Defendant states that it had moved from its New York headquarters on June
30, 2001, and its mail was thereafter forwarded to its Seattle office.
See Michael Ahern Affidavit ¶ 4, 5 ("Ahern Aff.").
On January 31, 2002, Plaintiff received a notice of removal dated
January 29, 2002. Id. at ¶ 11. On February 7, 2002, Plaintiffs
counsel requested from the Secretary of State any documents that were
filed by Defendant. On February 20, 2002, Plaintiffs counsel asked the
Secretary of State for any documents relating to service of process on
Defendant in this matter. With respect to the service of process of
Defendant, the Secretary of State produced a document stating that the
"envelope containing the process was returned by the Postal Service with
the following notation: Forwarding Order Expired." Diamond Aff., Ex. C,
at 7. There are no submissions from the parties that suggest Defendant
received the November 11, 2001 mailing from the Secretary of State.
Plaintiff now claims that Defendant did not file a notice of removal
within the thirty days required by Fed. R. Civ. Pro § 1446(b).
For a foreign corporation to be authorized in New York, it must apply
for such authority and designate "the secretary of state as its agent
upon whom process against it may be served and the post office address
within or without this state to which the secretary of state shall mail a
copy of any process against it served upon him." Bus. Corp. Law §
1304. Defendant in fact applied for authority in New York pursuant to
Bus. Corp. Law § 1304 on October 9, 1997, was granted such
authority, and designated the Secretary of State as the agent of the
corporation for purposes of service of process. See Diamond Aff., Ex. F.
Section 28 U.S.C. § 1446(b) states:
The notice of removal of a civil action or proceeding
shall be filed within thirty days after the receipt by
the defendant, through service or otherwise, of a copy
of the initial pleading setting forth the claim for
relief upon which such action or proceeding is based,
or within thirty days after the service of summons
upon the defendant if such initial pleading has been
filed in court and is not required to be served on
defendant, whichever period is shorter.
Fed. R. Civ. P. § 1446(b).
contrast, Defendant claims that it was not served until January 9, 2002
when it received the complaint at its offices in Seattle, Washington. See
Diamond Aff., Ex. H. If Defendant was served on November 11, 2001 or
shortly thereafter, the January 29, 2002 notice of removal would be
untimely and the case should be remanded to state court. If Defendant was
served on January 9, 2002, the notice of removal would be timely and the
motion to remand should be denied.
Defendant will prevail if (a) Defendant's failure to receive the
November 11, 2001 service of process was not the result of some
dereliction on its part, such as a failure to provide for the forwarding
of its mail by the Postal Service, (b) Defendant did not violate a
statutory duty or obligation that prevented its timely receipt of the
November 11, 2001 service of process, and (c) Defendant did not receive
the summons and complaint under a theory of constructive receipt.
A. Dereliction with Respect to the Forwarding Order
The first issue is whether the Defendant was derelict in some manner
with regard to having its mail forwarded from its New York address to its
Seattle office. If Defendant was derelict in failing to file the proper
forwarding order with the Postal Service, then Plaintiff may be able to
argue persuasively that service of process was effected on November 11,
2001 or soon thereafter even though Defendant did not receive the service
of process until January 9, 2002.
In general, this court has found that the "heavy weight of authority is
to the effect that the time for removal, in cases in which service is
made on a statutory agent, runs from receipt of the pleading by the
defendant rather than by the statutory agent." Cygielman v. Cunard Line
Ltd., 890 F. Supp. 305, 307 (S.D.N.Y. 1995) (citing cases) (emphasis
added); Medina, 945 F. Supp. at 520 ("That the New York Business
Corporation Law recognizes service of process as being complete in civil
actions brought against a corporation authorized to do business in the
state once the Secretary of State has been served is not relevant to
[the] question whether defendant's notice of removal is timely.").
Moreover, the "defendant's right to a federal forum ought not to depend
upon the rapidity and accuracy with which statutory agents inform their
principals of the commencement of litigation against them." Cygielman, 890
F. Supp. at 307. See also Cancel v. Challenge Printing Company, 1996 WL
701022 (S.D.N.Y. 1996) (finding that the New York Secretary of State is
considered a statutory agent for service of process purposes). If service
of process is lost in the mail or is returned to the sender as a result
of the Postal Service's error, the intended recipient is not and should
not be held responsible for the legal consequences, such as the operation
of the thirty days in which a notice of removal must be filed, as if
delivery and receipt had actually occurred at an earlier date. No case
that we have found in this circuit has stated otherwise, nor do we see
any compelling reason why such a rule should be adopted.
