Summary
In Nunez, the plaintiff unsuccessfully attempted to serve notice on the defendant's registered agent at its registered office twice: the first attempt through the sheriff and the second attempt through the process server.
Summary of this case from Amaba v. RFJ Land Mgmt.Opinion
1-21-1423
09-30-2022
ANDREA AYALA NUNEZ, Plaintiff-Appellee, v. C&C INVESTMENTS OF CHICAGO, LLC, an Illinois limited liability company, Defendant-Appellant.
Appeal from the Circuit Court of Cook County. No. 19 CH 11772 The Honorable Alison Conlon, Judge, Presiding.
JUSTICE ODEN JOHNSON delivered the judgment of the court, with opinion. Presiding Justice Mikva & Justice Walker concurred in the judgment and opinion.
OPINION
ODEN JOHNSON, JUSTICE
¶ 1 Following the entry of a default judgment in favor of plaintiff, Andrea Ayala Nunez against defendant, C&C Investments of Chicago, LLC, defendant filed a section 2-1401 (735 ILCS 5/2-1401 (West 2020)) petition to quash service. After a hearing, the circuit court denied defendant's petition and this appeal followed. On appeal, defendant contends that the circuit court erred when it denied its petition to quash service because plaintiff failed to strictly comply with the requirements of section 1-50 (805 ILCS 180/1-50 (West 2020)) of the Limited Liability Act (Act) for service on a limited liability company (LLC). For the following reasons, we affirm.
¶ 2 BACKGROUND
¶ 3 Briefly stated, the facts are as follows. On October 11, 2019, plaintiff filed a two-count complaint for declaratory judgment and breach of contract against defendant through her attorney, Matthew A. Sidor. A summons was issued the same day. The record contains a Sheriffs Office of Cook County affidavit of service dated November 4, 2019, which indicates that service was unsuccessfully attempted at 2201 South Halsted in Chicago on October 31, 2019, but defendant was not listed in the directory for the building. Plaintiff subsequently filed a motion to appoint a special process server on January 27, 2020, and notice was served to defendant's registered agent, Robert L. Cruz, at 2201 South Halsted. The motion to appoint a special process server was granted on January 30, 2020.
¶ 4 On January 30, 2020, a petition to intervene was filed by Spain, Spain & Varnet P.C. (escrow holder), alleging that: (1) plaintiffs suit arose from defendant's alleged failure to perform under a post-real estate closing escrow agreement; (2) the seller of the real estate to plaintiff hired defendant to rehab the property and at the time of the sales contract, there were open permits with the City of Chicago for defendant's rehab work; (3) defendant was unable to promise that the open permits would be closed out before the closing, so plaintiff, the seller and defendant entered into an assignment of work agreement so that defendant would be responsible to complete the work necessary to close the permits after the closing; (4) seller and plaintiff entered into an escrow agreement for the escrow holder to retain $7500 to cover any claim by plaintiff for remediation costs to correct work by defendant to close the permits; (5) the escrow agreement's initial deadline was October 31, 2019, but was extended until January 31, 2020; (6) seller and plaintiff were unable to reach an agreement on distribution of the escrow funds; and (7) the right to the escrow funds involved some of the same questions of fact and law as plaintiffs case against defendant and the outcome of the case directly impacted the dispute and use of the escrow funds. The escrow holder was granted leave to intervene on February 10, 2020.
¶ 5 The record reflects that an agreed order was entered between the parties on March 27, 2020, indicating that the parties to the interpleader action reached a settlement and agreed for the escrow holder to distribute the escrow balance pursuant to the settlement agreement and the escrow holder was subsequently dismissed as a party.
