Genesis Diamonds, LLC v. John Hardy, Inc., Case No. 3:15-cv-01093

• Decision Date: 27 June 2016
• Docket Number: Case No. 3:15-cv-01093
• Parties: GENESIS DIAMONDS, LLC, Plaintiff, v. JOHN HARDY, INC. et al., Defendants.
• Court: U.S. District Court — Middle District of Tennessee

GENESIS DIAMONDS, LLC, Plaintiff, v. JOHN HARDY, INC. et al., Defendants.

Case No. 3:15-cv-01093

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION

June 27, 2016

Judge Aleta A. Trauger

MEMORANDUM

Before the court are multiple motions: (1) defendant John Hardy, Inc.'s Motion for Judgment on the Pleadings (Doc. No. 8); (2) a Motion to Dismiss for Lack of Personal Jurisdiction and Insufficiency of Service of Process (Doc. No. 17), filed jointly by defendants John Hardy USA Inc. ("John Hardy USA") and John Hardy Management Inc. ("JHMI"); a Motion to Transfer to United States District Court for the Southern District of New York, Manhattan Division (Doc. No. 19), filed jointly by John Hardy USA and JHMI; a Motion for Voluntarily [sic] Dismissal of Defendant John Hardy Management, Inc. Without Prejudice (Doc. No. 24), filed by plaintiff Genesis Diamonds, LLC ("Genesis"); and JHMI's Motion for Summary Judgment (Doc. No. 27).

For the reasons discussed herein, the court will deny as moot defendant John Hardy, Inc.'s Motion for Judgment on the Pleadings (Doc. No. 8), the claims against that defendant having already been dismissed without prejudice.

The court will grant in part, as to defendant JHMI only, the motion to dismiss without prejudice for insufficiency of process and for lack of personal jurisdiction (Doc. No. 17), and will deny as moot both the plaintiff's Motion for Voluntarily Dismissal of that defendant (Doc. No. 24) as well as JHMI's Motion for Summary Judgment (Doc. No. 27).

The court will deny in part defendant John Hardy USA's motion seeking dismissal on the grounds of insufficient process (Doc. No. 17) and will instead grant the plaintiff 30 days to effect service properly under the Federal Rules of Civil Procedure. The court will defer ruling on that portion of the same motion seeking dismissal for lack of personal jurisdiction (Doc. No. 17) and on the Motion to Transfer (Doc. No. 19) until after service is effected.

I. PROCEDURAL HISTORY

Genesis originally filed this action in the Circuit Court for Davidson County, Tennessee. against all three defendants, alleging unfair and deceptive trade practices in violation of the Tennessee Consumer Protection Act, fraud and promissory fraud, breach of contract, and unjust enrichment. Genesis seeks actual damages, treble damages, punitive damages, and attorney fees but did not specify the quantity of damages sought. The defendants removed the action to this court on the grounds of diversity jurisdiction, asserting "upon information and belief" that the amount in controversy exceeds $75,000. (Doc. No. 1, at ¶ 5.) The plaintiff does not contest that assertion.

John Hardy, Inc. filed an Answer (Doc. No. 7) to the complaint as well as a Motion for Judgment on the Pleadings (Doc. No. 8) on November 5, 2015, asserting in both documents that John Hardy, Inc. does not exist, having converted from a corporation to a limited liability company in December 2004, that the successor company, John Hardy LLC, ceased existence in August 2007, and that neither John Hardy, Inc. nor John Hardy LLC had any contact or involvement with the plaintiff. Within a week, Genesis responded by filing its own Motion for Voluntarily [sic] Dismissal of Defendant John Hardy, Inc. Without Prejudice (Doc. No. 9) underRule 41(a)(2), as well as a Response in Opposition to John Hardy, Inc.'s Motion for Judgment on the Pleadings (Doc. No. 10).

On December 3, 2015, John Hardy USA and JHMI filed separate answers to the complaint (Doc. Nos. 13, 15) as well as their Motion to Dismiss for Lack of Personal Jurisdiction and Insufficiency of Process (Doc. No. 17) and Motion to Transfer (Doc. No. 19). The motions were filed on behalf of John Hardy, Inc. as well as the other two defendants.

On December 4, 2015, the court granted the plaintiff's Motion to Dismiss defendant John Hardy, Inc. without prejudice (Doc. No. 21) on the basis that the defendant had not filed a timely response. In the same order, the court denied the Motion to Dismiss (Doc. No. 17) and Motion to Transfer (Doc. No. 19) as moot as to defendant John Hardy, Inc. only.

Genesis filed its Motion for Voluntarily [sic] Dismissal of Defendant John Hardy Management, Inc. Without Prejudice (Doc. No. 24) on December 16, 2015. On December 22, 2015, JMHI filed a Motion for Summary Judgment. (Doc. No. 27.)

The motions have all been fully briefed and are ripe for review.

