RVM LAW, LLC PREVAILS ON APPEAL ESTABLISHING NEW LAW IN COLORADO (MECHANIC’S LIEN; IN REM FORECLOSURE) AND RECOVERING FAMILY HOME LOST AT FORECLOSURE SALE

            Jose Villar, a Colorado homeowner, retained RVM Law, LLC, to set aside a default judgment and foreclosure on his residential real property in Adams County, Colorado stemming from a dispute with his roofing contractor over a $5,374.69 bill for work that was never completed by Home Improvement, Inc. at his property.  The property was purchased by a third-party at an Adams County sheriff’s sale and the Villars first found out about the sale when the new owner initiated an forcible entry and detainer action to remove them from the property.

RVM Law, LLC prevailed in the case at the Colorado Court of Appeals, resulting in the setting aside of the foreclosure sale on their home, the recovery of title to their home, and the recovery of a substantial percentage of the attorney’s fees incurred by the Villar.  The Court of Appeals decision established new law in Colorado concerning the notice required for in rem foreclosure sales.

Background

Villar contracted with Home Improvement for repair work to the residence on his property. As provided in the contract, Home Improvement worked with Villar’s insurance company to determine the scope of work. After some delays, Home Improvement told Villar that it had completed the repairs. Home Improvement then requested that Villar’s insurance company send Villar the last insurance check to his post office box (P.O. box). Home Improvement told Villar’s wife that it had learned from the insurance company that a check had been mailed to Villar’s P.O. box. Villar’s wife later told Home Improvement that they had not checked the P.O. box for three weeks and had not gotten the check. Home Improvement then tried multiple times to collect the outstanding amount owed to it — $5,374.69.

In April 2019, Home Improvement texted Villar’s wife a screenshot of a notice of intent to file a mechanic’s lien, and Villar’s wife responded, “I see there was a lien on the house.” In June 2019, when the Villars still had not paid, Home Improvement sent Villar the notice of intent to file the mechanic’s lien via certified mail to the property. Although the notice was sent “return receipt requested,” it was returned as undeliverable, with a handwritten notation on the envelope saying, “UAA P[.]O. Box.”3 In addition to mailing the notice, Home Improvement again texted it, along with a letter from its counsel, to Villar’s wife.

Several months later, Home Improvement filed a complaint against Villar, to recover the outstanding balance. A process server unsuccessfully tried to serve Villar five times at the property over nine days. During one of the attempts, the process server saw someone staring out the second-story window, but no one answered the door. On another attempt, the process server heard voices inside the house, but no one answered the door. And on three attempts there were cars parked in the driveway but, again, no one answered the door.

Home Improvement filed a verified motion requesting permission to proceed against the property in rem. Home Improvement requested permission to serve by mail and by publication. The district court authorized service by mail and by publication and provided that service by mail would be complete upon mailing “together with such return receipt attached thereto signed by such addressee.” As to service by publication, the order provided that service would be complete on the day of the last publication.

Home Improvement sent a copy of the process via certified mail, return receipt requested, to the property. Again, the mail was returned undeliverable. Home Improvement also published the process in a newspaper in the county in which the action was pending, once a week for five consecutive weeks. Finally, it had the process server attach a copy of the complaint and other process to the front door of the house at the property.

Because Villar never appeared in the case, Home Improvement moved for entry of a default judgment on the mechanic’s lien claim, including for its attorney fees and costs, and for a decree of foreclosure. The district court entered both the default judgment and decree of foreclosure.

The sheriff mailed the notice of foreclosure sale to the property. It was returned. The notice of foreclosure sale was also published in a county newspaper for five consecutive weeks. The sheriff auctioned off the property, and the Trust bought it.

After Villar’s wife was served with a notice to quit at the property, Villar retained counsel, who moved to set aside the default judgment and foreclosure sale pursuant to C.R.C.P. 60(b)(3) and 60(b)(5). Concluding that Villar’s last known address was the property address, the district court rejected the bulk of Villar’s attacks on the judgment. The sole exception was that the court agreed with Villar that, because he had not separately signed the portion of the contract acknowledging the terms and conditions on the reverse side of the contract form, he had not agreed to the attorney fee provision included there. The district court concluded that Home Improvement was thus not entitled to attorney fees and revised that part of the default judgment pursuant to C.R.C.P. 60(b)(5), but it otherwise left the judgment intact.

The district court also consolidated a separate forcible entry and detainer action, brought by the Trust against Villar, with the mechanic’s lien case. Then, after a possession hearing, the district court entered an order granting possession of the property to the Trust and dismissing Villar’s counterclaims.

COURT OF APPEALS DECISIION

                  In a unanimous published opinion Home Improvement, Inv. v. Villar, 524 P.3d 329 (Colo. App., 2022) reasoned as follows:

C.R.C.P. 60(b)[1]

                 C.R.C.P. 60(b) permits a district court to set aside a judgment under certain circumstances. A party seeking relief under Rule 60(b) has the burden of establishing the grounds for relief by “clear, strong, and satisfactory proof.” Sharma v. Vigil, 967 P.2d 197, 199 (Colo. App. 1998).

