Accuprobe, Inc. v. Earth Search Sciences, Inc.

Background

Jan M. Arnett and Accuprobe, Inc. sued Earth Search Sciences, Inc., General Synfuels International, Inc., and Larry Vance. The complaint concerned an alleged settlement agreement arising from an earlier related proceeding. The plaintiffs obtained a certificate of default and moved for default judgment after the defendants did not answer.

Larry Vance appeared without a lawyer and opposed default judgment. He also moved to dismiss, arguing that the plaintiffs had not properly served him or the two corporations. The opinion states that corporations cannot represent themselves in federal court. Accuprobe, Inc. was later dismissed after it did not respond to an order requiring Arnett to explain why it should not be dismissed for proceeding without counsel.

Service on Larry Vance

Federal Rule of Civil Procedure 4 requires proper service before a federal court may exercise personal jurisdiction over a defendant or enter a default judgment. The plaintiffs filed an affidavit stating that the summons was left at a residence in Kalispell, Montana, with Tami Carver, identified as Vance’s former wife.

Carver submitted a declaration stating that Vance had never lived at that residence and that she had told the process server that Vance did not live there. The court treated her declaration as competent evidence that the residence was not Vance’s dwelling or usual place of abode. The court also found no evidence that Carver was authorized to accept service for Vance. The plaintiffs did not rebut that evidence.

The court concluded that service did not satisfy the federal service rules or the comparable service requirements of New York and Montana. Because service was not completed within the required 90-day period and the plaintiffs did not explain the failure or show good cause for an extension, the court set aside the default against Vance and granted the motion to dismiss as to him.

Service on the Corporate Defendants

The plaintiffs’ affidavits stated that Earth Search Sciences, Inc. was served through Laughlin Associates, described as its registered agent, and that General Synfuels International, Inc. was served through the Nevada Secretary of State. The records showed that the summonses and complaints were sent by United States mail.

The court held that this service was inadequate. Under the federal rules, service on a corporation generally requires delivery to an officer, managing or general agent, or another authorized agent, and service by mail alone was insufficient. The court also determined that Nevada law required personal delivery to the registered agent or another authorized method, not ordinary or certified mail. New York law allowed a mail procedure only if specified forms were included and receipt was acknowledged; the record did not show compliance with those requirements.

The court found that the plaintiffs had not explained why service was not completed properly or shown good cause for extending the service period. But rather than immediately dismissing the corporate defendants, the court ordered Arnett to show cause why the case should not be dismissed against them for failure to make timely service.

Disposition

The court granted Vance’s cross-motion to dismiss with respect to him, vacated the certificate of default as to him, and dismissed the claims against him without prejudice. The court ordered Arnett to file a response explaining why the case should not be dismissed for failure to timely serve Earth Search Sciences, Inc. and General Synfuels International, Inc. The opinion contains two different response dates: the discussion directs a filing by March 21, 2022, while the conclusion directs a filing by March 14, 2022. The conclusion also states that failure to show cause or comply with the order may result in dismissal.