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By Eric Fanning
I’d hate to be accused to beating a dead horse right off the bat here (no pun intended), but if you’re served with a lawsuit, you gotta show up to court. That’s day one stuff, people. Yet, here we go again!
The parties in this case divorced in 2007. As part of the original divorce decree, they agreed that the defendant, James Billado, would pay the plaintiff, Laura Cramer (formerly Billado) $50,000 to buy out her share of their business. Billado asked the court to set aside the stipulation after he signed it because he found out that Cramer had been stealing money from the business. The court had a hearing and decided that they were both up to some funny business with the books, and at best, Billado turned a blind eye to Cramer’s poor bookkeeping, since he benefited too. So, the court affirmed the order, and Billado was stuck with a $50,000 judgment as part of the divorce.
The divorce judgment went unsatisfied for years, and in 2015, Cramer brought a foreclosure action against Billado after recording the judgment lien in the Bakersfield land records. She couldn’t get proper service on him (which usually means a sheriff physically hands you the summons and complaint), so she got the court’s permission to serve him by alternative means—in this case, by tacking a copy of the summons and complaint to his front door.
Billado didn’t answer the complaint, and so Cramer moved for default judgment. The court granted the default and issued a judgment and decree of foreclosure by judicial sale (this is basically where the court supervises the sale of mortgaged property and makes sure the proceeds are handled properly). The final judgment against Billado, with interest accruing since 2007, came out to a whopping $112,527.23.
Billado asked the court to set aside the judgment because he claims he never saw any pleadings tacked to his house. He also filed a supplemental memorandum laying out his defenses on the merits. They had an evidentiary hearing and the court denied his motion, concluding that the service by tack order was appropriate, and that Billado did not present any meritorious defenses.
Billado asks SCOV to reverse on two grounds: (1) the tack order was an insufficient method of service; and (2) the trial court should have vacated the default judgment because he had defenses to the judgment on the merits.
SCOV is going to give a lot of deference to the trial court, since its job here is mostly to determine if the court’s findings were supported by the evidence. The crux of Billado’s first argument is that service by tack order wasn’t necessary at all because really it should not have been that difficult to find him—he had a “high profile” in the community, he lived in the same place for years, and he owned a local business.
This seems reasonable enough to me, but remember, this is a deferential level of review. Accordingly, SCOV concludes that the court didn’t abuse its discretion. The legal standard the trial court follows in allowing alternative service is Vermont Rule of Civil Procedure 4(d)(1). This requires “due diligence” by the party affecting service. So, if you make attempts to serve the defendant, but can’t find them, then you can move for alternative service. The court needs to be convinced that you really tried to serve the defendant (the sheriff can’t knock once really softly and then say “Oh, well. I guess he ain’t home.”) Billado and the deputy sheriff gave conflicting testimony, and the trial court decided the sheriff was more credible.
SCOV believes the trial court was correct to find that the “due diligence” test was satisfied because Billado actually spoke to a deputy sheriff personally and agreed to come pick up the pleadings at the courthouse. Granted, this is pretty unusual, because usually a defendant is not obligated to agree to travel to the process server to accept service. However, “when a defendant does agree to do so, a court may find that the process server’s reliance on that agreement is consistent with due diligence.” So, in a nutshell, Billado is estopped from claiming faulty service because he knew about the lawsuit and agreed to personally pick up the summons and complaint, but didn’t.
SCOV moves on to consider whether or not the trial court abused its discretion by denying Billado’s motion to set aside the default judgment. Typically, courts prefer to have cases decided on their merits, rather than by default. In this case, however, SCOV agrees with the trial court that default judgment was appropriate.
Billado wants SCOV to reverse because he should be given a fair opportunity to present his defense that Cramer defrauded him when they were in business together. Recall that Cramer and Billado’s divorce happened way back in 2007, and that’s when he first raised the fraud defense to offset the judgment. Since Billado was a party to that action, there was a final judgment on the merits, and he had a fair opportunity to litigate the issue back then, his fraud claim is barred by collateral estoppel, and so he can’t raise it again ten years later. Also, SCOV notes, the statute of frauds for most civil actions is 6 years and Billado is way beyond that.
SCOV affirms, and Billado still has to pay Cramer.
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