Ace Am. Ins. Co. v. Meadowlands Developer Ltd. P'ship

• Decision Date: 22 October 2015
• Docket Number: CIVIL ACTION No. 13–1613
• Citation: 140 F.Supp.3d 450
• Parties: Ace American Insurance Company, Petitioner, v. Meadowlands Developer Limited Partnership, Respondent.
• Court: U.S. District Court — Eastern District of Pennsylvania

140 F.Supp.3d 450

Ace American Insurance Company, Petitioner,

v.Meadowlands Developer Limited Partnership, Respondent.

CIVIL ACTION No. 13–1613

United States District Court, E.D. Pennsylvania.

Signed October 22, 2015

Zachary Robert Magid, Noah A. Schwartz, Patrick C. Lamb, Marks O'Neill O'Brien Doherty & Kelly PC, Philadelphia, PA, for Petitioner.

MEMORANDUM OPINION

TIMOTHY R. RICE

, U.S. Magistrate Judge

Plaintiff Ace American Insurance Co. ("Ace") holds a $5.2 million default judgment from an uncontested arbitration proceeding against defendant Meadowlands Developer Limited Partnership ("MDLP") for alleged unpaid insurance premiums. The judgment's validity, however, hinges on whether MDLP was properly served with Ace's Petition to Confirm the Arbitration Award.

After extensive briefing and oral argument, I find MDLP was properly served and therefore deny its Motion to Vacate the Default Judgment. Ace twice properly served MDLP—in May and August 2013. MDLP does not contest being served in May 2013 and Ace has filed a proof of service that confirms the service was proper under the federal rules. In any event, Ace's August 2013 service of MDLP's general partner, as listed in state records, also constituted proper service. Disregarding both acts of service for the technical reasons suggested by MDLP would denigrate service of process into a tactical game unworthy of our justice system.

A. Background¹

In 2004, Ace agreed to provide insurance through a Deductible Reimbursement Agreement to the Mills Corporation. See 3/27/2013 Pet. to Confirm Arb. Award (doc. 1) at ¶¶ 78; Mot. to Vacate Def. J. (doc. 17) at 4. That agreement was subsequently assigned to MDLP. See 3/27/2013 Pet. at ¶¶ 10–12; Mot. to Vacate at 4.

In October 2011, Ace demanded arbitration pursuant to the Deductible Reimbursement Agreement, claiming MDLP had failed to pay approximately $3.7 million in premiums. See 3/27/2013 Pet. at ¶ 22; Mot. to Vacate at 4. MDLP did not participate in the arbitration and, in March 2013, a panel of arbitrators awarded Ace approximately $5.2 million.² See 3/27/2013 Pet. at ¶ 26; Mot. to Vacate at 4.

On March 27, 2013, Ace filed a Petition to Confirm the Arbitration Award (the "petition") against MDLP in this Court. See 3/27/2013 Petition. In April 2013, Ace filed an Affidavit of Service signed by Andrew Miller of Metro Filing Services, Inc. See 4/10/2013 Aff. (doc. 3). Miller swore that he had personally served the petition on MDLP on April 5, 2013, but failed to state the location of service. Id. Miller also noted that an adult female had stated that MDLP was unknown at "this address." Id.

Approximately two months later, in June 2013, Ace filed another Affidavit of Service signed by Miller. See 6/3/2013 Aff. (doc. 4). Miller swore that he had again personally served the petition on MDLP on May 21, 2013, and that an adult female had accepted the petition. Id. Miller again failed to state the location of service. Id. One month later, MDLP filed two documents as exhibits to this second Affidavit of Service. See 7/10/2013 Praecipe to Substitute/Attach Exhibits (doc. 5). The first document was a copy of a May 17, 2013 letter from Ace's attorneys directed to MDLP, care of Corporation Service Company at 830 Bear Tavern Road, West Trenton, New Jersey. Id. The letter stated it was sent "via personal service" and enclosed the petition. Id. The second document was a New Jersey Business and Record report showing that MDLP's agent for service of process was Corporation Service Company at its West Trenton address. Id. Neither of these documents established that Miller had served the petition on Corporation Service Company in West Trenton. Id.

On July 30, 2013, United States District Court Judge Mitchell S. Goldberg entered an order noting "that the proof of service upon [MDLP] is deficient." 7/30/2013 Order (doc. 6). He ordered Ace, by August 20, 2013, to either: (a) amend its proof of service to demonstrate its service complied with the Federal Rules of Civil Procedure with an affidavit describing why such information was originally omitted; or (b) effect proper service on MDLP. Id. He further ordered that: "Failure to demonstrate or effect proper service by the above date will result in dismissal of this action for lack of prosecution." Id.

