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Fernwalt v. Our Lady of Kilgore

Court of Appeals of Ohio, Seventh District, Carroll

March 31, 2017

ANTHONY R. FERNWALT PLAINTIFF-APPELLEE
v.
OUR LADY OF KILGORE, et al. DEFENDANTS-APPELLANTS

         Civil Appeal from the Court of Common Pleas of Carroll County, Ohio Case No. 13 CVH 27615

          For Plaintiff-Appellee: Atty. Douglas C. Bond Morello & Bond, LTD.

          For Defendant-Appellant: Atty. Gary Johnson Atty. Matthew Miller Atty. Shawn W. Maestle Weston Hurd LLP.

          JUDGES: Hon. Cheryl L. Waite Hon. Gene Donofrio Hon. Mary DeGenaro

          OPINION

          WAITE, J.

         {¶1} Appellant Our Lady of Kilgore appeals the judgment of the Carroll County Court of Common Pleas denying Appellant's motion to vacate default judgment in favor of Appellee, Anthony R. Fernwalt in this action seeking quiet title in a parcel of property. Appellant raises several issues on appeal, including: whether the trial court obtained jurisdiction over Appellant due to Appellee's failure to perfect service of the complaint; whether the trial court erred in denying Appellant's motion to strike Appellee's memorandum in opposition to Appellant's motion to vacate default judgment; whether the trial court erred in adopting Appellee's proposed findings of fact and conclusions of law; and whether the trial court erred in denying Appellant's motion to vacate the default judgment. Based on this record, Appellant's assignments of error regarding service and the motion to strike are without merit and are overruled. However, Appellant's assignment of error regarding the trial court's findings of fact and conclusions of law and Appellant's motion to vacate are sustained. The trial court's decision is affirmed in part and reversed and vacated in part. The matter is remanded for further proceedings.

         Factual Background

         {¶2} In 1997, Appellee found himself a fugitive of the law, attempting to leave the country and flee to Canada. He had a relationship with a priest, Father John Steger ("Steger"). Appellant transferred real property he owned in Carroll County to Steger. This property is located at 4525 Post Rd. SE, Jewett, Ohio and is at the heart of this appeal.

         {¶3} Steger set up a New York not-for-profit religious corporation, Our Lady of Kilgore, and Appellee transferred the property to the religious corporation. A deed recorded on June 11, 1997 states that Appellee transferred the property to Appellant, Our Lady of Kilgore ("Kilgore"), a New York religious not-for-profit organization located in Rochester, New York with a mailing address of 4100 Lyell Road, Gates, New York, 14606. According to the record, at the time of the real estate transaction and until January 29, 2008, Steger was pastor of St. Jude Church. St. Jude Church is also registered as a New York religious not-for-profit corporation with an address listed as 4100 Lyell Road, Rochester, New York 14606. Neither party disputes that Gates is a suburb of Rochester. Steger resigned from St. Jude Church as pastor on January 29, 2008 and died on March 4, 2008.

         {¶4} In August of 2013, Appellee filed a complaint to quiet title and an action for partition with the Carroll County Court of Common Pleas, seeking to set aside the real estate transaction. Appellee claimed it was an invalid transfer due to defects with the notarization. Appellee also claimed he was under undue influence as a result of being a fugitive and that Steger took advantage of his agitated state. In his original complaint, Appellee also listed as party defendants several of his family members. These claims were never pursued and the familial defendants are not parties to this appeal.

         {¶5} Appellant failed to file a timely answer. After a default judgment was ordered in favored of Appellee, Appellant subsequently filed a notice of appearance and motion to vacate default judgment. Appellant alleged, among other things, that default was improper because the property had been properly transferred to Appellant and the parcel contained a natural spring which possessed healing powers.

         Procedural Background

         {¶6} Appellee filed a complaint to quiet title and an action for partition on August 5, 2013. A summons and complaint was issued to Appellant, a New York religious, not-for-profit corporation located at 4100 Lyell Road, Rochester, New York, 14606. Other defendants were served but, as noted, are not relevant to this appeal. On August 19, 2013, Appellant's service was returned as not deliverable as addressed, unable to forward, and with unsuccessful service. That same day a notice of failure of service was issued to Appellee.

