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ADVANCED WALL SYSTEMS, INC. v. HIGHLANDE BUILDERS, LLC
NO. COA04-01
                                                                                                     Filed:                                                                         21 December  2004
1.                                                                                                   Appeal and Error--writ of certiorari--timeliness of notice of appeal
Plaintiff’s motion to dismiss defendant’s appeal is denied and defendant’s petition for
writ of certiorari under N.C. R. App. P. 21 is granted even though notice of appeal was filed with
the trial court outside the thirty-day time period within which an appeal from a judgment in a
civil action must be taken under N.C. R. App. P. 3, because notice was timely filed with the
Court of Appeals.
2.                                                                                                   Process and Service--substitute service--limited liability company--personal
jurisdiction
The trial court did not err in an action to recover money owed on an account by refusing
to set aside a default judgment in favor of plaintiff even though defendant limited liability
company contends the judgment was void for lack of personal jurisdiction based on improper
service, because: (1) defendant failed to properly maintain a registered agent in the State of
North Carolina as required by N.C.G.S. § 55-30(a)(2) since its registered agent left the State and
defendant failed to appoint a new agent; (2) alternate service on the Secretary of State was
proper under N.C.G.S. § 57C-2-43; and (3) where the Secretary of State mailed the summons is
immaterial since service was effective when plaintiff served the Secretary of State.
3.                                                                                                   Judgments--default judgment--motion to set aside
The trial court did not abuse its discretion in an action to recover money owed on an
account by failing to grant defendant limited liability company relief under N.C.G.S. § 1A-1,
Rule 60(b) from entry of default judgment and by finding that defendant’s neglect was
inexcusable, because: (1) the registered agent refused service and changed addresses; and (2) the
trial court’s decision was not manifestly unsupported by reason when defendant failed to
properly maintain a registered agent in the State of North Carolina.
Appeal  by  Defendant  from  judgment  entered  1  October  2003  by
Judge Penn Dameron in Superior Court, Watauga County.   Heard in the
Court of Appeals  12 October  2004.
Turner  &  Yates,  P.A.,  by  David  W.  Yates  for  plaintiff-
appellee.
McElwee  Firm,  PLLC,  by  R.  Tyson  Ferrell  for  defendant-
appellant.
WYNN, Judge.




Defendant  Highlande  Builders,  LLC,  appeals  from  a  default
judgment entered 1 October 2003.   Defendant contends that the trial
court:  (1)  erred  in  denying  its  motion  to  set  aside  the  default
judgment  because  the  judgment  was  void  for  lack  of  personal
jurisdiction;  and  (2)  abused  its  discretion  in  failing  to  grant
Defendant  relief  under  Rule  60(b)  of  the  North  Carolina  Rules  of
Civil Procedure.    For the reasons stated herein, we affirm.
Plaintiff  filed  a  complaint  on                                           16  January   2002  to  recover
$15,140.82  owed  on  an  account.    Defendant’s  registered  agent  in
North Carolina was D. Michael Little.   In December 2001, Mr. Little
went  to  Florida  on  an  extended  vacation.     On                        17  January   2002
Plaintiff filed service with the North Carolina Secretary of State.
The Secretary of State attempted to send notice to the registered
agent  at  the  principal  place  of  business  address  of  record,  but
notice  was  returned  “unclaimed.”    On  11  February  2002,  Plaintiff
sent  service  to  Defendant  at  its  registered  address  by  certified
mail; this came back  “unclaimed.”    On  11 February  2002, Plaintiff
sent a letter to Ashe County Sheriff’s Department for service upon
Defendant  at  both  the  mailing  address  and  the  physical  address,
however, the Sheriff was unable to locate the registered agent or
other company official.   Upon discovering the registered agent had
gone to Florida for the winter, on 28 February 2002 Plaintiff sent
a  letter  to  the  Sheriff’s  Department  in  Naples,  Florida  for
service,  however,  the  sheriff  was  unable  to  locate  anyone  at  the
forwarded address.
Default  judgment  was  entered                                              4   March     2002.               Following
Defendant’s  motion  to  set  aside  the  default  judgment,  the  trial




