“I Just Work Here”: Service on Corporate “Employee” Not The Same As Service On Corporate “Agent” – IL Court


Route 31, LLC, v. Collision Centers of America, 2015 IL App (2d) 150344-U examines the law and facts that determine whether service of process on a corporation complies with Illinois law.

The plaintiff served its lawsuit on the defendant’s office manager and eventually won a default judgment.  About nine months later, the corporation moved to quash service and vacate the default judgment on the basis that service was defective.  The trial court denied the motion and the defendant appealed.

The corporate defendant argued that the court had no personal jurisdiction over it since the plaintiff improperly served the lawsuit. A judgment entered without personal jurisdiction can be challenged at any time.

  • Personal jurisdiction may be established either by service of process in accordance with statutory requirements or by a party’s voluntary submission to the court’s jurisdiction.
  • Strict compliance with the statutes governing the service of process is required before a court will acquire personal jurisdiction over the person served.
  • Where service of process is not obtained in accordance with the requirements of the statute authorizing service of process, it is invalid, no personal jurisdiction is acquired, and any default judgment rendered against a defendant is void.
  • Section 2–204 of the Code provides that a private corporation may be served by leaving a copy of the process with its registered agent or any officer or “agent” of the corporation found anywhere in the state or in any other manner permitted by law. 735 ILCS 5/2–204 (West 2012).
  • Substitute service of a corporation may be made by serving the Secretary of State. 805 ILCS 5/5.25(b)
  • A sheriff’s return of service is prima facie evidence of service, which can be set aside only by clear and satisfactory evidence.
  • However, when a corporation is sued, the sheriff’s return as to the fact of agency is not conclusive. Id.

(¶¶ 13-14)

Employee vs. Agent: “What’s the Difference?”

Employee status and agency are often used interchangeably in common parlance but the terms differ in the service of process context.  An employee is not always an “agent.”   Illinois cases have invalidated service of process on corporations where a plaintiff, in different cases, served a cashier and receptionist with process and neither understood what it was.

But at least one court (Megan v. L.B. Foster Co., 1 Ill.App.3d 1036, 1038 (1971), did find that “service upon an intelligent clerk of a company who acts as a receptionist and who understood the purport of the service of summons” was sufficient service on a corporate employee.

In Collision Centers, the plaintiff and defendant submitted warring affidavits.  The plaintiff’s process server testified that the summons recipient held herself out as the “office manager,” and acknowledged that she was authorized to accept service.  The office manager’s affidavit said just the opposite: she claimed to have no corporate responsibilities or authority to receive legal papers for her employer.

The court noted that under the process server’s affidavit, the office manager was akin to an agent – an “intelligent” company representative who appreciates the importance of the served summons.

Yet the defendant’s office manager swore she was only a garden-variety “employee” who lacked any corporate authority to accept service and lacked a basic understanding of the papers’ meaning.  In fact, the office manager stated in the affidavit that she was badgered into accepting the papers by the plaintiff’s process server.

The widely divergent affidavit testimony meant the court could only decide the service issue after an evidentiary hearing with live testimony.  Since plaintiff has the burden of proving proper corporate service and never requested an evidentiary hearing in the trial court, the trial court erred in denying defendant’s petition to quash service without first conducting a hearing.  As a result, the judgment against the corporation was reversed.

Afterwords:

This case highlights the importance of a civil suit plaintiff’s vigilance when serving a corporation.  If service on a registered agent of a corporation (something that is typically public record via a Secretary of State website) isn’t possible, the plaintiff should take pains to serve an officer of the corporation or at least a knowledgeable agent.  Unfortunately, in Illinois at least, this isn’t always possible on the first try since service must usually go through the County Sheriff in the first instance.

Process Server’s Return of Service Qualifies As Public Records and ‘Regularly Conducted Business Activity’ Hearsay Exceptions – Florida Appeals Court

My experience with the hearsay evidence rules usually involves trying to get a business record like an invoice or spreadsheet into evidence at trial or on summary judgment.  The business records hearsay exception is found at Illinois Evidence Rule 803(6) and mirrors the Federal counterpart.  “Exception” in the context of hearsay evidence means a document is hearsay (an out-of-court statement used to prove the truth of the matter asserted) and would normally be excluded but still gets in evidence because the document (or other piece of evidence) has an element of reliability that satisfies the court that the document is what it appears to be.

Occasionally though, I’ve found that a working knowledge of some of the more obscure (to me at least) hearsay exceptions can in some cases lead to a victory or at least resurrect a rapidly flagging case.

Davidian v. JP Morgan Chase Bank, NA, 2015 WL 5827124 (Fla. 4th DCA 2015) (http://www.4dca.org/opinions/Oct.%202015/10-7-15/4D14-2431.op.pdf) a recent Florida appeals court decision, examines some hearsay exceptions as they apply to a process server’s sworn return of service and the persons served are challenging service.

Chase Bank filed a foreclosure suit against defendants/appellants (a husband and wife) and filed returns of service signed by Chase’s process server who certified that he served both appellants at the same time on the same date. The appellants moved to quash service of process on the grounds they were never served. The trial court denied the motion leading to this appeal.

The appeals court affirmed.  It held the appellants failed to show by clear and convincing proof that the returns of service were deficient.

In Florida, the burden of proving proper service of process is on the suing party and the return of service is evidence of whether service was validly made.  A return of service is presumed to be valid and the party contesting service must overcome the presumption by clear and convincing evidence.  A return of service is technically hearsay since it’s an out-of-court statement used to show its truth – that service of summons was in fact made on a party.

