Powertrain, Inc. v. Ma et al

Filing 118

MEMORANDUM OPINION re 117 Order. Signed by Senior Judge Glen H. Davidson on 10/24/13. (rel)

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF MISSISSIPPI

ABERDEEN DIVISION

POWERTRAIN, INC., a Mississippi corporation

v.

PLAINTIFF

CIVIL ACTION NO.1: ll-CV-001 05-GHD-DAS

JOYCE MA, individually; and
BEST MACHINERY & ELECTRICAL, INC.

DEFENDANTS

MEMORANDUM OPINION CONCERNING
SERVICE OF PROCESS ON DEFENDANT BEST MACHINERY & ELECTRICAL, INC.
Presently before the Court is a brief [116] filed by Plaintiff PowerTrain, Inc. concerning
its service of process on Defendant Best Machinery & Electrical, Inc. Upon due consideration,
the Court finds as follows.

A. Factual and Procedural Background
On May 3, 2011, PlaintiffPowerTrain, Inc. ("PowerTrain") initiated this contract dispute
action against Defendants Joyce Ma, individually ("Ma"), and Best Machinery & Electrical, Inc.
("Best Machinery"). Best Machinery is a California corporation that has been dissolved since
2007. While in existence, Best Machinery was engaged in commercial activity consisting of
importing small engines from China to the United States for resale. Ma is a California resident
who allegedly "has conducted business individually and under the corporate name 'Best
Machinery and Electrical, Inc.' with PowerTrain in the State of Mississippi." PI.'s Am. Compi.
[83]

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5.

Plaintiff served the summons and initial complaint on Ma, but was unable to perfect
service of process on Best Machinery despite repeated attempts to serve Best Machinery's listed
agent for service of process. The Clerk of Court entered notices of default [12, 16, & 18] as to
Best Machinery. On January 20, 2012, Plaintiff filed a motion for entry of default [19] as to Best

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Machinery for failure to plead, answer, or otherwise defend itself in the case sub judice. On
January 23,2012, the Clerk issued an entry of default [20] as to Best Machinery.
Approximately one year later, PowerTrain filed an amended complaint [83] against Ma
and Best Machinery, perfected service on Ma, and again struggled to effect service on Best
Machinery. On March 8, 2013, PowerTrain filed a motion to set aside [89] the Clerk's entry of
default against Best Machinery and for the Clerk to reissue the summons to Best Machinery on
PowerTrain's amended complaint. That motion was subsequently granted by this Court's Order
[90] dated March 11,2013, and the summons was reissued. On April 15, 2013, the Clerk entered
a notice of incomplete process [93] as to Best Machinery. PowerTrain sought, and was granted,
two separate extensions of time to perfect service on Best Machinery, but was unable to do so.
PowerTrain then filed a motion [98] for the Court to allow service of process upon Best
Machinery through the California Secretary of State, and attached in support an affidavit of
reasonable diligence. On July 10, 2013, the Magistrate Judge entered an Order [99] directing
that service upon Best Machinery could be perfected by hand-delivering the summons and
complaint to the California Secretary of State.

PowerTrain then attempted to reissue the

summons and complaint to Best Machinery via the California Secretary of State. Meanwhile, the
Clerk issued an notice of entry of default [105] for Best Machinery'S failure to answer the
amended complaint or otherwise defend in the case; PowerTrain filed a motion for entry of
default [107]; the Clerk issued an entry of default [108]; PowerTrain filed a motion for default
judgment [109] against Best Machinery; and this Court set a writ of inquiry hearing on October
21,2013 at 1:30 p.m.
On September 30, 2013, the Court received a remark letter [113] from the California
Secretary of State informing the Court that the California Secretary of State is not the agent for

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service for Best Machinery as a dissolved corporation and that there is no statutory authority in
the California Corporations Code or the Code of Civil Procedure to present the entry of default
either directly to the Secretary of State or for forwarding to the corporation. Upon receipt of this
remark letter, the Court questioned the validity of Plaintiffs service of process on Best
Machinery and thus its in personam jurisdiction as to Best Machinery. Therefore, the Court
continued the writ of inquiry hearing and granted PowerTrain time to demonstrate the validity of
its service of process on Best Machinery.
On October 17, 2013, PowerTrain filed the present brief [116] wherein it maintains that it
has perfected service of process on Best Machinery through the California Secretary of State's
Office.

