Constructive Service of Process: Not as Good as the Real Thing

One of the most frustrating parts of a lawsuit can be service of process. I know exactly (generally) how long it takes to prepare and to file a Complaint, but, after it’s in the Sheriff’s or private process server’s hands for service, who knows how long that part will take?

And, under current Tennessee law, valid and effective service of process is critical to getting an enforceable judgment.

Last week, the Tennessee Court of Appeals issued an opinion that emphasizes these issues. The case is Theophilus Ebulueme v. Fred E. Onoh (M2018-00742-COA-R3-CV, Tenn. Ct. App., May 24, 2019), and it has some great analysis on jurisdictional issues.

What is the standard of review for a trial court’s decision on relief from a final judgment under Tenn. R. Civ. P. 60.02(3) (i.e. the judgment is “void” due to lack of personal jurisdiction)? Tennessee Courts follow an “abuse of discretion standard” that will be reviewed de novo with no presumption of correctness. Discover Bank v. Morgan, 363 S.W.3d 479, 487 (Tenn. 2012).

A judgment rendered without proper and valid personal jurisdiction is void. “The lawful authority of a court to adjudicate a controversy brought
before it depends upon that court having jurisdiction of the subject matter
and jurisdiction of the parties.” Turner v. Turner, 473 S.W.3d 257, 268-69 (Tenn. 2015). “Personal jurisdiction refers to the power of a court over the parties to the controversy to render a binding judgment.” Id.

If you don’t have good personal service, then you can’t get a valid judgment. “A court obtains personal jurisdiction over a party defendant by service of process.” Turner, 473 S.W.3d at 271. “A judgment rendered by a court lacking either personal or subject matter jurisdiction is void.” Id.

What about personal service by “constructive service”? Tenn. R. Civ. P. 4.08 provides a limited exception to the requirements of actual, personal service of process, but be careful in dealing with those less favored methods.

For instance, in that case, Plaintiff relied on Tenn. Code Ann. § 21-1-203 and § 21-1-204 to obtain service by publication. If you’re going to follow the exception to the general rule, however, you had better strictly comply. (Here, the plaintiff didn’t–those statutes apparently apply only to chancery court disputes and, going a step further, plaintiff published the notices in Montgomery County to serve a defendant who lived in Davidson County.)

The Court of Appeals went on to discuss service by publication generally, noting that “constructive service by publication is permissible only if it is accomplished in a manner reasonably calculated to give a party defendant adequate notice of the pending judicial proceedings” Turner, 473 S.W.3d at 272.

Long story short, if you’re going to rely on the constructive notice provisions: (1) You’d better follow the statutes to the letter; (2) You should have a valid, legal reason for resorting to the disfavored method; and (3) Your constructive notice should be reasonably calculated to give your defendant notice of the suit.

Service of Process via Registered Agents can be Hard, where There is no Registered Agent

As strange as it seems, but some businesses go to great lengths to set up a proper corporate entity (i.e. a corporation, LLC, etc.) for their business, but they don’t appoint a registered agent for process.

As you all know, a corporate entity must designate a person or entity to serve as a registered agent (i.e. to provide a public “face”) for service of process.

Before filing any lawsuits, I’ll research a corporation on the Tennessee Secretary of State business information search to get the name of its registered agent (i.e. the person/entity that I have to serve with service of process), and they simply don’t have one listed (or they just have the corporate name listed).

This may be dumb, or it may be dumb like a fox. I mean, if they don’t list an agent to accept service of legal documents, then is there a chance that plaintiffs simply can’t serve legal documents on them?

The short answer is “Of course not.” The longer answer is at
Tenn. Code Ann. § 48-15-104 (b), which provides:

(b) Whenever a domestic or foreign corporation authorized to do business in this state fails to appoint or maintain a registered agent in this state, whenever its registered agent cannot be found with reasonable diligence, whenever a foreign corporation shall transact business or conduct affairs in this state without first procuring a certificate of authority to do so from the secretary of state, or whenever the certificate of authority of a foreign corporation shall have been withdrawn or revoked, then the secretary of state shall be an agent of such corporation upon whom any such process, notice or demand may be served.

So, in that situation, you serve the Secretary of State. In the past, what I’ve frequently done is serve the managing corporate actor, such as the president, owner, or other suitable person in a management capacity. Per
Tenn. Code Ann. § 48-15-104 (d), that appears to also be allowed (that statute provides that “[t]his section does not prescribe the only means, or necessarily the required means, of serving a corporation.”

