Logan & Kanawha Coal Co. LLC v. Detherage Coal Sales, LLC, CIVIL ACTION NO. 2:11-cv-00342

Decision Date10 June 2011
Docket NumberCIVIL ACTION NO. 2:11-cv-00342
CourtU.S. Bankruptcy Court — Southern District of West Virginia

Pending before the court is the motion by the plaintiff, Logan & Kanawha Coal Co., LLC ("L&K") to Order Service by the U.S. Marshals Service [Docket 5]. For the reasons outlined below, this motion is hereby GRANTED to the extent it requests that this court direct the United States Marshals Service to serve upon the defendant the plaintiff's Motion to Confirm Arbitration Award and other supporting documentation. The plaintiff is hereby DIRECTED to complete Form USM-285, and take all necessary steps, including prepayment of the estimated fees and expenses for service, to facilitate service of the defendant by the U.S. Marshals Service, and deliver the same to the U.S. Marshal for the Southern District of West Virginia.

I. Background

According to L&K, an arbitration hearing was held in Charleston, West Virginia on March 16, 2011, pursuant to the American Arbitration Association's Rules for Commercial Arbitration. (Mot. Confirm Arbitration Award [Docket 1], at 1.) On April 21, 2011, a majority of the arbitration panel issued an award requiring the defendant Detherage Coal Sales, LLC ("Detherage") to payL&K a total of $2,724,719.50 plus L&K's reasonable attorneys' fees. (Id.) On May 13, 2011, L&K filed in this court its Motion to Confirm Arbitration Award, seeking, pursuant to the Federal Arbitration Act, 9 U.S.C. § 1, et seq. ("the FAA"), to confirm the arbitration award issued against Detherage and for an entry of judgment thereon.

On May 17, 2011, L&K filed the instant motion, requesting that this court order the United States Marshals Service for the Eastern District of Kentucky to serve L&K's Motion to Confirm Arbitration Award and supporting documentation upon Detherage Coal Sales, LLC ("Detherage"). L&K asserts that "the dictates of the FAA [. . .] require[] that service be made on Defendant by a United States marshal," because Detherage is a nonresident of the district where the arbitration award was made. (Mot. Order Service, at 1.) L&K asserts that Detherage is a resident of the Eastern District of Kentucky, but that district's Marshals Service will not serve the motion and supporting documentation without a court order. Accordingly, citing Federal Rule of Civil Procedure 4(c)(3), L&K requests that this court order that the U.S. Marshals Service in that district serve its Motion to Confirm Arbitration Award and other supporting documentation on Detherage.

II. Discussion

As a preliminary matter, I note that the reluctance of the U.S. Marshals to serve this motion on the defendant without a court order is entirely understandable. The service requirements embodied in Rule 4 of the Federal Rules of Civil Procedure were amended by Congress in 1983 to drastically reduce the requirement of marshal service in civil cases, and it is the rare case that now requires it. See Fed. R. Civ. P. 4(c); Changes in Federal Summons Service Under Amended Rule 4 of the Federal Rules of Civil Procedure, 96 F.R.D. 81, 94 (1983) ("[T]he amendment's ostensibly principal purpose is [. . .] taking the marshals out of summons service almost entirely.") (emphasisadded). It is also a decidedly strange result that a more formal service requirement should be imposed in the context of an arbitration than in a regular civil case. Nonetheless, I am bound here by the plain language of the statute.

a. The Federal Arbitration Act's Service Requirement

The FAA provides, in pertinent part:

If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made. Notice of the application shall be served upon the adverse party, and thereupon the court shall have jurisdiction of such party as though he had appeared generally in the proceeding. If the adverse party is a resident of the district within which the award was made, such service shall be made upon the adverse party or his attorney as prescribed by law for service of notice of motion in an action in the same court. If the adverse party shall be a nonresident, then the notice of the application shall be served by the marshal of any district within which the adverse party may be found in like manner as other process of the court.

9 U.S.C. § 9 (2006) (emphasis added). Unfortunately, "there is scant case law interpreting the FAA's § 9 service requirement." Hancor, Inc. v. R & R Eng'g Prods., Inc., 381 F. Supp. 2d 12, 15 (D. Puerto Rico 2005). A review of the existing case law reveals that district courts around the country are applying Section 9's service requirement inconsistently.

