Summary
In Hayden, the trial court entered an ex parte order for substituted service allowing the plaintiff to serve the defendant's insurer.
Summary of this case from Potter v. DevineOpinion
Docket No. 104905.
Decided August 21, 1989. Leave to appeal applied for.
Law Offices of Ben Shapero, P.C. (by David W. Martin), for plaintiff.
Cummings, McClorey, Davis Acho, P.C. (by Timothy Young and Marcia L. Howe), for Hartford Accident Indemnity Company.
Before: CYNAR, P.J., and SHEPHERD and MARILYN KELLY, JJ.
Plaintiff appeals an order of the Macomb Circuit Court quashing service of process by substituted means and dismissing the complaint. This case questions whether service of process may be made on a missing defendant by obtaining substituted service on the insurer which ultimately will be liable should plaintiff prevail. We respond affirmatively and remand.
Plaintiff, Kermit Hayden, was an independent trucker who owned his own tractor-trailer. He was hired to deliver goods by American Red Ball Van Lines. Appellee Hartford Accident Indemnity Company had issued a liability insurance policy to American and its truckers. Plaintiff was a named insured and his vehicle was described on an auxiliary form. Defendant Michael Gokenbach was a driver assistant.
On August 3, 1983, Gokenbach was driving plaintiff's tractor-trailer at a high rate of speed when it left the road and overturned. Plaintiff, a passenger at the time, sustained permanent injuries.
Plaintiff sued Gokenbach. When he was unable to serve him, plaintiff sought and obtained from the trial court an ex parte order to extend the summons. Thereafter, Gokenbach's aunt and uncle told plaintiff's process server they had not heard from their nephew in four years and that he worked somewhere in Indiana. Based on this information, the court entered an ex parte order for substituted service on Hartford, believing it to be Gokenbach's liability carrier.
Substituted service was accomplished and, as no answer was filed, a default was entered July 17, 1987. Hartford promptly filed a motion to quash the service attaching an affidavit stating that Hartford was not Gokenbach's liability carrier. Following a hearing, the trial court issued an opinion and order granting the motion.
The court saw the issue as whether the substituted service was reasonably calculated to give Gokenbach notice of the proceedings and an opportunity to be heard. The judge relied on Hartford's affidavit and held that, if no contractual relationship existed between Gokenbach and Hartford, Hartford could not be Gokenbach's representative for purposes of service. Although plaintiff requested that Hartford be required to produce the insurance policy, the court found it unnecessary.
Plaintiff argues on appeal that Hartford proceeded improperly in bringing a motion to quash service, and it should have sought first to set aside the default. We disagree. Where service of process is alleged to be improper, even though a default has been entered, the defect is properly attacked by a motion to quash. Coleman v Bolton, 24 Mich. App. 547; 180 N.W.2d 319 (1970).
Plaintiff contends also that the substituted service of process in this case was proper. He reasons that Hartford insured plaintiff's vehicle and is thus liable for the negligence of the vehicle's driver who caused plaintiff's injuries. Since Gokenbach could not be found, substituted service of process was proper against the insurer according to MCR 2.105(I) and Krueger v Williams, 410 Mich. 144; 300 N.W.2d 910 (1981), app dis 452 U.S. 956; 101 S Ct 3102; 69 L Ed 2d 967 (1981).
MCR 2.105(I)(1) provides:
On a showing that service of process cannot reasonably be made as provided by this rule, the court may by order permit service of process to be made in any other manner reasonably calculated to give the defendant actual notice of the proceedings and an opportunity to be heard.Krueger held that substituted service may be had on an absentee defendant's insurance carrier when diligent efforts are shown to have been made to serve defendant, yet without success. The Krueger Court was guided by the reasoning contained in Mullane v Central Hanover Bank Trust Co, 339 U.S. 306, 317; 70 S Ct 652; 94 L Ed 865 (1950):
[I]t has been recognized that, in the case of persons missing or unknown, employment of an indirect and even a probably futile means of notification is all that the situation permits and creates no constitutional bar to a final decree foreclosing their rights.
Hartford argues that although ultimately it might be held liable to plaintiff for Gokenbach's alleged negligence under the policy in question, it was not Gokenbach's liability insurer. It points out that in Krueger, unlike this case, the insurer upon which substituted service was good was the liability insurer. By that it appears to mean that the insurer had a contractual relationship with the defendant, Mrs. Williams. Presumably it was in a position to locate and give notice of the suit to Williams. It is for those reasons, Hartford insists, substituted service upon the insurer was upheld.
We find Hartford's position unpersuasive. In the Krueger case, Williams was an assigned risk. The insurance company never sold a policy to her. It had no direct contractual relationship with her. There is no reason to believe it had more knowledge than plaintiff had of her whereabouts. Its responsibility to Williams, simply put, was to provide coverage.
Of key importance in the case at bar is not whether Hartford contracted with Gokenbach or even if it knew or could learn of his whereabouts. What is crucial is whether Hartford is liable for plaintiff's damages in the event Gokenbach is found negligent. Krueger, supra. If that is true, then substituted service on Hartford was good.
The attorney for Hartford, who eventually entered an appearance on behalf of Gokenbach, argued before the trial court that Gokenbach was not covered under the policy. This critical and underlying question should not be disposed of based on the assertions, sworn or otherwise, of Hartford's representatives. Plaintiff is entitled to see the policy of insurance. We remand for production and review of the Hartford policy to determine whether Gokenbach was covered under the policy. If Gokenbach was covered, service was proper and the order quashing service must be vacated. If the court determines that Gokenbach was not covered, then the order quashing service was proper.
Finally, Hartford argues that, even if its coverage extended to Gokenbach, plaintiff has not demonstrated diligent efforts to serve Gokenbach directly. Hartford did not raise this issue before the trial court, thus it is not properly preserved for appeal. Providence Hospital v National Labor Union Health Welfare Fund, 162 Mich. App. 191, 194; 412 N.W.2d 690 (1987); Ledbetter v Brown City Savings Bank, 141 Mich. App. 692, 701-702; 368 N.W.2d 257 (1985).
Remanded for proceedings consistent with this decision. This Court does not retain jurisdiction.