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Northern States Power Co. v. TriVis, Inc.

United States District Court, D. Minnesota

December 21, 2016

Northern States Power Company, Plaintiff,
v.
TriVis, Inc., Defendant.

          James J. Hartnett, Esq., Kyle R. Hardwick, Esq. and Faegre Baker Daniels LLP, counsel for plaintiff.

          C. Todd Koebele, Esq., John Paul J. Gatto, Esq., Ryan Malone, Esq. and HKM Law Group, counsel for defendant.

          ORDER

          David S. Doty, Judge

         This matter is before the court upon the motion to vacate default judgment by defendant TriVis, Inc. Based on a review of the file, record, and proceedings herein, and for the following reasons, the court grants the motion.

         BACKGROUND

         This dispute arises from services performed by TriVis for plaintiff Xcel Energy. In 1999, David Bland incorporated TriVis under the laws of Alabama for the purpose of providing nuclear waste services. Bland Decl. ¶¶ 1-2. Bland served as the company's president and registered agent for service in Alabama. Id. ¶ 3. In 2008, TriVis filed a certificate of authority to transact business in Minnesota with the Minnesota Secretary of State, appointing Patrick Smith, a former TriVis employee, as the registered agent for service. Id. ¶¶ 4-5. On August 7, 2012, the Minnesota Secretary of State revoked the certificate, most likely for failing to pay the annual fee. Id. ¶ 6; Gatto Aff. Ex D, ECF No. 18-2.

         On March 18, 2013, Xcel contracted with TriVis to dispose of spent nuclear fuel rods at the Monticello, Minnesota nuclear plant. Gatto Aff. Ex. B ¶¶ 4-5, ECF No. 18. TriVis allegedly failed to follow proper procedures in disposing of the nuclear rods, which led Xcel to terminate the contract and triggered a regulatory investigation. See id. Ex. I ¶¶ 16-17; Hartnett Decl. Ex. 3, ECF No. 24. In June 2014, Bland informed Xcel that TriVis would be going out of business due to the Monticello event. Hartnett Decl. Ex. 7. On October 8, 2014, TriVis filed articles of dissolution with the Alabama Secretary of State. See id Ex. 10.

         In September 2015, Xcel brought claims against TriVis for breach of contract and negligent misrepresentation in Hennepin County. See Gatto Aff. Ex. B. On September 18, Xcel attempted to serve TriVis at its registered address in Alabama, but failed because TriVis had shut down operations. Hartnett Decl. Ex. 11. In an another attempt to effect service, on September 23, Xcel served the summons and complaint on the Minnesota Secretary of State pursuant to Minn. Stat. § 5.25, subd. 4(b). See Gatto Aff. Exs. C, E. Xcel requested that the secretary mail the summons and complaint to TriVis' Alabama address, but the secretary sent the documents to TriVis' registered office address in Clear Lake, Minnesota, which was also returned as undeliverable.[1] See id. Ex. F. Subsequently, on September 24, Xcel mailed the civil cover sheet for the summons and complaint by certified mail to TriVis' Alabama address, which was, again, returned as undeliverable. See Hartnett Decl. Ex. 12.

         Xcel moved for a default judgment against TriVis, which the state court granted on December 3, 2015, for the amount of $10, 020, 355, plus pre- and post-judgment interest and reimbursement of Xcel's costs and disbursements. See Gatto Aff. Ex. A. Shortly thereafter, Xcel instituted garnishment proceedings against several insurers of TriVis, which was timely removed to this court. See N. States Power Co. v. TriVis, Inc., No. 16-51, 2016 WL 2621953, at *2 (D. Minn. May 6, 2016). Garnishee Underwriters at Lloyds, London contacted Bland concerning the suit on February 5, 2016. Bland Decl. ¶ 14. Bland testified that this is the fist time he learned of Xcel's suit. Id. Separate from the garnishment action, TriVis removed the complaint and default judgment on August 19. On October 21, TriVis filed the instant motion to vacate the default judgment.

         DISCUSSION

         TriVis argues that the court should vacate the default judgment because the state court's judgment is void under Fed.R.Civ.P. 60(b)(4). The judgment of a court is void if the defendant was not properly served. See Printed Media Servs. Inc. v. Solna Web, Inc., 11 F.3d 838, 843 (8th Cir. 1993) (“If a defendant is improperly served, a federal court lacks jurisdiction over the defendant.”). The court looks to state law in determining whether service was sufficient. See Barner v. Thompson/Ctr. Arms Co., 796 F.3d 897, 900 (“In a case that has been removed from state court, the sufficiency of service prior to removal is determined by state law ....”).

         Where a state court's judgment is void for lack of service, a federal court has the authority to vacate the judgment. See Johnson v. Arden, 614 F.3d 785, 799 (8th Cir. 2010) (affirming district court's order vacating a state court judgment for lack of personal jurisdiction); see also Jenkinds v. MTGLQ Inv'rs, 218 F. App'x 719, 724 (10th Cir. 2007) (“The district court then could set aside the [state court's] default judgment under Fed.R.Civ.P. 55(c) and 60(b).”). The court has no discretion in granting relief from a void judgment. Johnson, 614 F.3d at 799.

         TriVis argues that Xcel's service of process under Minn. Stat. § 5.25 was insufficient, and the court agrees. Minnesota law provides that service of process may be effected on a foreign corporation “whenever the certificate of authority of a foreign corporation is revoked or canceled” by delivering to the Minnesota Secretary of State the documents to be served. Minn. Stat. § 5.25 subdiv 4(b). When service is effected by the secretary of state, the secretary must forward the copy of service of process addressed to the business entity: (1) at the registered office in Minnesota; (2) at the address designated in the application for withdrawal, if the business entity has withdrawn from Minnesota; (3) at the address provided by the submitting party, if the business' authority to do business in Minnesota has been revoked; or (4) at the address provided by the submitting party, if the business was never authorized to do business in Minnesota. Minn. Stat. § 5.25 subdiv. 6. Where a business entity has had its authority to transact business in Minnesota revoked, “service must be made” according to the third or fourth options listed above. Minn. Stat. § 5.25 subdiv. 5(c).

         Here, TriVis' authority to do transact business in the state had been revoked; therefore, the statute required the secretary of state to send service of process to the address provided by Xcel. But the secretary sent the service of process to TriVis' Minnesota address, not the Alabama address ...


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