Bowman v. Weeks Marine, Inc.

• Decision Date: 21 August 1996
• Docket Number: Civ. A. No. 2:96-1426-18.
• Citation: 936 F. Supp. 329
• Court: U.S. District Court — District of South Carolina
• Parties: Larry S. BOWMAN and Mary M. Bowman, Plaintiffs, v. WEEKS MARINE, INC., Defendant.

936 F. Supp. 329

Larry S. BOWMAN and Mary M. Bowman, Plaintiffs, v. WEEKS MARINE, INC., Defendant.

Civ. A. No. 2:96-1426-18.

United States District Court, D. South Carolina, Charleston Division.

August 21, 1996.

Mark A. Mason, Mt. Pleasant, SC, for plaintiffs.

Henry E. Grimball, Charleston, SC, for defendant.

ORDER

NORTON, District Judge.

This action is before the court on Plaintiff's Rule 12(b) Motion to Dismiss for Lack of Personal Jurisdiction. Defendant has also filed a Motion to Remand. Having heard oral argument and reviewed the pre-motion and post-motion memoranda submitted by the parties, this court finds that service of process was not proper and therefore grants Defendant's Motion to Dismiss.

I. BACKGROUND

This is a negligence case brought on January 8, 1996, by Plaintiffs Larry and Mary Bowman against Weeks Marine. Plaintiffs, residents of Greenville County, South Carolina filed this case in state court alleging that Defendant's negligence in placing sand and pumping water in front of their Edisto Island beach house damaged the residence. Defendant is a corporation whose principal place of business is some state other than South Carolina and whose corporate head-quarters is located in Cranford, New Jersey. On March 27, 1996, Plaintiffs' counsel mailed a summons and complaint to Defendant by certified mail, return receipt requested, with delivery restricted to Defendant addressee pursuant to state service of process rules. See S.C.R.Civ.P. 4(d)(8). The address on the return receipt was: "Mr. Richard N. Weeks, Weeks Marine, Inc., 216 North Avenue East, Cranford, New Jersey, XXXXX-XXXX." On or about April 1, 1996, Doris Huston, a receptionist at Defendant's corporate office, signed the receipt for the mailed summons and complaint. In her affidavit, she verifies that she signed for the letter, but states: "I am not a corporate officer of Weeks Marine, Inc., and I am not authorized to accept service of suit papers." Affidavit of Doris Huston ¶ 4. Additionally, Defendant presented an affidavit of Thomas F. Langan, the Corporate Risk Manager of Weeks Marine, who claims that he was unable to find any record of service on a corporate officer or the company's registered agent. Affidavit of Thomas F. Langan ¶ 3. He further states that Defendant has a registered agent for service of process in South Carolina. Id. ¶ 4. That agent, the Prentice Hall Corporation System, Inc., is also listed on the "Application By a Foreign Corporation for a Certificate of Authority to Transact Business in the State of South Carolina," which was apparently filed by Defendant with the State of South Carolina in June, 1995.

On May 13, 1996, Defendant filed Notice of Removal and an Answer, reserving its right to contest the personal jurisdiction of the federal court under its Motion to Dismiss for Lack of Personal Jurisdiction, which was filed simultaneously with its Answer and Notice of Removal. In its Motion to Dismiss, Defendant claims that service of process was improper pursuant to Rule 4 of the South Carolina Rules of Civil Procedure and therefore this court does not have personal jurisdiction over Defendant. On May 28, 1996, even though a Notice of Removal had been previously filed in state court, the state court entered an Order of Default finding Weeks Marine in default based on its failure to answer the state court summons and complaint.¹

A hearing was held on this matter on June 4, 1996 at which time the court realized it had not received Plaintiff's Motion to Remand.² Although the court agreed to hear oral argument on both motions since they involved closely related issues, it took Defendant's Motion to Dismiss under advisement pending receipt and review of Plaintiffs' Motion to Remand and Memorandum in Support. On June 6, 1996, Plaintiffs filed a copy of the remand motion and supporting memorandum in which they claim that Defendant has failed to remove this lawsuit within the thirty days provided by 28 U.S.C. § 1446(b) in that Defendant received the summons and complaint by mail on April 1, 1996 and did not file the Notice of Removal until May 13.

II. ANALYSIS

Before the court are Defendant's Motion to Dismiss and Plaintiffs' Motion to Remand. Plaintiffs argue that they complied with § 1446(b) while Defendant argues that there is no jurisdiction because service has not been perfected under the S.C.R.Civ.P. 4(d)(8).³ In their cursory memoranda and at oral argument, both parties focused primarily on whether the technicalities of the state law providing service by registered mail had been met. Neither party adequately presented the court with the legal analysis on which it ultimately relies.

The relevant part of the removal statute, 28 U.S.C. § 1446(b), states:

The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based....

