Family Law: Corporate And Trust Challenges To Service Of Process and Jurisdiction

The president of a corporation, manager of a limited liability company, trustee of a family trust, or principal of another business entity receives a summons in a Florida divorce case. One spouse contends the other's control, ownership of an interest in, or history of substantial business with the entity being sued requires its joinder as a party. The suing spouse may contend joinder is necessary for the court to transfer or sell real property or other assets from the entity to the spouse.

A spouse who sues a trust may contend the trust must be joined because the spouse claims a direct or equitable interest in the trust or may attack the other spouse's creation or use of a trust or entity as an attempt to manipulate the distribution of property in the divorce. See, e.g., Schneider v. Schneider, 864 So. 2d 1193, 1997 (Fla. 4th DCA 2004) (improper for husband to place marital funds in an irrevocable trust as a "stratagem" to manipulate equitable distribution). The spouse may further contend that failing to join a trust and beneficiaries may invite later lawsuits and motions by them to intervene in proceedings or otherwise collaterally challenge decisions of the family court regarding trust assets. See Crescenze v. Bothe, 4 So. 3d 31, 32 (Fla. 2d DCA 2009).

How may the business entity or trust get out of the family law case? This article discusses challenges to service of process and jurisdiction that may be available to secure dismissal.

Due Process: Service of Process and Personal Jurisdiction Over An Entity

For a family law judge in Florida to adjudicate a spouse's claims over a corporate entity or trust, the spouse must satisfy due process requirements. First, service of process over the entity or trust must be sufficient. Second, there must be a basis for personal jurisdiction over the entity. See Borden v. East-European Ins. Co., 921 So. 2d 587, 591 (Fla. 2006) and Scott-Lubin v. Lubin, 49 So. 3d 838, 840 n. 1 (Fla. 4th DCA 2010).

Service of process and personal jurisdiction are two distinct but related elements of due process protections. See Ulloa v. CMI, Inc., 133 So. 3d 914, 919 (Fla. 2013) (discussing difference between service of process, personal jurisdiction, and subpoena power). Both valid service of process and a basis for personal jurisdiction are necessary before an entity can be compelled to answer a claim brought in a Florida family law case.

Service of process

Service of process is the means of notifying a party of a legal claim. When accomplished, service enables a court to exercise jurisdiction and proceed to judgment.

Caution: If the entity seeks affirmative relief, it may waive otherwise valid challenges to the Florida court's exercise of jurisdiction.

Service of Process: Can It Be Challenged?

As a threshold matter, the entity sued in a family law lawsuit may consider challenging the sufficiency of service of process. Proper service of the family law papers on the entity is required before the Florida court can acquire personal jurisdiction over the entity as a party in a family law action. See Fla. Rules of Civ. P. 1.080(a) and 1.180. See also Thompson v. State/Dept. Revenue, 867 So. 2d 603, 605 (Fla. 1st DCA 2004) (the court lacks jurisdiction without proper service of process, and the burden of proof of proper service is upon the person who seeks to invoke the court's jurisdiction). Entry of an order adjudicating rights of a party not properly served is reversible error. See Varveris v. Alberto M. Carbonell, P.A., 773 So. 2d 1275, 1276 (Fla. 3d DCA 2000) (judgment debtor's wife was not properly brought before the court to set aside allegedly fraudulent transfers).

A summons, properly issued and served, is the method by which a court acquires jurisdiction over an entity. See Seymour v. Panchita Inv., Inc., 28 So. 3d 194, 196 (Fla. 3d DCA 2010). Defects in the summons may make service void. Id. at 196 (attempt to serve corporation with summons naming person individually was void to effect good service on the corporation of which he was registered agent.) An entity, through sufficient affidavits, may challenge service and obtain a hearing to present evidence on the effectiveness of services. See Panama City Gen. P'ship v. Godfrey Panama City Inv., LLC, 109 So. 3d 291, 293 (Fla. 1st DCA 2013) (affidavits supported partnership's assertion that managing partner identified in process server's affidavit as having been served moved from his home to assisted living nursing facility two days before alleged service).