court entered final judgment on 1 October 2003, denying the motion
to set aside the default judgment.    Defendant appealed.
[1] We first note that notice of appeal was not filed with the
trial  court  until                                                          5  November                                             2003,  outside  the  thirty-day  time
period  within  which  an  appeal  from  a  judgment  order  in  a  civil
action must be taken pursuant to Rule 3 of the North Carolina Rules
of Appellate Procedure, although notice was timely filed with this
Court.    However,  we  deny  Plaintiff’s  motion  to  dismiss  and  grant
Defendant’s Petition for Writ of Certiorari pursuant to Rule 21 of
the Rules of Appellate Procedure.
[2] On appeal, Defendant contends that the trial court erred
in denying its motion to set aside the default judgment because the
judgment was void for lack of personal jurisdiction due to improper
service.    We disagree.
Section                                                                      57C-2-43  of  the  North  Carolina  General  Statutes
provides  rules  for  substituted  service  of  process  on  limited
liability companies.
Whenever  a  limited  liability  company  shall
fail to appoint or maintain a registered agent
in  this  State,  or  whenever  its  registered
agent  cannot  with  due  diligence  be  found  at
the  registered  office,  then  the  Secretary  of
State   shall   be   an   agent   of   the   limited
liability   company   upon   whom   any   process,
notice,  or  demand  may  be  served.  Service  on
the  Secretary  of  State  of  any  such  process,
notice, or demand shall be made by delivering
to and leaving with the Secretary of State or
with any clerk authorized by the Secretary of
State to accept service of process, duplicate
copies  of  the  process,  notice,  or  demand  and
the  fee  required  by  G.S.  57C-1-22(b).  In  the
event  any  such  process,  notice,  or  demand  is
served on the Secretary of State in the manner
provided for in this section, the Secretary of




State shall immediately mail one of the copies
thereof,  by  registered  or  certified  mail,
return   receipt   requested,   to   the   limited
liability company at its principal office or,
if   there   is   no   mailing   address   for   the
principal  office  on  file,  to  the  limited
liability  company  at  its  registered  office.
Service  on  a  limited  liability  company  under
this  subsection  shall  be  effective  for  all
purposes  from  and  after  the  date  of  the
service on the Secretary of State.
N.C. Gen. Stat.  §  57C-2-43(b)  (2003)  (emphasis added).    It is the
duty of limited liability companies to maintain a registered agent
in  the  State  of  North  Carolina.    N.C.  Gen.  Stat.  §  55D-30(a)(2)
(2003).    Since  Defendant’s  registered  agent  left  the  State  and
Defendant failed to appoint a new agent, alternative service on the
Secretary of State was proper.    N.C. Gen. Stat.  §  57C-2-43.
Defendant  contends  that  service  was  improper  because  the
Secretary  of  State  mailed  the  summons  to  the  principal  address
instead  of  the  registered  office  mailing  address.     Where  the
Secretary of State mailed the summons is immaterial because service
was effective when Plaintiff served the Secretary of State.    N.C.
Gen.  Stat.  §  57C-2-43;  see  Royal  Bus.  Funds  Corp.  v.  S.  E.  Dev.
Corp.,  32  N.C.  App.  362,  366,  232  S.E.2d  215,  217  (1977)  (where
statute  had  similar  language  service  on  foreign  corporation
complete when Secretary of State served).                                     “[T]here is nothing in
[the statute’s] language to indicate that the registered mail must
be either accepted or rejected in order for service to be complete.
Such an interpretation would be contrary to the clear legislative
intent  .  .  . that service is complete when the Secretary of State
is served.”    Id.,  232 S.E.2d at  218.
As  Defendant’s  registered  agent  had  left  the  state,  service




