United Bankshares, Inc. et al v. First Niagara Bank, N.A. et al

Filing 46

ORDER pursuant to 40 Default entered against B.E. Koncepts, Inc. and Powell Contracting and Heavy Equipment, Inc.; proper service of process upon said defendants has not occurred; the court SETS ASIDE the 40 Default entered against B.E. Konc epts and Powell; denying the plaintiffs' 42 MOTION for Entry of Judgment against Defendants Powell and B. E. Koncepts; because service did not occur within 90 days of the filing of the Complaint, as required by Rule 4(m) of the Federal Rules of Civil Procedure, directing the plaintiffs to demonstrate good cause for not serving the defendants B.E. Koncepts and Powell with process; failure to respond to this notice within 10 days will result in dismissal without prejudice of this case against B.E. Koncepts, Inc. and Powell Contracting and Heavy Equipment, Inc. Signed by Judge Joseph R. Goodwin on 3/4/2016. (cc: attys; any unrepresented party) (taq)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION

UNITED BANKSHARES, INC., et al.,
Plaintiffs,
v.

CIVIL ACTION NO. 2:15-cv-11340

FIRST NIAGARA BANK, et al.,
Defendants.

ORDER
On December 7, 2015, the Clerk of this court entered a Default [ECF No. 40] against B.E.
Koncepts, Inc. (“B.E. Koncepts”) and Powell Contracting and Heavy Equipment, Inc. (“Powell”),
pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. See also Order, Dec. 7, 2015 [ECF
No. 38]. Now pending before the court is the plaintiffs’ Motion for Entry of Judgment Against
Defendants Powell and B. E. Koncepts. [ECF No. 42]. For reasons explained below, the Court
SETS ASIDE the Default [ECF No. 40], and accordingly, DENIES the Motion for Entry of
Judgment [ECF No. 42].
Upon further review of the docket, the court has determined that there has been insufficient
service of process upon defendants B.E. Koncepts and Powell. The summons for B.E. Koncepts
and the summons for Powell, which were mailed by the Secretary of State for West Virginia, were
later returned as “unclaimed.” See Summons Accepted for Service by Sec. of State re: Powell, July
31, 2015 [ECF No. 24]; Summons Accepted for Service by Sec. of State re: B.E. Koncepts, July
31, 2015 [ECF No. 25]; Summons Returned Unclaimed by Sec. of State re: B.E. Koncepts, Sept.

10, 2015 [ECF No. 33]; Summons Returned Unclaimed by Sec. of State re: Powell, Oct. 5, 2015
[ECF No. 35].
The Amended Complaint asserts that B.E. Koncepts and Powell are New York
corporations. Am. Compl. ¶¶ 5, 7 [ECF No. 16]. Rule 4 of the Federal Rules of Civil Procedure
provides that a corporation may be served by, among other methods, “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. 4(e)(1), (h)(1)(A). “[S]ervice of
process attempted under state law is governed by the relevant state statute or rule.” Ballard v. Bank
of Am., N.A., No. 2:12-2496, 2013 WL 1337356, at *3 (S.D. W. Va. March 29, 2013). In this case,
the plaintiff attempted to serve process on B.E. Koncepts and Powell through the Secretary of State
of West Virginia, presumably according to West Virginia’s statutory provision relating to service
of process on nonresident corporations, section 31D-15-1510 of the West Virginia Code.
Section 31D-15-1510 provides that a foreign corporation (i.e., a corporation incorporated
outside West Virginia) transacting business in West Virginia without authorization is
“conclusively presumed to have appointed the Secretary of State as its attorney-in-fact with
authority to accept service of notice and process on behalf of the corporation.” W. Va. Code §
31D-15-1510(e).1 The statute further explains what must occur for service to be sufficient:
Immediately after being served with or accepting any process or notice . . . the
Secretary of State shall file in his or her office a copy of the process or notice, with
a note endorsed of the time of service or acceptance, and transmit one copy of the
process or notice by registered or certified mail, return receipt requested . . . to the
corporation at the address of its principal office, which address shall be stated in
the process or notice. The service or acceptance of process or notice is sufficient if
the return receipt is signed by an agent or employee of the corporation, or the
registered or certified mail sent by the Secretary of State is refused by the addressee
1

A “foreign corporation” as used in this provision is defined as a “corporation for profit incorporated under a law other
than the laws of this state.” W. Va. Code § 31D-1-150(11).

2

and the registered or certified mail is returned to the Secretary of State, or to his or
her office, showing thereon the stamp of the United States postal service that
delivery thereof has been refused . . . .
W. Va. Code § 31D-15-1510(e).2
Thus, it is the refusal or acceptance of process that makes service of process sufficient
pursuant to section 31D-15-1510; mail returned as “undeliverable” or “unclaimed” is insufficient
to effect service of process. See Crowley v. Krylon Diversified Brands, 607 S.E.2d 514, 518 (W.
Va. 2004) (holding that under section 31D-15-1510, “service of process on a corporation is
insufficient when notice or process is mailed using registered or certified mail to an authorized
corporation’s listed agent by the Secretary of State, is neither accepted or refused by the agent, and
the mail is returned to the Secretary of State because the notice or process is undeliverable”); see
also Mason v. Smith, 760 S.E.2d 487, 494 (W. Va. 2014) (citing syl., Crowley, 607 S.E.2d. 514,
and equating “undeliverable” mail with “unclaimed” mail, both of which constitute insufficient
notice). The “unclaimed” summonses returned to the Secretary of State in this case were
insufficient to effectuate service of process under West Virginia law, and, consequently, under
Rule 4 of the Federal Rules of Civil Procedure.
In conclusion, proper service of process upon B.E. Koncepts and Powell has not occurred.
The court therefore SETS ASIDE the Default [ECF No. 40] entered against B.E. Koncepts and
Powell and DENIES the plaintiffs’ Motion for Entry of Judgment [ECF No. 42].

2

The West Virginia Code makes a distinction between foreign corporations authorized to conduct business in West
Virginia and those that are unauthorized. However, the statutory language explaining when service is sufficient is
identical for unauthorized and authorized foreign corporations. Compare W. Va. Code § 31D-15-1510(e) (relating to
unauthorized foreign corporations), with W. Va. Code § 31D-15-1510(d) (relating to authorized foreign corporations).
The plaintiff has not indicated that Powell or B.E. Koncepts is authorized to do business in West Virginia. The court’s
review of the West Virginia Secretary of State Business Organization Search did not reveal either business on record.
See Business Organization Search, http://apps.sos.wv.gov/business/corporations/ (accessed March 2, 2016).
Accordingly, the court is proceeding as though B.E. Koncepts and Powell are unauthorized foreign (i.e., New York)
corporations for the purpose of West Virginia Code, though the distinction would not change the analysis.

3

Because service did not occur within ninety days of the filing of the Complaint, as required
by Rule 4(m) of the Federal Rules of Civil Procedure, the court ORDERS the plaintiffs to
demonstrate good cause for not serving the defendants B.E. Koncepts and Powell with process.
Failure to respond to this notice within ten days will result in dismissal without prejudice of this
case against B.E. Koncepts, Inc. and Powell Contracting and Heavy Equipment, Inc.
The court DIRECTS the Clerk to send a copy of this Order to counsel of record and any
unrepresented party.
ENTER:

4

March 4, 2016