Opinion
C.A. No. 02C-04-212-JRS.
Submitted: February 27, 2004.
Decided: April 13, 2004.
On Defendant's Motion to Vacate Default Judgment. DENIED.
Danielle K. Yearick, Esquire, Tybout, Redfearn Pell, Wilmington, DE.
Jeffrey K. Martin, Esquire, Harvey, Pennington Cabot, Griffith Renneisen, Wilmington, DE.
Dear Counsel:
To follow is the Court's decision on the motion to vacate default judgment filed by defendant Baldwin Line Construction Co., Inc. ("Baldwin"). As you know, this litigation began when Verizon Delaware, Inc. ("Verizon") filed its complaint against Baldwin alleging that Baldwin damaged certain underground telephone cables while performing work on a construction project in Dover, Delaware. Verizon filed its complaint on or about April 22, 2002, and effected service upon Baldwin by serving its registered agent, Edwin Lechowicz, Esquire, a Maryland attorney. An administrative assistant in Mr. Lechowicz' law firm accepted service of the complaint on Mr. Lechowicz' behalf. Unbeknownst to Verizon, Mr. Lechowicz had passed away on July 12, 2000. According to an affidavit submitted on behalf of Baldwin by its President, Sylvia Taylor, Baldwin did not receive notice of the filing of the complaint until June 20, 2003, when it received notice that a default judgment had been entered against Baldwin in Delaware, and a judgment transferred to the Circuit Court of Maryland for Howard County.
Baldwin asserts, through Ms. Taylor, that it appointed a new registered agent in 2002. It further alleges that its new registered agent was identified in public filings as of July 24, 2002. Nevertheless, the motion for default judgment filed by Verizon on August 28, 2002 again was directed to Mr. Lechowicz. And, again, Mr. Lechowicz' law firm failed to notify Baldwin of the filing. Consequently, Baldwin alleges that it did not receive notice of the motion for default judgment until long after it was granted.
At the conclusion of oral argument on the motion to vacate, the Court directed Baldwin to supplement the record with evidence regarding the date on which Baldwin learned that its registered agent, Mr. Lechowicz, had passed away. In a supplemental affidavit, Ms. Taylor acknowledged that Baldwin knew of Mr. Lechowicz' death by October 30, 2000, approximately 90 days after he had passed away. Ms. Taylor avers that she believed Baldwin had appointed a new registered agent within "four to five months" after Mr. Lechowicz' death. In fact, however, a successor registered agent was not appointed until sometime in 2002.
A motion to vacate a default judgment pursuant to Superior Court Civil Rule 60(b) is addressed to the sound discretion of the Court. Delaware courts receive such motions with favor because they promote Delaware's strong judicial policy of deciding cases on the merits and giving parties to litigation their day in court. In furtherance of this policy, the Court will resolve any doubts raised by the motion in favor of the moving party.
Battaglia v. Wilmington Sav. Fund Soc'y, 379 A.2d 1132, 1135 (Del. 1977).
Keystone Fuel Oil Co. v. Del-Way Petroleum, Inc., 364 A.2d 826, 828 (Del. 1976).
Cohen v. Brandywine Raceway Assn., 238 A.2d 320, 325 (Del.Super. 1968).
Although Delaware courts afford Rule 60(b) "liberal construction," the movant still must satisfy three elements before a motion under that rule will be granted: (1) excusable neglect in the conduct that allowed the default judgment to be taken; (2) a meritorious defense to the action that would allow a different outcome to the litigation if the matter was heard on its merits; and (3) a showing that substantial prejudice will not be suffered by the plaintiff if the motion is granted. "Excusable neglect is defined as neglect which might have been the act of a reasonably prudent person under the circumstances."
Lewes Dairy, Inc. v. Walpole, 1996 Del. Super. LEXIS 53, at *6. The Court notes an additional component to the movant's burden under Rule 60(b): the movant must seek timely relief. Id. at * 9-10. Delaware courts have noted that a delay of six weeks in seeking relief from a default judgment was not excusable, even when a meritorious defense to the underlying action was available. Id. (Citations omitted). Here, Baldwin learned of the default judgment sometime in June, 2002 but did not file its motion to vacate until August 11, 2002. Although this delay would appear "inexcusable" at first glance, the Court need not reach the issue given its conclusion regarding the propriety of Baldwin's conduct leading up to the default judgment.
Id. (Citation omitted).
Baldwin's failure to satisfy its obligation to maintain a valid registered agent cannot be deemed excusable under the circumstances. Foreign corporations transacting business in the state of Delaware are obliged to appoint a registered agent. The process by which a foreign corporation shall appoint a registered agent is clearly prescribed in the Delaware General Corporation Law. Likewise, in the event a foreign corporation wishes to change its registered agent, the process for effecting that change also is prescribed by the Delaware General Corporation Law. "[T]he primary object of [§ 371] is to secure to the State and its people a way to serve process on a corporation which is organized elsewhere and which comes here to act through officers or agents." The General Assembly has codified penalties when foreign corporations fail to meet their obligations to appoint an appropriate registered agent.
DELAWARE CONSTITUTION of 1897, Art. IX, § 5 ("no foreign corporation shall do any business in this State through or by branch offices, agents or representatives located in this State, without having an authorized agent or agents in this State upon whom legal process may be served.")
DEL. CODE ANN., tit. 8 Del. C. § 371(b)(2)(2001).
See Id. at § 377.
Farmers Bank v. Sinwellan Corp., 367 A.2d 180, 183 (Del. 1976).
DEL. CODE ANN., tit. 8 Del. C. § 383(a) (2001).
Baldwin became aware of the death of its registered agent shortly after it occurred. Nevertheless, Baldwin took no steps to appoint a new registered agent for almost two years after learning that Mr. Lechowicz was no longer able to fulfill that role. For its part, Verizon acted reasonably in serving its complaint upon Mr. Lechowicz, the registered agent of record for Baldwin at the time the complaint was filed. It likewise acted reasonably when it served Mr. Lechowicz with the motion for default judgment.
Baldwin makes much of the fact that it had appointed its new registered agent by the time Verizon filed its motion for default judgment but Verizon, nevertheless, served the motion upon Mr. Lechowicz. "While [the court] recognizes the customary practice of serving a motion for default judgment on the opposing party, Superior Court Civil Rule 55 does not require such notice." Lewes Dairy, Inc., supra at * 7-8 (citation omitted). Thus, even if it is assumed that the motion for default judgment was not properly served upon Baldwin, that fact would not affect the result here.
Baldwin cannot satisfy the first of its three-pronged burden for establishing relief under Rule 60(b) — its conduct in failing to answer a properly served complaint simply cannot be characterized as "excusable neglect." Accordingly, its motion to vacate default judgment must be DENIED.