On August 20, 2013, Ace's attorney filed an Amended Affidavit of Service certifying that the U.S. Marshals Service had personally served the Petition to Confirm on Meadowlands Limited Partnership ("MLP") on August 14, 2013. See Am. Aff. of Service (doc. 7). Ace attached the Process Receipt and Return. Id. Ace's attorney noted that the petition was to be served on MLP at 660 Madison Avenue, Suite 1600, New York, New York. Id. The U.S. Marshal certified that, on August 14, 2013, he or she had personally served an entity named "Colony Capital" at the address listed by Ace. Id. The Marshal also noted that the woman at the desk had refused to give her name. Id.

Approximately one month later, Ace sought a default judgment based on MDLP's failure to respond to the petition. See Mot. for Entry of Default (doc. 8). Ace filed a second motion for default in early October 2013, and amended motions for default, in which Ace specified the amount owed, in late October and November 2013.³ See Req. for Entry of Default (doc. 12); Am. Req. for Entry of Default (doc. 13); Second Am. Req. for Entry of Default (doc. 14).

On December 5, 2013, this Court filed a September 19, 2013 letter from Ace's attorneys to Judge Goldberg, written in response to a call from Judge Goldberg's chambers concerning service of the petition. See 9/19/2013 Letter (doc. 15) at 1. Ace explained that it had properly served the petition on MDLP by personally serving its general partner, MLP, in New York. Id. at 2–3; see also id. at 7 (New Jersey Division of Revenue Report stating MLP was the sole general partner of MDLP and listing 660 Madison Ave., Suite 1600, New York, N.Y. as its address). Ace further explained that Colony Capital, a privately-held real estate investment firm, also was located at the New York address for MLP and that Colony Capital once employed the vice president of the managing partner of MLP. Id. at 3. Ace concluded that: MDLP "should not be able to thwart this proceeding by refusing to give its name to the United States Marshal who effected service on it." Id. at 4.

On December 6, 2013, Judge Goldberg granted Ace's motion for a default judgment. 12/6/2013 Order (doc. 16). Judge Goldberg found MDLP was served the petition at its place of business, as shown by the August 2013 Amended Affidavit of Service and Ace's September 2013 letter. Id. Judge Goldberg further found that MDLP had failed to answer the petition or otherwise appeal. Id. He granted Ace a judgment for $5,214,249 based on the arbitration award and interest. Id.

Almost eleven months later, in October 2013, MDLP moved to vacate the default judgment, asserting Ace had failed to properly serve the petition. See Mot. to Vacate. The parties have filed several additional briefs and appeared for oral argument on October 7.⁴ The parties agree that the default judgment must be deemed void if MDLP was not properly served. See Mot. to Vacate at 8; Resp. (doc. 18) at 6; see also Gold Kist, Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14, 19 (3d Cir.1985)

("[a] default judgment entered where there has been no proper service of the complaint is, a fortiori, void, and should be set aside") (citing Fed. R. Civ. P. 60(b)(4) ). The parties disagree, however, whether service was properly made.

B. Service of Process

"An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950)

. Courts, therefore, require plaintiffs to take steps to provide notice to those they sue. See Fed. R. Civ. P. 4(c). Moreover, compliance with these court rules is necessary for the court to have personal jurisdiction over a defendant. See Grand Entertainment Group, Ltd. v. Star Media Sales, Inc., 988 F.2d 476, 492 (3d Cir.1993) (Although notice underpins the rules governing service, "[p]roper service is still a prerequisite to personal jurisdiction."); Echevarria–Gonzalez v. Gonzalez–Chapel, 849 F.2d 24, 28 (1st Cir.1988) (defendant must be served in accordance with the federal rules "for the court to secure personal jurisdiction over him").

A plaintiff must serve a copy of the complaint and a summons on all defendants. See Fed. R. Civ. P. 4(c)

. Where a defendant is a partnership, such as MDLP, service may be completed by delivering a copy of the summons and complaint to an officer, a managing or general agent, or any other agent authorized by appointment to receive service of process. See Fed. R. Civ. P. 4(h)(1)(B). Service also may be completed by following the laws of the state where the case is filed or the state where service is made. See Fed. R. Civ. P. 4(h)(1)(A), 4(e)(1). The state laws relevant to this case allow service on a partnership similar to the federal rule. See Pa. R. C. P. 424 (partnership may be served by handing copy of the complaint to: (1) an executive officer or partner; or (2) the manager, clerk or other person for the time being in charge of any regular place of business or activity of the partnership; or (3) an agent authorized in writing to receive service of process); N.Y. C.P.L.R § 310 (partnership may be served by personally serving any of the partners, the managing agent, the general partner, or the person in charge of the office of the partnership within the state and by mailing the summons to the last known address or place of business of the partnership); N.J. R. 4:4–4 (partnership may be served by serving copy of summons and complaint on an officer, managing agent,...