Case of the Day: Universal Group Development v. Yu
Posted on September 28, 2015
The case of the day is Universal Group Development Inc. (Saipan) v. Yu (D.N.M.I. 2015). I believe this is our first case from the Commonwealth of the Northern Mariana Islands. Hafa Adai, Saipan! Just a brief word about the status of the Islands and the court: the Northern Mariana Islands are is an organized unincorporated territory of the United States, like Puerto Rico. The US District Court for the Northern Mariana Islands is not a court established under Article III of the Constitution: it is established under Article IV, § 3, which provides:
The Congress shall have power to dispose of and make all needful rules and regulations respecting the territory or other property belonging to the United States; and nothing in this Constitution shall be so construed as to prejudice any claims of the United States, or of any particular state.
Its judges are appointed by the President (with the advice and consent of the Senate) for a limited term, not for life. This is like the District Court of Guam but contrasts with the US District Court for the District of Puerto Rico, which Congress, by statute, made into a true Article III court with judges with tenure during their good behavior. Appeals from the court generally go to the US Court of Appeals for the Ninth Circuit.
Anyway, here was the case. Universal had an account with the First Hawaiian Bank with more than $200,000 on deposit. Universal learned that the Bank had frozen its account after a dispute arose as to who was entitled to control the account on Universal’s behalf: Wanzhong Yu, or else Mingnan Jin and Jinwei Guo. So Universal brought an action in the Northern Mariana Islands’ superior court against Yu and the Bank. The Bank then removed the case to the federal court and brought interpleader proceedings to determine the rights in the account. Yu brought cross-claims against Jin and Guo, alleging that they had wrongfully expelled him from the business. Neither Yu nor the Bank had been able to serve process on Jin (who apparently lived on Saipan) or Guo (who apparently lived in China). Yu and the Bank sought leave to serve Jin and Guo by serving Universal—according to the corporate records on file with the Commonwealth, Jin and Guo were the only two officers and directors of Universal.
The court correctly denied the motion as to Jin. The Northern Mariana Islands are within a “judicial district of the United States” even though the Islands are not part of the United States. Thus FRCP 4(f) was inapplicable, and so the court could not grant a motion for leave to use alternate means under FRCP 4(f)(3).
The court granted leave to serve Guo via service on Universal, finding this method reasonably likely to provide him with notice. The court rejected Universal’s argument that service had to be made via the Hague Service Convention, noting that under Volkswagen the Convention is not mandatory. Moreover, Guo’s address was unknown, so under Article 1 it would not have been applicable in any case.