¶ 6 Due to the COVID-19 pandemic, two of plaintiffs court dates were postponed, and a virtual status date of July 30, 2020, was scheduled. On July 27, 2020, plaintiff filed a motion for default against defendant. The motion for default was sent to defendant's registered agent, Robert L. Cruz, at 9249 South Cicero in Oak Lawn, Illinois. The motion for default indicated that service was completed via the Illinois Secretary of State and in compliance with the requirements set forth in the Act on or about March 3, 2020. An affidavit of compliance was attached to the motion. The affidavit of compliance indicated that the complaint and summons were sent by certified or registered mail to 828 North California, #3, and 2201 South Halsted, both in Chicago. The case was then set for default prove-up.
¶ 7 On October 21, 2020, the special process server filed an affidavit of nonservice, stating that it attempted to serve defendant on February 5, 2020, at 2201 South Halsted, but was unable to as there was no listing for defendant or its registered agent, Robert Cruz on the electronic address reader.
¶ 8 Subsequently, a default judgment order was entered on December 18, 2020, against defendant in the amount of $33,448.41 plus fees and costs in the amount of $4526.23.
¶ 9 Defendant filed its general appearance on April 30, 2021, by counsel, and filed its section 2-1401 petition to quash service the same day. The petition alleged that: (1) it was not properly served with the complaint and summons to its registered agent; (2) service on the Secretary of State also requires that the summons be sent by registered or certified mail to an address most likely to result in actual notice; (3) defendant's registered agent's office changed to 9249 South Cicero in Oak Lawn on March 31, 2020, and service was never attempted at that address nor was a copy of the complaint and summons sent to that address; (4) service was attempted at the prior address for defendant's registered agent, 2201 South Halsted in Chicago in February 2020, but plaintiff did not file her motion for default until July 27, 2020, after the registered agent's address changed; (5) the two addresses where copies of the complaint and summons were sent were the least likely places to give defendant actual notice of the proceedings; and (6) there was not strict compliance with the requirements of the statute so the purported service should be quashed and the judgment should be vacated as void. Attached to defendant's motion, among other things, was a certificate of good standing from the Secretary of State dated April 23, 2021, showing defendant's principal office location at 2201 South Halsted in Chicago and the registered agent's address at 9249 South Cicero in Oak Lawn. Also attached was an April 19, 2021, letter from Attorney Gregory J. Ram el to defendant at 9121 Karlov in Oak Lawn regarding the default judgment. The notice of motion attached to defendant's section 2-1401 petition was served to plaintiff directly, Attorney Sidor, and Attorney Ram el, both labeled as "Attorney for Plaintiff."
There is no indication in the record who Attorney Ramel represents or how he is related to this action as he was not plaintiffs attorney of record and filed no pleadings in this case until after entry of the order denying defendant's section 2-1401 petition, at which time he requested a transfer of the collection matter to the law division.
¶ 10 Attorney Sidor responded on plaintiffs behalf, stating that after repeated attempts to serve defendant at its registered office of 2201 South Halsted in Chicago as shown by the records on file with the Secretary of State, the complaint and summons was subsequently served to the Secretary of State on March 3, 2020. Further, on the date of service, the possible addresses for defendant per the records of the Secretary of State were 2201 South Halsted and 828 North California. Plaintiff pointed out that the principal office for defendant is still listed at 2201 South Halsted per defendant's own attachment to the petition to quash. Plaintiff argued that defendant cited no support for the implication that service to the Secretary of State 28 days prior to the change in the registered agent's address was ineffective and that plaintiff strictly complied with the Act. Attorney Sidor's affidavit, which was attached to plaintiffs response, indicated that the address of an alternate/former business owned and managed by Robert Cruz, defendant's manager, was 828 North California in Chicago, and additionally that the assignment and indemnification & hold harmless agreement that was the subject of the proceedings lists 2201 South Halsted as the notice address for defendant. There was no response from Attorney Ram el.
¶ 11 In its reply to plaintiffs response to defendant's section 2-1401 petition to quash service, defendant argues that plaintiffs counsel knew where defendant's manager lived as his wife used to work for Attorney Sidor as a paralegal; thus, Attorney Sidor knew "very well how to notify the defendant if he wanted to."
