Convergen Energy LLC v. Brooks

Background

The plaintiffs—Convergen Energy LLC, L’Anse Warden Electric Company, LLC, Euroenergy Biogas Latvia Limited, and Libra Capital US, Inc.—sued Steven J. Brooks and other defendants, including four defendants located in Madrid, Spain: Daniel Escandon Garcia, Ramon Uriarte Inchausti, Chipper Investment SCR, SA, and Urincha SL. The complaint alleged that the Spanish defendants were co-investors in Nianticvista Energy LLC’s acquisition of a renewable pellet manufacturing plant and asserted claims against them for aiding and abetting Brooks’s alleged fraud and breach of fiduciary duty.

The plaintiffs sought permission for alternative service under Federal Rule of Civil Procedure 4(f)(3), which allows a court to order service on an individual in a foreign country by means not prohibited by an international agreement. For the two Spanish companies, the plaintiffs relied on Rule 4(h), which applies Rule 4(f)’s foreign-service methods to foreign corporations, partnerships, and associations. The plaintiffs proposed service by postal channels, email, and email service through the Spanish defendants’ United States counsel. They also sought permission for personal service in Spain on Garcia and Inchausti under Rule 4(f)(2)(C)(i).

The plaintiffs had contacted Spain’s central authority about service under the Hague Service Convention. The central authority responded that, during the COVID-19 emergency, it could not ensure that all requests would be processed and that only urgent requests with proof of urgency would be processed. The plaintiffs also said that the defendants’ United States counsel had received communications about the lawsuit but had stated that the firm was not authorized to accept service. The court noted that the Spanish defendants had actual notice of the action, but explained that actual notice did not eliminate the need for formal service that satisfies the applicable rules and constitutional due process.

Legal Standard

The court explained that Rule 4(f)(3) does not require a plaintiff to first exhaust service under the Hague Service Convention or other methods listed in Rule 4(f)(1) and (2). A plaintiff must, however, show a reasonable attempt to serve the defendant and circumstances demonstrating that court intervention is necessary. The proposed method also must not violate federal law or an international agreement and must be reasonably calculated to notify the defendant and provide an opportunity to respond.

Spain is a party to the Hague Service Convention. The court stated that Spain had not objected to service of judicial documents through postal channels under Article 10(a). Because Rule 4(f)(3) authorizes alternative methods not prohibited by international agreement, the court treated postal service as available if it satisfied due process.

Rulings on the Proposed Methods

Postal service. The court granted the request to serve Garcia, Inchausti, Chipper Investment, and Urincha SL by postal channels. The plaintiffs represented that they had accurate addresses for the Spanish defendants. The court found that mailing the summons and complaint to those addresses was reasonably calculated to provide notice. The mailed documents were to include English and Spanish translations, and the plaintiffs still had to provide proof of service as required by Rule 4(l)(2)(B).

Email service on Garcia and Inchausti. The court granted email service on Inchausti at ruriarte@moninvest.es. The plaintiffs had previously emailed Inchausti at that address, and the defendants’ counsel contacted the plaintiffs afterward, supporting the conclusion that the address was likely to reach him.

The court denied email service on Garcia. The plaintiffs had not proposed an email address for Garcia or provided other facts showing that email service was likely to reach him.

Service through United States counsel. The court denied the request to serve the Spanish individual defendants through their United States counsel and likewise rejected service through that counsel for the Spanish corporate defendants. The court interpreted Rule 4(f)(3) as applying to the place where service occurs, not merely to the foreign location of the defendant. Because the proposed service would occur through counsel in New York, a United States judicial district, Rule 4(f)(3) did not authorize it. In addition, counsel had expressly stated that the firm was not authorized to accept service.

Email service on the companies through Inchausti. The court granted email service on Urincha SL through Inchausti’s personal email address. Inchausti was identified as Urincha SL’s president, so service on him abroad was likely to notify the company. The court relied on the plaintiffs’ showing that defendants were likely to receive and respond to emails sent to the address.

The court denied email service on Chipper Investment through the same address. The plaintiffs identified Inchausti as a representative and attorney-in-fact for Chipper Investment, but did not show that he was an officer, managing or general agent, or otherwise authorized to accept service. They also did not show that Chipper Investment communicated with him through the personal email address or that service on him would likely notify the company.

Personal service in Spain. The court declined to decide in advance whether personal service on Garcia and Inchausti was permitted under Spanish law and Rule 4(f)(2)(C)(i). The court stated that the rule did not require advance court approval. The plaintiffs could attempt personal service if they believed in good faith that Spanish law did not prohibit it. If the Spanish defendants challenged that service, they could raise the issue later through a motion under Rule 12(b)(5), which addresses insufficient service of process.

Disposition

Judge Lewis J. Liman ordered that the motion for alternative service was granted in part and denied in part. The plaintiffs were authorized to serve Garcia, Inchausti, Chipper Investment, and Urincha SL by postal channels, and to serve Inchausti and Urincha SL by email at ruriarte@moninvest.es. The order did not authorize email service on Garcia or Chipper Investment, service through United States counsel, or advance approval of personal service in Spain.