July 21, 2018

Colorado Court of Appeals: District Courts Must Exercise Reasonable Discretion in Determining the Person for Substituted Service

The Colorado Court of Appeals issued its opinion in Minshall v. Johnston on Thursday, March 22, 2018.

C.R.C.P. 4(f)Substituted ServiceDefault Judgment.

The Minshalls filed a complaint against Johnston. Johnston was not personally served with process; instead, the court permitted substitute service under C.R.C.P. 4(f) on the registered agent of Aries Staffing LLC (Aries), a corporation of which Johnston was a co-owner and shareholder. The district court entered a default judgment against Johnston when he failed to respond to the complaint. Six months after he claimed he learned of the default judgment, Johnston moved pro se to set it aside, arguing that he was not properly served with process. The district court denied the motion.

On appeal, Johnston argued that the judgment against him is void for lack of jurisdiction. He contended that the Minshalls did not exercise due diligence in attempting to serve Johnston personally, which was a necessary condition precedent to serving him by substituted service. It was undisputed that the Minshalls complied with the procedural requirements of Rule 4(f) by filing an affidavit from the process server detailing his numerous unsuccessful attempts to serve Johnston. They also documented numerous other ways they tried to locate and serve Johnston. The record supports the district court’s finding that the Minshalls met the due diligence requirement of the rule.

Johnston also argued that substituted service on Aries’ registered agent, Incorp Services, Inc., was not reasonably calculated to give him actual notice of the suit. The court of appeals found no authority supporting the proposition that service on a registered agent of a corporation is sufficient, by itself, to effectuate valid service on a “co-owner” of a corporation. Here, there was no indication in the record of a separate relationship between Incorp and Johnston or other facts that would support the required finding under Rule 4(f).

The order was vacated. The case was remanded for a determination as to whether service on Incorp under Rule 4(f) was reasonably calculated to give actual notice to Johnston.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Foreign-Country Judgment Improperly Served so No Recognition Required

The Colorado Court of Appeals issued its opinion in Ledroit Law v. Kim on Thursday, August 13, 2015.

Ontario Judgment Enforceability—Uniform Enforcement of Foreign Judgments Act—Uniform Foreign-Country Money Judgments Recognition Act.

Ledroit Law, a Canadian law firm, filed this action seeking recognition of an Ontario court’s assessment of legal fees against Snell & Wilmer, L.L.P., an Arizona law firm with offices in Colorado, and Eugene Kim, a former associate at Snell & Wilmer. In 2011 and 2012, Snell & Wilmer represented two related Ontario entities in a civil suit they filed against an American corporation in federal court in Colorado. Kim was a first-year associate who worked on the case. Ledroit represented at least one of the Ontario entities in related proceedings in Canada.

Defendants stated that the principals of the Ontario entities instructed Snell & Wilmer to have Ledroit serve subpoenas duces tecumin Ontario related to the federal suit in Colorado. Kim communicated with Ledroit by telephone and e-mail to coordinate service. In March 2012, Ledroit sent Snell & Wilmer a bill for legal services of over $15,000 Canadian for their attempts to serve the subpoenas. There was no retainer agreement, and Snell & Wilmer stated that the Ontario entities were responsible for the bill.

In September 2012, Ledroit filed an action in the Ontario Superior Court of Justice to recover the legal fees. A “Notice of Appointment for Assessment of Costs” was sent by regular mail to Kim’s office in Colorado. The Ontario court issued an assessment in the amount of $15,829.99 Canadian against Kim and Snell & Wilmer following their non-appearance.

Ledroit filed this action in district court seeking enforcement of the assessment in Colorado under the Uniform Enforcement of Foreign Judgments Act (Enforcement Act). The district court entered an order domesticating the assessment under the Enforcement Act.

Defendants moved to vacate the order on the basis that the Enforcement Act only applies to judgments entered by sister states within the United States and that the Uniform Foreign-Country Money Judgments Recognition Act (Recognition Act) governs the recognition of foreign-country money judgments. The district court vacated its order and ultimately recognized the Ontario assessment under both the Recognition Act and common law principles of comity.

On appeal, defendants argued it was error to recognize the Ontario judgment under the Recognition Act because the Ontario court lacked personal jurisdiction over them. The Court of Appeals agreed. Under the Recognition Act, CRS § 13-62-104(2)(b), a Colorado court “may not recognize a foreign-country judgment if . . . [t]he foreign court did not have personal jurisdiction over the defendant.”