¶ 12 Hearing on defendant's petition to quash service was set for October 26, 2021, after which the circuit court entered an order denying defendant's petition and finding that plaintiff complied with the requirements of the Act for service on the Secretary of State "for the reasons stated in open court," after being "duly advised in the premises." The record contains no report of proceedings or certified bystander's report from the hearing on defendant's petition to quash service, so we are unable to conclusively determine whether this was a full evidentiary hearing or what specific factual findings were made by the circuit court. We are also unable to determine if defendant requested an evidentiary hearing from the circuit court. Defendant's timely notice of appeal was filed on November 1, 2021.
¶ 13 ANALYSIS
¶ 14 On appeal, defendant contends that the circuit court erred in denying its section 2-1401 (735 ILCS 5/2-1401 (West 2020)) petition to quash service. In support of this contention, defendant argues that plaintiff failed to strictly comply with the statute governing service on a LLC, specifically when the Secretary of State is served in a defendant's stead. Defendant further contends that the address listed on the summons was not where plaintiff knew or reasonably believed was most likely to result in actual notice to defendant of the proceedings and that the circuit court "seemed" to disregard the information that was available to plaintiff that would have achieved actual notice to defendant.
¶ 15 Section 2-1401 of the Code provides a mechanism for a party to belatedly challenge and avoid a trial court's final judgment. MB Financial Bank, N.A. v. Ted & Paul, LLC, 2013 IL App (1st) 122077, ¶ 12. It creates an exception to the general rule that a court cannot review its own judgment more than 30 days from the date of entry of the judgment. Id. A proceeding under 2-1401 is an independent and separate action from the original action and must be supported by affidavit or other appropriate showing for matters not in the record. Warren County Soil and Water Conservation District v. Walters, 2015 IL 117783, ¶ 31. Typically, the petition must be filed more than 30 days from entry of the final judgment or order but not more than 2 years after that entry. Id. A section 2-1401 petition can present either a factual or legal challenge to a final judgment or order. Id. The nature of the challenge presented in a section 2-1401 petition is critical because it dictates the proper standard of review on appeal. Id.
¶ 16 A section 2-1401 petition seeking to vacate a void judgment, a purely legal issue, is reviewed de novo on appeal. Id. ¶¶ 45-48. However, a section 2-1401 petition that raises a fact-dependent challenge to a final judgment or order must be resolved by consideration of the specific factual allegations that support the petition and is reviewed under the abuse of discretion standard. Id. ¶¶ 50-51.
¶ 17 In this case, defendant's argument on appeal is that the circuit court's entry of default judgment is void because the court lacked personal jurisdiction over defendant. However, defendant has provided specific factual allegations in support of the petition, that were apparently presented to the circuit court and considered in the circuit court's ruling. As noted above, the record is unclear as to the nature of the hearing that was held in consideration of defendant's section 2-1401 petition: although the wording of the order entered suggests that the circuit court made factual findings to support its final ruling that plaintiff complied with the statute. Where the trial court held an evidentiary hearing on the issue of personal jurisdiction and made factual findings, we will review any of its relevant factual findings under the manifest weight of the evidence standard. Madison Miracle Productions, LLC v. MGM Distribution Co., 2012 IL App (1st) 112334, ¶ 39. However, the circuit court's legal conclusions- including its conclusions regarding the legal effect of its own factual findings and its ultimate resolution of the issue of personal jurisdiction - will be reviewed de novo. Id.
¶ 18 In the absence of service of process or a waiver of service by the defendant, a court ordinarily may not exercise its power over a party. Pickens v. Aahmes Temple #132, LLC, 2018 IL App (5th) 170226, ¶ 36. A judgment entered by a circuit court without jurisdiction over the parties is void and may be challenged at any time. Id.
