Opinion
No. 11–P–1540.
2012-08-23
CAMBRIDGE MUTUAL FIRE INSURANCE COMPANY v. Brad P. SPINOSA.
By the Court (KATZMANN, SIKORA & AGNES, JJ.).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The defendant, Brad P. Spinosa, appeals from an order of the Superior Court reinstating a default judgment after his failure to comply with an order to post a $160,000 bond. For the following reasons, we vacate the reinstated default judgment and remand the case for further proceedings in the Superior Court.
Background. The record to date supports the following findings.
Spinosa is a roofing contractor. On June 7, 2006, he was installing a new roof at the home of the Dantone family in Marlborough. When he suspended work for the day, he placed a tarp over the exposed roof area. Overnight, storm water penetrated the tarp area and caused approximately $160,000 in damage to the home and its contents. The insurer and plaintiff in this case, Cambridge Mutual Fire Insurance Company (Cambridge Mutual), paid the Dantones' claim. It commenced this subrogation action against the defendant on February 7, 2008. It alleged that the damage to the Dantone home proximately resulted from Spinosa's negligent failure to cover the roof area. It sought full reimbursement for payment of the claim. On February 15, 2008, the sheriff left a copy of the summons and complaint at apartment 1 at 669 Broadway, Everett, Massachusetts, Spinosa's presumed last and usual address in a dwelling owned by his father. However, Spinosa did not reside at this address at the time of service and did not receive a copy of the summons and complaint. On or about January 1, 2008, he had purchased and moved into a residence at 49 Prospect Street, Malden. After his move to Malden, he had (1) not executed a change of address form with the post office; (2) not updated his business address as required by G.L. c. 110, § 5; and (3) not updated his address with the Registry of Motor Vehicles. Spinosa did not respond to the complaint or otherwise appear. Cambridge Mutual assumed proper service and subsequently obtained a default against Spinosa under Mass.R.Civ.P. 55(a), 365 Mass. 822 (1974).
“For the purpose of deciding the defendant's motions under rule 60(b)(4), the motion judge was required to accept as true the unconverted allegations recited in the defendant's affidavits.” Metivier v. McDonald's Corp., 16 Mass.App.Ct. 916, 918 (1983). The underlying facts here appear to be undisputed.
In May, 2008, a Superior Court judge conducted a hearing upon the assessment of damages, and in July, 2008, a default judgment entered in the amount of $159,173.94 pursuant to Mass.R.Civ.P. 55(b)(2), as amended, 454 Mass. 1401 (2009). Spinosa finally became aware of the lawsuit in October of 2008 when the sheriff mailed a copy of the levy on execution to his residence at 49 Prospect Street in Malden, Massachusetts. Spinosa then acquired statutory homestead protection on his property in Malden in November of 2008.
He then moved to vacate the default judgment pursuant to Mass.R.Civ.P. 60(b)(4), 365 Mass. 828 (1974), on the ground that failure of service, and thereby of adequate notice, deprived him of due process and rendered the default judgment void from the beginning.
Spinosa stated in an affidavit and testified subsequently that he believed the homestead protection on his residence had been recorded when he had closed on his home in December of 2007. He testified that at the time of the closing he had signed a homestead declaration and paid the $110 fee. This fee does appear in his closing documents. However, the homestead declaration was not recorded until November of 2008.
The motion to vacate proceeded to an evidentiary hearing. Cambridge Mutual requested the court to require a bond in the event of a vacatur. Spinosa objected to this request on the ground that the judge had no authority to impose a bond. After the hearing, the judge (the first judge) (a) vacated the default judgment as void for lack of proper service, (b) ordered the defendant to file his answer within twenty days of the order, and (c) ordered the defendant to post a bond in the amount of $160,000 as security for any subsequent judgment obtained by Cambridge Mutual.
Spinosa filed his answer within twenty days. However, he did not post the bond.
As a result, Cambridge Mutual filed an emergency motion for sanctions of either (a) an order reinstating the default judgment and execution retroactively so as to acquire priority against the recorded homestead protection, or (b) an order imposing an attachment on the Malden house and subordinating the homestead declaration to that attachment. A different Superior Court judge (the second judge) then “reinstat[ed]” the default judgment as a sanction for Spinosa's failure to post the bond, and ostensibly restored the priority of the $160,000 security interest of Cambridge Mutual over Spinosa's homestead protection. Spinosa filed a timely notice of appeal.