was effective when served upon the Secretary of State.   Therefore,
the  trial  court  had  personal  jurisdiction  and  entry  of  default
judgment was proper.
[3]  On  appeal,  Defendant  also  contends  that  the  trial  court
abused  its  discretion  in  failing  to  grant  Defendant  relief  under
Rule                                                                          60(b)  of  the  North  Carolina  Rules  of  Civil  Procedure  and
finding that Defendant’s neglect was inexcusable.    We disagree.
“On  motion  and  upon  such  terms  as  are  just,  the  court  may
relieve a party or his legal representative from a final judgment,
order,  or  proceeding  for  the  following  reasons:                         (1)                                                                 [m]istake,
inadvertence, surprise, or excusable neglect;  .  .  . or;  (6)  [a]ny
other reason justifying relief from the operation of the judgment.”
N.C. Gen. Stat. § 1A-1, Rule 60(b) (2003).   The decision whether to
set aside a default judgment under Rule 60(b) is left to the sound
discretion of the trial judge, and will not be overturned on appeal
absent a clear showing of abuse of discretion.    Thomas M. McInnis
&  Assocs.,  Inc.  v.  Hall,  318  N.C.  421,  425,  349  S.E.2d  552,  554
(1986).
Whether neglect is “excusable” or “inexcusable” is a question
of  law  which                                                                “depends  upon  what,  under  all  the  surrounding
circumstances,   may   be   reasonably   expected   of   a   party”   to
litigation.   Id., 349 S.E.2d at 555.   The trial judge’s conclusion
in  this  regard  will  not  be  disturbed  on  appeal  if  competent
evidence supports the judge’s findings, and those findings support
the conclusion.   In re Hall, 89 N.C. App. 685, 687, 366 S.E.2d 882,
884,  disc.  review  denied,                                                  322  N.C.                                                           835,         371  S.E.2d   277   (1988).
Once excusable neglect has been shown as a matter of law, “whether




the  judge  shall  then  set  aside  the  judgment  or  not  rests  ‘in  his
discretion  . .  ..’”   Morris v. Liverpool, London & Globe Ins. Co.,
131  N.C.  212,  213,  42  S.E.  577,  578  (1902);  accord  McInnis,  318
N.C. at  425,  349 S.E.2d at  554.
In  the  case  before  us,  the  trial  court  found  that  the
registered agent refused service and changed addresses, also that
service  upon  the  Secretary  of  State  was  proper.    The  trial  court
concluded  that  the  Defendant’s  neglect  was  inexcusable.    We  hold
that the evidence and findings support that conclusion.
A default judgment may be set aside under Rule  60(b)(6) only
                                                                               upon   a   showing   that:                                                                                (1)   extraordinary   circumstances   were
                                                                                                                   responsible for the failure to appear, and (2) justice demands that
                                                                                                                   relief.    See Huggins v. Hallmark Enters., Inc.,  84 N.C. App.       15,
24-25,                                                                         351  S.E.2d                  779,   785                                                                   (1987).  The  decision  to  grant  this
rule’s exceptional relief is within the trial court’s discretion.
Id. at 25, 351 S.E.2d at 785. Because this court “cannot substitute
‘what  it  consider[s]  to  be  its  own  better  judgment’  for  a
discretionary  ruling  of  a  trial  court,”  we  may  not  overturn  the
judge’s ruling unless it was “‘manifestly unsupported by reason.’”
Id.  (citations omitted).
While the law does not favor default, preferring instead that
controversies  be  resolved  on  their  merits,  “it  is  also  true  that
rules  which  require  responsive  pleadings  within  a  limited  time
serve important social goals, and a party should not be permitted
to flout them with impunity.”    Howell v. Haliburton,  22 N.C. App.
40,  42,  205 S.E.2d  617,  619  (1974).    Likewise, courts justifiably
disapprove  of  a  limited  liability  company’s  failure  to  properly




                                                                                                                          maintain a registered agent because that requirement is  “designed
                                                                                                                          to inform potential litigants of necessary information,” Huggins,
84  N.C.  App.  at                                                          25,                                           351  S.E.2d  at                                                               785,  thereby  protecting  the
                                                                                                                          company’s  interests  and  guarding  against  judgment  by  default,  as
                                                                                                                          well  as  reducing  the  chance  that  the  company  will  avoid  paying  a
                                                                                                                          judgment  by  evading  service  of  process.    See  Anderson  Trucking
                                                                            Serv.,  Inc.  v.  Key  Way  Transp.,  Inc.,   94  N.C.  App.                                                                36,                              43,   379
S.E.2d  665,  669  (1989).
As Defendant failed to properly maintain a registered agent in
the  State  of  North  Carolina,  the  trial  court’s  decision  was  not
“manifestly unsupported by reason.”    Huggins,  84 N.C. App. at  25,
351 S.E.2d  785.   The trial court committed no error in refusing to
set aside the default judgment under Rule  60(b)(6).
Affirmed.
Judges HUNTER and THORNBURG concur.

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