¶ 19 A defendant has the right to challenge a default judgment on voidness grounds for improper service in the circuit court within two years of entry of the judgment. Sarkissian v. Chicago Board of Education, 201 Ill.2d 95, 103 (2002); Smith v. Airoom, Inc., 114 Ill.2d 209, 221-22 (1986). A petition seeking postjudgment relief from a void order can be filed pursuant to section 2-1401. Id. A section 2-1401 petition seeking to vacate a void judgment, a purely legal issue, does not need to establish a meritorious defense or satisfy due diligence requirements. Warren County, 2015 IL 117783, ¶ 48; Sarkissian, 201 Ill.2d at 104.
¶ 20 The record in this case establishes that the default judgment was entered on December 18, 2020, and defendant filed the petition to quash under section 2-1401 on April 30, 2021. Although not required, the petition additionally alleged that it was brought with due diligence once defendant learned of the default judgment and further alleged a meritorious defense that defendant never had notice of the pleadings and was never served, thus rendering the default judgment void. Our initial inquiry is to determine whether that original default order was void or voidable.
¶ 21 Whether a judgment is void (or voidable) presents a question of jurisdiction. LVNV Funding, LLC v. Trice, 2015 IL 116129, ¶ 27. If there is no jurisdiction, any subsequent judgment of the court is rendered void and may be attacked collaterally. Id. A void order is a complete nullity from its inception and has no legal effect. Cushing v. Greyhound Lines, Inc., 2012 IL App (1st) 100768, ¶ 103. A voidable judgment, on the other hand, is an erroneous judgment entered by a court that possesses jurisdiction and is not subject to collateral attack. In re Marriage of Mitchell, 181 Ill.2d 169, 174 (1998).
¶ 22 Under Illinois law, only the most fundamental defects, i.e., a lack of personal jurisdiction or lack of subject matter jurisdiction warrant declaring a judgment void. LVNV Funding, 2015 IL 116129, ¶ 38. Once a court has acquired jurisdiction, an order will not be rendered void merely because of an error or impropriety in the issuing court's determination of the law. Marriage of Mitchell, 181 Ill.2d at 174. In this case, defendant does not question the circuit court's subject matter jurisdiction; its argument is that the court lacked personal jurisdiction over it and therefore its, order is void. Accordingly, we must determine whether the circuit court had jurisdiction over defendant when the default judgment was entered.
¶ 23 The object of service of process is to notify a party of pending litigation and thus secure his presence. In re Marriage of Wilson, 150 Ill.App.3d 885, 887 (1986). Although the usual method is by personal service; the legislature provides for substitute service. Id. at 887-88. The use of substitute service demands strict compliance with the statutory requirements. Id. at 888. In construing the sufficiency of the notice, courts focus not on" 'whether the notice is formally and technically correct, but whether the object and intent of the law were substantially attained thereby.' " Id. (quoting Fienhold v. Babcock, 275 Ill. 282, 289-90 (1916)).
¶ 24 Here, personal jurisdiction over defendant was obtained through substitute service on the Secretary of State because defendant is an LLC. Service of process on an LLC is governed by section 1-50 of the Act, which states as follows, in pertinent part:
"(a) Any process, notice, or demand required or permitted by law to be served upon either a limited liability company *** shall be served either upon the registered agent appointed by the limited liability company or upon the Secretary of State as provided in this Section.
(b) The Secretary of State shall be irrevocably appointed as an agent of a limited liability company upon whom any process, notice, or demand may be served under any of the following circumstances:
(1) Whenever the limited liability company shall fail to appoint or maintain a registered agent in this State.
(2) Whenever the limited liability company's registered agent cannot with reasonable diligence be found at the registered office in this State or at the principal place of business stated in the articles of organization.
(c) Service under subsection (b) shall be made by the person instituting the action by doing all of the following:
(1) Serving on the Secretary of State, or on any employee having responsibility for administering this Act, a copy of the process, notice, or demand, together with any papers required by law to be delivered in connection with service and paying the fee prescribed by Article 50 of this Act.
(2) Transmitting notice of the service on the Secretary of State and a copy of the process, notice, or demand and accompanying papers to the limited liability company being served, by registered or certified mail:
(A) at the last registered office of the limited liability company shown by the records on file in the Office of the Secretary of State; and
(B) at the address the use of which the person instituting the action, suit, or proceeding knows, or on the basis of reasonable inquiry, has reason to believe is most likely to result in actual notice.