Some district courts have interpreted the language of the statute strictly, and required that plaintiff's seeking to confirm arbitration awards show proof of service by a marshal in order to obtain jurisdiction over nonresident defendants under the FAA. See Kirby Morgan Dive Sys, Inc. v. Hydrospace LTD, No. 09-4934, 2010 WL 234791, at *4 (C.D. Cal. Jan. 13, 2010) (finding that when a nonresident, foreign defendant was not served by a marshal in a judicial district within the UnitedStates, "such service does not give the Court personal jurisdiction over Smith under § 9"); Med. Shoppe Int'l, Inc. v. Med. Solutions, Inc., No. 4:06MC622 CDP, 2006 WL 3538800, at *1 (E.D. Mo. Dec. 7, 2006) (citing 9 U.S.C. § 9 and noting without further explanation that "service must be made 'by the marshal [. . .] in like manner as other process of the Court.'"); Nu-Best Franchising, Inc. v. Motion Dynamics, Inc., No. 805CV507T27TGW, 2006 WL 1428319, at *3, *6 (M.D. Fla. May 17, 2006) (holding in the analogous context of a motion to vacate an arbitration award under 9 U.S.C. § 12 that "[p]laintiffs were required to serve notice through the United States Marshal" and that because the notice requirement "expressly addresses the manner of serving notice of motion to vacate [. . .] the Federal Rules of Procedure [. . .] relating to service are inapplicable."); see also Dobco, Inc. v. Mery Gates, Inc., No. 06-0699(HAA), 2006 WL 2056799, at *2 (D. N.J. July 21, 2006) (finding notice by way of a notice of motion to the defendant's attorney was inadequate, and noting that the plaintiff "had an obligation to have [the defendant] served by a marshal, as the strict language of the statute provides," but also recognizing in the alternative, "recent federal jurisprudence recognizing the elimination of the use of marshals for service of original process.").

Other district courts have reached the opposite conclusion, finding that Section 9's service requirement is "anachronistic" and should not be followed because it fails to account for the amendments to the Federal Rules reducing the role of the U.S. Marshals Service as process servers in civil cases. See Hancor, 381 F. Supp. 2d at 15 (citing Matter of the Arbitration Between InterCarbon Bermuda, Ltd. & Caltex Trading and Trans. Corp., 146 F.R.D. 64, 67 n. 3 (S.D.N.Y. 1993) (quoting Changes in Federal Summons Service Under Amended Rule 4 of the Federal Rules of Civil Procedure, 96 F.R.D. 81, 94 (1983)) ("Section [9] is an anachronism not only because it cannot account for the internationalization of arbitration law subsequent to its enactment, but alsobecause it cannot account for the subsequent abandonment of the United States marshals as routine process servers."); see also United Cmty. Bank v. Campbell, No. 1:10cv79, 2011 WL 815684, at *2 (W.D.N.C March 1, 2011) (citing Hancor, 381 F. Supp. 2d at 15) (finding that service by certified mail, return receipt and by individual service in accordance with Federal Rule of Civil Procedure 4(e) was proper, and that "'[i]n these circumstances, Section [9] cannot be taken as the proper standard for service of process. Recourse must be had to the Federal Rules of Civil Procedure.'"); Own Capital, LLC v. David Smith Autoland, Inc., No. 10-mc-51002, 2010 WL 3623173, at *2 (E.D. Mich. Sept. 15, 2010); ("[T]he phrase 'in like manner as other process of court' requires the party applying for confirmation of an arbitration award under section 9 to follow Fed. R. Civ. P. 4 in providing notice to adversarial parties."); May Fin. Corp. v. Granger Meadows, LTD, No. Civ.A.3:02-CV-2482-L, 2003 WL 21246130, at n. 1 (N.D. Tex. March 31, 2003) (citing Matter of Arbitration Between Trans Chem. Ltd. and China Nat. Mach. Imp. & Exp. Corp., 978 F. Supp. 266, 300, n.138 (S.D. Tex. 1997) ("[Section] 9 'cannot be taken as the proper standard for service of process.'"). Instead, Section 9's reference to service by marshal has been interpreted by those courts to permit service by means now used for service of initial process under Rule 4 of the Federal Rules of Civil Procedure. See Hancor, 381 F. Supp. 2d at 15; United Cmty. Bank, 2011 WL 815684, at *2; Own Capital, LLC, 2010 WL 3623173, at *2; May Financial Corp., 2003 WL 21246130, at *2. In support of this conclusion, courts have relied heavily on a statement by the Second Circuit Court of Appeals that the second part of the final sentence in Section 9 describing service on nonresidents that requires service be "in like manner as other process by the court," means that a plaintiff seeking to confirm an arbitration award need only comply with the requirements of Rule 4 for initial service of process of...

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