                 C.R.C.P. 60(b)(3) provides an avenue for relief from void judgments. Murray v. Bum Soo Kim, 2019 COA 163, ¶ 17. “A void judgment is one rendered without subject matter or personal jurisdiction.” Id. We review de novo a district court’s ruling on a C.R.C.P. 60(b)(3) motion for relief from judgment. Teran v. Reg’l Transp. Dist., 2020 COA 151, ¶ 10.

Service Under C.R.C.P. 4(g)[2]

              In actions affecting specific property, Rule 4(g) permits service by mail or publication under certain circumstances. A verified motion seeking service by mail or publication must state “the address, or last known address” of the person to be served.

C.R.C.P. 4(g).

For service by mail, a copy of the process must be sent by registered or certified mail to such address and a signed return receipt is required before service is complete. C.R.C.P. 4(g)(1). For service by publication, “[w]ithin 14 days after the order the party shall mail a copy of the process to each person whose address or last known address has been stated in the motion and file proof thereof.” C.R.C.P. 4(g)(2).

Analysis

            The Colorado Rules of Civil Procedure do not define “address” or “last known address.” To discern the plain and ordinary meaning of a term that is not defined, we may consult recognized dictionaries. Ybarra v. Greenberg & Sada, P.C., 2016 COA 116, ¶¶ 9-10. Merriam-Webster Dictionary defines “last” as “following all the rest” or “most recent.” Merriam-Webster Dictionary, https://perma.cc/P7DP-7KTK. It defines “known” as “generally recognized.” Merriam-Webster Dictionary, https://perma.cc/B4NA- QBMK. It defines “address” as “a place where a person or organization may be communicated with.” Merriam-Webster Dictionary, https://perma.cc/JE2Q-43PS. Black’s Law Dictionary defines “address” as “[t]he place where mail or other communication is sent.” Black’s Law Dictionary 48 (11th ed. 2019).

            Given these definitions, “address” is the place at which a party generally recognizes that another party can be communicated with, and “last known address” is the most recent such place. This definition comports with due process. See Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950) (notice must be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections”).

            The district court observed that Home Improvement “was given the [property] address at the outset of the contract, and nowhere in the record does it reflect that [Villar] instructed otherwise.”

            Quoting Devore v. Industrial Commission, 129 Colo. 10, 13, 266 P.2d 774, 775 (1954), the district court concluded that “it was not only reasonable but natural for [Home Improvement] to infer that [Villar’s] ‘address is the place of his domicile and residence’ and for            purposes of receiving mail or notice, his address in the contract ‘is the designation of the place where delivery is desired.’” The court further noted that the mere fact that Home Improvement was aware that Villar also used a P.O. box did not make use of the property address improper.

            The court’s conclusion, while accurate to a point, ignores a significant change in circumstance: in July 2019, the notice of intent to file the mechanic’s lien was returned to Home Improvement “not deliverable as addressed.” At this point, Home Improvement’s inference that the property address was an appropriate address to use for mailing ceased to be “natural” or “reasonable.” Home Improvement became aware that mail would not be delivered to the property address but could be delivered to Villar’s P.O. box.7 In other words, the property address ceased to be a “known” address, while the P.O. box remained one; indeed, it became the only — and thus last — known address.

            Although the district court found, with record support, that Villar had actual notice of the lien, this is not a substitute for proper service. See Weber v. Williams, 137 Colo. 269, 277, 324 P.2d 365, 369 (1958) (“[W]e find no authority holding that knowledge of the pendency of an action can be substituted for service of process. Courts acquire jurisdiction in actions in rem . . . by lawful service of lawful process or by voluntary appearance.”).

            Because neither the service by mail nor the service by publication used Villar’s P.O. box (i.e., his last known address), the district court never obtained in rem jurisdiction over the property. Without jurisdiction, the judgment is void. And, of course, in the absence of a judgment, the foreclosure and any resulting orders cannot stand. See C & C Invs., LP v. Hummel, 2022 COA 42, ¶ 51 (concluding that the trial court did not have adequate jurisdiction, and the default judgment and resulting sheriff’s sale and confirmation deed were void and properly vacated).

Disposition

                 The order denying the motion to set aside the default judgment and the order of possession are reversed. The case is remanded for further proceedings consistent with this opinion.

[1] Colorado Rule of Civil Procedure 60 https://advance.lexis.com/documentpage/?pdmfid=1000516&crid=27a1d63c-baa6-45c2-b363-11a34be6e66e&nodeid=AABAAGAAI&nodepath=%2FROOT%2FAAB%2FAABAAG%2FAABAAGAAI&level=3&haschildren=&populated=false&title=Rule+60.+Relief+from+Judgment+or+Order.&config=0153JAAzODIzMTkyYi0wMGVlLTRjZTYtODJkYS0xNjNkYjg1ZWFiNmEKAFBvZENhdGFsb2fOlgkVCVbWdTuP47Jc42rK&pddocfullpath=%2Fshared%2Fdocument%2Fstatutes-legislation%2Furn%3AcontentItem%3A63CY-K261-DYDC-J0NP-00008-00&ecomp=6gf5kkk&prid=ef5cea95-b62f-4973-963e-36aa417e0e16

[2] Colorado Rule of Civil Procedure 4