Dairyland Insurance Company v. Jarman

#24461-rev & rem-SLZ

2007 SD 110

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

* * * *

DAIRYLAND INSURANCE
COMPANY, Plaintiff and Appellee,

v.

BRETT JARMAN, Defendant and Appellant.

* * * *

APPEAL FROM THE CIRCUIT COURT OF
THE SEVENTH JUDICIAL CIRCUIT
FALL RIVER COUNTY, SOUTH DAKOTA

* * * *

HONORABLE THOMAS L. TRIMBLE
Judge

* * * *

ROBERT B. ANDERSON of
May, Adam, Gerdes & Thompson, LLP Attorneys for plaintiff
Pierre, South Dakota and appellee.

PATRICK M. GINSBACH of
Farrell, Farrell & Ginsbach, PC Attorneys for defendant
Hot Springs, South Dakota and appellant.

* * * *
ARGUED ON AUGUST 28, 2007

OPINION FILED 10/31/07
#24461

ZINTER, Justice

[¶1.] Dairyland Insurance Company sought enforcement of a Wyoming

default judgment obtained against Brett Jarman. The circuit court ordered

enforcement over Jarman’s personal jurisdiction defense. We reverse and remand

for a determination of whether Dairyland’s Wyoming counsel exercised due

diligence in serving Jarman under that state’s non-resident automobile jurisdiction

statute.

I.

[¶2.] In 2003, Jarman, a resident of South Dakota, was driving a car in

Wyoming. Leona Farrell was a passenger. They unexpectedly encountered black

ice, the vehicle slid off the road, and Farrell was injured. The Wyoming Highway

Patrol investigated the accident, and Jarman’s address was recorded in the accident

report. That address was: P.O. Box 113, Hot Springs, SD 57747.

[¶3.] Farrell’s insurance company, Dairyland, paid her uninsured motorist

benefits. It then brought suit against Jarman in Wyoming to recover those benefits.

Dairyland asserted personal jurisdiction under Wyoming’s non-resident automobile

jurisdiction statute.

[¶4.] Pursuant to that statute, Dairyland’s Wyoming counsel served the

Wyoming Secretary of State with a summons, complaint and jury demand. He also

mailed a copy of those documents to Jarman by certified mail. Instead of sending

the documents to Jarman’s P.O. Box address in Hot Springs listed on the accident

report, however, Dairyland sent the documents to the following address: 502 8th

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Street, Edgemont, SD 57735. The documents were subsequently returned to

Dairyland marked, “Refused.”

[¶5.] Jarman did not answer or appear in the Wyoming action, and

Dairyland obtained a default judgment. Dairyland’s Wyoming counsel then filed

the judgment with the Fall River County Clerk of Courts and sought to have it

enforced. Jarman responded with an order to show cause 1 “why the Filing of

Foreign Judgment and Request for Writ of Execution should not be dismissed[.]”

Jarman contended that although the envelope was marked “Refused,” he was out-

of-state at the time and never received the documents. Both parties filed affidavits

relating their factual positions. After a hearing, but without trial, the circuit court

denied the motion to dismiss and granted enforcement of the judgment.

Notwithstanding Jarman’s factual assertions, the circuit court concluded, “[t]o

accept Jarman’s argument in this case that Wyoming jurisdiction could be defeated

by refusal of the certified mail from Dairyland does not constitute a proper

application of the law under the circumstances which exist.”

[¶6.] Jarman appeals contending that the judgment is not subject to

enforcement because the Wyoming court never obtained personal jurisdiction under

the non-resident automobile statute. There is no dispute that if the rendering state

did not have personal jurisdiction, South Dakota can not recognize the judgment.

See Baldwin v. Heinold Commodities, Inc., 363 NW2d 191 (SD 1985). This

1. We treat this pleading as a motion.

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jurisdictional issue is a question of law that we review de novo. Grajczyk v. Tasca,

2006 SD 55 ¶8, 717 NW2d 624, 627.

II.

[¶7.] Wyoming’s procedure to obtain service of process over a non-resident

motorist is found in Wyo. Stat. 1-6-301(a). This statute provides, in relevant part:

The . . . operation of a motor vehicle on any street or highway
within Wyoming by any person upon whom service of process
cannot be made within Wyoming either personally or by service
upon a duly appointed resident agent is deemed an appointment
of the secretary of state of Wyoming as the operator’s lawful
attorney upon whom may be served all legal processes in any
proceeding against him . . . due to damage or injury to person or
property resulting from the operation of a motor vehicle on the
streets or highways within this state. Such operation
constitutes the operator’s agreement that any process served in
any action against him or his personal representative has the
same legal force and validity as if served upon him or his
personal representative personally within this state. Service
shall be made by serving a copy of the process upon the
secretary of state or by filing such copy in his office[.] Within
ten (10) days after the date of service, notice of such service and
a copy of the process shall be served upon the defendant . . .
either personally or by certified mail addressed to the last
known address of the defendant[.] 2

2. The Wyoming statute is similar to South Dakota’s non-resident motorist
statutes: SDCL 15-7-6 and SDCL 15-7-7. SDCL 15-7-6 provides in part:

The use and operation by a resident of this state or the resident’s
agent, or by a nonresident or the nonresident’s agent of a motor vehicle
within the State of South Dakota, shall be deemed an irrevocable
appointment by the resident or the resident’s agent. . . of the secretary
of State of South Dakota to be his or her true and lawful attorney upon
whom may be served all legal process in any action or proceeding
against the resident or nonresident. . . .

