Case of the Day: United States v. Distribuidora Batiz CGH, S.A. de C.V.

The Case of the Day is United States v. Distribuidora Batiz CGH, S.A. de C.V. (S.D. Cal. 2011). According to the complaint, Distribuidora Batiz, a Mexican firm, gave a promissory note to First National Bank in San Diego. The note was guaranteed by several members of the Batiz family and other Batiz business entities. The note contained a choice of court provision under which Distribuidora Batiz and the guarantors submitted to the jurisdiction of the state or federal courts in San Diego. The Export-Import Bank of the United States, a government agency, insured the note. After Distribuidora Batiz and the guarantors defaulted, the Bank made a claim with the Export-Import Bank, which paid the Bank’s claim in return for an assignment of the note without recourse. The government then sued on the note.

According to the opinion, the government unsuccessfully attempted to serve process on several of the defendants in Mexico under the Inter-American Convention. The government later served fourteen of the defendants by serving process “at the San Diego, California offices of Wilson Batiz LLC, ‘a Batiz family business.'” Based on this service, the clerk entered a default against those defendants, and the government moved for a default judgment. Thirteen of the fourteen then appeared and moved to set aside the default and to dismiss the action for failure to serve process.  The government withdrew its motion for a default judgment. But the government did not know most of the defendants’ addresses, and their lawyer would not reveal them. The government, after attempting to obtain the addresses through third-party discovery, sought leave to authorize service on the defendants’ attorney in the United States under Rule 4(f)(3). The court granted the motion. Following service on the attorney, the defendants moved to dismiss. The court denied the motion as to those defendants whose addresses were unknown. The court denied the motion without prejudice as to certain other defendants pending additional efforts to serve them via the Mexican central authority, as prescribed by the Hague Service Convention.

The court’s decision seems plainly correct. We have seen this issue in several prior cases. Because the Hague Service Convention applies only when “there is occasion to transmit a judicial or extrajudicial document for service abroad,” the Convention does not apply when service within the United States (on an agent, by publication, or whatever)  is sufficient under U.S. law to constitute service on a defendant who is abroad. There might be a question of due process in particular cases (e.g., if a notice by publication is not reasonably calculated to give actual notice to the defendant), but in general, if the court authorizes alternate means of service that do not require transmission of a document abroad, the Hague Service Convention does not make the service invalid. (Enforcement of the judgment in Mexico in these circumstances is, of course, another matter).  And indeed, in this case, the Hague Service Convention does not apply at all, since under Article 1(1), “This Convention shall not apply where the address of the person to be served with the document is not known.”

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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