Plumbing Matters; Default Judgment Upheld When 

Registered Agent Address Insufficient

The decision of the Kentucky Court of Appeals in Village Square Shopping Center, LLLP v. Hyde, No. 2020-CA-1161-MR, 2021 WL 4228482, 2021 Ky. App. Unpub. LEXIS 545 (Ky. App. Sept. 17, 2021) is an unremarkable slip and fall case that is a significant caution to all companies to be sure the registered agent / office information of record with the Kentucky Secretary of State is complete and accurate.

Jim Hyde suffered a slip and fall in the parking lot of a shopping center owned by Village Square Shopping Center, LLLP, a Kentucky limited partnership (“Village Square”), it managed by National Redevelopment, Inc., an Ohio corporation (“National”).  The accident occurred after exiting a Subway sandwich shop operated by Subway of Middlesboro, Inc. (“Subway Middlesboro”). Hyde filed suit against all three with service to be completed at their respective registered agents as of record with the Secretary of State.  While there were no issues as to service on Subway Middlesboro, the services upon Village Square and National were returned “for insufficient addresses.” Additional efforts to reach at least National by certified mail were not successful.  

In response to its failure to participate in the action, Hyde moved for summary judgment against Subway Middlesboro; that summary judgment was entered on January 14, 2019.  Then on May 29 Hyde (i) moved for a hearing to determine damages to be assessed against Subway Middlesboro and (ii) for a default judgment against Village Square, asserting that “the failure of Village Square to provide a sufficient address for service of process is tantamount to ‘service having been effectuated by estoppel.’”  The court agreed and a default judgment was entered against Village Square. Then, a month after the damages hearing, Hyde moved for a default judgment against National on the basis that his efforts to effect service under the long arm statute (KRS 454.210(3)) were sufficient.  The Circuit Court granted that motion. 

Here is where it gets interesting.  The Circuit Court, by regular USPS mail to Village Square and National, notified them of the default judgment sent to the addresses to which the multiple certified mail communications had been sent. Those letters got through, and each moved to have the default judgments set aside, asserting the had never been served.  That motion was denied, but the damages hearing was reopened to allow Village Center and national  to submit additional evidence as to the damages.  

On appeal, both Village Square and National sought to excuse the ssues with respect to service on each, an effort that failed when “Tellingly, they do ot point to anything Hyde could have done differently to achieve such service.” 2021 WL 4228482, *2-3. Rather:

[I]n accordance with CR 4.04(4), Hyde attempted to serve the partnership of Village Square by having the clerk issue a summons and serve it with a copy of the complaint via certified mail to “an agent authorized by appointment or by law to receive service on its behalf.” Hyde used the name and address Village Square provided to the Secretary of State as its registered agent for service of process. Although there was arguably more Hyde could have done to ensure that Village Square received notice of his complaint, nothing more was required. 2021 WL 4228482, *3.

Addressing who has the burden of making sure the records of the Secretary of State are complete and accurate, the Court went on to note:

It is the duty of partnerships doing business in Kentucky to ensure they have accurately and effectively listed the name and address of their registered agent. Under KRS 362.2-114(1)(b), every “limited partnership shall designate and continuously maintain in this Commonwealth: ... [a] registered office and agent for service of process at that office that comply with KRS 14A.4-010.” (Emphasis added.) This is not optional. Its purpose is to facilitate communication. Listing an address that is insufficient to allow communication, such as service of legal process, does not satisfy this requirement and essentially constitutes fraud by omission. Even so, Village Square contends it had no actual or constructive knowledge4 of these facts. Had Village Square complied with the applicable provisions of KRS 14A.4-010, it undoubtedly would have eventually identified the insufficiency with its listed address. Thus, it may be charged with constructive knowledge under the facts of this case. Id.

. . . .

Appellants assert Village Square did not make any false representations, conceal material facts, or intend to conceal its correct address. However, as previously mentioned, this is a case of fraud by omission. Village Square failed to provide sufficient information to the Secretary of State to allow service of process to reach its registered agent, as evidenced by the return of the certified mail addressed to its agent at the address it provided. Accordingly, the trial court did not err in finding that Hyde complied with his service requirements as to Village Square, and it was equitably estopped from claiming otherwise.  2021 WL 4228482, *4.

Turning to National, it “claim[ed] there was an ‘irregularity’ in how–more specifically to whom–the summons was issued.” The Court of Appeals disposed of that argument by noting it was never raised with the trial court and was therefore waived. 2021 WL 4228482, *4.  From there is was held there no basis for setting aside the default judgment.

I would note that this decision follows numerous others in which default judgments were entered notwithstanding that service through the registered agent could not be accomplished or was subsequently ignored:

• Bradford White Corp. v. Ky. Farm Bureau Mut. Ins. Co., No. 2013–CA-001549–MR, 2014 Ky. App. Unpub. LEXIS 598 (Ky. App. July 25, 2014) (default judgment not set aside based upon excusable neglect when foreign corporation failed to update information with both the Kentucky and Pennsylvania secretary of state offices). 
• JP Morgan Chase Bank ex rel. ABFS Mortg. Loan Trust 2003-1 v. Engle, No. 2006-CA-001182-MR, 2007 Ky. App. Unpub. LEXIS 348 (Ky. App. Sept. 21, 2007) (assertion by the defendant that they “somehow misplaced the complaint” not accepted as a valid basis to set aside default judgment).
• Dakota Enters., Inc. v. Carter, No. 2001-CA-002417-MR, 2003 Ky. App. Unpub. LEXIS 1069 (Ky. App. May 30, 2003) (registered agent’s regular and long term absence from business address not a basis for setting aside default judgment). 

• Crop Prod. Servs., Inc. v. Williamson, No. 1998-CA-000124-MR, 1999 BL 1452 (Ky. App. June 25, 1999) (default judgment would not be set aside based upon registered agent’s failure to properly forward the complaint to the defendant).
• Bennche, Inc. v. Silver Creek Transp., LLC, 650 S.W.3d 312 (Ky. Ct. App. 2022) (default judgment not set aside when Texas LLC “did not receive the summons and complaint due to the singular fact that it failed to abide by its obligation to change its registered address with the Texas Secretary of State. The requirement that corporate entities maintain a current registered address and agent for service of process is not a mere formality but is a necessity for the consistent and effective functioning of our governing and regulatory agencies as well as the only means by which parties can effectuate redress with our judiciary.” The Court observing  as well “Carelessness alone does not support a finding of excusable neglect or good cause. Accordingly, we cannot say that the circuit court's determination on this issue was an abuse of discretion.”).

For more on the consequences of a failure to qualify to transact business, see Thomas E. Rutledge & Laura H. Pulliam, Qualification to Transact Business in Kentucky, § 12.07, in Kentucky Business and Commercial Law (forthcoming 2025).

Practice Pointer:  For your primary entity and its subsidiaries in whatever state they may be organized, double check who is the registered agent and the registered address thereof to be sure they are accurate and complete.  Also be sure the registered agent knows who at your company is to be contacted should they receive service of process or other communications addressed to your company.