Tuesday, January 17, 2012

Serving IHOP Hostess May Not Be Enough

A law firm that sued its former client for non-payment of fees appealed an order setting aside a default judgment. The South Carolina Supreme Court reversed and remanded the matter. On remand, the law firm can take discovery on the issue of sufficiency of service of process.

The facts:

In 2007 Graham filed suit against Respondents MKKM, Inc., and Mohamed Makawi, individually and doing business as International House of Pancakes, seeking payment for professional services.  Graham served both complaints on Makawi, who is MKKM’s president and registered agent for service of process, by certified mail, return receipt requested, restricted delivery, at the IHOP location in Florence, South Carolina.  The documents sent to Makawi individually were signed for by Kim Richardson, while those mailed to him as agent for MKKM were signed for by Ana Carvajal.  The circuit court found that Edward Graham of Graham Law Firm received a phone call from Makawi in which Makawi acknowledged receipt of the summons and complaint and asked for copies of the itemized bill.   

Neither Makawi nor MKKM filed an answer to the complaint, and Graham’s motions for entry of default and default judgment were granted.  Graham served a copy of the order granting default judgment by certified mail on Makawi and Makawi as registered agent of MKKM, and the return receipt was signed by [illegible] Makawi.  In March 2009, counsel for respondents contacted Graham to request information about the judgment.

The trial court thereafter set aside the judgment based on an affidavit that denied the authority of the employees to accept service. The court here found that discovery was appropriate:

In this case, Graham’s claim of personal jurisdiction over Makawi and his corporation through service on their agents is not conclusory, frivolous, or attenuated.  Kim Richardson, who signed the receipt for the summons and complaint sent to Makawi individually, may have had authority to accept them if she did serve as an office manager with significant authority as an employee of IHOP or by virtue of the services Graham alleges Richardson performed for Makawi personally.

With regard to MKKM, Graham has claimed no greater status for Carvajal as an MKKM employee than that she was a hostess at IHOP for a few months.  Even if it seems unlikely that further discovery will demonstrate that she had sufficient authority or responsibility to be deemed an agent for purposes of service of process on MKKM, Graham’s claim that MKKM was properly served is not conclusory, frivolous, or attenuated, given that she was an employee of MKKM and signed the return receipt.

(Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2012/01/a-law-firm-that-sued-its-former-client-for-non-payment-of-fees-appealed-an-order-setting-aside-a-default-judgment-the-south.html

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