(3) Attaching an affidavit of compliance with this section, in substantially the form that the Secretary of State may by rule regulation prescribe, to the process, notice, or demand. (d) Nothing herein contained shall limit or affect the right to serve any process, notice, or demand required or permitted by law to be served upon a limited liability company in any other manner now or hereafter permitted by law. 805 ILCS 180/1-50(a)-(d) (West 2020).
¶ 25 As noted, the Act allows service only on the registered agent appointed by the LLC or on the Secretary of State. Id. §1-50(a). In this case, plaintiff unsuccessfully attempted to serve the registered agent appointed by defendant, at the address listed in the Secretary of State's records on two separate occasions in 2019 and 2020, with the complaint and summons prior to the entry of the default judgment in December 2020. Plaintiff then served the Secretary of State on March 3, 2020, after the unsuccessful service on the registered agent, as allowed under the Act. We therefore find that such service was proper under the Act.
¶ 26 However, defendant contends that because plaintiff did not file its motion for default until July 2020, she should have checked the Secretary of State records again to attempt service as defendant's registered agent's address was changed on March 31, 2020. Defendant argues, without citing to any authority, that the four-month gap in time renders plaintiff s due diligence in attempting to serve defendant ineffective. We disagree.
¶ 27 The record establishes that plaintiff unsuccessfully attempted to serve defendant's registered agent at the address on file with the Secretary of State's office in October 2019 by the Sheriff and in February 2020 by a special process server. In early March 2020, having complied with attempts at service to the registered agent, plaintiff served the Secretary of State in accordance with the Act. That additional notice was simultaneously sent to defendant's registered agent at the address listed in the Secretary of State's records as well as an additional address to another or prior company related to defendant that plaintiff located after an online search. Defendant's petition to quash indicated that the address for its registered agent was changed on March 31, 2020, which was after the prior unsuccessful attempts at service to defendant's agent. Additionally, the Secretary of State's records that defendant attached to its petition still indicated that defendant's place of business was located at 2201 South Halsted, even though the registered agent's address was changed to 9249 South Cicero.
¶ 28 Section 1-35 of the Act provides that each LLC "shall continuously maintain in this State a registered agent and registered office, which agent much be an individual resident of this State or other person authorized to transact business in this State." 805 ILCS 180/1-3 5(a) (West 2020). The company's articles of organization must set forth the name of the company's registered agent and the address of its registered office, and the articles of organization must be filed with the Secretary of State. Id. § 5-5(a)(3), (b).
¶ 29 There is no dispute that the various process servers relied on the information represented by defendant in the Secretary of State records to attempt service, and further complied with defendant's express representations with respect to the exact name and location of its registered agent. When serving the Secretary of State in defendant's stead, plaintiff took the additional step of doing another search for a business address on a different website that was possibly related to defendant and found one with the same registered agent showing a different registered address that it also sent notice to, the California address. Defendant's argument that this address was "random" is without merit when it was for a company with a similar name and the same registered agent as defendant. The fact that defendant later changed its registered agent and registered office does not negate whether plaintiff fully complied with the Act in October 2019, February 2020, and early March 2020. At the point that service was made on the Secretary of State, service was complete and in full compliance with the requirements of the Act.
¶ 30 Defendant's argument that plaintiffs attorney had personal knowledge of its registered agent's home address does not negate plaintiffs full compliance with the requirements of the Act in serving defendant. Defendant contends that this additional knowledge negates the Act's requirement that notice of service on the Secretary of State must be sent to the address that the person instituting the action has reason to believe is most likely to result in actual notice. 805 ILCS 180/1-50(c)(2)(B) (West 2020). We disagree.
