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Eliasnik v. Y & S Pine Bluff, LLC

Court of Appeals of Arkansas, Division III

February 21, 2018

SHOKROLLA ELIASNIK (A/K/A "SHAWN NIK") APPELLANT
v.
Y & S PINE BLUFF, LLC, AND SHAHROKH JAVIDZAD (A/K/A "STEVE JAVIDZAD") APPELLEES

         APPEAL FROM THE JEFFERSON COUNTY CIRCUIT COURT [NO. 35CV-15-188] HONORABLE ROBERT H. WYATT, JR., JUDGE

          Kezhaya Law, by: Matthew A. Kezhaya, and Jennifer Hosp, law student admitted to practice pursuant to Rule XV of the Rules Governing Admission to the Bar of the Supreme Court, for appellant.

          Ramsay, Bridgforth, Robinson and Raley, by: William M. Bridgforth and Brett D. Watson, Attorney at Law, PLLC, by: Brett D. Watson, for appellees.

          ROBERT J. GLADWIN, JUDGE.

         The Jefferson County Circuit Court set aside its default judgment against appellee- Shahrokh Javidzad and Y&S Pine Bluff, LLC (Y&S), which is an administratively dissolved LLC solely owned by Javidzad.[1] Shokrolla Eliasnik appeals, arguing three points: (1) the circuit court erred by granting appellee's motion to set aside default judgment because it had been deemed denied; (2) the circuit court abused its discretion by granting appellee's Arkansas Rule of Civil Procedure 59 (2016) motion because the service question was meritless, waived, and barred; and (3) the circuit court erroneously ignored the savings statute by dismissing appellant's lawsuit with prejudice. We affirm.

         I. Procedural History

         A. The Default Judgment

         Appellant filed a complaint on April 21, 2015, alleging that appellee had written seventeen checks to him over the past five years totaling $505, 000. Appellant had tried to deposit the first three checks, but they were returned due to insufficient funds. Appellant claimed that he was entitled to restitution from appellee in twice the amount of the seventeen checks. See Ark. Code Ann. § 4-60-103 (Repl. 2011). Appellant alleged in his complaint that he was sending written demand to appellee's last known addresses, 4030 West 25th Street, Pine Bluff, Arkansas 71603 and 10435 Santa Monica Boulevard, 2nd Floor, Los Angeles, California 90025.

         On June 4, 2015, appellant filed a motion for default judgment claiming that he had attempted to serve Y&S but was unable to perfect service through certified mail. Appellant alleged that Javidzad was the registered agent for process for Y&S according to the Arkansas Secretary of State's records. Appellant stated that he had served appellee on May 4, 2015, through the Arkansas Secretary of State, see Ark. Code Ann. § 16-58-120 (Repl. 2005) (the long-arm statute); thirty days had elapsed; and neither Y&S nor Javidzad had filed an answer or pleading. Thus, appellant asked for default judgment pursuant to Arkansas Rule of Civil Procedure 55(a).

         A damages hearing was held on September 1, 2015, and the circuit court noted that "[appellee] was served on April 29, 2015, and since that time, he has not filed an answer, nor has he filed any motion pursuant to Rule 12.[2] He is in default. You may call your first witness." Appellant's counsel presented an affidavit signed by appellant and a letter mailed April 21, 2015, asking for damages in addition to the $515, 000 double damages. The circuit court asked if appellee had responded, and appellant's counsel said, "No response." The circuit court awarded $2500 in attorney's fees and a $1, 515, 030 judgment with interest against appellee. The judgment was filed on September 1, 2015.

         B. Motion to Set Aside Default Judgment

         On August 8, 2016, appellee filed a motion to set aside the default judgment under Rule 55(c), arguing that the default had been procured by fraud. Appellee claimed that appellant had represented to the circuit court that appellee's last known addresses were in Pine Bluff, Arkansas, and at 10435 Santa Monica Boulevard, 2nd Floor, Los Angeles, California 90025. Appellee asserted that at the time the complaint was filed in April 2015, he and appellant were parties in a lawsuit that remained pending in California and that the subject matter of the California complaint involved the same business dispute that was the subject of the instant complaint. The California pleadings were attached and incorporated. Appellee alleged that appellant filed proofs of service in the California court stating that appellee was personally served at 1608 Sawtelle Boulevard, Los Angeles, California 90025. Therefore, appellee asserted that at the time of the filing of the instant matter, appellant knew that appellee's office address was 1608 Sawtelle Boulevard in Los Angeles, and appellant knowingly and deliberately provided the circuit court with outdated and incorrect addresses for appellee. Appellee alleged that appellant's statement that appellee's last known address was anything other than 1608 Sawtelle Boulevard in Los Angeles was perjury.