Spinosa did not move for reconsideration of the bond order, request a stay of the order pending appeal, or bring an interlocutory appeal.
Neither party includes the notice of appeal in the record appendix or describes it in its brief. Cambridge Mutual does not contest the propriety of the appeal. We treat it as one permitted by the rule of present execution. See, e.g., Fabre v. Walton, 436 Mass. 517, 521 (2002); Slade v. Ormsby, 69 Mass.App.Ct. 542, 544–545 (2007). In this instance, restoration of the insurer's recorded levy to priority over the homestead protection would immediately affect Spinosa's financial standing and creditworthiness.
Analysis. On appeal, Spinosa argues (1) that the first judge had lacked authority to impose a bond, and (2) that, since the prior default judgment was void, the second judge lacked authority to reinstate it as a sanction for failure to post the bond.
1. Standard of review. We confront pure questions of law. As a result, we review the judge's conclusions de novo. See Anastos v. Sable, 443 Mass. 146, 149 (2004); T.W. Nickerson, Inc. v. Fleet Natl. Bank, 456 Mass. 562, 569 (2010).
2. Equitable order for bond as security for measurable damages. Spinosa first argues (1) that the first Superior Court judge grounded the bond in the invalid default judgment, and (2) that the judge lacked the authority to impose a bond as security for any future judgment even independently of the void default judgment. We disagree.
As an initial matter, we do not read the first judge's decision to impose the bond as a condition of the vacation of the default judgment. Her ruling vacates the default judgment as an independent matter. In this regard, Spinosa's reliance on Burger Chef Sys., Inc. v. Servfast of Brockton, Inc., 393 Mass. 287 (1984) ( Burger Chef ) is misplaced. In Burger Chef, the judge's order used explicit conditional language, a proviso that the default judgment be set aside “only upon the posting of a $25,000 bond by Servfast.” Id. at 288. Here the first judge recited two separate and independent orders, one allowing Spinosa's motion to vacate the default judgment and a second requiring the defendant to post a bond as security for any future judgment. The decision does not contemplate the reimposition of the default judgment as a sanction for failure to comply with the bond requirement. Nor does it condition the vacation of the default judgment upon the posting of the bond. Consequently, the bond requirement does not depend on, and does not collapse with, the default judgment.
The remaining question is whether the judge properly employed the bond as a separate interim remedy. The Superior Court has inherent equitable authority to order a bond as security for a likely liability for a liquidated or measurable amount of damages. See Damaskos v. Board of Appeal of Boston, 359 Mass. 55, 58 (1971); Burger Chef, supra at 290. The imposition of a bond “as a condition for judicial or other action [is] not unusual.” Burger Chef, supra at 290, quoting from Damaskos v. Board of Appeal of Boston, supra at 58. “Bonds also may be required, under usual equity principles, in connection with granting or dissolving injunctions and possibly other equitable relief, as matter of judicial discretion.” Damaskos, supra at 59. See Burger Chef, supra at 290.
Here, the equitable considerations include the first judge's sense of the probable ultimate merits of Cambridge Mutual's subrogation claim and Spinosa's failure to provide a workable address for service of process upon him by (a) his failure to complete a change of address form with the post office, (b) his failure to update his business address with his city or town of residence as required by statute, and (c) his failure to update his address with the Registry of Motor Vehicles. All of these omissions prevented effective and timely service of process upon him. Additionally, Spinosa secured homestead protection upon his home after learning about the default judgment, but prior to his motion to vacate the judgment. We therefore conclude that under principles of equity, the imposition of the bond was proper and within the authority of the judge.
Our present determination does not bar Spinosa from a request for modification or elimination of the bond if pretrial discovery reduces Cambridge Mutual's probability of ultimate success on the merits.
3. Reinstatement of the original default judgment. Spinosa next argues that it was error for the second judge to reinstate the default judgment, previously determined to be void (for lack of service) under rule 60(b)(4), as a sanction for failure to post the bond. We agree. “A judgment is void if the court from which it issues lacked jurisdiction over the parties, lacked jurisdiction over the subject matter, or failed to provide due process of law.” Harris v. Sannella, 400 Mass. 392, 395 (1987). At a minimum, the due process clause of the Fourteenth Amendment to the United States Constitution requires notice and an opportunity to be heard. See Ciampi v. Commissioner of Correction, 452 Mass. 162, 170 (2008), citing Logan v. Zimmerman, 455 U.S. 422, 428, 434 (1982) .
