United States District Court, S.D. New York
OPINION AND ORDER
GREGORY H. WOODS, DISTRICT JUDGE:
RCC Ventures, LLC (“RCC”) initiated this action
on March 2, 2017 against Defendant Brandtone Holdings Limited
(“Brandtone”), an Irish business corporation with
a principal place of business in Dublin. Am. Compl. (ECF No.
7) (“AC”) ¶ 3. RCC is a debt advisory
company that, among other things, introduces business to
institutional lenders and arranges for institutional lenders
to providing funding to businesses. AC ¶ 5. Brandtone is
a mobile marketing firm. AC ¶ 6. RCC seeks damages for
amounts allegedly owed it by Brandtone under an exclusive
debt financing agreement.
March 6, 2017, RCC filed with the Court an affidavit of
service of a summons and the amended complaint. ECF No. 10.
The affidavit indicates that service of process was made on
“Brandtone, Inc. s/h/a Brandtone Holdings
Limited” through the New York Secretary of State.
Id. In a May 1, 2017 letter to the Court, RCC
described “Brandtone, Inc.” as Brandtone's
“wholly owned subsidiary.” ECF No. 12. On June
14, 2017, RCC informed the Court of its intention to request
a certificate of default and to move for default judgment.
ECF No. 14. The Court issued an order the next day, advising
RCC that the Court “will carefully scrutinize the issue
of service of process prior to granting any default judgment,
” and directed RCC to “the ample case law holding
that service of process on a subsidiary does not constitute
valid service on the parent merely by virtue of the
parent-subsidiary relationship.” ECF No. 15.
after entry of the Court's June 15, 2017 order, RCC began
the process of pursuing a default judgment against Brandtone.
Upon RCC's request, the Clerk of Court issued a
certificate of default on July 6, 2017. ECF No. 17. The Court
then issued an order to show cause why default judgment
should not be entered against Brandtone on July 14, 2017. ECF
No. 19. In accordance with the Court Individual Rules of
Practice in Civil Cases, RCC supported its motion for default
judgment with an attorney's affidavit, a memorandum of
law, and other required materials. ECF Nos. 21-22.
the Court's order explaining that it would carefully
scrutinize whether service on Brandtone's wholly owned
subsidiary amounted to proper service on Brandtone before
granting default judgment, RCC's discussion of service on
Brandtone was limited to the following: “On March 23,
2017, Plaintiff served the Summons and Complaint personally
on Nancy Dougherty, the authorized agent in the Office of the
Secretary of State of the State of New York.” Mem. of
Law (ECF No. 21) at 4; see also Decl. of Chris Han
(ECF No. 22) (“A copy of the Summons and Amended
Complaint was served on Defendant on March 23, 2017 by
personal service made on Nancy Dougherty, the authorized
agent in the Office of the Secretary of State of the State of
New York.”). RCC presented no argument as to why its
method of service was effective as to Brandtone, nor did RCC
address the case law specifically cited by the Court in its
June 15, 2017 letter.
court may not properly enter a default judgment unless it has
jurisdiction over the person of the party against whom the
judgment is sought, which also means that he must have been
effectively served with process.” Acceptance Ins.
Co. v. Home Med. Of Am., Inc., No. 04-cv-9338 (WHP),
2005 WL 3471780, at *2 (S.D.N.Y. Dec. 20, 2005) (quoting
Copelco Capital, Inc. v. Gen. Consul of Bolivia, 940
F.Supp. 93, 94 (S.D.N.Y. 1996)); see also Licci v.
Lebanese Canadian Bank SAL, 673 F.3d 50, 59 (2d Cir.
2012) (stating that “[t]he lawful exercise of personal
jurisdiction by a federal court requires, ” inter
alia, “plaintiff's service of process upon the
defendant [to] have been procedurally proper”);
Aspex Eyewear, Inc. v. Cheuk Ho Optical Int'l
Ltd., No. 00-cv-2389 (RMB), 01-cv-1315 (RMB), 2005 WL
3501900, at *1 (S.D.N.Y. Dec. 21, 2005) (“A default
judgment ‘obtained by way of defective service is void
ab initio and must be set aside as a matter of law.
Plaintiff has the burden of demonstrating that service was
proper.” (quoting Howard Johnson Int'l v.
Wang, 7 F.Supp.2d 336 (S.D.N.Y. 1998),
aff'd, 181 F.3d 82 (2d Cir. 1999))).
Court has already informed RCC, service of process on a
subsidiary does not automatically constitute valid service on
the parent. See, e.g., Ehrenzeller v. McLane
Foodservice, Inc., No. 13-6872, 2014 WL 325640, at *2
(E.D. Pa. Jan. 29, 2014) (“It is well-established that
service upon the subsidiary does not constitute valid service
upon the parent merely because of the relationship between
the corporate entities.”); Gilderhus v. Concentrix
Corp., 825 F.Supp.2d 414, 432 n.23 (W.D.N.Y. 2011)
(“It is hornbook law that service of process on a
subsidiary does not constitute service on a parent
corporation, nor does service on a parent constitute service
on the subsidiary. Except in exceptional circumstances not
present here, the law respects separate corporate identities
even where one corporation may wholly own another . . .
.” (quoting Sansui Elecs. Corp. v. Am. Southern
Ins. Co., No. 88-cv-6184, 1992 WL 77591, at *4 (S.D.N.Y.
Mar. 26, 1992))).
RCC has not demonstrated that service on Brandtone's
wholly owned subsidiary constituted effective service on
Brandtone itself, the Court concludes that RCC has failed to
make a prima facie showing of proper service of
process. Accordingly, RCC's motion for default judgment
is DENIED, the order to show cause issued by the Court on
July 14, 2017 (ECF No. 19) is VACATED, and the hearing
scheduled for August 11, 2017 is adjourned. In addition, RCC
is ORDERED TO SHOW CAUSE, no later than August 4, 2017, why
this action should not be dismissed for failure to effectuate
service in accordance with Federal Rule of Civil Procedure
further ORDERED to serve a copy of this order on Brandtone
Holdings Limited, and to ...