bank's apparent disregard for civil conversation or
correspondence to resolve the matter more expeditiously. At the same time, we cannot
overlook the fact that service by certified mail on the registered agent for Wells Fargo in
Topeka, Kansas, would have effectively vested the district court with unquestionable
jurisdiction and perhaps have led to the expeditious resolution desired.

For the reasons outlined above, we must conclude that the district court never had
personal jurisdiction over Wells Fargo Bank, N.A., and the judgment entered was void
and must be vacated.

Vacated and remanded.