Ritts v. Dealers Alliance Credit Corp.

• Decision Date: 14 August 1997
• Docket Number: No. Civ.A. 1:96-CV-2639-JOF.,Civ.A. 1:96-CV-2639-JOF.
• Citation: 989 F.Supp. 1475
• Parties: William H. RITTS, III, Plaintiff, v. DEALERS ALLIANCE CREDIT CORP., Defendant.
• Court: U.S. District Court — Northern District of Georgia

Page 1475

989 F.Supp. 1475

William H. RITTS, III, Plaintiff, v. DEALERS ALLIANCE CREDIT CORP., Defendant.

No. Civ.A. 1:96-CV-2639-JOF.

United States District Court, N.D. Georgia, Atlanta Division.

August 14, 1997.

Bobby Adkins, Marietta, GA, for Plaintiff.

Albert A. Chapar, Jr., Atlanta, GA, for Defendant.

ORDER

FORRESTER, District Judge.

This matter is before the court on Plaintiff's motion to remand [3-1], Plaintiff's motion opposing entry of default [11-1], Defendant's motion to extend the time to file a motion for default judgment [13-1], Defendant's motion to dismiss [12-1], and Plaintiff's motion to extend or stay discovery [19-1, 19-2].

I. Statement of the Case

On August 13, 1996 Plaintiff William Ritts filed the instant action in the Superior Court of Fulton County, State of Georgia. In the complaint, Plaintiff alleges that Defendant breached an employment agreement when it terminated him and he seeks damages. Defendant filed a Notice of Removal and removed the action to this court on October 9, 1996 on the basis of diversity jurisdiction, 28 U.S.C. § 1332. Defendant filed its answer in this court on October 11, 1996. Included with the answer was a counterclaim for breach of fiduciary duties and breach of an employment agreement.

II. Discussion

A. Motion to Remand

Plaintiff moves to remand this action to state court on the grounds that diversity jurisdiction does not exist in this court. Plaintiff contends that on the day this suit was filed, August 13, 1996, he was a Georgia citizen and Defendant had its principal place of business in Georgia. Defendant, in its notice of removal and its response to Plaintiff's motion, contends that Plaintiff is a citizen of Florida and that it is a Delaware corporation with its principal place of business in Pennsylvania.

It is well settled that when a party seeks to remove a case based on diversity jurisdiction, there must be complete diversity of citizenship both at the time the complaint was filed and at the time of removal. Roecker v. U.S., 379 F.2d 400, 407 (5th Cir.), cert. denied, 389 U.S. 1005, 88 S.Ct. 563, 19 L.Ed.2d 600 (1967).¹ At the time that Plaintiff filed his complaint and when the action was removed, a federal court had diversity jurisdiction when the amount in controversy exceeded $50,000.00 and the action was between citizens of different states. 28 U.S.C. § 1332(a).² For the purposes of diversity jurisdiction, a corporation is deemed to be a citizen of both its state of incorporation and the state where it has its principal place of business. 28 U.S.C. § 1332(c)(1). To determine a corporation's principal place of business, the Eleventh Circuit examines the "total activity" of the corporation. Vareka Investments, N.V. v. Am. Inv. Prop., Inc., 724 F.2d 907, 910 (11th Cir.), cert. denied, 469 U.S. 826, 105 S.Ct. 107, 83 L.Ed.2d 51 (1984). This fact-sensitive inquiry involves the application of both the "nerve center" test, which asks where the locus of the managerial and policy-making center of the corporation is located, and the "place of activities" test, which focuses on the location of the production or sales activities of the corporation. Id.; See Mercury Finance Corp. of Ala. v. Aetna Cas. and Sur. Co. of Illinois, 900 F.Supp. 390 (M.D.Ala.1995). The removing party bears the burden of establishing that federal jurisdiction exists on a motion to remand. Diaz v. Sheppard, 85 F.3d 1502, 1505 (11th Cir.1996).

In an affidavit, Defendant maintains that it is a Delaware corporation with its principal place of business in Pittsburgh, Pennsylvania (Affidavit of Richard J. Uhl, at ¶¶ 3, 5). Defendant claims that it had an office in Georgia but that it sold most of its assets on or about August 2, 1996 to Search Capital Group, Inc., and Search Funding IV, Inc. (Id. at ¶ 5). Defendant also claims that it ceased all its business operations in Georgia on August 3, 1996 and that, from that day forward, it has not retained any employees in Georgia. (Id. at ¶¶ 5-6). Plaintiff has offered only his conclusory argument, in his brief, that Defendant maintained its principal place of business in Georgia on August 13, 1996 and that he is a citizen of Georgia. Plaintiff has not presented any affidavits or other admissible evidence that would show that Defendant did maintain an office or employees in Georgia after August 3, 1996.

As a result, the court concludes that Defendant has met its burden of showing the existence of federal jurisdiction in this court at the time that Plaintiff filed his complaint. Accordingly, Plaintiff's motion to remand is DENIED.

