McCulley v. Brooks & Co. General Contractors, Inc., 816 S.E.2d 270, 295 Va. 583 (2018)

July 19, 2018 · Supreme Court of Appeals of Virginia · Record No. 171117
816 S.E.2d 270, 295 Va. 583

COLIN MCCULLEY
v.
BROOKS & CO. GENERAL CONTRACTORS, INC.

Record No. 171117

Supreme Court of Virginia.

JULY 19, 2018

Richard T. Booker (McDonald, Sutton & DuVal, on brief), Richmond, for appellant.

Patrick C. Henry, II (Bradley P. Marrs ; Marrs & Henry, on brief), Richmond, for appellee.

PRESENT: All the Justices

OPINION BY JUSTICE D. ARTHUR KELSEY

In this case, a landlord obtained a default judgment against a commercial tenant and its guarantor for unpaid rent. The judgment was void as to the guarantor, however, because the landlord had failed to properly serve the complaint on him. Despite this fact, the circuit court found that the guarantor had entered a general appearance during post-judgment enforcement proceedings and thereby had waived any objection to the validity of the default judgment. We disagree and reverse.

I.

In 2013, Brooks & Co. General Contractors, Inc. ("Brooks & Co.") leased office and warehouse space to Plastic Lumber & Outdoor, LLC ("Plastic Lumber"). Colin McCulley personally guaranteed Plastic Lumber's lease obligations. In May 2016, Brooks & Co. filed a complaint against Plastic Lumber and McCulley for unpaid rent, utilities, late fees, interest, and attorney fees and costs.

Brooks & Co. served process on McCulley by posting it to his front door pursuant to Code § 8.01-296(2)(b), see J.A. at 68, but the record fails to demonstrate that Brooks & Co. followed the additional requirements of that statute to mail a copy of the process to McCulley 10 days before obtaining a default judgment and to file a certificate of mailing in the circuit court clerk's office, see id. at 95. After neither Plastic Lumber nor McCulley filed responsive pleadings, Brooks & Co. obtained a default judgment against both defendants. The circuit court entered the default judgment on July 7, 2016.

On August 24, 2016, the circuit court clerk issued a summons commanding McCulley to appear before a commissioner in chancery on September 15 to answer debtor's interrogatories. McCulley's counsel thereafter contacted the commissioner and successfully requested that the date be rescheduled to September 27. On September 19, McCulley filed a motion to vacate the default judgment in the circuit court, the first sentence of which reads:

COMES NOW COLIN MCCULLEY by counsel, MAKING A SPECIAL APPEARANCE FOR THE SOLE PURPOSE OF CONTESTING THIS COURT'S EXERCISE OF PERSONAL JURISDICATION [sic] BUT NOT OTHERWISE SUBMITTIN
*272G TO THE COURT'S PERSONAL JURISDICATION [sic], pursuant to Virginia Code § 8.01-428(A) and respectfully prays that this Honorable Court will vacate the Default Judgment ... as the same is a void judgment.

J.A. at 65. The motion asserted that Brooks & Co. had failed to properly serve the complaint, thereby depriving the circuit court of personal jurisdiction over McCulley, and that the default judgment was therefore void. See id. at 65-67. McCulley concluded his motion by reiterating that he had "made this SPECIAL APPEARANCE for the sole purpose of contesting this Court's exercise of personal jurisdiction over him." Id. at 67. Brooks & Co. did not file any written response to the motion and later made no claim that its attempted service of process was valid.

At some point prior to September 27, 2016, McCulley's counsel advised opposing counsel that he would ask the commissioner to stay the debtor's interrogatories until the circuit court had an opportunity to rule on his motion to vacate the default judgment. See id. at 85, 90. On September 26, the day before the rescheduled meeting at the commissioner's office, Brooks & Co.'s counsel emailed his response: "There is no legal basis on which to stay the interrogatories, as such, I would object to the seeking of any stay of collection proceedings, as the judgment is final."Id. at 90. A later email from Brooks & Co.'s counsel to the commissioner confirmed that McCulley had made the stay request and that the commissioner had ultimately rejected it. See id. at 91-92.

The debtor's-interrogatory proceedings continued for several months. After an order of production directed to McCulley went unanswered, Brooks & Co.'s counsel requested that the commissioner issue a show-cause order demanding compliance upon penalty of being held in contempt. See id. The commissioner responded by instructing the parties that "[a]ny enforcement action would have to come from the Circuit Court." Id. at 92. He advised them to present the enforcement request "at the same time as the Motion to Vacate [was] heard" in the circuit court. Id.

The circuit court conducted a hearing on McCulley's motion to vacate and ruled that the "initial service" of process on him "was defective" but that "McCulley waived any objection to this defect in service by making a general appearance in this case through his post-judgment participation in Debtor's Interrogatories." Id. at 95. The court's letter opinion, incorporated by reference into its final order, held that a general appearance during enforcement proceedings on a final judgment could effectively waive any claim that the judgment was void ab initio. See id. at 78-82.

II.

