Utilicom Supply Assocs., LLC. v. Terra Tech, Inc.

360 Ga.App. 509

861 S.E.2d 449

UTILICOM SUPPLY ASSOCIATES, LLC.

v.TERRA TECH, INC.

A21A0225

Court of Appeals of Georgia.

July 2, 2021

Smith Gambrell & Russell, Jason Southerland Bell, Steven Anthony Vickery, Atlanta, for Appellant.

Smith Conerly, Charles Samuel Conerly, for Appellee.

Rickman, Chief Judge.

In this interlocutory appeal, Utilicom Supply Associates, LLC, appeals from the trial court's order setting aside a default judgment in Utilicom's action against Terra Tech, Inc. The trial court offered two grounds for its decision: it concluded that service of process upon Terra Tech was insufficient under OCGA § 9-11-4 (e) (1) and, alternatively, it exercised its discretion to set aside the judgment within the same term of court that it had been entered. Because the trial court had the inherent authority in its discretion to set aside the default judgment, we affirm.

Under Georgia law, a trial court's power to set aside its own judgments during the same term of court is extensive.

A court has plenary control of its judgments, orders, and decrees during the term at which they are rendered, and may amend, correct, modify, or supplement them, for cause appearing, or may, to promote justice, revise, supersede, revoke, or vacate them, as may, in its discretion seem necessary.

(Citation and punctuation omitted.) Lemcon USA Corporation v. Icon Technology Consulting, Inc. , 301 Ga. 888, 891, 804 S.E.2d 347 (2017) ; see Pope v. Pope , 277 Ga. 333, 334, 588 S.E.2d 736 (2003) ("During the term in which a judgment is entered, a trial court has plenary control over it and has the discretion to set aside the judgment ... for the purpose of promoting justice.") (citations and punctuation omitted); see also OCGA § 15-1-3 (6). While the discretion to set aside a judgment is not without limits and should be exercised "for some meritorious reason," it is within the trial court's discretion to determine what amounts to "a meritorious reason" for that purpose. Pope , 277 Ga. at 334, 588 S.E.2d 736 ; see also Holcomb v. Trax, Inc. , 138 Ga. App. 105, 107, 225 S.E.2d 468(1976) (noting further that the question is not whether the order contains a "meritorious reason," but whether any "meritorious reason" is shown in the record). This Court may reverse that discretion only if it is manifestly abused. See Pope , 277 Ga. at 334, 588 S.E.2d 736 ; Holcomb , 138 Ga. App. at 107, 225 S.E.2d 468.

The record shows that Utilicom is a Georgia company in the business of selling communication and utility related products. In March 2018, Terra Tech submitted a credit application form to establish an account with Utilicom. The form was completed by Terra Tech's owner and included an e-mail address, phone number, and specific address in Concord, North Carolina. Throughout the duration of the parties’ relationship, Utilicom shipped materials to and billed Terra Tech using the Concord, North Carolina address.

On June 11, 2019, Utilicom filed a complaint against Terra Tech asserting an action on open account and claims for breach of contract, unjust enrichment, attorney fees and costs, and expenses of litigation. The complaint involved the same materials and invoices that had been sent to Terra Tech at the Concord, North Carolina address.

At the time the complaint was filed, Terra Tech's most recent annual filing with the Secretary of State of Georgia listed a specific address in Cumming, Georgia as the location of both its registered agent and its principal office. But neither Terra Tech's registered agent nor its principal office was located at that address in 2019.

On August 23, 2019, Utilicom filed a proof of service of process with the trial court, asserting that it had effected substitute service of process on Terra Tech via Georgia's Secretary of State pursuant to OCGA § 9-11-4 (e) (1). The proof of service included an affidavit from Utilicom's counsel, who averred, among other things, that he had been unable to locate and effect service on a registered agent at the Cumming, Georgia address listed in Terra Tech's annual filing, but that he had sent the summons and complaint via statutory overnight delivery to that address. Counsel further asserted that he was "not aware of a last known address of a known officer of Terra Tech, Inc."

Terra Tech did not answer the complaint, and on October 23, 2019, Utilicom moved for the entry of a default judgment against it. The trial court entered a default judgment on December 12, 2019.