         Appellee also claimed that appellant knew his home address in Beverly Hills and that prior to this dispute, the parties had been family friends for many years, appellant having been in appellee's home and residing in the same neighborhood. Appellee claimed that appellant knew his telephone number and email address. Appellee alleged that appellant defrauded the circuit court to gain an advantage in the California litigation. Appellee claimed that the fraud was discovered when appellant's son alluded to him that a judgment had been entered against him in Arkansas.

         Appellant responded that he had relied on the Arkansas Secretary of State's records when obtaining appellee's address. He denied that the California litigation involved the same business dispute because he sued appellee under Arkansas statutes seeking restitution for insufficient checks in the instant matter. He also denied having any personal knowledge of appellee's whereabouts. Appellant claimed that appellee received valid service of the complaint through his designated agent pursuant to Arkansas's long-arm statute. Appellant also contended that appellee had failed to establish fraud.

         At the November 28, 2016 hearing on appellee's motion to set aside the default judgment, appellant testified using an interpreter. He said that he lives in Beverly Hills, California, that he does not work, and that he could speak very little English. He said that his son had filed the lawsuit on his behalf against appellee.

         Appellee testified that he lives in Beverly Hills, California, that he had known appellant for about ten years, and that appellant had filed a lawsuit against him in California. Appellee said that appellant's lawyer in California had personally served him with the California complaint at his office at 1608 Sawtelle Avenue, [3] Los Angeles, California 90025, and proofs of service were filed. When appellant later amended his California complaint, it was served on appellee's attorney. Appellee also said that he had provided his office address of 1608 Sawtelle to appellant when he answered discovery requests in the California case. When appellant filed suit against him on April 21, 2015, in Arkansas, his office address was 1608 Sawtelle Avenue, Los Angeles, California 90025. Appellee said that he did not know of the Arkansas lawsuit until he learned of the default judgment through appellant's son, and his attorney researched it.

         Appellant testified that he did not know appellee's whereabouts between 2013 and 2015. He said that he never provided his attorneys in California or Arkansas with the address of appellee, and that neither asked him for it. He said that he did not speak to his Arkansas attorney before the lawsuit was filed, and he did not know if he had ever talked to his Arkansas attorney.

         The circuit court found that there was no proof of fraud presented and that no meritorious defense was provided. It found that service was valid because appellant used the addresses for appellee on file with the Arkansas Secretary of State's office and that appellee had a duty to update the records at the Arkansas Secretary of State's office. The Arkansas Secretary of State was served, and that officer forwarded the lawsuit to appellee at the last known addresses. Thus, the circuit court denied from the bench the motion to set aside the default judgment.

         II. Post-Hearing Proceedings

         A. Motions

         Appellee filed a motion for findings of fact and conclusions of law on November 29, 2016, stating that no order had been entered and requesting specific findings and conclusions because the circuit court did not state any as to why the default judgment should stand against him individually. Appellee stated that Arkansas law requires that service giving actual notice of a lawsuit is mandatory in all cases when the whereabouts of a defendant is known to the plaintiff. Appellee then requested that the circuit court grant the motion to set aside default judgment.

         Appellee filed a motion for new trial on December 21, 2016, stating that judgment had not been entered regarding the circuit court's ruling on the motion to set aside default judgment. Appellee asked for a new trial because the circuit court's decision was contrary to the preponderance of evidence and contrary to the law. Appellee alleged that there was an error in the assessment of the amount of recovery awarded to appellant and argued that the circuit court should reconsider under Arkansas Rule of Civil Procedure 59.

         In the supporting brief, appellee claimed that Arkansas's long-arm statute was not applicable because the checks on which the cause of action was premised were not written in Arkansas, the parties' agreement of June 9, 2010, occurred in California, and appellant never attempted to have appellee served outside the State of Arkansas. See Ark. Code Ann. § 16-58-120(a) and (b)(1). Further, appellee alleged that the parties' agreement of June 9, 2010, contained a choice-of-law provision that California law would govern. Appellee also argued that appellant failed to perfect service at the addresses of which appellant had actual knowledge based on the discovery answers filed in the California lawsuit. Further, appellant failed to strictly adhere to the requirements of section 16-58-120. Appellee claimed that because the default judgment was void, appellee was not required to demonstrate a meritorious defense. Finally, appellee argued that the damages awarded in the default judgment were excessive, because appellant's complaint alleged that only three checks were shown to be returned for insufficient funds; thus, the award should be as to only those three.

         Appellant responded, arguing that appellee's Rule 59 motion was untimely, because Rule 59(b) requires that such motions be brought within ten days after entry of the judgment. Because the default judgment was filed September 1, 2015, appellant claimed that appellee's motion under Rule 59 was time-barred. Appellant also argued that appellee's arguments were barred by the law of the case, that the trial court's decision-to ...


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