Two hearsay rule exceptions recognized not only by Florida courts but various state and Federal courts include the public records and the “regularly conducted business activity” exceptions.  Fla. Stat. s. 90.801, 803(6), (8).

Here, the court found the service return admissible under both exceptions.  The return was a public record – presumably because it was filed as part of the case record.  The return also qualified as evidence of regularly conducted business activity since the process server stated in his affidavit that was his regular practice to prepare such an affidavit detailing the date, time and manner of service.

The appeals court also rejected appellants’ argument that the service returns were defeated by their counter-affidavits in which they denied receiving the summons and complaint.  When faced with a service return and a defendant claiming he/she wasn’t served, the court makes a credibility determination after an evidentiary hearing.   Factual determinations are typically not disturbed on appeal.  The court found that the trial court was in a better position to judge the credibility of the witnesses and upheld the motion to quash’s denial.

Take-aways:

This case presents application of hearsay exceptions in an unorthodox factual setting.  The court expanded the scope of the public records and regularly-conducted-business-activity exceptions to encompass a process server’s return of service.  This case and others  like it validate process servers’ sworn returns and make it easier for plaintiffs to clear service of process hurdles where a defendant claims to have never been served.

 

 

 

Rule 103(b): Plaintiff’s Year-Long Delay In Serving Lawsuit Merits Dismissal For Lack of Diligence – IL 1st Dist.

Illinois Supreme Court Rule 103(b) requires a plaintiff to exercise diligence in serving a defendant.  The rule is based on the principle that litigation should have an end-date and not languish.  Rule 103(b) also heightens the probability that suits will be resolved when the underlying facts are fresh in the minds of the parties and witnesses and lessens the chance that trials will be tainted by stale evidence or faded memories.

Mular v. Ingram, 2015 IL App (1st) 142439 serves as a recent and harsh example of a plaintiff failing to actively find and sue a defendant.

The plaintiff was injured at the defendant’s home in July 2010 and sued in July 2012 – just before the two-year statute of limitations period for personal injuries ran.  735 ILCS 5/13-202 (two-year limitations period for personal injuries).  Over the next several months, the plaintiff issued multiple summonses to the wrong address.  The case was also dismissed for want of prosecution (DWPd) for several weeks before being reinstated by the plaintiff.  Almost three years from the occurrence and a full 1/2 year after the limitations period expired, plaintiff finally served the defendant.

The trial court dismissed the plaintiff’s suit with prejudice for lack of diligence in serving the defendant under SCR 103(b).

Holding: Affirmed

Rules/Reasons:

Rule 103(b) aims to protect a defendant from unnecessary delay in service of process.  The rule is designed to give a defendant a fair opportunity to investigate the nature of a plaintiff’s claims.  The rule doesn’t specify a specific amount of time for a defendant to be served and the trial court has wide discretion in considering a Rule 103(b) motion.

Once a defendant makes an initial showing that the plaintiff was not diligent in serving him, the burden shifts to the plaintiff to refute this.  The reasonable diligence standard is an objective one and the court does not consider whether the plaintiff intentionally delayed service.  While the defendant isn’t required to prove he was prejudiced by the delay, prejudice to the defendant is still a factor considered by the court.

Multiple factors guide the court’s analysis on a Rule 103(b) motion.  These include: (i) the length of time it took to serve the defendant; (ii) plaintiff’s efforts to obtain service; (iii) whether plaintiff knew of defendant’s whereabouts; (iv) whether the defendant’s whereabouts  could be easily obtained; (v) whether defendant was actually aware of the suit; (vi) whether the defendant was actually served; and (vii) any special circumstances that justify a service delay.

While the time period during which a case is voluntarily dismissed (non-suited) by a plaintiff is not calculated when assessing whether a plaintiff was reasonably diligent in obtaining service, the time where a case is involuntarily dismissed (such as a DWP) is included in the reasonable diligence calculus.

Where a plaintiff isn’t diligent but the defendant is still served before the statute of limitations period runs out, a Rule 103(b) motion can be granted without prejudice.  Where the defendant is served after the statute runs, the plaintiff’s case can be dismissed with prejudice.

(¶¶ 22-24).

Under these guideposts, the court found the plaintiff exhibited a lack of diligence.  She repeatedly put wrong addresses on multiple summonses when her own complaint correctly listed the defendant’s address.  The plaintiff also didn’t serve the defendant until nearly three years after the underlying incident and a year after the personal injury limitations period ran.  In addition, the plaintiff’s case was DWPd for over five weeks during the time preceding service on the defendant.

The plaintiff’s argument that the four-year statute of limitations for construction-related claims (735 ILCS 13-214) also failed.  The construction negligence statute only applies to activities related to the “design, planning, supervision, observation or management of a construction project.”  Defendant fit none of these categories; she was a landowner only.  With no complaint allegations that the defendant participated in the construction or design of a home, the plaintiff couldn’t rely on the four-year limitations period to sustain her claim.

Take-aways:

There’s no chronological litmus test for determining whether a plaintiff was reasonably diligent in getting service.  Where a defendant’s location is no mystery and several months elapse from suit to service, the plaintiff runs the risk of having his case dismissed.  This is especially true if the defendant isn’t served with the lawsuit until after the applicable statute of limitations expires.

The other lesson from the case is that the two-year, not the four-year, limitations period governs personal injury suits against landowners.  If the landowner defendant wasn’t involved in the construction or design of the accident site, he won’t be subject to the longer construction negligence limitations period.