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Jones Stephens Corp. v. Coastal Ningbo Hardware Manufacturing Co., Ltd.

United States District Court, N.D. Alabama, Southern Division

June 7, 2019

JONES STEPHENS CORP., Plaintiff,
v.
COASTAL NINGBO HARDWARE MANUFACTURING CO., LTD, et al., Defendants.

          MEMORANDUM OPINION

          KARON OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE.

         A simple question comes before the court in this convoluted insurance matter: did Plaintiff Jones Stephens Corp. properly serve Defendant Coastal Ningbo Hardware Manufacturing Co., LTD?

         In its motion to dismiss, Coastal Ningbo, a corporation residing in China, contends that Jones Stephens did not properly serve it because Jones Stephens only served an individual in California who was not an agent authorized by Coastal Ningbo to receive service of process on its behalf. (See Doc. 105). So Coastal Ningbo asks the court to dismiss it from this case or, in the alternative, quash the defective service.

         As further explained below, the court finds that Jones Stephens has not met its burden of showing that it properly served Coastal Ningbo because Jones Stephens has only shown that it served Coastal Ningbo's U.S. mail forwarder-not its agent authorized to receive service of process. So the court will quash the defective service on Coastal Ningbo and afford Jones Stephens another opportunity to perfect service on that defendant.

         I. STANDARD OF REVIEW

         Coastal Ningbo moves for dismissal under Federal Rule of Civil Procedure 12(b)(2), “lack of personal jurisdiction”; Rule 12(b)(5), “insufficient service of process”; and Rule 12(b)(6), “failure to state a claim upon which relief can be granted.” Because the court will resolve Coastal Ningbo's motion on grounds of insufficient service of process, the court will only apply the Rule 12(b)(5) standard of review.

         A Rule 12(b)(5) motion to dismiss challenges the court's personal jurisdiction over a defendant for insufficient service of process. To invoke the court's personal jurisdiction on a defendant requires service of process; so if a plaintiff fails to properly serve a defendant according to one of the methods of service in Rule 4, the court will, on a timely motion, dismiss all claims against the defendant. Pardazi v. Cullman Med. Ctr., 896 F.2d 1313, 1317 (11th Cir. 1990). And, when a defendant challenges service of process, the plaintiff bears the burden of showing that it properly served the defendant under Rule 4. Reeves v. Wilbanks, 542 Fed.Appx. 742, 746 (11th Cir. 2013) (citing Aetna Business Credit, Inc. v. Universal Decor & Interior Design, Inc., 635 F.2d 434, 435 (5th Cir. 1981)).

         II. BACKGROUND

         From June 2007 to August 2015, Jones Stephens, an Alabama corporation, regularly purchased plumbing products from Coastal Ningbo in China and sold them in the United States. Coastal Ningbo allegedly maintained U.S. general liability insurance on any products it sold to Jones Stephens, named Jones Stephens as an additional insured party on its insurance policies, and agreed to defend and indemnify Jones Stephens against claims arising out of Coastal Ningbo's products.

         Some unknown parties who are not involved in this case sued Jones Stephens for property damage allegedly caused by Coastal Ningbo's products that Jones Stephens sold in the U.S. But, according to Jones Stephens, Coastal Ningbo repudiated its obligation to defend and indemnify Jones Stephens against those claims. Jones Stephens also alleges that Coastal Ningbo and the other defendants in this case-Coastal Ningbo's insurance carrier, Great American E&S Insurance Co., and the insurance brokers and agents involved in negotiating the insurance coverage, New Century Insurance Services, Inc., and AmWINS Insurance Brokerage of California, LLC-conspired to retroactively modify the Great American insurance policies to exclude Jones Stephens from coverage under those policies.

         Jones Stephens filed its complaint in this case on May 9, 2017. At first, Jones Stephens unsuccessfully sought to serve Coastal Ningbo in China through the Hague Convention. Then, during the course of discovery with Great American, Jones Stephens learned that Coastal Ningbo's “U.S. Administrator, ” Wen Chen Liao, lived in California. So Jones Stephens served Mr. Liao copies of Coastal Ningbo's summons and the amended complaint at his residence in California on September 28, 2018. (See Doc. 84).

         Coastal Ningbo responded to the amended complaint by filing a motion to dismiss. (Doc. 105). The other defendants also moved to dismiss the amended complaint. The court granted in part and denied in part the other defendants' motions to dismiss and deferred ruling on Coastal Ningbo's motion to dismiss because of Coastal Ningbo's unique personal jurisdiction and service of process arguments. (See Docs. 114 and 115).

         The court next addresses Coastal Ningbo's contention of insufficient service of process. In doing so, the court finds that Jones Stephens did not properly serve Coastal Ningbo and the court has no need to address Coastal Ningbo's other arguments for dismissal.

         III. ...


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