28 U.S.C. § 1446(b) (emphasis added). In addition to arguing that they have complied with state law, Plaintiffs contend that service to the receptionist at Defendant's corporate office, even if not in strict compliance with the state statute, complied with § 1446(b) in that it equated to receipt by Defendant "through service or otherwise." Plaintiffs in their short two page memorandum in support, cite to no authority for this proposition nor does Defendant present the court with any counter argument on point. If Plaintiffs are correct, removal even without proper service was untimely. On the other hand, if Defendant is correct, failure to achieve proper service on the corporate Defendant is fatal because the court lacks personal jurisdiction over Defendant.

The interpretation of the meaning of the phrase "or otherwise" in § 1446(b) is the subject of much debate. See Kluksdahl v. Muro Pharmaceutical, Inc., 886 F.Supp. 535, 537-38 (E.D.Va.1995). Concerning the two lines of reasoning that have developed in interpreting the "or otherwise" language, the Kluksdahl court noted:

Federal courts have developed two rules to determine the commencement of the thirty-day period provided for removal in 28 U.S.C. § 1446(b). The "receipt rule" requires that a defendant must remove a state action to federal court within thirty days of receipt of a copy of the initial pleading, without regard to whether service has been effected. Shoemaker v. GAF Corp., 814 F.Supp. 495, 498 (W.D.Va. 1993). Under the "proper service" rule, "the thirty-day removal period commences only upon proper service of the defendant." Id. at 497. The Court of Appeals in this circuit has not decided the issue.

The receipt rule has been accepted by an increasing majority of federal courts, and it represents the modern trend.... Only two appellate decisions exist concerning the conflicting rules, both decided recently, and each adopted the receipt rule. Roe v. O'Donohue, 38 F.3d 298, 304 (7th Cir.1994) (holding that "the 30 days commences when the defendant, or its authorized agent, comes into possession of a copy of the complaint whether or not the delivery complies with the requirements of `service'"); Tech Hills II Associates v. Phoenix Home Life Mutual Insurance Co., 5 F.3d 963, 968 (6th Cir.1993) (holding that the thirty days commence "when the defendant has in fact received a copy of the initial pleading that sets forth the removable claim"). Both courts of appeals concluded that there was no escape from the plain statutory language. In Roe, for example, the Seventh Circuit observed that the courts adopting the receipt rule were holding "that § 1446(b) means what it says." Roe, 38 F.3d at 303. "Like the judges who decided Tech Hills," the Roe court "saw no escape from the language of the statute."

Id. at 537-38 (footnotes omitted). Recent district court cases in the Fourth Circuit have shown a trend towards adoption of the receipt rule. See id. at 539; Shoemaker v. GAF Corp., 814 F.Supp. 495 (W.D.Va.1993); Schwartz Bros., Inc. v. Striped Horse Records, 745 F.Supp. 338 (D.Md.1990).

This court has reviewed the multitude of cases, which over the past forty years⁴ have debated the advantages and disadvantages of both the "receipt rule" and the "proper service" rule, and hereby joins what may appear to be the minority position by adopting the proper service rule. At one time the majority view, the proper service rule apparently has its origins in a 1982 case, Love v. State Farm Mut. Automobile Ins. Co., 542 F.Supp. 65, 67 (N.D.Ga.1982). See Apache Nitrogen Prods., Inc. v. Harbor Ins. Co., 145 F.R.D. 674 (D.Ariz.1993). The current majority view, the receipt rule, is commonly traced to a 1981 case, Tyler v. Prudential Ins. Co. of America, 524 F.Supp. 1211, 1213 (W.D.Pa. 1981). See Spielman v. Standard Ins. Co., 932 F.Supp. 246, 247-48 (N.D.Cal.1996). But see Bullard v. American Airlines, 929 F.Supp. 1284 (W.D.Mo.1996) (adopting the proper service rule). Because of the due process problems inherent with the receipt rule in addition to the widespread confusion which it creates, this court believes that the proper service rule is the more sound approach. It provides all litigants, in addition to the court, with a bright line test by which to measure the commencement of a defendant's removal period, and is for many reasons the better approach to determine the triggering event for the § 1446(b) thirty-day removal period.

A. The Recent Circuit Court of Appeals' Cases Adopting the Receipt Rule.

As noted by the Kluksdahl court, both the Seventh Circuit Court of Appeals and the Sixth Circuit Court of Appeals have adopted the receipt rule. See Kluksdahl, 886 F.Supp. at 537-38 (discussing Roe v. O'Donohue, 38 F.3d 298, 303 (7th Cir.1994) and Tech Hills II Assocs. v. Phoenix Home Life Mut. Ins. Co., 5 F.3d 963, 968 (6th Cir.1993)). In Tech Hills the Sixth Circuit addressed whether the receipt of a complaint by a security guard at defenda...