Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_08-cv-01050/USCOURTS-caed-1_08-cv-01050-3/pdf.json

Nature of Suit Code: 893
Nature of Suit: Environmental Matters
Cause of Action: 28:1441 Petition for Removal

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

TEAM ENTERPRISES, LLC., CASE NO. CV F 08-1050 LJO SMS

Plaintiff, ORDER ON DEFENDANT MULTIMATIC’S

MOTION TO DISMISS (Doc. 26)

vs.

WESTERN INVESTMENT REAL

ESTATE TRUST, et. al,

Defendants.

 /

Defendant Multimatic Corporation moves to dismiss plaintiff’s Second Amended Complaint,

pursuant to Fed.R.Civ.P. 12(b)(5), on the grounds of insufficient service of process. In the alternative,

defendant Multimatic Corporation moves to quash service. Plaintiff Team Enterprises, LLC filed its

opposition on September 8, 2008. Multimatic Corporation filed its reply brief on September 18, 2008.

The Court found the motion suitable for decision without oral argument and vacated the hearing set for

September 25, 2008. See Local Rule 78-230 (h). Having considered the moving, opposition, and reply

papers, as well as the Court’s file, the Court issues the following order.

FACTUAL BACKGROUND

This action involves determining responsibility for soil and groundwater contamination near the

Century Shopping Center in Modesto, California. This case was originally filed in Stanislaus County

in September 2006 and was removed to this Court on July 21, 2008. Plaintiff named defendant

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"Multimatic Corporation," in its Second Amended Complaint filed on May 8, 2008. Plaintiff alleges that

Multimatic Corporation manufactured dry cleaning equipment designed for the use, application and

disposal of a hazardous substance which has resulted in the contamination of the soil and ground water

under the property.

Before the action was removed to this Court, plaintiff attempted to serve defendant Multimatic

Corporation on June 17, 2008 at the address of 162 Veterans Drive, Northvale, New Jersey 07647.

Multimatic Corporation presents evidence that the address is the address for Multimatic, LLC, a separate

entity. The person on whom the summons and complaint were served was Ronald Velli, who is the

President of Multimatic, LLC. (Doc. 26 p.3.) The proof of service indicates the complaint was served

on Ronald Velli as a person authorized to accept service for Multimatic Corporation. (Doc. 35, Motola

Decl. Exh. A.) Defendant Multimatic Corporation does not dispute that the complaint eventually made

its way to Multimatic Corporation and thus, it has actual knowledge of the lawsuit.

ANALYSIS AND DISCUSSION

A. Standards under Rule 12(b)(5)

A challenge to service of process may bemade by separatemotion to dismiss under Fed.R.Civ.P.

12(b)(5) for defects in the manner of service (“insufficient service of process”). When service of process

is properly challenged, the party on whose behalf service was made, the plaintiff, has the burden to

establish its validity. Aetna Business Credit, Inc. v. Universal Decor & Interior Design, Inc., 635 F.2d

434, 435 (5th Cir. 1981). Return of service is prima facie evidence of how service was effectuated.

O'Brien v. R.J. O'Brien & Assocs., Inc., 998 F.2d 1394, 1398 (7th Cir. 1993). Normally, a court will

resolve any factual disputes raised by a Rule 12(b)(5) motion. In this regard, the court may require an

evidentiary hearing or may postpone resolution of the motion until trial (Fed.R.Civ.P. 12(i)). If it

appears that effective service can be made and there has been no prejudice to the defendant, the court

will quash service rather than dismissthe action. Umbenhauer v. Woog, 969 F.2d 25, 31 (3rd Cir. 1992).

B. Voluntary Appearance by Joinder in the Notice of Removal

Plaintiff argues that Multimatic Corporation waived any right to challenge service of process

when it made a voluntary appearance in this action by joining in the removal petition. Plaintiff argues

the joinder in removal constituted a voluntaryappearance in federal court, citing William W. Schwarzer,

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et al., California Practice Guide: Federal Civil Procedure Before Trial §2:1031.1 (2008). Multimatic

argues that it did waive its right to challenge jurisdiction. Multimatic notes that it signed the Joinder in

the Notice of Removal, but that Joinder does not waive its right to challenge service of process. 

