BFV Perspectives, Corporate Matters, Georgia Business Disputes, | Sep 22, 2017

Protect Yourself and Your Company from a Default Judgment

“Are You Being Served?” was a British sitcom about the salacious misadventures of the staff of an upscale clothing store, broadcast on BBC1 between 1972 and 1985. That show has nothing to do with this blog post, which instead addresses what to do if served with a lawsuit in Georgia. This blog details steps you can take to minimize a default judgment being entered against you or your company.

Under our system of civil justice, when an aggrieved person or entity (the Plaintiff) seeks damages or other relief from another (the Defendant) in court, he must file a Complaint or Petition. Basically, the Complaint explains the relationship or dealings between the parties, the actions or omissions of the Defendant, and the resulting damages suffered by the Plaintiff, in individually numbered single sentence paragraphs.  The Complaint must then be served on (i.e. delivered to) the Defendant. 

This service of process, as it is known, is generally accomplished by a deputy sheriff, marshal, or private process server hand delivering the Complaint and an accompanying Summons to the Defendant. In the case of an individual Defendant, the process server will generally knock on the front door of their home or show up at their office to serve the Complaint.  In the case of an entity, the Complaint may be served on a corporate officer, manager, or the company’s registered agent. The company’s registered agent is the person on file with the Secretary of State in the state in which the entity was organized and is authorized to accept service of process on behalf of the entity. 

Most lawsuits are served personally on the Defendant, but there are alternatives. For example, a Complaint may be served on an individual Defendant by delivering it to a family member at the individual’s home who is of “suitable age and discretion.”  While this is a case-by-case inquiry, a spouse likely qualifies; a child likely does not. If, after reasonable attempts to locate an individual Defendant, he cannot be found, a judge may authorize the Defendant to be served by publication. Basically, the Plaintiff runs a notice for four weeks in the official legal organ (often a newspaper) of the county in which the Defendant resides, alerting the Defendant of the pending lawsuit. Similarly, if a corporate officer, manager, or registered agent cannot be found, an entity can be served by delivering the Complaint to the Secretary of State with which the entity is registered and sending a copy of the Complaint to the company’s address on file by registered mail. 

Once served, a Defendant generally has 30 days in a Georgia state court or 20 days in federal court in which to file an Answer. Basically, an Answer consists of a point by point response to the individually numbered paragraphs of the Complaint, either admitting or denying each allegation. If an Answer is not filed timely, the allegations of the Complaint are deemed admitted and the Defendant is considered to be in default. Once in default, the Defendant loses the opportunity to contest those allegations of the Complaint deemed admitted. Entry of a default judgment typically follows. Once a judgment is entered, the Plaintiff can undertake to collect on the judgment with the help of the deputy sheriff by taking the Defendants’ assets for sale on the courthouse steps or by draining funds directly from the Defendant’s bank account. Far too many Defendants find themselves on the wrong end of a default judgment because they did not act quickly enough upon being served with a Complaint, or because they did not even realize that they had been served. Don’t become one of them. 

Getting sued is never fun, but losing before you even get started is even worse. There are steps you can take to minimize the possibility of a default judgment being entered against you or your company.

#1 If you are served, talk to a lawyer immediately.  If applicable, notify your insurance carrier or broker as well. Do not assume that if you have turned the Complaint over to your insurance carrier, that the Complaint is off your plate. Often, insurance companies deliberate (delay) long beyond the time to Answer before even making a coverage decision. By then, it can be too late. 

#2 Make sure that your employees, especially receptionists, managers, and others who may greet visitors at the door, are aware that packages delivered must immediately be brought to the attention of management, with no exceptions. 

#3 Utilize a professional registered agent, such as an attorney or a company whose business it is to serve as registered agents for other companies. 

As always, let me know if I can help or if you have any questions if you or your company is served with a lawsuit in Georgia.

BFV Perspectives, Corporate Matters, Georgia Business Disputes, | Sep 22, 2017
William J. Piercy
William J. Piercy

Healthy business relationships are an essential component of business success.  When disputes cause business relationships to sour, declining productivity and revenues are sure to follow.  Bill works with business owners to bring successful and efficient resolution to a wide variety.