A party who attempts to serve a foreign corporation not qualified to do business in Florida must show that the requirements for service have been met and that process has been served upon a person qualified to accept such process. Courts strictly construe statutory requirements and require strict compliance with them for effective service. See Grange Insurance v. Walton Transport, 2014 WL 1917987 *3, Case No. 3:13-cv-977-J-34MCR (M.D. Fla. May 13, 2014); Estela v. Cavalcanti, 76 So. 3d 1054, 1055 (Fla. 3d DCA 2011); Mecca Multimedia, Inc. v. Kurzbard, 954 So. 2d 1179, 1181 (Fla. 3d DCA 2007); S.T.R. Indus., Inc. v. Hidalgo Corp., 832 So. 2d 262, 263 (Fla. 3d DCA 2002).

Failure to comply with the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters articles 2-6, November 15, 1965, 20 U.S.T. 361 (Hague Convention), may invalidate service of process. See SDS-IC v. Florida Concentrates International, LLC, 157 So. 3d 389 (Fla. 2d DCA 2015) (service of process quashed because it did not comply with Florida law or China's Central Authority under the Hague Convention). But note Article 10(a) of the Hague Convention permits service of process by mail. See Portalp International SAS v. Zuloaga, 40 Fla. L. Weekly D2791b (Fla. 2d DCA December 18, 2015).

A corporation cannot make it impossible for a plaintiff to comply strictly with the statutory requirements by listing a private mailbox or "virtual office," where no directors, officers, corporate employees, or registered agent can be found and evade service by feigning compliance with the requirement of maintaining a registered agent under section 48.091, Florida Statutes. The party seeking service may serve such corporation under section 48.081(3)(b) at another physical address for the corporation, its officers, directors, or registered agent discoverable through public records, under the general service of process statute (section 48.031). See Diaz v. Winn-Dixie Stores, Inc., 2015 WL 136404 at *3, No. 14-cv-21045 (S.D. Fla. January 9, 2015) (setting aside clerk's default where attempted service on corporation took place at local store, rather than corporation's principal place of business, meaning where the corporation's high level officers direct, control, and coordinate the corporation's activities); Natures Way Marine, LLC v. Everclear of Ohio, Ltd., No. 12-0316-CG-M (S.D. Ala. January 18, 2013) (applying Florida law); TID Services, Inc. v. Dass, 65 So. 3d 1 (Fla. 2d DCA 2010) (reversing order denying motion to vacate for lack of jurisdiction a default judgment, where summons was left at UPS store where defendant maintained a private mailbox).

Improper service of process on a person not among those persons authorized to be served may be quashed. See Seymour v. Panchita Inv., Inc., 28 So. 3d 194, 198 (Fla. 3d DCA 2010) (affirming order vacating final judgment after default because attempted service on a corporate officer in his individual capacity was void); S.T.R. Industries, Inc., 832 So. 2d at 264 (quashing service of process on a foreign corporation not qualified to do business in Florida because a party failed to meet its burden of proof to show a diligent search for superior officers or the necessity for substitute service and where the process server's affidavit failed to indicate that the foreign corporation's business agent was served absent superior officers); Lisa, S.A. v. Gutierrez, 806 So. 2d 557, 559 (Fla. 3rd DCA 2002) (affirming order quashing service on a receptionist or on a law clerk); Washington Capital Corp. v. Milandco, Ltd., Inc., 665 So. 2d 375, 376 (Fla. 4th DCA 1996) (quashing service on a secretary/receptionist of a foreign corporation not in strict compliance with section 48.081, Florida Statutes). Compare with Kalb v. Sail Condominium Ass'n, Inc., 112 So. 3d 674, 675 (Fla. 3d DCA 2013) (judgment against a corporation qualified to do business in Florida was not void where service had been validly accomplished on an employee of the condo association's registered agent, as permitted by amended section 48.081(3)(a), Florida Statutes).

An affidavit of service merely alleging service of process statute has been complied with may not be enough to meet the burden of establishing proper service. See Diaz v. Winn-Dixie Stores, Inc., 2015 WL 136404 at *3, No. 14-cv-21045 (S.D. Fla. January 9, 2015) (bare allegation of failing to keep a sign posted designating the name of the registered agent on whom process may be served is insufficient to justify service on a corporation's employee or employee of its registered agent, pursuant to section 48.081(3)(a), Florida Statutes); Johnston v. Halliday, 516 So. 2d 84, 85 (Fla. 3d DCA 1987)(a return of service merely stating that substituted service was effected on the defendant's son who was "of suitable age and discretion" was insufficient absent facts establishing that the process server complied with the requirements for substituted service); York Communications, Inc. v. Furst Group, Inc., 724 So. 2d 678, 679 (Fla. 4th DCA 1999) (a process server's...