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Phoenix Process Equipment Co. v. Capital Equipment & Trading Corp.

United States District Court, W.D. Kentucky, Louisville Division

April 19, 2017

PHOENIX PROCESS EQUIPMENT CO. PLAINTIFF
v.
CAPITAL EQUIPMENT & TRADING CORPORATION, et al DEFENDANTS

          MEMORANDUM OPINION & ORDER

          Joseph H. McKinley, Jr., Chief Judge.

         This matter is before the Court on a motion to reconsider portions of the Court's January 13, 2017 memorandum opinion and order by Defendants Capital Equipment & Trading Corporation, Coralina Engineering, LLC, and Alexander Chudnovets (DN 60), as well as a motion for authorization of substituted service by Plaintiff Phoenix Process Equipment Co. (DN 66.) Fully briefed, these matters are ripe for decision.

         I. Background

         Previously, Coralina and Chudnovets filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(2), (5), (6), and the doctrine of forum non conveniens, and Trading Corporation filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). The Court's memorandum opinion and order on January 13, 2017, granted the motions to dismiss Counts II and V and denied the motions to dismiss Counts III and IV. The Court also denied Coralina and Chudnovets' motion to dismiss for lack of personal jurisdiction and forum non conveniens as it pertained to both defendants. Finally, the Court denied the motion to dismiss for insufficient service as to Chudnovets, but it granted the motion as to Coralina and quashed service upon it. Trading Corporation, Coralina, and Chudnovets now move for reconsideration of the Court's decisions regarding personal jurisdiction over Coralina and Chudnovets, service of process on Chudnovets, and the civil conspiracy claim. Phoenix also now moves for authorization to serve Coralina via its Kentucky-based attorney.

         II. Standard of Review

         Fed. R. Civ. P. 59(e) permits a court to “alter or amend” its prior judgment for one of four reasons: “(1) a clear error of law; (2) newly discovered evidence; (3) an intervening change in controlling law; or (4) a need to prevent manifest injustice.” Schlaud v. Snyder, 785 F.3d 1119, 1124 (6th Cir. 2015) (citations omitted). However, Rule 59(e) is a limited rule, whose purpose is “to allow the [Court] to correct its own errors” that are timely presented. Howard v. United States, 533 F.3d 472, 475 (6th Cir. 2008) (citations omitted). It is not an opportunity for the losing party to simply offer old arguments a second time or “to offer additional arguments in support of its position” that were not properly presented initially. Elec. Ins. Co. v. Freudenberg-Nok, Gen. P'ship, 487 F.Supp.2d 894, 902 (W.D. Ky. 2007).

         III. Motion For Reconsideration

         A. Service of Process

         Chudnovets first asks this Court to reconsider its previous decision that Phoenix sufficiently served process upon him. Phoenix served Chudnovets by sending process via certified mail to 2042 Brentwood Drive, Houston, Texas, the address on file for Chudnovets as CEO of Trading Corporation with the Texas Secretary of State. As a result of a mail forwarding directive, it was delivered to 2727 Kirby Drive, Houston, Texas, a high rise condominium building that Chudnovets has never been to. The certified mail was delivered and apparently signed for by a doorman at the building. The Court previously held that Chudnovets was sufficiently served, as the Hague Service Convention, 20 U.S.T. 361, was not implicated due to service being effected within the United States, and that service of process otherwise complied with the Texas Rules of Civil Procedure. (DN 57, at 12-13.) Chudnovets argues that this service was insufficient, as it failed to comply with the requirements for service of a foreign resident under the Hague Convention, which preempts other methods of service permitted under the Federal Rules of Civil Procedure. He also argues that even if the Hague Convention was not implicated, service was insufficient under the Texas Rule of Civil Procedure.

         The Hague Service Convention states that it “shall apply in all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extrajudicial document for service abroad.” 20 U.S.T. 361. However, the Supreme Court has stated that, “[i]f the internal law of the forum state defines the applicable method of serving process as requiring the transmittal of documents abroad, then the Hague Service Convention applies.” Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 700 (1988). As a result, when the laws of the forum state allow for service to be effected within the United States, then service need not comply with the Convention, even if the individual being served is a foreign resident.

         The Court previously found that Rule 4(e)(1) permitted Phoenix to serve Chudnovets according to the Texas Rules of Civil Procedure, as that was the state in which service would be effected. Because the Texas rules did not require service to be transmitted abroad, the Hague Convention was not implicated. Chudnovets argues that Rule 4(e) is inapplicable, since Chudnovets is a resident of a foreign country; instead, service must be effected under Rule 4(f), which would require compliance with the Hague Convention. Based on this argument, the Court must determine whether service under Fed.R.Civ.P. 4(e) is permissible when the party being served is a foreign individual. At first glance, the answer would appear to be no, as Rule 4(e) is titled “Serving an Individual Within a Judicial District of the United States.” Likewise, Rule 4(f) is titled “Serving an Individual in a Foreign County.” The most grammatical reading of those titles implies that each rule will provide the method for serving an individual when that individual is located either in a judicial district of the United States (4(e)) or abroad (4(f)). However, the actual text of the rules implies otherwise. Rule 4(e) reads, in pertinent part,

Unless federal law provides otherwise, an individual . . . may be served in a judicial district of the United States by[] following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made[.]

(subdivisions omitted). Rule 4(f) likewise reads, in pertinent part,

Unless federal law provides otherwise, an individual . . . may be served at a place not within any judicial district of the United States[] by any internationally agreed means of service that is reasonable calculated to give notice, such as those authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents[.]

(subdivisions omitted).

         These rules make no mention of the location of the individual upon whom service is being effected. Instead, all references to location are to the location of where service is being effected. This reading of the rules harmonizes with well-accepted methods of service, such as serving an appointed agent, that are acknowledged by the federal rules and the rules of many states. E.g., Fed.R.Civ.P. 4(e)(2)(C); Ky. R. Civ. P. 4.04. An individual who is actually located abroad is certainly permitted, and sometimes required, to appoint an agent located within the United States to receive service on their behalf, and the fact that individual is located abroad does not mean that Rule 4(f) must instead be invoked. See also Calista Enter. Ltd. v. Tenza Trading Ltd., 40 F.Supp.3d 1371, 1376 n. 2 (D. Or. 2014) (“[I]f service is properly effected under Rule 4(e)(2)(B) by delivery at the person's dwelling located within a judicial district of the United States, the Convention is not triggered simply because the person being served may, at the time of service, be vacationing in the Czech Republic”). The text of the rules reference the location of the service being effected, not the location of the individual to be served. Therefore, so long as the Texas Rules of Civil Procedure permitted service upon an individual abroad to be effected within the United States, then service of process fell wholly within Rule 4(e), and the Hague Convention is not implicated at all. Accord Charles v. Sanchez, 2013 WL 12087219, at *3 (W.D. Tex. Aug 5, 2013) (“Rule 4(e)(1) . . . allows a plaintiff to serve a foreign individual within a judicial district of the United States pursuant to the law of the state in which the district court is located [or service is effected] . . . the Hague Convention is not initially applicable because service was not effected in [the foreign country]”) (emphasis in original).

         The Court previously found that Texas allows for service by certified mail at “the defendant's usual place of business or usual place of abode or other place where the defendant can probably be found.” Tex.R.Civ.P. 106(b). Because Chudnovets could “probably be found” at the company address listed with the Secretary of State, the Court found that the Texas rules for service of process did not “requir[e] the transmittal of documents abroad, ” and the Hague Convention was not implicated at all. Chudnovets now argues that the Texas Rules of Civil Procedure do not allow service by direct mail for ...


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