SDCL 15-7-7 provides in part:

Service of process as authorized by §15-7-6 shall be made by serving a
copy thereof upon the secretary of state, or by filing the copy in the
(continued . . .)
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Wyo. Stat. § 1-6-301(a) (1977).

[¶8.] In addition to the procedural requirements of this statute, Wyoming

requires a showing of due diligence in serving the notice of service on the defendant.

Colley v. Dyer, 821 P2d 565, 568 (Wyo 1991) (interpreting the statute “to implicitly

require the plaintiff to exercise due diligence in attempting to locate an absent

defendant”). The due diligence showing is more than perfunctory:

The diligence to be pursued and shown . . . is that which is
reasonable under the circumstances and not all possible
diligence which may be conceived. Nor is it that diligence which
stops just short of the place where if it were continued might
reasonably be expected to uncover an address . . . of the person
on whom service is sought. . . . Due diligence must be tailored to
fit the circumstances of each case. It is that diligence which is
appropriate to accomplish the end sought and which is
reasonably calculated to do so. 3

____________________
(. . . continued)
office of the secretary of state, together with payment of a fee of ten
dollars. The service shall be sufficient service upon the absent resident
or the nonresident or the resident's or nonresident's personal
representative if the notice of the service and a copy of the process are
within ten days thereafter sent by mail by the plaintiff to the
defendant at the defendant’s last-known address and that the
plaintiff’s affidavit of compliance with the provisions of this section is
attached to the summons.

3. We require a similar showing to establish due diligence in constructive
service cases:

before service by publication . . . may be ordered, the party
instituting the litigation must exhaust all reasonable means
available in an effort to locate interested parties to the
litigation[.] Ultimately, ‘[t]he test of the sufficiency of the
showing of due diligence is not whether all possible or
conceivable means of discovery are used, but rather it must be
shown that all reasonable means have been exhausted in an
effort to locate interested parties.’ Therefore:

(continued . . .)
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Id. at 568 (quoting Carlson v. Bos, 740 P2d 1269, 1277 n13 (Utah 1987)).

[¶9.] In Colley, the plaintiff attempted to serve the defendant in person at a

former address. When personal service failed, the plaintiff hired an investigator

who contacted the defendant’s sister. That query rendered no information.

Plaintiff then utilized constructive service under the non-resident motorist statute.

Notice was mailed to the previously used address, but the address did not include

the defendant’s complete address. Based on those facts, the Wyoming Supreme

Court reversed and remanded for an adequate showing of due diligence. Id. at 569.

[¶10.] Dairyland argues that it utilized due diligence because it mailed the

documents to Jarman’s “last known address.” Under Colley, however, Wyoming

counsel’s evidentiary showing of due diligence was inadequate. Additionally,

Jarman’s opposing affidavit raises disputed issues of material fact that should not

have been resolved by motion to dismiss.

[¶11.] With respect to the evidentiary showing, there is no dispute that

Dairyland never sent the documents to the address listed on the accident report,

____________________
(. . . continued)
A diligent search is measured not by the quantity of the search
but the quality of the search. In determining whether a search
is diligent, we look at the attempts made to locate the missing
person or entity to see if attempts are made through channels
expected to render the missing identity. While a reasonable
search does not require the use of all possible or conceivable
means of discovery, it is an inquiry that a reasonable person
would make, and it must extend to places where information is
likely to be obtained and to persons who, in the ordinary course
of events, would be likely to have information of the person or
entity sought.
(continued . . .)

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and according to Jarman’s affidavit, the address on his driver’s license. Dairyland

sent the documents to the 502 8th Street address in Edgemont. According to

Jarman’s affidavit, however, there was no street delivery of mail in Edgemont.

Rather, all mail was received through the post office. Additionally, the documents

were sent to Edgemont instead of Hot Springs.

[¶12.] Dairyland responds that it obtained this address through

“investigat[ion].” Nothing in Wyoming counsel’s affidavit, however, indicated how

he determined that 502 8th Street, Edgemont was Jarman’s last known address or

what investigatory steps he took to determine that address. Thus, there are no

underlying evidentiary facts from which the circuit court could determine that the

documents were mailed to Jarman’s last known street address or that 502 8th

Street, Edgemont was ever Jarman’s address.

[¶13.] This Court has previously addressed a similar situation. In Lekanidis

v. Bendetti, 2000 SD 86, 613 NW2d 542, plaintiff’s attorney believed that an

accident report prepared by an officer misspelled the defendant’s city’s name. The

report further contained no zip code for the city. Consequently, counsel looked up

the proper spelling of the city and found the zip code to include on the mailing. The

initial notice and the notice of the hearing on the motion for default judgment were

both sent to the amended address and both were returned marked, “Attempted-Not

____________________
(. . . continued)
In re D.F., 2007 SD 14, ¶9, 727 NW2d 481, 484 (emphasis added) (internal
citations omitted).

