Thursday, June 15, 2017

Arkansas Court of Appeals Sets Aside 8-Year Old Judgment Due to A Deficient Warning Order Affidavit


The Arkansas Court of Appeals recently took the wood to a default judgment that was entered against a defendant solely on the basis of constructive service by warning order. See Self v. Hustead, 2017 Ark. 339.  In this case, our firm, Daily & Woods, P.L.L.C. represented the successful appellant.

Setting the Stage

All lawsuits begin with the filing of a complaint.  The Court does not acquire jurisdiction over the defendant, however, until he is served with the summons.  Service of process rules must be complied with exactly and while there are several ways to serve a defendant in person, none of those methods were relevant in Self.  In that case, service was constructive, and “accomplished” through the publication of a warning order.

Warning order service amounts to notice by way of an ad in the newspaper that more or less says, “Hey…Pssst…You’ve been sued.”  Unless the defendant scans the classified ads on a daily basis, he’ll never see it.  In fact, I don’t know of a single case where the defendant happened to be looking for a used car, or lawn tool, etc., only to discover that he had been named a civil defendant.  Nevertheless, it’s a valid means of serving a defendant, but only as a last resort. 

To obtain the warning order, the plaintiff must file an affidavit, or otherwise prove, that “after diligent inquiry, the identity or whereabouts of a defendant remains unknown.” Ark. R. Civ. P. 4(f)(1). The warning order is usually issued on the same day, and then it becomes published in the newspaper.  If no response is filed, the court will enter a default judgment.  That’s the usual order of operations,
anyway.

Self v. Hustead

In Self v. Hustead, the plaintiff was a home-owner landlord, and the defendant had been a tenant in the plaintiffs’ home.  After the defendant moved out, the plaintiffs sued the defendant for breach of the lease and damages.  Plaintiffs never actually served the defendant with the complaint or summons.  Instead, the defendant attempted to effectuate service by warning order.

The affidavit used to obtain the warning order read as follows: 

Comes now [Attorney for Plaintiffs], and upon his Oath states as follows:

1. That I have made diligent inquiry and that it is my information and belief that the [Defendant’s] last known address was 3203 McDonald Avenue, Springdale, Washington County, Arkansas 72762.

2. Personal service upon Defendant was unsuccessfully attempted by [a] licensed process server at said address.

3. That the Clerk of this Court should forthwith issue a Warning Order directing the defendant to appear and show cause, if any, why the relief prayed for by the Plaintiffs should not be granted.

(Names have been redacted. It’s all public record, so if you’re curious, check the case file.)

The warning order was issued based on this apparent showing of a diligent inquiry to locate the defendant, and it was published.  After 30 days, with no additional activity in the case file, the plaintiffs requested that the court enter a default judgment.  The court entered judgment against the defendant in the amount of $27,442.89, plus costs and attorney fees. 

Nothing happened for another 8 years.  Defendant eventually learned about the sizeable default judgment rendered against him when he was served with a show cause order in early 2016. In response, he moved to set aside the default judgment, based on service being defective.  The trial court denied his requests, so he appealed.

The Appeal

On appeal, the Arkansas Court of Appeals agreed with the defendant, reversed the trial court and set aside the default judgment. Specifically, the Court of Appeals held that service was wholly defective because the warning order was obtained based on a patently deficient affidavit.  The defendant never lived at the address listed in the affidavit and the affidavit contained absolutely no information that would support how the plaintiffs or their process server determined that McDonald Street in Springdale, Arkansas was an address he ever used. 

Also, the record revealed that the plaintiffs’ had some means to contact the defendant, but they apparently didn’t try.  Their real estate agent had defendant’s cell phone number, and had actually communicated with the defendant during the time leading up to the lawsuit.  On these facts, the Court of Appeals determined that the plaintiffs had not conducted a diligent inquiry—a prerequisite to obtaining the warning order.

The Result

If the procedures used to obtain the warning order are not followed exactly, then the warning order is defective, and service is never accomplished.  For this reason, in Self v. Hustead, the default judgment was set aside, and all proceedings related to the case were held to be void.  In other words, the original winner—the Plaintiff, became the loser.  Since the default judgment was set aside as void, it is treated as if it never happened. 


To avoid this result, the attorney for the plaintiff must always make a diligent attempt to locate the defendant, and should document all attempts. Through a diligent search, he may even locate the defendant, and be able to serve him with actual service of the complaint and summons.


C. Michael Daily is an attorney with the long-established law firm of Daily & Woods, P.L.L.C. and is licensed to practice in Arkansas, Oklahoma, North Dakota and Wyoming. C. Michael Daily can be contacted by telephone at 479-242-3953, by email at mdaily@dailywoods.com, or by regular post at 58 South 6th Street, Fort Smith, Arkansas 72902.  

C. Michael Daily accepts civil litigation, appeals, oil, gas, mineral, probate cases, and other matters in all cities in Arkansas, Oklahoma, North Dakota and Wyoming.  You can follow C. Michael Daily via social network using any of the social network links in the right hand column of the page.  


Disclaimer:  This blog is for informational purposes, is certainly not to be considered legal advice and is absolutely not a substitute for any of the benefits that are associated with the attorney-client relationship.

