Case of the Day: Suncoast Tech Corp. v. Hondutel

The case of the day is Suncoast Tech Corp. v. Hondutel (S.D. Fla. 2012). Suncoast had a contract with Hondutel, a Honduran telecommunications firm, to do work aimed at weeding out “gray trafficking” (a kind of misuse of telecommunications lines) and detecting fraudulent calls on Hondutel’s network. Once Suncoast had identified and eliminated any gray trafficiking or fraud, it would be allowed to operate legitimate traffic on the lines that had been freed up. Suncoast claims that it purchased expensive equipment aimed at gray trafficking detection, but that Hondutel later told it that it did not intend to eliminate gray trafficking after all. Suncoast sued for fraud, unjust enrichment, and conversion.

Honduras is a party to the Inter-American Convention on Letters Rogatory. Although Suncoast initially told the court that it was seeking to make service via a letter rogatory, ultimately it effected service by service on the office manager at the Honduran consulate general in Miami. Based on this service, a default judgment ultimately entered and Suncoast began garnishing assets in the hands of third parties. Hondutel then moved for relief from the judgment under FRCP 60(b) on the grounds that the judgment was void as it had never been properly served with process. Hondutel argued—and Suncoast didn’t really dispute—that it was an agency or instrumentality of the Honduran state, which means that Suncoast had to make service under the FSIA, specifically 28 USC [section] 1608(b). The statute provides:

Service in the courts of the United States and of the States shall be made upon an agency or instrumentality of a foreign state:
(1) by delivery of a copy of the summons and complaint in accordance with any special arrangement for service between the plaintiff and the agency or instrumentality; or
(2) if no special arrangement exists, by delivery of a copy of the summons and complaint either to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process in the United States; or in accordance with an applicable international convention on service of judicial documents; or
(3) if service cannot be made under paragraphs (1) or (2), and if reasonably calculated to give actual notice, by delivery of a copy of the summons and complaint, together with a translation of each into the official language of the foreign state—
(A) as directed by an authority of the foreign state or political subdivision in response to a letter rogatory or request or
(B) by any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the agency or instrumentality to be served, or
(C) as directed by order of the court consistent with the law of the place where service is to be made.

There was no evidence, according to the court, of an agreement that service could be made on the consulate general, thus [section] 1608(b)(1) did not apply. Section 1608(b)(2) also was inapplicable. Although there was some evidence that Suncoast had emailed a copy of the complaint to the Director General of Hondutel, it was unclear that the email address to which the documents were sent was his, and there was no evidence of receipt. (The court might also have noted that it is not clear that service by email can ever satisfy the requirement of “delivery” in [section] 1608(b)(2)). Finally, [section] 1608(b)(3) was inapplicable, because there was no evidence that the Director General received the copy of the papers Suncoast claimed to have sent to him by mail; the statute specifically calls for use of a return receipt.

Unlike service on a foreign state itself, service on an agency or instrumentality need only substantially comply with the FSIA, at least in the Ninth Circuit. But there was no evidence that Hondutel had actual notice of the action, and so there was no substantial compliance.

The judge therefore vacated the default judgment and directed Suncoast to serve the summons and complaint as required by the FSIA by a date certain.

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