Annextelecom Co. v. Brown
| Decision Date | 14 October 2014 |
| Docket Number | CIVIL ACTION No. 13-4605 |
| Court | U.S. District Court — Eastern District of Pennsylvania |
| Parties | ANNEXTELECOM CO., LTD., Plaintiff, v. MELVIN BROWN et al., Defendants. |
Plaintiff AnnexTelecom Co., Ltd. ("Annex"), a South Korean corporation with its principal place of business in South Korea, filed suit against a host of defendants in connection with a business deal apparently gone bad. Annex allegedly invested money in connection with the production of a worldwide singing talent competition that Defendants would produce. Annex asserts that the Defendants took its money without performing their obligations under the contract, and that the Defendants are liable to Annex for violations of Pennsylvania law. Annex claims that it served copies of the summons and the Complaint on the Defendants,1 but the Defendants failed to appear or defend the action, and the Clerk of Court entered default upon Annex's request. Annex then filed Motions for Default Judgment as to each of the defendants. Upon review of the Complaint and the Motions, the Court ordered Annex to file a supplemental brief on the issue of personal jurisdiction. Annex has, in response to the Court's directive, filed a Supplemental Brief in Support of Motions for Default Judgment.2
The Court may only grant a motion for default judgment if it has both (1) subject matter jurisdiction over the case, and (2) personal jurisdiction over the parties against whom a judgment for affirmative relief is sought. See Williams v. Life Sav. & Loan, 802 F.2d 1200, 1203 (10th Cir. 1986) (). Upon entry of default against a defendant, the Court "must accept as true the jurisdictional allegations in the complaint." D'Onofrio v. Il Mattino, 430 F. Supp. 2d 431, 439 (E.D. Pa. 2006). Annex can try to satisfy the burden of proving personal jurisdiction with a prima facie showing and "may rest [its] argument on [its] pleadings, bolstered by such affidavits and other written materials as they can otherwise obtain." Id. (quoting Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005).
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Congress has granted district courts original jurisdiction over claims valued at more than $75,000 between "citizens of a State and citizens or subjects of a foreign state." 28 U.S.C. § 1332(a)(2). For purposes of diversity jurisdiction, a corporation is a citizen of "every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business." Id. § 1332(c). Diversity jurisdiction requires that there be complete diversity, so that "in cases with multiple plaintiffs or multiple defendants, no plaintiffbe a citizen of the same state as any defendant." Zambelli Fireworks Mfg. Co., Inc. v. Wood, 592 F.3d 412, 419 (3d Cir. 2010); see Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005).
A court with original jurisdiction may assert supplemental jurisdiction over claims arising from the same case or controversy, but it may not assert supplemental jurisdiction over claims by plaintiffs against certain defendants "when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332." 28 U.S.C. § 1367(a), (b). Thus, plaintiffs may not use supplemental jurisdiction in diversity cases to circumvent the complete diversity rule. See, e.g., Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 375-77 (1978); Exxon Mobil Corp., 545 U.S. at 553-54.
Annex argues that the Court has diversity jurisdiction over its state law claims against Melvin Brown, Rich Music Entertainment, MBMG, LLC, Konvict Muzik Group, and World Music Icon, LLC (collectively, the "American Defendants") under 28 U.S.C. § 1332(a)(2). Annex further argues that the Court has supplemental jurisdiction over its state law claims against Sun Keun Lee and On-Spot Enterprises Korea (collectively, the "South Korean Defendants") under 28 U.S.C. § 1367. Annex is a South Korean corporation with its principal place of business in South Korea and registered to do business in Pennsylvania. See Compl. at 1-2. Annex claims that the American Defendants are citizens of either Virginia or Georgia, and that the South Korean Defendants are citizens of South Korea.3 See id. at 2-3; Supp. Br. at 2.