II. JOHN HARDY, INC.'S MOTION FOR JUDGMENT ON THE PLEADINGS

The court previously granted the plaintiff's motion to voluntarily dismiss defendant John Hardy, Inc. and denied the other pending motions as to John Hardy, Inc. on the basis of mootness. The court inadvertently overlooked John Hardy, Inc.'s motion for judgment on the pleadings, which was also rendered moot by the granting of the plaintiff's motion to voluntarily dismiss this defendant. This motion (Doc. No. 8) will therefore be denied as moot.

III. JHMI'S MOTIONS

Defendant JHMI joined in the Motion to Dismiss for Insufficiency of Process and Lack of Jurisdiction (Doc. No. 17) and the Motion to Transfer (Doc. No. 19). The plaintiff respondedto these motions by asserting that it does not oppose the dismissal of JHMI without prejudice (Doc. Nos. 26, 45) and also filed its own motion to dismiss without prejudice the claims against JHMI. (Doc. No. 24.) A week later, JHMI filed its Motion for Summary Judgment (Doc. No. 27), reasserting the same grounds for dismissal of the claims against it but seeking dismissal with prejudice.

Because the plaintiff does not oppose JHMI's motion to dismiss without prejudice for insufficiency of process and lack of personal jurisdiction, the court will grant that motion (Doc. No. 17) as it pertains to defendant JHMI. The remaining motions (Doc. Nos. 19, 24, 27), insofar as they pertain to JHMI, will be denied as moot, the claims against that defendant having already been dismissed without prejudice.

IV. JOHN HARDY USA'S MOTION TO DISMISS FOR INSUFFICIENT PROCESS

A. Facts Relevant to the Service of Process

The Summons issued by the Davidson County Circuit Court on October 9, 2015 for John Hardy USA was personally delivered to Linda Vasso, an employee of John Hardy USA, at 4121 Hillsboro Road in Nashville, Tennessee on October 10, 2015. (Doc. No. 18, at 1; see also Decl. of Kim Pelletier, Doc. No. 14, at ¶ 8; Return on Personal Service of Summons, Doc. No. 26-1, at 2.) John Hardy USA removed the case to federal court two days later, on October 12, 2015, reserving the right to raise affirmative defenses based upon insufficiency of process and lack of personal jurisdiction, among others.

In challenging the sufficiency of process, John Hardy USA does not dispute that the complaint and summons were served upon Vasso in Nashville or that Vasso was employed at the time by John Hardy USA. Rather, John Hardy USA contends that Vasso was not authorized to accept service of process on behalf of John Hardy USA, that no officer, managing agent, generalagent, or any other agent authorized by law to receive service of process, including its registered agent for service of process, was served with a copy of the summons or complaint, and therefore that process was insufficient. (Doc. No. 14, at ¶¶ 6, 7, 8.) John Hardy USA asserts that it maintains its principal place of business and corporate office in New York, New York, and that it does not have a registered agent in the state of Tennessee or a chief agent in Davidson County, Tennessee. (CF No. 14, at ¶¶ 4, 5, 11).)

In response, Genesis argues that Vasso was a "manager" for John Hardy USA with actual or apparent authority to accept service of process.

B. Legal Standards

The defendants' motion, filed under Rule 12(b)(5), seeks dismissal based on the insufficiency of process. When faced with such a motion, the plaintiff generally bears the burden of establishing the validity of service. Metro. Alloys Corp. v. State Metals Indus., Inc., 416 F. Supp. 2d 561, 563 (E.D. Mich. 2006). Courts may look to "record evidence" and "uncontroverted affidavits" in determining whether a plaintiff has met this burden. Id.

The parties do not dispute that Tennessee law governing service of process applies, since service or attempted service was effected prior to removal to federal court. Under Rule 4.04(4) of the Tennessee Rules of Civil Procedure:

Service shall be made . . . . (4) Upon a domestic corporation, or a foreign corporation doing business in this state, by delivering a copy of the summons and of the complaint to an officer or managing agent thereof, or to the chief agent in the county wherein the action is brought, or by delivering the copies to any other agent authorized by appointment or by law to receive service on behalf of the corporation.

Tenn. R. Civ. P. 4.04(4). Rule 4.05, which governs service upon a defendant outside the state of Tennessee, provides in pertinent part:

(1) Whenever the law of this state authorizes service outside this state, the service,when reasonably calculated to give actual notice, may be made:

(a) by any form of service authorized for service within this state pursuant to Rule 4.04;

(b) in any manner prescribed by the law of the state in which service is effected for an action in any of the courts of general jurisdiction in that state;

(c) as directed by the court.

. . . .

(3) Service by mail upon a corporation shall be addressed to an officer or managing agent thereof, or to the chief agent in the county wherein the action is brought, or by delivering the copies to any other agent authorized by appointment or by law to receive service on behalf of the corporation.

Tenn. R. Civ. P. 4.05(1), (3).

Proper service of process "is not some mindless technicality." Friedman v. Estate of Presser, 929 F.2d 1151, 1156 (6th Cir. 1991) (quoting Del Raine v. Carlson, 826 F.2d 698, 704 (7th Cir. 1987)). The requirement stems from the Due Process Clause of the Fifth Amendment, which requires that defendants receive adequate notice of proceedings...