Tuesday, February 21, 2017

The Arkansas Bar Association's 56th Annual Natural Resources Law Institute, February 23-25th






Daily & Woods, P.L.L.C. is proud to once again sponsor the 56th Annual Arkansas Bar Association's Natural Resources Law Institute in Hot Springs, Arkansas.  The institute is the "must attend" event for anyone interested in the Arkansas oil and gas industry.

The Natural Resource Law Institute will include social events and industry meetings beginning at 5:00 p.m. on February 23rd, followed by CLE courses on the mornings of February 24th-25th.  Daily & Woods, P.L.L.C. partner Thomas A. Daily, will kick off the CLE portion of the event by providing an update of recent developments in Arkansas oil and gas law.

Make arrangements to join us in Hot Springs.  Registration can be made by contacting the Arkansas Bar Association.

C. Michael Daily is an Arkansas oil and gas law attorney with the long-established law firm of Daily & Woods, P.L.L.C. and is licensed to practice in Arkansas, Oklahoma, North Dakota and Wyoming. C. Michael Daily can be contacted by telephone at 479-242-3953, by email at mdaily@dailywoods.com, or by regular post at 58 South 6th Street, Fort Smith, Arkansas 72902.  

C. Michael Daily accepts clients in all cities in Arkansas, including Fort Smith, Fayetteville, Springdale, Bentonville, Lowell, Rogers, and Bella Vista. You can follow C. Michael Daily via social network using any of the social network links in the right hand column of the page.  

Disclaimer:  This blog is for informational purposes, is certainly not to be considered legal advice and is absolutely not a substitute for any of the benefits that are associated with the attorney-client relationship. Your situation is unique--if you need an attorney, contact C. Michael Daily for assistance.

Wednesday, January 11, 2017

What Do Prostitution and the Failure to Pay Rent Have In Common?

C. Michael Daily is a business law attorney with the long-established law firm of Daily & Woods, P.L.L.C. and is licensed to practice business law and real estate law in Arkansas, Oklahoma, North Dakota and Wyoming. C. Michael Daily can be contacted by telephone at 479-242-3953, by email at mdaily@dailywoods.com, or by regular post at 58 South 6th Street, Fort Smith, Arkansas 72902.  

Arkansas is the only state to criminalize the failure to pay rent.  I'll just leave that sentence here for you to re-read in a moment.

If a tenant enters into a residential lease with his landlord, he is always contractually required to pay rent in exchange for a place to live. In simplest terms, the parties have a private rental agreement.  In most states, if the tenant breaches this agreement, the landlord has a right to initiate eviction proceedings, and can pursue civil remedies and collect damages in the form of back rent and actual damage to the premises.  A prevailing party in such a lawsuit can often recover his attorney's fees.

All of the above is true in Arkansas, however, the landlord also has another remedy he can pursue. The landlord has the right to retain the taxpayer-funded prosecuting attorney to enforce a private landlord-tenant agreement in furtherance of an eviction and seek criminal penalties against the tenant.  Under current law, the failure to pay rent will currently subject a tenant to the following:
  1. Eviction;
  2. A fine of $25.00 per day for each day the tenant fails to vacate the premises; 
  3. A criminal conviction in the form of a Class B misdemeanor.  Class B misdemeanors carry fines of up to $1000, and up to 90 days in jail. See Ark. Code Ann. 18-16-101
Now re-read that first sentence.  No other state has a similar law.  For reference, prostitution is also a Class B misdemeanor. Is the Arkansas legislature trying to tell us that prostitution and the failure to pay rent are comparable offenses?  

Newly introduced Senate Bill 25 attempts to "clarify" the existing law by eliminating provisions related to the deposit of disputed rent and defining the criminal offence as a Class B misdemeanor.  It does not decriminalize the failure to pay or vacate, however, as other portions of the statute still define the failure to pay and vacate as a misdemeanor offense.  In essence, this token bill does nothing to clarify, modernize, or otherwise improve Arkansas law.   

Here's the often discovered "rub" in landlord-tenant evictions:  it creates a downward spiral.  If a tenant cannot afford to pay rent, he also cannot afford to pay a fine of $25.00 per day; or the additional $1000.00 fine associated with a criminal conviction.  A criminal conviction will certainly ruin the chances the tenant may have of obtaining or maintaining gainful employment, where said tenant could earn a wage to pay his rent.  Nevermind the court costs, and attorneys fees he also faces.

There are other social issues to consider.  Do our prosecutors even want these cases?  Why should citizens bear the expense associated with prosecuting a private landlord-tenant agreement?  I'd be interested to hear your thoughts.   

C. Michael Daily accepts clients in all cities in Arkansas, including Fayetteville, Springdale, Bentonville, Lowell, Rogers, and Bella Vista. You can follow C. Michael Daily via social network using any of the social network links in the right hand column of the page.  Disclaimer:  This blog is for informational purposes, is certainly not to be considered legal advice and is absolutely not a substitute for any of the benefits that are associated with the attorney-client relationship. Your situation is unique--if you have an Arkansas business law question, you can contact C. Michael Daily.