Anderson v. John Royle & Sons

Citations: 784 F. Supp. 955; 1992 U.S. Dist. LEXIS 2235; 1992 WL 37646Docket: No. 91-CV-1077

Court: District Court, N.D. New York; February 27, 1992; Federal District Court

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Plaintiff initiated a lawsuit on September 23, 1991, seeking damages for personal injuries incurred in a work-related accident on June 14, 1991, while employed by Microfoam, Inc. The case is under the jurisdiction of the court due to the diversity of citizenship as outlined in 28 U.S.C. § 1332. The plaintiff claims her injuries were caused by a machine manufactured by defendant John Royle, Sons, and later refurbished and sold to Microfoam by defendant Dependable Rubber Machinery Co. 

Dependable has moved to dismiss the complaint, arguing that the service of process was inadequate under Federal Rule of Civil Procedure 12(b)(5). Federal Rule 4 dictates the proper method of serving process, allowing for service via state law or by mailing a summons and complaint. The court notes two undisputed facts for this motion: Dependable is an unauthorized foreign corporation, and the plaintiff attempted to serve Dependable according to New York Business Corporation Law (BCL) § 307.

The BCL states that a foreign corporation not authorized to operate in New York may be served through the secretary of state if they would otherwise be subject to the court's jurisdiction. Service must be made by personally delivering the process to the secretary of state or an authorized representative, along with the requisite statutory fee. If the plaintiff successfully served Dependable under BCL § 307, this would establish the court's personal jurisdiction over the corporation as per Federal Rule 4(c)(2)(C)(i).

Service of notice and process on a foreign corporation is valid if performed in one of two ways: (1) personal delivery outside the state by an authorized person per the laws of the jurisdiction where service occurs, or (2) sending the process by registered mail with return receipt requested to the corporation's designated mailing address on file with the state's department or equivalent authority. If no address exists, it may be sent to the corporation's registered or other specified office, or the last known address to the plaintiff.

Proof of service must be filed within thirty days of personal service as an affidavit of compliance with the court clerk, with service deemed complete ten days post-filing. For mail service, the affidavit must include the signed return receipt or proof of delivery, or the original envelope if acceptance was refused, along with notice of mailing. If acceptance is refused, the notice and process must be re-sent via ordinary mail, with the affidavit reflecting this attempt.

In this case, the plaintiff attempted to serve Dependable via BCL section 307(b)(2) by first serving the New York Secretary of State in October 1991. On November 13, 1991, the plaintiff mailed a copy of the process to Dependable's last known agent, Mr. Dalessio, but the mail was returned undelivered. The plaintiff subsequently filed an affidavit of compliance with the court in November. Anticipating a motion, the plaintiff then attempted personal service on Mr. Sobieraj, claiming to be Dependable’s President. Dependable contends that the plaintiff failed to meet the requirements of BCL section 307, asserting a lack of personal jurisdiction and moving for dismissal under Fed. R. Civ. P. 12(b)(5).

Plaintiff asserts compliance with the service requirements of BCL section 307, referencing the Pertz Affidavit. The New York Court of Appeals mandates strict adherence to BCL section 307 for serving unauthorized foreign corporations, as established in Flick v. Stewart-Warner Corp. The core issue is whether the plaintiff's attempts to serve Dependable met these legal requirements. Dependable argues that the plaintiff did not properly serve it under BCL sections 307(b)(1) or (b)(2). Specifically, the envelope submitted by the plaintiff noted "fwd order exp. 10 yrs ago," instead of "acceptance was refused," which is necessary under BCL section 307(b)(2)(c)(2). Furthermore, Dependable contends that personal service on Mr. Sobieraj was invalid under BCL section 307(b)(1) because he lacked authorization to accept service on behalf of Dependable. The court finds that while the plaintiff claims Mr. Sobieraj was listed as President in past corporate documents, these documents date back to 1978 and do not establish his current authority. The plaintiff concedes the validity of Sobieraj’s affidavit, which states he sold his stock in the merged company in 1979 and had no interest in Dependable thereafter. He also asserts he was not authorized to receive service at the time of being served. The court determines that the plaintiff has not provided evidence to dispute these claims, and thus concludes that Mr. Sobieraj was not an authorized individual for service, invalidating the plaintiff's personal service attempt under BCL section 307(b)(1).

Sufficiency of the plaintiffs' service under New York Business Corporation Law (BCL) section 307(b)(2) is contested, specifically regarding whether a returned envelope marked 'fwd order exp. 10 yrs ago' should be treated equivalently to one marked 'acceptance was refused.' The court leans against treating them as equal but does not need to resolve this to rule on the current motion. Even assuming both return types satisfy the statute, the plaintiff did not fully comply with BCL section 307. The statute mandates that if acceptance is refused, a copy of the notice and process, along with the mailing notice and refusal, must be sent to the foreign corporation by ordinary mail, and the affidavit of compliance must confirm this. The plaintiff's affidavit lacks this confirmation, leading the court to conclude that service on Dependable was insufficient for personal jurisdiction.

Despite insufficient service, the court will not dismiss the action, referencing the Second Circuit's ruling in Grammenos v. Lemos, which allows for liberal construction of service rules to uphold jurisdiction when actual notice is received. However, compliance with service rules is essential, and improper service can lead to dismissal unless proper service remains feasible. Unlike Flick, where dismissal was necessary due to an expired statute of limitations, the current case does not face such a barrier. The plaintiff's injury occurred on June 14, 1991, with a three-year statute of limitations. The plaintiff argues Dependable's last president was Mr. Sobieraj and that the corporation was not legally dissolved, suggesting that Dependable may have received actual notice. Therefore, the court denies Dependable's motion to dismiss for insufficient service of process without prejudice, allowing the plaintiff 60 days to effect proper service before any renewal of the motion.

The court concludes that the plaintiff has not successfully served Dependable in accordance with BCL section 307, resulting in a lack of personal jurisdiction over the defendant at this time. Nevertheless, the court denies Dependable’s motion to dismiss for insufficient service under Fed. R. Civ. P. 12(b)(5) without prejudice, allowing the plaintiff an opportunity to effect proper service within 60 days. Personal service on a corporation must comply with New York Civil Practice Law and Rules section 311, which requires delivery to specific corporate representatives or authorized agents. The court assumes, for the sake of this motion, that an independent basis for jurisdiction exists and that the plaintiff mailed service to Dependable’s last known address, as no official address was on file. Although the affidavit of compliance was filed several days after the required service, the court acknowledges that the proof of compliance must demonstrate that adequate notice was given, as established by the Flick decision, emphasizing the importance of due process in service requirements.