Ineffective Service of Process Will Not Toll the Statute of Limitations in Tennessee: Act Fast in Obtaining (or Correcting) Service

Earlier this year, I wrote a blog post explaining that, under Tenn. R. Civ. P. 3, just because you filed a timely lawsuit, doesn’t mean that you don’t have statute of limitations issues–you have to also accomplish prompt and timely service of process.

Recently, the Tennessee Court Appeals re-visited that issue in Kimberly Urban v. Robin Nichols, and it came to the same conclusion. In the Urban case, the Plaintiff filed the lawsuit within the one year statute of limitations, but the Plaintiff delayed in obtaining valid service of process and, worse, delayed in correcting her defective efforts to obtain service. The Court found that the ineffective service, followed by the long delay in correcting the service, failed to prevent the statute of limitations from expiring. Accordingly, the Court dismissed the lawsuit.

But, basically, that’s the same law as the blog post from April, right? Yes, but what I found interesting about this new case is that, if the Plaintiff had been diligent about correcting the ineffective service of process, the Court would have cut her some slack.

In fact, the Court said she could have amended her Complaint under Rule 15 to correct the defective name of one of the defendants or she could have issued new summons. If she had made any of these corrective efforts in a timely fashion, the Court suggests, the case would not have been dismissed on the technicalities, since Tennessee law and policy favor litigants to amend their pleadings to have disputes resolved on the merits.

So, the moral of the story may be: If you make a technical error, act fast in getting it fixed or at least brought before the Court.

A Filed, but Not Served Complaint, May Not Prevent the Statute of Limitations from Expiring under Rule 3

The Court of Appeals issued an interesting case yesterday to remind us all about the importance of prompt service of process. This case is Amresco Independence Funding, LLC v Renegate Mountain Golf Club, LLC (Tenn. Crt. Apps., Mar. 31, 2015, No. E2014-01160-COA-R3-CV), and the full text can be found here.

The basic facts are that the Plaintiff filed a collection lawsuit against Defendant, but did not obtain valid and timely service of process of the Complaint. Then, after the statute of limitations expired and after one year from the date that the original Summons was issued, the Defendant filed a Motion to Dismiss. In the Motion, the Defendant argued that any new Summons would not relate back to the Complaint filing date and, as a result, the lawsuit was too late.

This is a good argument. Under Tenn. Rule. Civ. P. 3:

If process remains unissued for 90 days or is not served within 90 days from issuance, regardless of the reason, the plaintiff cannot rely upon the original commencement to toll the running of a statute of limitations unless the plaintiff continues the action by obtaining issuance of new process within one year from issuance of the previous process or, if no process is issued, within one year of the filing of the complaint.

The Court of Appeals agreed with this analysis and upheld the dismissal.

So, as a rule of thumb, don’t think that because you filed your lawsuit that all your statute of limitations issues go away. Indeed, if you simply file the lawsuit and then don’t obtain service of process, your time-sensitive claims could potentially expire.

And this isn’t just a rule that penalizes lazy lawyers. I’ve filed lawsuits to satisfy deadlines, but then considered not serving the Summons because the parties were engaged in settlement talks or waiting for a sale or some other event to occur.

Under Rule 3, the mere filing of the lawsuit may not be enough to save your claims.

Service of Process: Just Like the Movies

There’s a reason that there’s never been an epic movie about Bankruptcy lawyers: To the rest of the world, it’s not very exciting work.

In fact, the only movie about it (that I know of) is Heart and Souls (1993), starring Robert Downey, Jr. as a creditor bankruptcy attorney who goes after struggling companies and shuts them down when they can’t pay their bills.  The premise is that his four childhood guardian angels come back to visit him and are shocked at the work he does. (Yikes).

But, there is one aspect of my practice that is just like the movies: Service of Process.

Under the Tennessee Rules of Civil Procedure, a lawsuit and summons must be physically served on an individual (Per Rule 4.04).

This part of the process can be frustrating to clients, because, until you get the other party served, they have no responsibility to answer and the case doesn’t move forward. Obviously, the other party in the lawsuit has every incentive to dodge, evade, and generally run from you when you go to serve them.

I wrote about this on Paid in Full–some of my clients get so upset that they want to serve the process themselves (which they can’t).

My advice: Find a really good process server, one who is willing to be creative in order to get the job done.

Have you ever seen the movie Pineapple Express? In that movie, Seth Rogen plays a sneaky process server, who has a car full of costumes and disguises. That’s who you want working for you.

I have a guy right now, who is great. He’s gone to the door with a big bouquet of flowers. He’s used a pizza delivery guy disguise. Around the holidays, he doesn’t serve “process”–he delivers “gifts.” Who doesn’t like gifts?

Sometimes you get efficient and good results because you’re a great lawyer. Sometimes, it’s because the other side thinks they have a secret admirer.