Case of the Day: Murtech Energy Services v. ComEnCo Systems

Great Seal of the United States
Happy birthday, America!
The case of the day is Murtech Energy Services, LLC v. ComEnCo Systems, Inc. (E.D. Mich. 2014). ComEnCo, a Canadian firm, was in the business of manufacturing HVAC equipment. Murtech was its exclusive sales representative in Ontario and Michigan. The business relationship soured, and Murtech sued ComEnCo as well as its wholly owned subsidairy, ComEnCo (Hangzhou) Environmental Equipment Co., and its president, Raymond Hsu. Hangzhou was a Chinese firm, and Hsu was a Canadian national living in Toronto.

Murtech served process on Hsu at a business meeting held in Michigan. It served process on ComEnCo by mail sent to its headquarters in Ontario. And it sought to serve process on Hangzhou via the Chinese central authority. All of the defendants moved to dismiss on grounds of insufficient service of process.

Die drei Affen
Hear No Evil, Speak No Evil.
Credit: blu-news.org
Hsu’s main argument was that he had been lured from Canada to Michigan under false pretenses not to have a real meeting but only in order to be served with process. The fact of the matter was disputed. But the judge noted that some courts have adopted a bright-line rule forbidding service of process whenever a party enters a jurisdiction in order to attend settlement discussions or a business meeting. The judge adopted this rule and quashed the service.

I have to say I really don’t understand the policy behind this outcome. Being served with a summons and complaint is not a punishment. It does no harm. No one was clapped in irons. There was no capias ad respondendum. Clearly there would be nothing objectionable had Murtech simply said to Hsu, “we’re suing you,” or even had Murtech handed Hsu a copy of the complaint. But by also handing him the summons—a piece of paper we endow with strange powers—Murtech caused the full weight of the US justice system to fall on Hsu. Isn’t there something crazy about this way of thinking? Morevoer, it’s not as though Hsu was willing to accept service even if made by an entirely unobjectionable method. According to the judge, after Hsu returned to Canada:

Murtech’s process server went to Hsu’s home …. A man in his 20s or 30s answered the door. Though Hsu was visible from the door, the man denied that Hsu was in the home. The man also did not let Murtech’s process server leave the papers with him. So the process server left the summons and the Second Amended Complaint in a sealed envelope addressed to Hsu inside the door. He then mailed a copy to Hsu the next day.

Ultimately, the Canadian process server was able to hand Hsu copies of the papers personally in Canada. This accomplished service as to all of the defendants, as Hsu was an officer of the corporations. While personal delivery is not authorized by the FRCP for service on a corporation abroad, it is authorized by Ontario law, and the FRCP incorporate the foreign law for this purpose. The service was valid under the Convention because Canada has not made an Article 10(c) objection under the Hague Convention. The service as to the Chinese firm was proper notwithstanding the argument that the Convention required resort to the central authority mechanism, because the applicability of the Convention turned on where the service was made, not the nationality of the party served. The court properly rejected the defendants’ “fruit of the poisonous tree” argument—the argument that because the first attempt at service was “tainted” later attempts could not succeed.

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.

Leave a Reply

Your email address will not be published. Required fields are marked *