Delta Apparel, Inc. v. Farina

Citations: 406 S.C. 257; 750 S.E.2d 615; 2013 WL 5819541; 2013 S.C. App. LEXIS 246Docket: Appellate Case No. 2012-205467; No. 5180

Court: Court of Appeals of South Carolina; October 30, 2013; South Carolina; State Appellate Court

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Daniel G. Farina appeals the trial court's denial of his Rule 60(b), SCRCP motion for relief from judgment, claiming the court lacked personal jurisdiction and that he did not receive proper notice of the initial claim from Delta Apparel, Incorporated (Delta). The court reversed the trial court’s decision. 

Farina was employed by Delta as the general manager of its Ceiba Textiles plant in Honduras. Following a request from the California Franchise Tax Board, Delta withheld a portion of Farina's severance payment after terminating his employment in July 2008. Farina later filed a lawsuit in Honduras for wrongful termination and unpaid severance, resulting in a favorable judgment that Delta appealed. The final ruling affirmed Farina's award, excluding punitive damages, and Delta subsequently paid the judgment.

On May 4, 2010, Delta sought a restraining order in South Carolina to prevent Farina from disposing of the judgment funds, but the court denied this motion during a hearing where Farina was absent despite having consulted an attorney. On the same day, Delta filed a complaint alleging Farina committed fraud and breached his employment agreement. After Farina failed to respond, Delta sought a default judgment. 

Farina filed a motion to dismiss in July 2011, which prompted Delta to notify him of the default judgment hearing. Delta claimed to have served notice through multiple methods, including mailing to his last known address, certified mail, and FedEx with signature confirmation. They argued that Farina had actual notice due to his communications with an attorney regarding the case, asserting that Farina was employed by Delta at all times, regardless of his work location.

Delta submitted an affidavit from employee Deborah Merrill to support its claim for $96,484.14 in damages, asserting that Farina had frequent contact with Delta's Greenville, South Carolina offices. The trial court ruled in favor of Delta. Farina's motion to dismiss, scheduled for a hearing on November 7, 2011, raised five issues against Delta’s claim, including a lack of proper service for a default judgment and the assertion that he had no relationship that could lead to a monetary judgment from a South Carolina Family Court. Farina, who served as General Manager at Delta's Honduran subsidiary, Ceiba Textiles SRL, from October 2006 until June 2008, argued that any labor disputes fell under Honduran jurisdiction. He alleged that Delta was using the South Carolina legal system to harass him, as he could not afford legal representation without risking his job and incurring unexpected expenses. At the hearing, Farina stated he resided in Arizona, worked in northern Mexico, and had not lived in California since April 2010. He claimed he first learned of Delta’s motion for a default judgment in July 2011. Delta denied Farina's allegations and contended that he did not provide valid grounds for relief under Rule 60(b) of the South Carolina Rules of Civil Procedure (SCRCP). Farina believed the restraining order issue was dropped and was unrelated to the South Carolina court. The trial court denied Farina’s Rule 60(b) motion. The standard of review for setting aside a default judgment lies within the trial judge's discretion, with appellate courts reluctant to disturb such decisions unless an abuse of discretion is evident. Farina’s arguments were considered under Rule 60, SCRCP, which allows relief from judgments for specific reasons, including mistakes, newly discovered evidence, or fraud. The analysis of his appeal will follow.

Farina challenges the validity of a default judgment, claiming improper service of the summons and complaint under Rule 60(b)(4), SCRCP, and argues that the trial court wrongly denied his request to vacate the judgment. The court finds otherwise, referencing Rule 4, SCRCP, which requires reasonable notice to defendants. The rule outlines acceptable methods of service, including personal delivery, leaving copies at the defendant's residence, service via registered or certified mail, and commercial delivery services. Effective service is recognized upon receipt confirmation, and a default judgment cannot be entered based solely on this service unless there is proof of delivery acceptance by the defendant. Furthermore, if a delivery receipt is signed by someone unauthorized, the defendant may seek to set aside the judgment. The burden of proof lies with the movant in a Rule 60(b) motion. The court emphasizes that while exact adherence to service rules is not mandated, sufficient compliance must exist for the court to maintain personal jurisdiction and ensure the defendant is notified. An officer's return of service creates a presumption of proper service, which cannot be disputed by mere denial from the defendant. In this case, Delta provided an affidavit confirming service on Farina at his residence, which included first-class mail and notice of a related motion for a restraining order. Despite Farina acknowledging receipt of the restraining order notice, he claimed ignorance of the summons and complaint, asserting they were separate matters. Ultimately, the court concludes that proper service is presumed due to Delta's compliance with service requirements, and Farina's denial of service is insufficient to challenge this presumption.

