Equitable distribution order remanded for necessary party

While the service of process to a husband in an equitable distribution case was proper, the trial court’s order was null and void due to the absence of a necessary party, the North Carolina Court of Appeals has ruled.

Meredith Strickland and Charles Strickland were married on Jan. 22, 2017, and separated on May 6, 2020. Meredith filed a complaint for equitable distribution.

The summons and filed-stamped copies of her complaint and a temporary restraining order enjoining the withdrawal of funds from a home equity line of credit were sent via certified mail to Charles at his private post office box, located within a UPS store, in Charlotte.

Upon receipt, a UPS store employee signed for the correspondence and placed it into Charles’s post office box, pursuant to the Mailbox Service Agreement required by the UPS facility.

Charles did not file an answer or other responsive pleading and did not appear at any hearings conducted during the course of the case.

The trial court held an equitable distribution trial in March 2021 in Charles’s absence. In an order, the court found that certain property was marital property, including Strickland Building Group, its bank account and property purchased by the group.

Meredith sent a copy of the order to Charles as well as his attorney, which is when Charles later alleged to be the first time he learned an equitable distribution trial had taken place.

Charles appealed. He first argued that the equitable distribution order was void and that the trial court lacked personal jurisdiction over him because Meredith failed to serve him with the summons and complaint.

In an opinion authored by Judge Allegra Collins, the court disagreed.

By filing a copy of the signed return receipt along with an affidavit that comported with N.C. Gen. Stat. § 1-75.10, Meredith was entitled to a rebuttable presumption of valid service.

Charles was unable to overcome the presumption based on the findings of fact made by the trial court, which he did not challenge, including that the Mailbox Service Agreement clearly established that the UPS store acted as his agent for purposes of accepting certified mail and the owner of the store accepted the certified mail sent by Meredith and placed it in Charles’s mailbox.

The agreement was a valid contract, and since Feb. 1, 2013, Charles and the UPS store have behaved as though a valid contract existed, the court said; Charles picked up his mail at his post office box and received personal mail at his post office box, and never abandoned his mailbox.

“These actions evidence a contract between [Charles] and the UPS Store,” the court wrote. “Furthermore, by using his mailbox for years following the execution of the Mailbox Service Agreement, [Charles] ratified his contract with the UPS Store and cannot deny the existence of the contract.”

The agreement also provided Charles’s express consent to the UPS store to accept certified mail on his behalf.

“We therefore conclude that the … requirements of service of process were met,” the court held. “Furthermore, because service of process was proper, [Charles’] argument that the trial court lacked personal jurisdiction over him because service was not properly effectuated is without merit.”

However, the court sided with Charles on his second argument: that the trial court’s failure to join his father, Charles E. Strickland, and the Strickland Building Group, as necessary parties to the action, rendered the equitable distribution order void.

When a person is so vitally interested in the controversy that a valid judgment cannot be rendered in the action completely and finally determining the controversy without his presence, such person is a necessary party to the action, the court said.

In his deposition, Charles testified that “there was a lot” that Meredith did not know about Strickland Building Group and that he had no reason to tell her that his father was a business partner.

Although the trial court made findings of fact that no credible evidence was presented that showed Meredith believed, or had reason to believe, that Charles’s father was a part owner of Strickland Building Group, it also failed to address whether the Group should have been joined as a party.

“Indeed, the findings support the conclusion that Strickland Building Group was a third party holding legal title to a bank account and [a piece of property] which [Meredith] claimed to be marital property,” the court said. “Accordingly, Strickland Building Group is a necessary party to the equitable distribution proceeding.”

A corporation, even one closely held, is recognized as a separate legal entity when its members are engaged in litigation which is personal in nature, the court pointed out, and the trial court was not free to ignore the corporate form nor the existence of the LLC when entering the equitable distribution order.

The court remanded for ex mero motu joinder of Strickland Building Group as a necessary party, followed by further proceedings regarding the equitable distribution claims of Charles and Meredith.

Neither David E. Simmons of Charlotte, who represented Meredith, nor Robert P. Hanner II, also of Charlotte, who represented Charles, responded to a request for comment.

The case is Strickland v. Strickland, No. COA23-353.