¶ 31 At the time plaintiff s suit was filed and at all times relevant, that agent was Robert L. Cruz, and the registered office was 2201 South Halsted. The record establishes that this was the address where plaintiff unsuccessfully attempted to serve defendant at least twice. Defendant's own pleadings stated that it did not change the registered address until March 31, 2020, which was after the date of service on the Secretary of State. We additionally note that, even then, defendant's principal place of business per the Secretary of State's records remained at 2201 South Halsted. We cannot find on this record that the circuit court erred in finding that the plaintiff attempted to give notice at the address most likely to result in actual notice. We further note that in July 2020, plaintiff sent the notice of default motion to defendant's registered agent at the new registered address, 9249 South Cicero, putting defendant on notice of the action filed against it as well as notice of the default proceedings. Defendant provides no explanation for why it did not respond to the notice of default proceedings when notice was provided to the updated registered address for the registered agent that was on file with the Secretary of State. Additionally, although defendant included a copy of a letter sent to its registered agent's home address from an Attorney Ramel, that attorney was not plaintiffs attorney of record at that time and did not file his appearance until after the default judgment was entered.
¶ 32 Moreover, there was hearing held on defendant's section 2-1401 petition before the circuit court where, according to the order entered denying defendant's petition, the circuit court provided its reasoning in open court for the denial. As noted above, defendant has not provided this court with a report of proceedings or certified bystander's report, so we are unable to determine precisely what factual findings the circuit court made in support of its decision. To the extent that defendant now claims it should have been given an evidentiary hearing and was not, we cannot tell if the defendant requested such a hearing from the circuit court. Defendant's written filings in the circuit court do not include any such request.
¶ 33 Illinois Supreme Court Rules 321 and 324 require an appellant to provide a complete record on appeal, including a certified copy of the report of proceedings. Ill. S.Ct. R. 321 (eff. Feb. 1, 1994); Ill. S.Ct. R. 324 (eff. July 1, 2017). If a verbatim transcript is unavailable, the appellant may file an acceptable substitute, such as a bystander's report or an agreed statement of facts, as provided for in Rule 323. Ill. S.Ct. R. 323 (eff. July 1, 2017). The burden of providing a sufficient record on appeal rests with the appellant (here, plaintiff). Maniscalco v. Porte Brown, LLC, 2018 IL App (1st) 180716, ¶ 30; Foutch v. O'Bryant, 99 Ill.2d 389, 391-92. In the absence of such a record, we must presume that the trial court acted in conformity with the law and with a sufficient factual basis for its findings. Foutch, 99 Ill.2d at 392. Furthermore, any doubts arising from an incomplete record will be resolved against the appellant. Id. This is particularly true "'when the judgment order states that the court is fully advised in the premises.'" Maniscalco, 2018 IL App (1st) 180716, ¶ 31 (citing Dell'Armi Builders, Inc. v. Johnston, 172 Ill.App.3d 144, 149 (1988)).
Rule 321 has since been amended by 2021 Illinois Court Order 0037 entered September 29, 2021, effective October 1, 2021.
¶ 34 As noted above, the written order entered by the circuit court stated that it was entered after a hearing on defendant's section 2-1401 petition, it was "duly advised in the premises" and further that it found that plaintiff fully complied with section 1-50(c) "for the reasons stated in open court." As defendant has not provided this court with a report of proceedings or a certified bystander's report, we must presume that the circuit court acted in conformity with the law and with a sufficient factual basis for its findings. Moreover, we must resolve any doubt arising from the incomplete record against defendant.
¶ 35 Thus, we find that the circuit court's conclusion that plaintiff fully complied with the requirements of the Act when it served the Secretary of State, for the reasons stated at the hearing on defendant's section 2-1401 petition, was proper. We therefore conclude that the circuit court had jurisdiction over the defendant as a result of such service. As a result, we find that the circuit court's default order of December 18, 2020, is not void. Accordingly, the circuit court properly denied defendant's petition to quash service and set aside the default judgment.
¶ 36 CONCLUSION
¶ 37 For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.
¶ 38 Affirmed.