B. Motion to Dismiss

Defendant moves to dismiss this action pursuant to Fed.R.Civ.P. 12 and Fed. R.Civ.P. 4(m) because Plaintiff has not properly served it within 120 days of filing the complaint.³

Although this action is now in federal court, in analyzing Defendant's motion to dismiss for insufficiency of service of process, the court must examine whether Plaintiff complied with Georgia law governing process. See Usatorres v. Marina Mercante Nicaraguenses, S.A., 768 F.2d 1285, 1286 n. 1 (11th Cir.1985). Under Georgia law, a plaintiff may perfect process on a domestic corporation or a foreign corporation authorized to do business in Georgia in several ways. First, the plaintiff can deliver a copy of the summons and complaint "to the president or other officer of the corporation, secretary, cashier, managing agent, or other agent thereof...." O.C.G.A. § 9-11-4(d). Second, if for any reason that will not work, the plaintiff can deliver a copy of the summons and complaint to the Secretary of State along with a certification that the plaintiff has forwarded by registered mail the summons and complaint to the last known address of the corporation's office or agent. O.C.G.A. § 9-11-4(d). Finally, as foreign corporations are required to maintain a registered agent for service of process in Georgia under the Georgia Business Corporation Code, the plaintiff can serve the corporation's registered agent. O.C.G.A. § 14-2-504(a); O'Neal Constr. Co., Inc. v. Lexington Developers, Inc., 240 Ga. 376, 378, 240 S.E.2d 856 (1977).

Plaintiff claims that on September 11, 1996 a representative of the Fulton County Sheriff's Department personally served a copy of the summons and complaint on Defendant at its office on Powers Ferry Road. Plaintiff includes a copy of the Sheriff's Entry of Service. (Plaintiff's Response to Defendant's Motion to Dismiss, Exhibit A). Plaintiff also claims that he served Defendant's registered agent, Prentice-Hall Corporation System, Inc., by mail, with a copy of the summons and complaint. Defendant contends that, after August 3, 1996 it ceased all business operations in Georgia and no longer had any employees at its former office location of 6400 Powers Ferry Road, Suite 400, Atlanta, Georgia 30339. Although Plaintiff claims it served an agent of Defendant at that address on August 13, 1996, Defendant claims that there was no one at that address authorized to accept service.

In the instant case, the sheriff's return of service is prima facie evidence of service. Webb v. Tatum, 202 Ga.App. 89, 91, 413 S.E.2d 263 (1991). However, it is not conclusive and may be rebutted by proof that its facts are not true. Id. The party challenging the sufficiency of the service bears the burden of showing it was improper. Yelle v. U.S. Suburban Press, Inc., 216 Ga. App. 46, 47, 453 S.E.2d 108 (1995). Defendant submitted an affidavit demonstrating that it had no agents authorized to accept service at the Powers Ferry office on September 11, 1996. (Uhl Aff. at ¶¶ 5-6). In response to this affidavit, Plaintiff has offered no affidavits or other admissible evidence indicating that the person served on September 11, 1996 was actually an agent for Defendant. In response to a denial of an agency relationship, conclusory allegations that an agent relationship exists are not sufficient. See Standard Guar. Ins. Co. v. Landers, 206 Ga.App. 803, 804-05, 426 S.E.2d 574 (1992). The court therefore must conclude that service was not proper because the summons and complaint were not delivered to one of Defendant's agents. See Yelle, 216 Ga.App. at 47, 453 S.E.2d 108. Furthermore, assuming Plaintiff's unsworn statement that Prentice-Hall was Defendant's registered agent is true, the mailing of a copy of the summons and complaint along with a request for acknowledgment of service to Defendant's registered agent is not sufficient under Georgia law to perfect service. The service upon a registered agent has to be personal. See Todd v. Harnischfeger Corp., 177 Ga. App. 356, 357, 340 S.E.2d 22 (1985). In addition, Plaintiff has not provided any evidence that Prentice-Hall acknowledged the mailed service of process or that he later had a sheriff's representative serve them as he stated he would in his cover letter. (Plaintiff's Response to Defendant's Motion to Dismiss, Exhibit B).

Pursuant to Fed.R.Civ.P. 4(m), the court may dismiss an action without prejudice if the plaintiff fails to perfect service of process within 120 days of the filing of the complaint. Fed.R.Civ.P. 4(m). However, when an action is removed from state court, there is some authority that the 120 day period does not begin to run until the date that the action is removed to federal court. See Alber v. Illinois Dep. of Mental Health, 786 F.Supp. 1340, 1376 (N.D.Ill.1992); Motsinger v. Flynt, 119 F.R.D. 373, 377 (M.D.N.C.1988). These courts reason that there is no reason that federal procedural rules should apply retroactively back to the day of filing, and that such an interpretation could result in substantial prejudice to plaintiffs. Alber, 786 F.Supp. at 1376. If service is not made within the requisite time, the court is required to extend the time for a plaintiff to serve properly the defendant if the plaintiff shows good cause. Fed.R.Civ.P. 4(m); Madison v. BP Oil Co., 928 F.Supp. 1132, 1137 (S.D.Ala.1996). However, even if the plaintiff does not...