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Clarifying 'Usual Place of Abode' in SCRA Collection Cases

Posted By USFN, Tuesday, February 4, 2020
Updated: Monday, February 3, 2020


by Blair Gisi, ESQ. 
SouthLaw, P.C. 
USFN Member (IA, KS, MO, NE)

In overturning the default judgment granted against the debtor in Coastal Credit, LLC v. McNair, 446 P.3d 495 (Kan. Ct. App. 2019), the Kansas Court of Appeals has recently made an important ruling regarding service of process on active military debtors.

The debtor in McNair was in active status in the Army and stationed in Africa when the financing contract he had entered into to purchase a car went into default.  After the default, the creditor repossessed the car, sold it, and then filed a limited action against the debtor to pursue the remaining deficiency.

While the debtor was stationed in Africa, his family was living in Manhattan, KS and in February 2014, the process server executed service upon the debtor’s family at the “usual place of abode” per the process server’s field notes.  It was also noted that that the debtor was in the military and stationed in Africa until June 2014.

The debtor failed to respond or appear to any of the subsequent pleadings and hearings and after complying with the relevant Servicemembers Civil Relief Act (SCRA) requirements, default judgment was granted against the debtor in August 2015.  When the debtor noticed his wages being garnished in October 2017, he sought to set aside the judgment and disgorge the garnished funds.

To support his motion, the debtor argued that the service was ineffective since the debtor was not served at his “usual place of abode” as defined by Coleman v. Wilson, 1995 Kan. App. Unpub. LEXIS 932 (Ct. App. Dec. 1, 1995).  In that case, this court held that a military service person's usual place of abode is where the person lives, eats, sleeps, and works at the time of the attempted service.  However, the district court denied debtor’s motion on the grounds that service on the debtor’s wife at their Manhattan, Kansas residence as the usual place of abode and that the service was valid.  Debtor timely appealed that ruling.

Focusing on the “usual place of abode” argument, which comes from Kan. Stat. Ann. § 61-3003, the Court of Appeals overturned the district court. 

The Court of Appeals began its analysis with the legislative intent of K.S.A. 2018 Supp. 77-201 which provides:

Usual place of residence' and 'usual place of abode,' when applied to the service of any process or notice, means the place usually occupied by a person. If a person has no family, or does not have family with the person, the person's office or place of business or, if the person has no place of business, the room or place where the person usually sleeps shall be construed to be the person's place of residence or abode.

Finding that the legislative intent of the statute was clear and unambiguous, the Court of Appeals applied the statute to mean that the debtor’s usual place of abode in this situation was “the room or place where he usually slept,” which at the time, was in Africa.  The Court of Appeals went on to further state that a person’s usual place of abode may be determined on a case-by-case basis and had the debtor been on vacation or brief business trip to Africa, for instance, then the Manhattan would have constituted his usual place of abode.  Here, the active military deployment to Africa for six months was enough to shift his usual place of abode from his family’s residence to Africa.

The Court of Appeals also made an interesting distinction between a family’s usual place of abode the debtor’s usual place of abode in finding that that there was ineffective service on the debtor, stating that they are not necessarily the same and that the family’s usual place of abode does not control the debtor’s usual place of abode.

When attempting service on an active military debtor, the McNair case serves as an outline for both the scrutiny the debt collector may face in obtaining a default judgment as well as the additional steps that may be necessary in ensuring the judgment can withstand that scrutiny.

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Tags:  Bankruptcy  Kansas  Servicemembers Civil Relief Act (SCRA) 

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