On appeal, Brooks & Co. concedes that it failed to certify that it had satisfied the mailing requirement of Code § 8.01-296(2)(b).1 The only issue before us is whether McCulley waived his right to challenge the default judgment as void ab initio by participating in the debtor's-interrogatory proceedings. McCulley argues that he did not waive that right. We agree.

A. GENERAL-APPEARANCE WAIVER

"It is elementary that one is not bound by a judgment in personam resulting from litigation ... to which he has not been made a party by service of process."

*273Zenith Radio Corp. v. Hazeltine Research, Inc. , 395 U.S. 100, 110, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969). "The consistent constitutional rule has been that a court has no power to adjudicate a personal claim or obligation unless it has jurisdiction over the person of the defendant." Id. Consequently, "a judgment against a party not before the court in any way will be as utterly void as though the court had undertaken to act when the subject-matter was not within its cognizance," Blanton v. Carroll , 86 Va. 539, 541, 10 S.E. 329, 329 (1889), "and may be so treated in any proceeding, direct or collateral," Finkel Outdoor Prods., Inc. v. Bell , 205 Va. 927, 931, 140 S.E.2d 695, 698 (1965) (quoting Martin P. Burks, Common Law and Statutory Pleading and Practice § 353, at 667-68 (T. Munford Boyd ed., 4th ed. 1952) ).2

In this context, we mean void ab initio and thus "ex vi termini , a nullity," Ferguson's Adm'r v. Teel , 82 Va. 690, 696 (1886), not merely voidable, see Singh v. Mooney , 261 Va. 48, 51-52, 541 S.E.2d 549, 551 (2001) (distinguishing between judgments that are void ab initio and those that are merely voidable); 1 Henry Campbell Black, A Treatise on the Law of Judgments Including the Doctrine of Res Judicata § 170, at 248-50 (2d ed. 1902) (same).

We have held many times that a party making a general appearance prior to the entry of a final judgment waives any objection to the service of process by voluntarily submitting to the court's jurisdiction over him. See, e.g. , Lyren v. Ohr , 271 Va. 155, 159, 623 S.E.2d 883, 885 (2006) ("A general appearance 'is a waiver of process, equivalent to personal service of process, and confers jurisdiction of the person on the court.' " (citation omitted) ); New River Mineral Co. v. Painter , 100 Va. 507, 509, 42 S.E. 300, 301 (1902) ("It is a well-established rule of practice that by appearing to the action the defendant waives all defects in the process and in the service thereof."); Atlantic & Danville R.R. v. Peake , 87 Va. 130, 140, 12 S.E. 348, 351 (1890) (reiterating the same "well-established rule").

We have never held, however, that a general appearance after the entry of a final judgment retroactively waives an objection to the court's failure to obtain personal jurisdiction prior to the entry of the void judgment.3 And for good reason: A mere general appearance after the entry of a void judgment is too little, too late, to save the judgment. Just as medicine may cure a sick man of a fatal disease but not revive him after his burial, a litigant can "cure" the absence of personal jurisdiction by making a general appearance prior to final judgment but cannot resurrect a void judgment thereafter.

Many courts have adopted this logic;4

*274some have not.5 Agreeing with the former courts, we hold that a general appearance after the entry of a final judgment that is void ab initio because of the absence of personal jurisdiction does not, by itself, convert the prior void judgment into a valid one. Ruling otherwise, as one court succinctly put it, "defies logic and common sense." Abarca v. Henry L. Hanson, Inc. , 106 N.M. 25, 738 P.2d 519, 520 (N.M. Ct. App. 1987).

B. RATIFICATION-EQUITABLE ESTOPPEL

While a mere general appearance, by itself, is not enough to retroactively validate a judgment that is void for lack of personal jurisdiction as a result of defective service, it is possible for a litigant to forfeit the right to make that challenge to the judgment. Under the prevailing view, outlined in the Restatement (Second) of Judgments § 66 (1982), a challenge to an "invalid" default judgment, raised for the first time after entry of the judgment, should be denied if (1) the challenger "had actual notice of the judgment" and ratified it by manifesting "an intention to treat the judgment as valid," and (2) granting relief from the judgment "would impair another person's substantial interest of reliance on the judgment."6

The Restatement recognizes "[t]he apparent anomaly of thus according a 'void' judgment the dispositive effect of a valid judgment" but correctly reframes the issue, not as whether a court can resuscitate a void judgment, but rather, whether a court can equitably estop a challenger from asserting the voidness of the judgment in the first place because of a "contract or concord, express or implied," that adopts the judgment "as a consensual resolution of the parties' rights." Id. cmt. a. This view does not appear to be an innovation by the Restatement authors, as sometimes seems to be the case,7 but rather a historical recognition that "[i]n an earlier era, when law and equity were separately administered, it was possible to say that the judgment remained 'void' but *275that relief would be denied as a matter of the independent jurisprudence of equity." Id.