Upon due consideration, the Court finds that PowerTrain has perfected service of

process on Best Machinery and that the writ of inquiry hearing concerning PowerTrain's motion
for default judgment against Best Machinery should be reset.
B. Analysis and Discussion

PowerTrain maintains that in accordance with the Magistrate Judge's July 10,2013 Order
[99] allowing service of process on Best Machinery through the California Secretary of State,
PowerTrain served process on Best Machinery on August 9, 2013, by hand-delivering the
Magistrate Judge's Order [99] and a copy of the summons and amended complaint to the
California Deputy Secretary of State. See Proof of Service [116-3] at 1-6. PowerTrain further
attaches a record of service of process indicating that on August 15, 2013 the California
Secretary of State's Office sent copies of the Magistrate Judge's Order, summons, and amended
complaint to Best Machinery. See Record of Service of Process [116-4] at 1-2. PowerTrain
contends that under the California Corporations Code, service was complete ten days after
delivery was made to the California Secretary of State's Office, which was August 19,2013, and

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notes that the California Secretary of State's office never informed PowerTrain prior to August
19, 2013 that service of process was improper or ineffective. Finally, PowerTrain maintains that
the remark letter [113] from the California Secretary of State referred to the Clerk's entry of
default when stating that the California Secretary of State was not the agent for service of
process on Best Machinery. The Court finds as follows.
Rule 4 of the Federal Rules of Civil Procedure provides in pertinent part that a domestic
corporation must either be served "in the manner prescribed by Rule 4(e)(1) for serving an
individual" or "by delivering a copy of the summons and of the complaint to an officer, a
managing or general agent, or any other agent authorized by appointment or by law to receive
service of process and-if the agent is one authorized by statute and the statute so requires-by
also mailing a copy of each to the defendant." FED. R. CIV. P. 4(h)(1). Rule 4(e)(1) provides that
an individual may be served by "following state law for serving a summons in an action brought
in courts of general jurisdiction in the state where the district court is located or where service is
made." FED. R. CIv. P. 3(e)(l). Under the California Rules of Civil Procedure:
A summons may be served on a corporation that ... has dissolved
[ ] by delivering a copy of the summons and of the complaint:
(a) To a person who is a trustee of the corporation
and of its stockholders or members; or

(b) When authorized by any provision in
Sections 2011 or 2114 of the Corporations
Code (or Sections 3301 to 3303, inclusive, or
Sections 6500 to 6504, inclusive, of the
Corporations Code as in effect on December 31,
1976, with respect to corporations to which they
remain applicable), as provided by such
provision.
CAL. CODE OF CIV. P. § 416.20 (emphases added). Section 2011 of the California Corporations
Code provides in pertinent part:
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Summons or other process against such a corporation may be
served by delivering a copy thereof to an officer, director[,] or
person having charge of its assets or, if no such person can be
found, to any agent upon whom process might be served at the
time of dissolution. If none of such persons can be found with
due diligence and it is so shown by affidavit to the satisfaction
of the court, then the court may make an order that summons
or other process be served upon the dissolved corporation by
personally delivering a copy thereof, together with a copy of
the order, to the Secretary of State or an assistant or deputy
secretary of state. Service in this manner is deemed complete
on the 10th day after delivery of the process to the Secretary of
State.
CAL. CORP. CODE § 2011(b) (emphasis added).
It is apparent from the record that Plaintiff repeatedly attempted to effect service of

process on the listed agent for Best Machinery, but was unable to do so. The Magistrate Judge
found that Plaintiff had demonstrated due diligence to effect service of process on Best
Machinery and therefore entered the Order allowing the summons and amended complaint to be
served upon Best Machinery through the California Secretary of State. Once service was made
to the California Secretary of State, the California Secretary of State forwarded copies of the
Magistrate Judge's Order, the summons, and the amended complaint to Best Machinery's
principal executive office in accordance with California Corporations Code § 1702(b). As
PowerTrain maintains in its brief, service was deemed complete under Federal Rule of Civil
Procedure 4( e)( I), California Code of Civil Procedure § 416.20, and California Corporations
Code § 201 1(b) on August 19,2013, the tenth day after delivery of the process to the California
Secretary of State.

No documentation before the Court suggests to the contrary.

Thus,

PowerTrain has demonstrated to the satisfaction of the Court that service of process has been
perfected on Best Machinery.

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C. Conclusion
For all the foregoing reasons, the Court finds that Plaintiff PowerTrain, Inc. has perfected
service of process on Defendant Best Machinery & Electrical, Inc. The writ of inquiry hearing
concerning Plaintiff PowerTrain Inc.'s motion for default judgment [109] against Defendant Best
Machinery & Electrical, Inc. will be reset by further order of the Court.

de. ;J

A separate order ~accordance with this opinion shall issue this day.

THIS, theo2f; ofOctober, 2013.

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SENIOR JUDGE

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