         {¶7} On September 3, 2013, the court received a letter from counsel representing St. Jude Church, 4100 Lyell Road, Gates, New York 14606. The letter stated that Appellant was not located at that address and that it was solely the address of the church. The letter also revealed that Rev. John J. Steger ("Steger") had been the parish priest at St. Jude and was listed as incorporator of Our Lady of Kilgore with the New York Secretary of State using the St. Jude address. In the letter counsel also stated that St. Jude was not affiliated with Our Lady of Kilgore and had no knowledge of that entity's status.

         {¶8} Pretrials were held on November 18, 2013 and January 29, 2014. On February 3, 2014, Appellee filed an affidavit for service on Appellant by publication along with a legal notice pursuant to Civ.R. 4.4 and R.C. 2703.14. The notice indicated the last day to answer the complaint was April 17, 2014 and that bench trial was set for May 19, 2014.

         {¶9} Bench trial occurred on May 19, 2014 as scheduled. The trial court issued a judgment entry dated that same day, invalidating and holding null and void the deed that had transferred property to Appellant. The trial court found that the deed was procured by undue influence. In this entry, the court also quieted title of the property in the name of Appellee and held that Appellant had no interest in the subject property. On May 20, 2014, the trial court judgment entry was mailed to Appellant at 4100 Lyell Road, Rochester, New York, 14606.

         {¶10} On September 19, 2014, about four months later, counsel for Appellant filed a notice of appearance. On December 23, 2014, Appellant filed a motion to vacate the default judgment. On January 7, 2015, the trial court sent a notice scheduling pretrial on February 9, 2015. On January 9, 2015, Appellant requested oral argument which was held on February 9, 2015. At that hearing, an evidentiary hearing was scheduled for April 20, 2015.

         {¶11} On April 20, 2015, both parties were present and represented by counsel. As the court ordered the parties to submit proposed findings of fact and conclusions of law, these were filed May 8, 2015. In a judgment entry dated July 10, 2015, the trial court denied Appellant's motion to vacate the default judgment and indicated it was a final appealable order. Appellant filed this timely appeal, presenting four assignments of error.

         ASSIGNMENT OF ERROR NO. 1

         THE TRIAL COURT ERRED IN FINDING THAT PROPER SERVICE HAD BEEN OBTAINED ON OUR LADY OF KILGORE AND IN GRANTING DEFAULT JUDGMENT IN FAVOR OF APPELLEE.

         {¶12} Appellant argues the trial court did not obtain jurisdiction over Our Lady of Kilgore because service was never perfected by Appellee. Appellant claims that Appellee did not utilize the appropriate method for serving an agent of a foreign corporation under Ohio Civ.R. 4.1(A)(1).

         {¶13} Due process requires that service of process be accomplished in a manner "reasonably calculated, under all the circumstances, to apprise [interested parties] of the pendency of the action." Samson Sales, Inc. v. Honeywell, Inc., 66 Ohio St.2d 290, 293, 421 N.E.2d 522 (1981). The trial court's decision regarding the validity of service should be upheld absent an abuse of discretion.

         {¶14} Civ.R. 4.2 delineates the potential recipients and proper means of service of process in the State of Ohio:

Service of process pursuant to Civ.R. 4 through Civ.R. 4.6, except service by publication as provided in Civ.R. 4.4(A), shall be made as follows:
(F) Upon a corporation either domestic or foreign: by serving the agent authorized by appointment or by law to receive service of process; or by serving the corporation at any of its usual places of business by a method authorized under Civ.R. 4.1(A)(1); or by serving an officer or a managing or general agent of the corporation[.]

         {¶15} Civ.R. 4.4(A)(1) details the requirements for service of process by publication where a defendant's residence cannot be discovered:

Before service by publication can be made, an affidavit of a party or his counsel shall be filed with the court. The affidavit shall aver that service of summons cannot be made because the residence of the defendant is unknown to the affiant, all of the efforts made on behalf of the party to ascertain the residence of the defendant, and that the residence of the defendant cannot be ascertained with reasonable diligence.

         {¶16} R.C. 2703.14, paragraphs (A) through (L) inclusive, sets forth twelve separate, specific grounds for service by publication. Specifically, R.C. 2703.14 states:

(A) In an action for the recovery of real property or of an estate or interest in real property, when the defendant is not a resident of this state or his place ...

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