The Court found that defendants were not validly served with process by the attempt at service by regular mail. Service under Ontario law requires either service through the central authority in the contracting state or “in a manner that is permitted by the [Hague] Convention and that would be permitted by these rules if the document were being served in Ontario.” Because service by mail was not proper under the Ontario rules, the Ontario court lacked personal jurisdiction over defendants when it issued the assessment.

The Court also agreed with defendants’ contention that the district court erred in relying on principles of comity. The Recognition Act requires a Colorado court to deny recognition if the foreign court lacked personal jurisdiction. Here, where the Recognition Act applied, the Colorado court was required to deny recognition of the assessment. The order was reversed.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Default Judgment Must Be Set Aside When Defendants Not Served

The Colorado Court of Appeals issued its opinion in Burton v. Colorado Access on Thursday, August 13, 2015.

Employee Retirement Income Security Act of 1974—Process Service.

Burton was formerly employed by a company known as Colorado Access. Colorado Access sponsored the Colorado Access Long Term Disability Plan (plan), which was issued and administered by Unum Life Insurance Company of America (Unum). Burton sought benefits from Unum under the plan, and Unum paid her benefits for approximately two years before terminating them. Burton filed a complaint against the plan, claiming entitlement to additional benefits under the Employee Retirement Income Security Act of 1974 (ERISA). Instead of serving the complaint on the plan, she served the complaint on the Secretary of the U.S. Department of Labor. Burton sought a default judgment against the plan, which the district court entered but later set aside. The district court also entered summary judgment in favor of the plan.

On appeal, Burton argued that the trial court erred in finding that she did not properly serve the plan administrator when she served the Secretary of Labor. A party intending to sue a plan must serve the plan administrator where it is designated as the agent for service of process. It is only where the summary plan description designates neither the plan administrator nor some other person as the agent for service of process that service on the Secretary of Labor is allowed. Given that Colorado Access was the plan administrator, and the plan designated Colorado Access as its agent for service of process, Burton could not properly serve process on the plan by serving the Secretary of Labor under § 1132(d)(1) of ERISA. Therefore, the district court did not err in determining that Burton failed to properly serve the plan.

Burton also argued that the district court erred in entering summary judgment in favor of the plan. The only proper defendants in an ERISA claim to recover plan benefits are those entities that make eligibility or payment decisions or are obligated to pay benefits. In this case, Unum (the insurer) made all decisions regarding eligibility for and payment of benefits, and made all such decisions with respect to Burton. Further, only Unum was obligated to pay any benefits owed to Burton under the plan. Therefore, the plan was not a proper defendant as to Burton’s ERISA benefits claim, and the trial court properly entered summary judgment in the plan’s favor.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Rules of Civil Procedure and Municipal Court Rules of Procedure Amended

On Monday, September 9, 2013, the Colorado Supreme Court announced Rule Changes 2013(10), 2013(11), and 2013(12).

Rule Change 2013(10) amends Rule 210of the Colorado Municipal Court Rules of Procedure, “Arraignment.” The rule change allows the court to designate violations and penalties for traffic infractions involving speeding 24 or less miles per hour over the speed limit. Previously, the limit was 19 miles per hour over the speed limit.

Rule Change 2013(11) amends Rule 232 of the Colorado Municipal Court Rules of Procedure, “Sentence and Judgment.” It adds subparagraph (f), mandating that any sentence imposed shall comply with the Compact for the Supervision of Adult Offenders at C.R.S. §§ 24-60-2801, et seq.

Rule Change 2013(12) amends Rules 4 and 15 of the Colorado Rules of Civil Procedure. Rule 4, “Process,” was amended to add a subsection (m), which sets a limit for service on a defendant to 63 days, unless good cause can be shown by the plaintiff why the service could not be completed in that time. This change also clarifies that the new subsection does not apply to service in foreign countries.

C.R.C.P. 15, “Amended and Supplemental Pleadings,” was amended in subsection (c) by clarifying that an amended pleading relates back to the original filing if notice of the amendment was served within the time frame elucidated in C.R.C.P. 4(m).

For all of the Colorado Supreme Court’s adopted and proposed rule changes, click here.