"As the Restatement points out, the theory is not that a void judgment has somehow become valid, as such; rather, as a result of the parties' conduct in connection with the judgment the judgement debtor is held estopped to assert that invalidity." Katter v. Arkansas La. Gas Co. , 765 F.2d 730, 734 n.8 (8th Cir. 1985) ; see also Lee v. Graber , 170 Colo. 419, 462 P.2d 492, 495 (1969) ("The doctrine of estoppel is not in direct conflict with the rule that a judgment rendered without jurisdiction is void. The purpose of the estoppel is not to give validity to a void decree, but to prevent a party, by reason of his conduct, from asserting the invalidity of such decree."); Leedy v. Leedy , 399 S.W.3d 335, 340 (Tex. App. 2013) ("The application of estoppel in a particular case does not necessarily mean the judgment in question is thereby rendered valid; it simply means that the estopped party will not be heard to assert the judgment's invalidity in order to avoid its provisions.").

The ratification concept of Restatement § 66 parallels historic principles of equitable estoppel.8 In this context, equitable estoppel applies when a party "claim[s] that the court had no jurisdiction" or attempts "to discountenance the validity of its process" yet nonetheless "c[a]me into court and sought and obtained relief through proceedings regularly had therein" and thus "submit[ted] himself to the jurisdiction, and receive[d] benefits from its judgments." 3 Joseph Story, Commentaries on Equity Jurisprudence as Administered in England and America § 2020, at 581 (W.H. Lyon, Jr. ed., 14th ed. 1918).9

We need not expressly adopt or reject the Restatement's view, however, because neither of its two prerequisites is present in this case. First, McCulley never "manifested an intention to treat the judgment as valid," Restatement (Second) of Judgments § 66, at any point before or after filing his motion to vacate. The motion to vacate expressly denied that McCulley was making a general appearance and stated that he was appearing specially to challenge the validity of the default judgment. See J.A. at 65-67. Brooks & Co. emphasizes the fact that McCulley contacted the commissioner in chancery before filing the motion to vacate in a successful effort to reschedule the initial date for the debtor's interrogatories.10 That *276action, however, did not manifest an intention to accept the validity of the default judgment or even hint at an intention to do so.11

An "express reference to the judgment" is insufficient to prove a manifest intention without a similarly clear "acknowledgement of its validity." Restatement (Second) of Judgments § 66 reporter's note to cmt. b. This conclusion follows from the unique nature of the equitable-estoppel rationale:

The essential point is that parties to a dispute may resolve it not only by adjudication but by contract or concord, express or implied by conduct giving rise to an estoppel. Such a concord may be reached not only by direct communication with that purpose in view, but also by manifestation of intention concerning the matter in dispute. A judgment purporting to determine the rights of the parties, though lacking effect of its own force because of invalidity, can thus be adopted as a consensual resolution of the parties' rights. The party who obtained the judgment expresses his assent to the terms by obtaining the judgment; the other party expresses adherence by some act following the judgment in which the judgment is recognized as determinative.

Id. cmt. a; see also id. cmt. b (explaining that, absent equitable reasons justifying estoppel, "silence is not a manifestation of assent" and that "[i]t is not enough that the person against whom the judgment was rendered simply failed to take action to attack the judgment or to protest the fact that it had been rendered"); 3 Story, supra , § 2023, at 582-83 ("For an estoppel to arise from silence, the person upon whom the duty to speak rests must have an opportunity to speak, and knowledge of the circumstances requiring him to speak. In other words, his silence must amount to bad faith; and that, of course, cannot be predicated of silence in regard to a transaction of which one has no knowledge or means of knowledge.").

Nor does this case satisfy the Restatement's second prerequisite. Nothing in the record indicates that granting the motion to vacate "would impair another person's substantial interest of reliance on the judgment." Restatement (Second) of Judgments § 66. There has been no partial enforcement of the void judgment, no sale of debtor assets to others, no seizure of bank accounts or assets, or the like. Our declaration that the default judgment against McCulley is void will affect no third party. The contest appears to be entirely limited to the original parties to the lease dispute. We thus see neither "property interests, interests in status, or interest in repose from legal controversy," nor any other "interests of reliance," id. cmt. c, that would serve to preclude a challenge to this void judgment.12

III.

In sum, the circuit court erred in denying McCulley's motion to vacate the default judgment. Because the judgment was void as to McCulley, we enter final judgment declaring it so and vacate the judgment against him as well as all later orders seeking to enforce it.

Reversed and final judgment.

JUSTICE McCULLOUGH, concurring.

I join the majority's opinion in full. I write separately, however, to highlight the fact *277that this case does not address, much less resolve, whether an appearance made prior to the entry of judgment before someone who is not a judge constitutes a general appearance that waives any defect in personal jurisdiction. A variety of institutional actors perform valuable functions that assist the courts in handling cases, including clerks of court, mediators, commissioners of accounts, and commissioners in chancery. These actors occasionally perform their functions based on an informal local arrangement, or their role can stem from a statutorily sanctioned delegation of judicial power. It may be that appearing before a person who is assisting the court in the dispatch of judicial business constitutes a general appearance that waives defects in personal jurisdiction, or it may be that the law treats such an appearance differently than an equivalent appearance before a court. A future case will have to answer that question.