Objections to personal jurisdiction can be expressly or impliedly waived. See Fed. R. Civ. P

12(h)(1). A defendant's choice to first remove an action to federal court before seeking to challenge

personal jurisdiction does not constitute a waiver of objections to personal jurisdiction. See Diesli v.

Falk, 916 F.Supp. 985, 994 (C.D.Cal.1996) (noting, in dictum, that a defendant does not waive

jurisdictional challenges by removing from state to federal court); see e.g., Tanzman v. Midwest Exp.

Airlines, Inc., 916 F.Supp. 1013, 1018 (S.D.Cal. 1996) (the filing of a removal petition in a diversity

action, without more, does not waive the right to object in federal court to the state court venue); see

Nationwide Eng'g & Control Sys. v. Thomas, 837 F.2d 345, 347-48 (8th Cir. 1988) ("[r]emoval, in itself,

does not constitute a waiver of any right to object to lack of personal jurisdiction"). 

Multimatic, here, has done no more than join in the removal petition. Multimatic has not

answered or set up defenses. It has not consented to jurisdiction. It has not participated in any

substantive court proceeding. Removal is an independent basis for invoking federal subject matter

jurisdiction. Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9 Cir. 1979). It does not create th

personal jurisdiction. Thus, the joinder of in the removal petition, in an of itself, does not waive

Multimatic’sright to challenge personal jurisdiction. Therefore, Multimatic has not waived its right to

challenge the service of process by its joinder in the removal petition.

C. Statutory Requirements for Service of the Summons and Complaint 

Pursuant to Rule 4(h), sufficiency of service on Multimatic Corporation, is determined under

state law. The sufficiency of service of process before removal from state court is determined under

state law. Lee v. City of Beaumont, 12 F.3d 933, 936–937 (9th Cir. 1993), overruled on a different

ground, California Dept. of Water Resources v. Powerex Corp., 533 F.3d 1087, 1091 (9th Cir. 2008).

Here, service on Multimatic was attempted on June 17, 2008, before removal from state court.

Therefore, the sufficiency ofservice is determined under state law. The parties do not dispute that state

law controls.

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1. Liberal Standard for Compliance

The parties dispute whether plaintiff must strictly comply with the California’s service statute

or whether substantial compliance is sufficient. Defendant argues that strict compliance is required and

therefore, service was improper. Plaintiff argues that if service was not technically proper, plaintiff

substantially complied with the statutory requirements for service. The parties agree that Multimatic

Corporation had actual notice of the lawsuit. 

The statutory requirements are construed to uphold jurisdiction, rather than defeat it. As long as

the defendant receives actual notice of the lawsuit, substantial compliance with the Code provisions

governing service of summons will generally be held sufficient. Pasadena Medi–Center Associates v.

Sup.Ct. (Houts), 9 Cal.3d 773, 778, 108 Cal.Rptr. 828, 832 (1973) (the provisions for service are to be

liberally construed); Summers v. McClanahan, 140 Cal.App.4th 403, 407–411, 44 Cal.Rptr.3d 338,

341–344 (2006) (discussing “liberal construction” of service of process law).

When deciding whether service was valid, the statutory provisions regarding service of process

should be liberally construed to effectuate service and uphold the jurisdiction ofthe court if actual notice

has been received by the defendant.” Summers v. McClanahan, 140 Cal.App.4th 403, 410-411, 44

Cal.Rptr.3d 338, 344 (2006). Actual notice of the action alone, however, is not a substitute for proper

service and is not sufficient to confer jurisdiction. "[N]o California appellate court has gone so far as to

uphold a service of process solely on the ground the defendant received actual notice when there has

been a complete failure to comply with the statutory requirements for service." Summers v. McClanahan,

140 Cal.App.4th at p. 414. The Summers court found service invalid, where service was made on an

individual defendant's personal manager, who was not authorized to receive service on her behalf, even

though, immediately upon receipt, the personal manager forwarded the summons and complaint to

defendant's attorney, who was then representing defendant in another action involving plaintiff. See

also, Honda MotorCo. v. Superior Court, 10 Cal.App.4th 1043 (1992) (service on Japanese corporation

that did not conform to the Hague Convention held invalid, even though defendant admitted receipt of

the papers.)