On January 27, 2020, Terra Tech moved to set aside the default judgment under OCGA § 9-11-60 (d) (1), arguing that the trial court lacked jurisdiction over it because Utilicom had not perfected service of process. In the alternative, Terra Tech asserted that the trial court had the discretion within the same term of court to set aside the judgment. Terra Tech maintained that Utilicom's attempt to serve it through the Secretary of State was premature because Utilicom had not attempted service at Terra Tech's last known address in Concord, North Carolina. With its motion, Terra Tech included an affidavit from its owner that included the credit application form it had submitted to Utilicom with the Concord, North Carolina address, and each of the invoices forming the basis of the complaint that listed the North Carolina address as the "Bill To" and "Ship To" address. Additionally, the affidavit included a demand letter that Utilicom's counsel had sent to Terra Tech's owner at the Concord, North Carolina address in May 2019, prior to Utilicom's filing of the lawsuit. Terra Tech stated that it had no knowledge of the lawsuit or the default judgment until it received a letter from its bank at the Concord, North Carolina address informing it that the bank had been served with legal papers requiring it to restrict Terra Tech's accounts.

Utilicom opposed the motion, arguing that because Terra Tech did not have a registered agent to serve in Georgia, Utilicom had effected substituted service on Terra Tech through the office of the Secretary of State, OCGA § 9-11-4 (e) (1) (A). Utilicom further asserted that even if substituted service of process was insufficient, it effectively served Terra Tech under the Georgia Business Corporation Code, OCGA § 14-2-504.¹

The trial court granted Terra Tech's motion to set aside the default judgment. In its order, the court concluded that because Utilicom "had actual knowledge of a valid address, or at least a last known address, for [Terra Tech] and one of its officers" – namely the Concord, North Carolina office – but failed to send the summons and a copy of the complaint to that address, service was insufficient under OCGA § 9-11-4 (e) (1).² As an alternative basis for its holding, the trial court expressly stated: "The Court further notes that it has the power within the same term of court during which the Judgment was entered to set aside the Judgment in the exercise of its discretion.... In the exercise of its discretion, the Court further finds that the Judgment should be vacated and set aside."

Utilicom argues the trial court erred in holding that service of process was insufficient. We need not reach that issue, however, because the trial court had the inherent power within its discretion to set aside the default judgment entered in the same term of court. See Pope , 277 Ga. at 334, 588 S.E.2d 736 ; Holcomb , 138 Ga. App. at 107, 225 S.E.2d 468.

In its order, the trial court expressly found that Utilicom "had actual knowledge of a valid address, or at least a last known address for [Terra Tech] and one of its officers" and yet failed to send the summons and a copy of the complaint to that address. The record fully supports that finding, and the trial court did not manifestly abuse its discretion by concluding that those facts presented a meritorious reason for setting aside the default judgment. See P.H.L. Development Corp. v. Smith , 174 Ga. App. 328, 328 (1), 329 S.E.2d 545 (1985) (holding that implicit in the trial court's ruling was "[the] finding of a meritorious reason, the promotion of justice, for exercising its inherent power to set aside the default judgment"); see also Pope , 277 Ga. at 334, 588 S.E.2d 736 ; Holcomb , 138 Ga. App. at 107, 225 S.E.2d 468. This is particularly true in light of the policy of our state that, "whenever possible[,] cases should be decided on their merits[,] for default judgment is not favored in law." (Citation and punctuation omitted.) Gilliam v. Love , 275 Ga. App. 687, 688, 621 S.E.2d 805 (2005) (recognizing, while discussing the opening of a default judgment under OCGA § 9-11-55, that "[o]ur courts have expressed a policy of liberality toward motions for relief from entry of default and have resolved doubts in favor of the party seeking relief so that the case can be heard on the merits.") (citation and punctuation omitted); see also Bowen v. Savoy , 308 Ga. 204, 209, 839 S.E.2d 546 (2020).

We simply do not agree with the dissent's position that no "meritorious reason" exists to justify the trial court's exercise of its discretion, particularly when Georgia law also gives the trial court the discretion to determine what constitutes a "meritorious reason" in this context. See Pope , 277 Ga. at 334, 588 S.E.2d 736 ; see also P.H.L. Development Corp. , 174 Ga. App. at 328 (1), 329 S.E.2d 545 ("The promotion of justice is a meritorious reason which will support the trial court's exercise of its inherent power to set aside a judgment.").

Judgment affirmed.

Senior Appellate Judge Herbert E. Phipps concurs. McFadden, P. J., dissents.

McFadden, Presiding Judge, dissenting.

Citing the trial court's inherent power to set aside orders during the same term of court, the majority affirms the set aside of the default judgment without addressing whether or not Terra Tech received service of process and is currently in default. But Terra Tech is in default, because Utilicom effected service of process under the Georgia Business Corporation Code. Moreover, Terra Tech has...