Here, the parties' submissions indicate that Defendant did not receive
the summons and complaint mailed by the Secretary
of State on November
11, 2001 because of some error outside of Defendant's control. Defendant
states that it "has not maintained any office, facility, or employees in
New York State since June 30, 2001." See Ahern Aff. ¶. Since June
30, 2001, all the mail at the 470 7th Avenue address has been forwarded
to the Defendant's address in Seattle, Washington.*fn3 Ahern Aff. ¶
5. Defendant argues that the service of process should have been
forwarded to the Seattle office, but instead the Postal Service returned
the service to the Secretary of State with the notation: "Forwarding
Order Expired." See Diamond Aff., Ex. C. We know that at least some mail
was being forwarded because the second summons and complaint, mailed by
Plaintiff's counsel to the New York address, was signed in Seattle on
January 9, 2002 by "A. Dollahite," who was then a receptionist at
Defendant's Seattle office. See Ahern Aff. ¶ 6; Transcript at 20.
Plaintiff offers nothing to counter Defendant's assertions. Under these
circumstances, Defendant, through no fault of its own, never received the
initially mailed summons and complaint and thus should not be held
responsible for a third part/s failure to effect service. See, e.g.,
Pastor v. Advision, Inc., 1996 WL 721996 (W.D.N.Y. 1996) (finding that
defendant, who never received service of process, was not responsible for
failure of service where (a) the law firm designated to receive the
service of process was defunct, (b) the defendant's own address did not
receive mail deliveries, and (c) there was no evidence that the defendant
knew about the suit in the relevant time frame). There is also no
evidence that Defendant learned of the litigation in any other manner
before it received the second mailing of the summons and complaint on
January 9, 2002.
Thus, Defendant did not allow its forwarding order to expire and hence
was not responsible for what can only be characterized as a clerical
error by the Postal Service.
B. Dereliction with Respect to Statutory Obligations
Plaintiff argues that Defendant may also be equitably estopped from
arguing that removal was timely because it failed to deliver and file
with the New York Department of State essential documents in violation of
the Business Corporation Law. Plaintiff argues that even if Defendant
were not derelict in filing the proper forwarding order with the Postal
Service, the Defendant would have received the summons and complaint on
November 11, 2001 or soon thereafter had it filed the proper documents
with the Secretary of State.
We agree with the proposition that if Defendant's failure to meet a
statutory obligation prevented Defendant from receiving service of
process through the Secretary of State's November 11, 2001 mailing, then
Defendant may be estopped from arguing that its notice of removal was
timely. The only federal case dealing with a similar issue is Sostre v.
Century Products, 1998 WL 765173 (S.D.N.Y. 1998). In Sostre, the
plaintiff attempted to serve the defendant Century Products under N.Y.
Bus. Corp. Law § 306 as an "authorized foreign corporation." Id. The
plaintiff contended that the notice of removal was filed more than 30 days
after the initial service of process and was therefore untimely.
Defendant answered that "the initial service was invalid because Century
is an unauthorized foreign corporation that cannot be served
under § 306, and that, accordingly, defendant's notice of removal was
timely since it should be measured from the valid service of process
[that occurred at a later date]." Id. The Court found that Bus. Corp. Law
§ 1301 did not require defendant to register in New York State;
thus, because plaintiffs failed to show that defendant was "in violation
of an obligation to seek authorization from the Secretary of State,"
notice of removal was timely. The negative implication of Sostre is that
if a plaintiff complies with the laws regarding service of process, a
defendant corporation's violation of a legal obligation that prevented it
from receiving service of process may result in a finding that service of
process was received at the time plaintiff first attempted service.*fn4
See also In re Martin-Trigona, 763 F.2d 503, 505 (2d Cir. 1985)
("[Defendants'] failure either to collect corporate mail sent to the
Ridge Road address or to change the address for service with the
Secretary of State constitutes a willful disregard of legal process and a
willful default."). We also think this rule would create an appropriate
incentive for parties to maintain accurate service of process addresses
with the Secretary of State.*fn5
In this case, Plaintiff seeks to demonstrate that Defendant is in
violation of various provisions of the New York Business Corporation
Law. If Defendant were in violation of one such provision, and such
violation prevented Defendant from actually receiving the November 11,
2001 service, then the timeliness of the notice of removal would be
highly questionable and remand likely.
1. § 408 Violation
First, Plaintiff argues that Defendant is in violation of Bus. Corp.
Law § 408, which states in relevant part:
1. Each domestic corporation, and each foreign
corporation authorized to do business in this state,
shall, during the applicable filing period as
determined by subdivision three of this section, file
a statement setting forth:
(a) The name and business address of its chief
(b) The street address of its principal executive officer.
(c) The post office address within or without this
state to which the secretary of state shall mail a
copy of any process against it served upon him or her
Such address shall supersede any previous address on
file with the department of state for this purpose . . . .
3. For the purpose of this section the applicable
filing period for a corporation shall be the calendar
month during which its original certificate of
incorporation or application for authority were filed
or the effective date thereof if stated. The
applicable filing period shall only occur: (a)
annually, during the period starting on April 1, 1992
and ending on March 31, 1994; and (b) biennially
during a period starting on April 1 and ending on
March 31 thereafter . . . .
Bus. Corp. Law § 408 (emphasis added).