July 22, 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.