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Allstate Insurance Co. v. Funai Corp.

February 25, 2008

ALLSTATE INSURANCE COMPANY, ET AL., PLAINTIFFS
v.
FUNAI CORPORATION, ET AL., DEFENDANTS
HA L. HOANG AND NAM L. HOANG, PLAINTIFFS
v.
FUNAI CORPORATION, ET AL., DEFENDANTS



The opinion of the court was delivered by: Yvette Kane, Chief Judge United States District Court

(Chief Judge Kane)

MEMORANDUM

Before the Court is a motion to dismiss the Hoang action by Defendant Funai Electric Co., Ltd. ("Funai Electric") on the basis of improper service of process. (Doc. No. 8.) The motion has been briefed and is ripe for disposition. For the reasons that follow, the motion will be granted.

I. BACKGROUND

These consolidated cases arise from property damages and personal injury sustained as a result of a house fire on December 29, 2004, which was allegedly caused by Defendants' negligence and/or a malfunction in a combination television/video cassette recorder ("TV/VCR") designed, manufactured, and/or sold by Defendants.*fn1 In the first consolidatedaction, Allstate Insurance Company ("Allstate"), as subrogee of Nam Hoang, seeks to recover money paid to Mr. Hoang pursuant to a homeowners insurance policy. (This action will be referred to as the "Allstate action.") In the second consolidated action, Plaintiffs Ha and Nam Hoang seek to recover for injuries and property damage sustained by them personally. (This action will be referred to as the "Hoang action.")

Both the Allstate and Hoang actions were filed in the Court of Common Pleas of Philadelphia County, Pennsylvania, on December 19, 2006. The Allstate action was timely removed to the United States District Court for the Eastern District of Pennsylvania pursuant to 28 U.S.C. §§ 1332(a)(1) and 1441(a) on January 17, 2007; the Hoang action was similarly removed on January 19, 2007. All of the Defendants except Funai Electric filed answers to the Allstate and Hoang complaints on January 17, 2007, and January 19, 2007, respectively. Funai Electric, a Japanese corporation with its principal place of business located in Japan, did not file an answer because it had yet to be served in either action.

On February 16, 2007, Allstate, the Hoangs, and all Defendants except Funai Electric (which had not been served in either action) entered into a stipulation that "the interests of justice and the convenience of the parties and witnesses will be served by consolidating these two actions [the Allstate and Hoang actions] for all pretrial proceedings and trial." (Doc. 1-7, at 1.) The stipulation acknowledged that Funai Electric had not yet been served, and asserted that it would not be prejudiced by consolidation. (Id. at 1-2.) On February 26, 2007, the United States District Court for the Eastern District of Pennsylvania ordered that the Allstate and Hoang actions "be consolidated under Docket Number 07-227," the case number assigned to the Allstate action. (Doc. No. 1-9.) On March 22, 2007, the Eastern District ordered that the consolidated actions be transferred to this Court, where the consolidated actions were assigned docket number 07-799. (Doc. No. 1-13.)

Funai Electric was served with process in the Allstate action in accordance with the provisions of the Hague Convention, and it filed an answer to the Allstate complaint on June 18, 2007. (Doc. No. 3.) On that date, Mr. Rubendall, II,*fn2 entered his appearance on behalf of Funai Electric in the consolidated cases.*fn3 On June 26, 2007, Mr. Rubendall informed the Hoangs by letter that Funai Electric had been served in Japan in the Allstate action, and he further advised that Funai Electric "insist[s] that service be accomplished separately upon Funai Electric in [the Hoang action]" under the Hague Convention, as per the company's policy. (Doc. No. 9-2, at 19.) In response, counsel for the Hoangs stated their position that, "Allstate's case and the Hoangs' case is one in the same," and that the "the Hoangs can serve . . . counsel of record for Funai in this single pending lawsuit." (Doc. No. 9-2, at 21.)

On August 3, 2007, the Hoangs mailed Mr. Rubendall an original and copy of the summons and complaint in the Hoang action. (Id. at 25.) Mr. Rubendall refused to accept service on the company's behalf on the grounds that he was not authorized by his client to accept service of process in the Hoang action. (Id. at 27.) To date, no return of service upon Funai Electric in the Hoang action has been filed, no extension of time for service has been sought, and the Court has not been requested to appoint an international process server as a predicate for serving Funai Electric in Japan pursuant to the Hague Convention.*fn4

Since the filing of the instant motion, Allstate filed an unopposed motion to dismiss its claims against all defendants (Doc. No. 17), which was granted on January 24, 2008 (Doc. No. 18). Thus, the Hoang action is the only remaining action.

On October 23, 2007, Funai Electric moved to dismiss the Hoang action for lack of timely service of process. Acknowledging that Rule 4(m) of the Federal Rules of Civil Procedure generally exempts service in a foreign country from the standard 120-day time limitation for service, Funai Electric argues that the Hoangs never attempted to effectuate service in Japan so as to fall within this "foreign country" exception. Additionally, Funai Electric maintains that its attorney in the Allstate action is not authorized to accept service on its behalf, rendering the Hoangs' August 3, 2007, attempt at service not only untimely but also "pointless." (Doc. No. 9, at 4.) Finally, Funai Electric asserts that the consolidation of the Allstate and Hoang actions in no way relieved plaintiffs of their obligation to serve Funai Electric with complaints in each action.

In their brief in opposition to the motion to dismiss, the Hoangs do not respond to Funai Electric's Rule 4(m) argument that "far too much time has passed . . . for service upon Funai Electric to be effected in a timely fashion." (Doc. No. 9, at 9.) Rather, the Hoangs maintain that they effectively served their complaint on Funai Electric in August 2007 by serving Mr. Rubendall, the attorney who entered his appearance on the company's behalf in the related Allstate action. (Doc. No. 13, at 3.) Furthermore, the Hoangs argue that Funai Electric's "demonstrated . . . willingness to engage in extensive litigation in the Middle District" in the consolidated cases has "effectively waived any defense based upon lack of personal jurisdiction, including an absence of service." (Id. at 4.)

II. STANDARD OF REVIEW

"Before a federal court may exercise personal jurisdiction over a defendant, the procedural requirement of service of summons must be satisfied." Omni Capital Int'l v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987). Under Rule 12(b)(5) of the Federal Rules of Civil "insufficiency of service of process," is one basis for which a defendant may seek dismissal of a complaint. Fed. R. Civ. P. 12(b)(5). In a motion under Rule 12(b)(5), "the party asserting the validity of service bears the burden of proof on that issue." Mitchell v. Theriault, 516 F. Supp. 2d 450, 452 (M.D. Pa. 2007) (quoting Grand Entm't Group, Ltd. v. Star Media Sales, Inc., 988 F.2d 476, 488 (3d Cir. 1993)).

III. DISCUSSION*fn5

A. Timeliness of ...


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