Farina's last known address in California was corroborated by tax notices from the California Tax Board. To argue he no longer resided there, Farina submitted only an affidavit denying proper service by Delta, along with a claimed Arizona voter registration that was not part of the appeal record. Although Delta also attempted service via first-class mail and FedEx, the court found service valid based on personal delivery to an authorized person at Farina's last known address, leading to the conclusion that the trial court did not err in denying Farina's motion for relief from judgment regarding service of process.

Farina challenged the trial court's personal jurisdiction, asserting that Delta failed to demonstrate sufficient contacts with South Carolina for jurisdiction to exist. He argued that objections to personal jurisdiction must be preserved for appellate review, citing cases that emphasize the need for issues to be raised in lower courts. Despite not explicitly naming the personal jurisdiction doctrine, Farina's arguments were deemed clear enough for the trial court's consideration. His relevant points included a lack of a relationship justifying a judgment in South Carolina, his past employment with Delta in Honduras, and the assertion that any labor disputes were governed by Honduran law. The court noted that both parties discussed specific rather than general jurisdiction, focusing its analysis on specific jurisdiction defined under South Carolina law, which allows for jurisdiction based on a defendant's contacts with the state related to the cause of action.

The determination of personal jurisdiction over a nonresident by a court involves a two-step analysis: first, assessing the applicability of the South Carolina long-arm statute, and second, evaluating whether the nonresident's contacts with South Carolina meet due process requirements. Due process necessitates "minimum contacts" so that maintaining the lawsuit does not violate fair play and substantial justice. The defendant must have sufficient contacts with the forum state to reasonably anticipate being brought into court there.

In this case, Farina signed a contract with Delta, which has its corporate offices in Greenville, South Carolina, potentially implicating the long-arm statute concerning contracts. However, mere entry into a contract or negotiations in South Carolina do not alone establish sufficient minimum contacts. Courts consider the nature of the parties' negotiations, the outcomes anticipated by the parties, the contract terms, and their actual dealings to determine if minimum contacts are established.

Delta contended that personal jurisdiction over Farina existed due to his employment relationship with Delta, a South Carolina corporation, and claimed an ongoing business relationship. Delta supported its assertion with an affidavit from Merrill, who indicated that Delta's CEO and vice president, both located in Greenville, interviewed Farina and discussed job responsibilities and benefits with him. However, the affidavit alone may not suffice to establish the requisite minimum contacts necessary for jurisdiction.

Merrill indicated that Farina was aware of Delta's corporate offices in Greenville and had regular contact with personnel there. However, the California Tax Board sent requests to withhold money from Farina’s paychecks to locations in Duluth, Georgia, where Farina's severance settlement was also executed and filed. Merrill's affidavit lacked specifics about the location of interviews between Farina and Delta's corporate officers, while Delta acknowledged that the interview took place in North Carolina. There was no evidence showing that Farina visited South Carolina for those discussions, nor did his contacts indicate he would reasonably expect to be subject to personal jurisdiction in South Carolina. Consequently, the court found that Farina did not have the minimum contacts for personal jurisdiction, leading to a reversal of the trial court's ruling.

Farina also claimed that the case should be barred by res judicata and collateral estoppel, but these defenses were raised for the first time on appeal and therefore were not preserved for review. The court reaffirmed that affirmative defenses like these must be raised during the trial to be valid on appeal. For an issue to be preserved, it must be timely raised, ruled upon by the trial court, and presented with adequate specificity.

The trial court’s decision was reversed, with judges Huff and Geathers concurring. Farina had previously been awarded $57,984.14 for unpaid severance salaries and $172,055.64 for damages from wrongful termination, totaling thirteen months and twenty days. Although Farina's motion was titled a motion to dismiss, he argued for relief under Rule 60(b) of the South Carolina Rules of Civil Procedure, which the trial court subsequently addressed.