Included within the concept of due process is the requirement of proper service of process upon a defendant. Wang v. Niakaros, 67 Mass.App.Ct. 166, 171 (2006). When process is not effectively served upon the defendant, the judgment is void. Metivier v. McDonald's Corp., 16 Mass.App.Ct. 916, 918 (1983). In such a case, a judge lacks discretion to deny a request for relief under rule 60(b)(4); the judgment must be vacated. See Bowers v. Board of Appeals of Marshfield, 16 Mass.App.Ct. 29, 31 (1983), and cases and authorities cited; Colley v. Benson, Young & Downs Ins. Agency, Inc., 42 Mass.App.Ct. 527, 533 (1997); Fleishman v. Stone, 57 Mass.App.Ct. 916, 916 (2003).
The Massachusetts Constitution provides parallel protection. Duarte v. Commissioner of Rev., 451 Mass. 399, 412 n. 20 (2008), quoting from Pinnick v. Cleary, 360 Mass. 1, 14 n. 8 (1971) (“Part II, c. 1, § 1, art. 4, of the Massachusetts Constitution, and arts. 1, 10 and 12 of its Declaration of Rights, are the provisions in our Constitution comparable to the due process clause of the Federal Constitution”).
It is undisputed in this case that process never reached Spinosa. The original default judgment was therefore void under rule 60(b)(4).
See Metivier v. McDonald's Corp., supra at 918. It follows that we cannot affirm the reinstatement of the original default judgment because it was void ab initio within the meaning of rule 60(b)(4). See Harris v. Sannella, supra at 395, quoting from Lubben v. Selective Serv. Sys., 453 F.2d 645, 649 (1st Cir.1972) (“A void judgment is one which, from its inception, was a complete nullity and without legal effect”). We must vacate the second judge's order reinstating the default judgment.
The first judge reached this conclusion in her original order dated June 30, 2009, which vacated the default judgment.
In other circumstances, the entry of a default judgment for the knowing and intentional violation of a court order is within the discretion of the judge. See Roxse Homes Ltd. Partnership v. Roxse Homes, Inc., 399 Mass. 401, 405 n. 5 (1987). See also Clamp–All Corp. v. Foresta, 53 Mass.App.Ct. 795, 805 (2002), quoting from Greenleaf v. Massachusetts Bay Transp. Authy., 22 Mass.App.Ct. 426, 429 (1986) (the entry of a judgment of dismissal or a default judgment as a sanction for failing to comply with discovery orders “has to do with the management of the case and, as such, is committed to the sound discretion of the trial judge”); Short v. Marinas USA Ltd. Partnership, 78 Mass.App.Ct. 848, 853 (2011) (Based on defendants' knowing and intentional disregard for the court's order, “the imposition of a default judgment was within the broad range of the judge's discretion”).
Conclusion. The Superior Court judge retains discretionary authority to impose alternative measures for the purposes of (a) providing Spinosa with access and opportunity for a fair adjudication of any liability,
and (b) providing Cambridge Mutual with some deserved security in the event of a favorable judgment. For the reasons stated we (a) vacate the reinstated default judgment; and (b) remand the case for further consideration in the Superior Court consistent with the reasoning of this memorandum and order, including, but not limited to the entry of orders (i) maintaining the present bond requirement, or (ii) placing an attachment upon Spinosa's residential property with its priority against his homestead declaration to be determined at the conclusion of an adjudication of the merits of Cambridge Mutual's claim, and/or (iii) preliminarily enjoining Spinosa's use of business and personal assets.
Spinosa argues that the imposition of a bond (which would require him to give the bonding company security to cover the face amount of the bond, or to give the bonding company a security interest in his home senior to his homestead protection) interferes with his right to access to the courts. We disagree. He still has access to the courts. He must provide a security interest as the price of access. That requirement is not unfair in the circumstances of the case.
The order allowing the motion to reinstate the default and default judgment is reversed. The default and default judgment are vacated. The order for bond is affirmed, and the matter is remanded to the Superior Court for further consideration consistent with this memorandum and order.
So ordered.