Defendant relies upon several cases for its position that strict compliance is the standard for

service of process. 

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These cases, however, are inapplicable to the statute and facts before the Court. In Williams v.

Los Angeles Unified School Dist., 23 Cal.App.4th 84 (1994), the court strictly construed the statute

which excused plaintiff from timely complying with service of process. In Williams, plaintiff failed to

serve the defendant within the statutory time for service. The court held that while the statute contains

an exclusion for service which is “impossible, impracticable, or futile due to causes beyond the plaintiff's

control,” that exclusion must be strictly construed against the plaintiff. “The excuse of impossibility,

impracticability, or futility should be strictly construed in light of the need to give a defendant adequate

notice of the action so that the defendant can take necessary steps to preserve evidence.” Thus, excusing

plaintiff for failing to give timely notice to defendant is strictly construed.

Defendant also cites Monterey S. P. Partnership v. W. L. Bangham, Inc., 49 Cal.3d 454, 465

(1989). That case which merely stated the requisites for service by publication must be strictly

construed. The reason for strict construction is that “[w]hen jurisdiction is sought to be established by

constructive service, the statutory conditions for such service must be strictly complied with or the

judgment is subject to collateral attack.” See Donel, Inc. v. Badalian, 87 Cal.App.3d 327, 334 (1978).

The publication statute, however, is different than that statute before the Court, as the California courts

have consistently strictly construed the requirements for publication. See Katz v. Campbell Union High

School Dist., 144 Cal.App.4th 1024, 1034, 50 Cal.Rptr.3d 839, 846 (2006). 

Defendant also relies upon Zirbes v. Stratton, 187 Cal.App.3d 1407, 232 Cal.Rptr. 653 (1986)

which dealt with substitute service. In Zirbes, the court noted that "[i]n order to obtain in personam

jurisdiction through any form of constructive service there must be strict compliance with the requisite

statutory procedures." 187 Cal.App. 3d at 1417. Since Zirbes, however, the service of process statutes

requiring strict and exact compliance have been more liberally construed to effectuate service if actual

notice has been received by the defendant. See Stafford v. Mach, 64 Cal.App.4th 1174, 1183, 75

Cal.Rptr.2d 809, 814 (1998); Pasadena Medi–Center Associates v. Sup.Ct. (Houts), 9 Cal.3d at 778;

Katz v. Campbell Union High School Dist., 144 Cal.App.4th at 1034 (Substantial compliance may be

sufficient when summons is served personally, but strict compliance is usually required when it is served

by publication).

Accordingly, the Court finds that California employs a liberal construction of its service of

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process statutes to effectuate jurisdiction, rather than defeat it.

2. California’s Statute for Service of Process upon a Corporation

Service on a corporation under California law is effectuated by delivery of summons and

complaint to some authorized person on behalf of the corporation. Dill v. Berquist Const. Co., Inc., 24

Cal.App.4th 1426, 1437, 29 Cal.Rptr.2d 746, 752 (1994). Service may be made upon “the president,

chief executive officer, or other head of the corporation, a vice president, a secretary or assistant

secretary, a treasurer or assistant treasurer, a controller or chief financial officer, a general manager ...”

Cal.Code.Civ.P. § 416.10(b). A “general manager” is a person apparently in charge of the corporation's

office or headquarters, as long as “the person served is of such rank to make it reasonably certain that

the corporation will be apprised of service.” Gibble v. Car–Lene Research, Inc., 67 Cal.App.4th 295,

302–303, 78 Cal.Rptr.2d 892, 896 (1998) (service on manager of regional office).

Defendant argues that Gibble does not apply, because “if the individual served was not an agent

of sufficient character and rank as to make it reasonably certain the corporation would be apprised of

the service made, then the service would have been insufficient.” (Doc. 42, Reply brief p. 3.) Gibble,

however, also dealt with an agent’s ostensible authority: service on a person who was ostensibly, even

if not actually, a corporate officer is sufficient under section 416.10. Where there has been service upon

a corporate agent with ostensible authority to accept it, jurisdiction is established and a claim of

defective service in such a case is not a proper basis for setting aside a default judgment entered against

the corporation. Gibble v. Car-Lene Research, Inc., 67 Cal.App.4th at 313.