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Known.” 4 This Court concluded that the plaintiff had failed to comply with the non-

resident motorist statute by failing to make the necessary due diligence showing to

utilize substitute service of process. Id. at ¶32, 613 NW2d at 549-50. This Court

stated:

Clearly Lekanidis had knowledge that this address was not
Bendetti’s correct address. It certainly did not take Lekanidis
long to find the correct address once the default judgment was
entered. With only minor effort and diligence, Lekanidis could
have discovered the correct address of Bendetti. He could have
utilized the “skip trace” or the name of Bendetti’s insurance
company and policy number listed on the accident report to
locate his current address long before seeking a default
judgment. Based upon this lack of diligence, Lekanidis has
failed to show that he strictly complied with the requirement
under SDCL 15-7-7 by mailing all legal documents to
defendant’s “last known address.”

Id. at ¶32, 613 NW2d at 548-49 (emphasis added). See also Ryken v. State, 305

NW2d 393, 395 (SD 1981) (providing, “it must be shown that all reasonable means

have been exhausted in an effort to locate interested parties.”) (emphasis added).

[¶14.] In this case, Wyoming counsel’s affidavit, although stating that he

exercised due diligence, is conclusionary without any evidentiary detail. The

affidavit describes none of the investigatory steps Wyoming counsel took to

ascertain that Jarman’s last known address was the address he utilized.

[¶15.] Dairyland, however, argues because its letter was marked “Refused,”

as opposed to “Undeliverable” or “Unclaimed,” the service was effective. In its brief,

4. After judgment was entered, counsel performed a “skip-trace” and
determined the defendant’s location. “Skiptracing” is a “[s]ervice which
assists creditors in locating delinquent debtors or persons who have fled to
avoid prosecution.” Black’s Law Dictionary 1387 (6th ed 1990).

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Dairyland contends, “[t]he Postal Service marked the box ‘Refused’ for a reason.”

Dairyland suggests this means that Jarman must have intentionally refused the

mail and therefore the service should be deemed effective. The circuit court agreed,

concluding that Jarman could not evade service by refusing to accept the attempted

service.

[¶16.] According to Jarman’s responsive affidavit, however, he was in

Chicago when delivery of Dairyland’s certified mail would have been attempted at

the Edgemont street address. Moreover, Jarman’s affidavit specifically stated that

he never received the documents. This created a material issue of disputed fact

because Dairyland’s affidavit contains no evidence concerning post office procedure

or protocol for marking a letter “Rejected.” There was also no evidence from a

postal worker that the “Refused” box was checked in this case because Jarman

actually refused to accept delivery of the letter. 5

5. Dairyland relies on Miserandino v. Resort Properties, Inc., 345 Md 43, 59, 691
A2d 208, 215-16 (Md 1997) for the proposition that a letter marked “refused”
is an affirmative refusal by the defendant, and a letter that is not
affirmatively refused is marked “unclaimed.” The Miserandino discussion of
“refused” verses “unclaimed” is, however, dicta because the court’s holding
was that service by first class mail was improper. The Miserandino Court
also noted, “[i]n the case before us, there is no indication that any earlier
attempt of service had been made, or that the defendants were attempting to
avoid or resist service.” Id. at 56, 691 A2d at 214 (emphasis added).

Dairyland also relies on Tate v. Hughes, 255 Ga App 511, 565 SE2d 853
(GaApp 2002). In that case, the nonresident defendant did not claim the
certified mail at her local post office even though postal authorities had
notified her of the mail. Further, unlike Jarman, the defendant in Tate did
not deny having received the notices from postal authorities that the certified
mail had been available for pickup.

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[¶17.] In light of the foregoing disputes of fact, the circuit court erred in

granting enforcement on the ground that Jarman refused delivery of the letter.

Although the use of affidavits is often permissible in deciding motions, “[w]here the

affidavits are so conflicting as to render cross-examination essential, then the

desirability of expeditious procedure must give way to a more formal hearing.”

Matter of Estate of Eberle, 505 NW2d 767, 771 (SD 1993) (citations omitted). In

such cases, “[a]ffidavits, although made under oath, are ordinarily not considered

competent evidence. . . . [They] are unsatisfactory as forms of evidence; they are not

subject to cross-examination, combine facts and conclusions and, unintentionally or

sometimes even intentionally, omit important facts or give a distorted picture of

them.” Id.

[¶18.] In this case, the circuit court erred in deciding this matter on

affidavits. Wyoming counsel’s affidavit was conclusionary with respect to due

diligence and the conflicting assertions in Jarman’s affidavit raise material disputes

of fact about the due diligence exercised by Wyoming counsel. Because the circuit

court incorrectly relied upon affidavits to determine due diligence, including

whether Jarman had effectively refused service, we reverse and remand for a due

diligence hearing. Because we have remanded, we do not reach the parties’

remaining arguments.

[¶19.] GILBERTSON, Chief Justice, SABERS, KONENKAMP, and

MEIERHENRY, Justices, concur.

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