This Court has diversity jurisdiction over Annex's state law claims against the American Defendants because those claims meet the amount-in-controversy requirement and the controversy is between a citizen of South Korea and citizens of Virginia and Georgia. However, this Court may not assert supplemental jurisdiction over Annex's state law claims against the South Korean Defendants because the parties are not completely diverse, namely, here there is a South Korean plaintiff suing South Korean defendants. Annex cannot use § 1367 to circumvent the complete diversity requirement of § 1332 and assert state law claims against the South Korean Defendants. Annex's claims against the South Korean Defendants are therefore dismissed for lack of subject matter jurisdiction.
Turning to Annex's claims against the American Defendants, the Court must now assure itself that it has personal jurisdiction over the remaining defendants.
The Court will first consider the adequacy of Annex's service of process on the American Defendants. Lampe v. Xouth, Inc., 952 F.2d 697, 700-01 (3d Cir. 1991). "A default judgment entered when there has been no proper service of the complaint is, a fortiori, void, and should be set aside." Gold Kist, Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14, 19 (3d Cir. 1985). "When a court asked to enter default judgment against a party concludes that it lacks personal jurisdiction over the party, the appropriate procedure is to dismiss sua sponte for lack of personal jurisdiction." D'Onofrio, 430 F. Supp. 2d at 438.
Annex's proof of service on the American Defendants4 (Docket Nos. 6-10) states that William Robbins served the American Defendants at Mr. Brown's residence in Virginia. In his Affidavits of Service—identical as to all the American Defendants—Mr. Robbins explains that Mr. Brown refused to come to the door to accept service, so he left the summonses with Mr. Brown's mother Betty Brown. The Affidavits also state that Ms. Brown is a person of suitable age and discretion living at Mr. Brown's residence, and that a copy of the summons was also mailed to Mr. Brown's last known address.
The Federal Rules of Civil Procedure govern the adequacy of service in this case. "[T]he rules distinguish between service of one in his individual capacity, [Rule 4(e)], and service of one as a representative of a corporation, [Rule 4(h)]." Gottlieb v. Sandia Am. Corp., 452 F.2d 510, 514 (3d Cir. 1971). One method of serving an individual in the United States is "substituted service," or "leaving a copy of [the summons and of the complaint] at the individual's dwelling or usual place of abode with someone of suitable age and discretion who resides there," Fed. R. Civ. P. 4(e)(2)(B).
Although substituted service is permitted for a defendant in his or her individual capacity, a corporation may only be served in the United States either (a) in the manner prescribed by the law of the state where the district court is located or where service is made, or (b) by personal service on "an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process . . . ," id. 4(h)(1). Neither Pennsylvania (the state in which this district is located) nor Virginia (the state in which the district in which service was supposedly made is located) permit corporations to be served through the "substituted service" permitted by Rule 4(e). See Pa. R. Civ. P. 424; Va. Code § 8.01-299 (); see also Sampath v. Concurrent Techs. Corp., 227 F.R.D. 399, 402 (W.D. Pa. 2005) ().
The service on Mr. Brown in his individual capacity was proper under Rule 4(e) because Mr. Robbins's Affidavit states that he left a copy of the summons and of the complaint with at Mr. Brown's residence with Ms. Brown, an individual of suitable age and discretion who apparently resides there. However, that same service was improper as to Rich Music Entertainment, MBMG, LLC, Konvict Muzik Group, and World Music Icon, LLC. Proper service would have required that Mr. Robbins personally serve Mr. Brown in his capacity as the official representative of those defendants. Mr. Robbins could have served someone else authorized to accept service on behalf of the corporations, but there is nothing to suggest that Ms. Brown had any connection to them. Hence, although the service of process was adequate as to Mr. Brown individually, the attempted service on the corporations failed to meet the requirements of the Federal Rules, Pennsylvania law, or Virginia law. Thus, the Clerk's entry of default against all the American Defendants, except for Mr. Brown in his individual capacity, was in...
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