Here, service was made on Ronald Velli, who is admittedly the President of Multimatic, LLC.

Defendant argues that the LLC is an entirely different entity from Multimatic Corporation. Plaintiff,

however, presents evidence that the LLC and Multimatic Corporation share the same physical address,

162 Veterans Drive, Northvale, New Jersey, the same location where Ronald Velli was served. (Doc.

35, Motola Dec. Ex. B, Exh. F.) Plaintiff also presents evidence that Ronald Velli was a manager and

agent of Multimatic Corporation - he signed discovery responses for Multimatic Corporation in other

litigation and he signed off on substitution of attorneys. (See e.g., Doc. 35, Motola Dec. Exh. D.)

Plaintiff presents evidence that Ronald Velli is identified on the Multimatic website as the “President”

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Plaintiff presents additional evidence in support of its motion. (See Doc. 35, Motola.) Defendant objects to this 1

evidence on various grounds. The Court does not resolve the evidentiary disputes because the Court finds that this evidence

is unnecessary for resolution of the merits of the motion.

 Multimatic argues two points as to its corporate status. Multimatic argues that plaintiff has submitted evidence 2

that Multimatic is a “forfeited” corporation. See (Doc. 35, Motola Decl Exh. I (“status: forfeited”).) Multimatic also notes

that plaintiff has represented in other filings that Multimatic changed its name to “Kirrberg Corporation.” (See Doc. 32.) In

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of Multimatic Corporation.1

Defendant objects to the evidence as hearsay, irrelevant, and not properly authenticated. (See

Doc. 42-2.) The Court finds that the evidence regarding Mr. Velli’s signature is not offered to prove the

truth of the matter that he is or is not a manager, but offered for the nonhearsay purpose to show he

represented in another action that he had the authority to bind Multimatic Corporation. Multimatic does

not dispute that Mr. Velli signed on its behalf. He signed on behalf of Multimatic Corporation earlier

in 2008. Indeed, its argument is that he signed as a “former manager.” Nonetheless, Mr. Velli must

have some sufficient authority for Multimatic if he is authorized to sign legal documents filed with the

Court. Those documents were signed recently. Further, plaintiff presents evidence that the business

office for Multimatic Corporation is the same as for Multimatic LLC. The Court finds that plaintiff has

presented sufficient admissible evidence to establish that the businesses have same address, which is the

address at which process was served and that Mr. Velli has ostensible authority.

Here, the service on Multimatic was not strictly according to the statutory requirements. Under

the substantial compliance policy for service of process, the Court finds that the service was sufficient

to satisfy the requirements of due process. The summons and complaint were served at a physical

location where Multimatic Corporation has its business offices. The summons and complaint were

served on a person who from the admissible evidence has sufficient authority within Multimatic

Corporation for the Corporation to take steps to protect its interests. It was made on a person who

appears to be a “manager,” if not the president, of Multimatic Corporation. Multimatic did indeed

protect its interests. The summons and complaint made it way to the proper authority such that counsel

was retained and its interests were protected. Multimatic Corporation participated in the petition for

Removal and has brought law and motion before this Court to protect its interests. Thus, substantial

compliance with the statutory requirements is sufficiently satisfied. 

2

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Multimatic’s own filings with this Court, however, there is no indication that it is a forfeited corporation or named anything

other than Multimatic Corporation. For instance, the notice of motion for the instant motion is made on behalf of “Defendant

Multimatic Corporation.” (Doc. 26, Notice.) In addition, the joinder in the Notice of Removal was signed by “Multimatic

Corporation.” (Doc. 4, Joinder in Removal.) A corporation whose powers have been suspended for nonpayment of the

corporate franchise tax lacks capacity to sue; and, if sued, it lacks capacity to defend. Cal.Rev. & Tax.C. § 23301. Since

the current representations by Multimatic Corporation before this Court is that it exists as a viable corporation named

“Multimatic Corporation,” the Court will not address issues pending in other motions yet to be decided.

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CONCLUSION

For the foregoing reasons, the Motion to Dismiss, or in the alternative, to quash service is

DENIED.

IT IS SO ORDERED.

Dated: September 22, 2008 /s/ Lawrence J. O'Neill 

b9ed48 UNITED STATES DISTRICT JUDGE

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