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What Every Business Should Know About Service of Process Through the Secretary of State

If you are like most businesses (and most attorneys), you probably think serving a lawsuit is a pretty straight-forward affair. Sure, there are the hilarious stories of Slick Mike serving E-Vil, Inc.’s recalcitrant CEO at the breakfast table by gaining admission to the CEO’s palatial estate posing as his daughter’s hippy boyfriend. Most of us view these war stories as the exception that proves the rule.

But Minnesota’s service-of-process rules contain a trap for the unwary plaintiff that can throw a serious monkey wrench into the litigation before it has even begun.

Service in Minnesota

The foundation of every civil action is that the parties to the action have actually been served. “[O]ne is not made a ‘party’ to an action” until effective service of process occurs.[1] When service of process is challenged, “the plaintiff must submit evidence of effective service.”[2] When there is conflicting evidence, the question of whether service was made is one of fact.[3]

So far, so good. But what if you want to sue a foreign corporation or foreign LLC who no longer has authority to do business in Minnesota?[4] This happens more than you might expect.

Service of process on a foreign corporation or an LLC whose authority to transact business in Minnesota has been revoked is governed by section 5.25, subdivision 5(c) of Minnesota Statutes, which then invokes the application of subdivisions 3 or 4. Minn. Stat.  §5.25, subd. 5(c).  Subdivision 4 applies to corporations, while subdivision 3 applies to entities LLCs. Minn. Stat. § 5.25, subd. 3.

Subdivision 6(3) provides that in these circumstances, service by the Secretary of State may be made “at the address provided by the party submitting the document….”  Minn. Stat. § 5.25, subd. 6(3). More specifically, if the company cannot “be served at its registered office address, the document may be served upon [the Secretary of State’s] office by submitting…an ‘Affidavit of Not Found’ showing that service was attempted at the registered office address.”[5]

The party seeking service must provide the Secretary of State with the address “where service of process can be mailed.”[6] If the Secretary of State then sends the process to a different address than that provided by the requesting party, that service is invalid as a matter of law.[7]

Fact Pattern

The below is based on real-world events. The identities of the parties have been changed.

  • ACME is a Delaware limited liability company that was registered as a foreign LLC in Minnesota in 2013. Originally, ACME’s business address in Minnesota was 8765 Jenny Street in St. Paul and its registered agent was QRZ Systems, Inc., at 24601 Javert Street in Minneapolis.
  • In 2013, ACME entered into a contract with RoadRunner Ltd., where RoadRunner would provide delivery services to support ACME’s dynamite production. The contract was renewed by ACME and RoadRunner several times over the years that followed.
  • ACME moved its Minnesota office to a new business address at 99 Luftballons Avenue in Minneapolis (the Luftballoons address) in 2014. RoadRunner knew of ACME’s new location, and the new address was displayed on ACME’s website as well as on the email signature blocks of ACME employees. However, ACME did not update its registration with the Minnesota Secretary of State, and its certificate of authority to conduct business in Minnesota was revoked in 2015.
  • In 2021, the business relationship between ACME and RoadRunner broke down, and RoadRunner filed a breach-of-contract action to obtain $100,000 in unpaid delivery bills from ACME.
  • RoadRunner engaged Jetson’s Legal Services, Inc. to serve its summons and complaint in the breach-of-contract action on ACME.[8] And on April 5, 2021, process server Wile E. Coyete executed an Affidavit of Not Found stating that “agents in his employ” attempted to serve ACME “at its registered address” and were unable to locate any officer or registered agent. But the address identified in Mr. Coyete’s Affidavit of Not Found was not ACME’s registered agent address, nor was it ACME’s registered business address. Instead, it was ACME’s Luftballoons address (ACME’s current address).
  • After obtaining the Affidavit of Not Found, which identified the Luftballoons address, RoadRunner’s counsel opted to request service by the Minnesota Secretary of State. The Secretary of State, for its part, did not serve the documents at the address provided by RoadRunner in the Affidavit of Not Found, but instead sent the documents to the QRZ Systems address. The summons and complaint were returned to the Secretary of State on as undeliverable.
  • Several months later, when the court finally ruled on this service-of-process issue, it found that ACME was not properly served with the summons and complaint.

Application

In this fact-pattern, RoadRunner requested service based on its claims that “a registered agent could not be found at ACME’s registered office.” RoadRunner was required to submit an Affidavit of Not Found with ACME’s registered business address: the Jenny Street address in St. Paul. Instead, RoadRunner’s Affidavit of Not Found specifically identified the Luftballoons address.

The law isn’t entirely clear on this, but the misidentification of the address alone would probably be enough to make the service of process ineffective.

But here, the Secretary of State’s attempted service by mail was doubly ineffective, because it was sent to ACME’s former agent rather than the address that RoadRunner provided.

Final Thoughts

In our example, RoadRunner never served ACME, despite trying very hard to do so. If RoadRunner’s counsel had understood the applicable law better, they outcome could have been avoided. At the very least, RoadRunner’s counsel could have saved RoadRunner several months of lost time and money by understanding that ACME had not been properly served.

Fortunately for RoadRunner, no Minnesota statute or rule prevent is from then serving ACME the old-fashioned way. So, if you’re in RoadRunner’s position, calling Slick Mike and getting to know the dating habits of the CEO’s daughter might not be a bad idea.

As always, it never hurts to retain a lawyer—preferably on the front-end—who understands these issues.

If you have any questions regarding serving out-of-state businesses or complying with Minnesota business regulations, or any other litigation-related questions or issues, please feel free to contact Brendan Kenny at [email protected] or 952-746-2139.

[1] In re Skyline Materials, Ltd., 835 N.W.2d 472, 475 (Minn. 2013) (quotation omitted).

[2] DeCook v. Olmsted Med. Ctr., Inc., 875 N.W.2d 263, 271 (Minn. 2016).

[3] CK Wegner, Inc. v. United Stage Equip., Inc., No. C6-01-907, 2001 WL 1570847, at *1 (Minn. Ct. App. Dec. 11, 2001) (citation omitted).

[4] In this context, foreign refers an any out-of-state company, no just companies from other nations.

[5] See Service of Process Office of the Minnesota Secretary of State, https://www.sos.state.mn.us/business-liens/business-help/service-of-process/ (last visited May 2, 2022) (emphasis added).

[6] Id.

[7] See Northern States Power Co. v, TriVis, Inc., 224 F.Supp.3d 807, 810 (D. Minn. 2016) (finding default judgment void against a revoked foreign entity when service was made through the Secretary of State to the defendant’s registered address, rather than the address provided by the plaintiff, and the defendant first learned of the lawsuit when garnishment was initiated).

[8] Generally, the summons and complaint are the first documents that a party files and serves in a lawsuit.

ABOUT THE AUTHOR

Brendan M. Kenny
Phone: 952-746-2139
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