Televentures v. Auto-Owners Ins. Co.

Full title: TELEVENTURES, INC., Respondent, v. AUTO-OWNERS INSURANCE COMPANY, Appellant

Court: Minnesota Court of Appeals

Date published: Jul 23, 1996

No. C3-96-542 (Minn. Ct. App. Jul. 23, 1996)

Opinion

No. C3-96-542.

Filed July 23, 1996.

Appeal from the District Court, Ramsey County, File No. C1959452.

Gudrun Emrich, Afton Law Office, P.A., (for Respondent).

Joseph F. Lulic, Timothy L. Blakely, Margaret K. Ackerman, Hanson Lulic Krall, (for Appellant).

Considered and decided by Short, Presiding Judge, Schumacher, Judge, and Foley, Judge.^_

_ Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1994).

UNPUBLISHED OPINION

SHORT, Judge.

After Auto-Owners Insurance Company denied its insurance claim, Televentures, Inc. sought legal redress. In an attempt to commence this action, Televentures served the attorney who had represented Auto-Owners during the claim's investigation by leaving a copy of the summons and complaint with a receptionist at the attorney's law firm. Auto-Owners received notice of the complaint and filed an answer alleging ineffective service of process, but the trial court denied its motion to dismiss. On appeal, Auto-Owners argues the trial court erred in concluding: (1) the law firm enjoyed implied authority to receive service of process for its client Auto-Owners; and (2) the receptionist could accept service of process on behalf of the attorneys at the law firm. We reverse.

DECISION

A trial court's denial of a motion to dismiss on the grounds of ineffective service of process is appealable as a matter of right. See In re State Regents Bldg. Asbestos Cases , 435 N.W.2d 521, 522 (Minn. 1989) (citing Hunt v. Nevada State Bank , 285 Minn. 77, 88-89, 172 N.W.2d 292, 299-300 (1969), cert. denied , 397 U.S. 1010 (1970), and noting the vitality of this rule). The effectiveness of service involves a question of law, which we review de novo. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n , 358 N.W.2d 639, 642 (Minn. 1984) (de novo review of legal questions); Amdahl v. Stonewall Ins. Co. , 484 N.W.2d 811, 814 (Minn.App. 1992) (sufficiency of service presents a legal question), review denied (Minn. July 16, 1992). When reviewing motions to dismiss based on personal jurisdiction, the allegations of the plaintiff are assumed to be true. Hunt , 285 Minn. at 82-83, 172 N.W.2d at 296-97.

A domestic or foreign corporation may be served by delivering a copy of the summons and complaint to (1) an officer or managing agent, (2) any agent authorized expressly or impliedly to receive service, or (3) any agent designated by statute to receive service. Minn.R.Civ.P. 4.03(c). While service-of-process rules should be construed liberally, service in an unauthorized manner is ineffective. See Derrick v. Drolson Co. , 244 Minn. 144, 155, 69 N.W.2d 124, 131 (1955) (stating rule 4.03(c) should be liberally construed); Miller v. A.N. Webber, Inc. , 484 N.W.2d 420, 422 (Minn.App. 1992) (noting unauthorized service is ineffective), review denied (Minn. June 10, 1992). However, substantial compliance combined with actual notice will subject a defendant to personal jurisdiction. Thiele v. Stich , 425 N.W.2d 580, 584 (Minn. 1988); see also Amdahl , 484 N.W.2d at 814 (applying this rule to service on a corporation).

I.

The trial court concluded the law firm had authority to accept service for Auto-Owners. However, attorneys generally do not have the power to receive service of process for their clients. Smith v. Spitzenberger , 363 N.W.2d 470, 472 (Minn.App. 1985) (quoting Masterson v. Le Claire , 4 Minn. 163, 4 Gil. 103, 111-12 (1860)). But an attorney retained to bring a suit may be impliedly authorized to accept service in a suit related to the object for which the attorney was initially retained. Id. (quoting 7A C.J.S. Attorney Client § 196 (1980)). The record demonstrates: (1) Auto-Owners did not retain the law firm to commence litigation, but only to assist in the investigation of a claim; (2) the law firm's representation never required it to appear in court or otherwise take legal action on behalf of Auto-Owners that would expose Auto-Owners to the jurisdiction of Minnesota courts; and (3) this action is not a "necessary incident" of the law firm's representation and was not required to achieve Auto-Owners's original goal to determine the validity of Televentures's claim. Under these circumstances, the law firm had no authority to accept service for Auto-Owners. See id. (finding effective service based on the power of an attorney who was retained to negotiate a settlement, but later prepared a notice of cancellation of a contract for deed advising the plaintiffs of the possibility of litigation, and the authority implied by his previous appearance on a motion directly involving the subject matter of the summons and complaint); see also United States v. Bosurgi , 343 F. Supp. 815, 818 (S.D.N.Y. 1972) (finding service on attorneys was effective because receipt of process was a necessary incident of their representation, and "must have been intended as within the scope of the attorney's authority, since * * * [they] would inevitably have to face and overcome the claim of the United States") (emphasis added); Southerlin v. Automotive Elecs. Corp. , 773 P.2d 599, 601 (Colo.Ct.App. 1988) (holding service of process on an attorney was proper because the plaintiffs' objection to the foreclosure proceedings required the defendants to appear in another forum in order for the attorney to achieve the specific purpose for which he was retained), cert. denied (Colo. May 1, 1989); Doble v. Talbott , 589 P.2d 994, 997-98 (Mont. 1979) (quoting Bosurgi , 343 F. Supp. at 818 and finding an attorney had authority because he necessarily would have to resist claims asserted by other parties).

II.

Assuming the law firm had the power to accept service on behalf of Auto-Owners, Televentures would still have to prove the receptionist was authorized to receive service for the firm. See McNeely v. Clayton Lambert Mfg. Co. , 292 F. Supp. 232, 243 (D.Minn. 1968) (requiring the plaintiff to submit proof of an agency relationship). For the purposes of service of process, an agency relationship requires the employee accepting service (1) to possess the authority to exercise independent judgment and discretion in promoting the business of the corporation, and (2) to occupy a position the character and rank of which makes it reasonably certain the corporation will be apprised of service. See Duncan Elec. Co. v. Trans Data, Inc. , 325 N.W.2d 811, 812 (Minn. 1982) (reversing a finding of effective service of process based on the implied authority of a receptionist who lacked these attributes). Authority also may be inferred from a prior course of dealing and includes any powers necessary to carry out express duties. Schlick v. Berg , 205 Minn. 465, 468, 286 N.W. 356, 358 (1939) (prior course of dealing); Amdahl , 484 N.W.2d at 814 (express duties).

The record contains no evidence that the receptionist's job involved any exercise of judgment or discretion regarding the business of the law firm. See Miller , 484 N.W.2d at 422 (quoting Derrick , 244 Minn. at 149, 69 N.W.2d at 128 (quoting Hatinen v. Payne , 150 Minn. 344, 346, 185 N.W. 386, 387 (1921)), and finding a clerical employee was not impliedly authorized to accept service because she could not "make independent judgments on behalf of the corporation and in no way occup[ied] a position `similar in character and importance' to a corporate officer"); see also Winkel v. Eden Rehabilitation Treatment Facility, Inc. , 433 N.W.2d 135, 138 (Minn.App. 1988) (reviewing the record for circumstantial evidence of an implied agency relationship). Nor has Televentures shown that the receptionist's position required her to accept service or that she routinely did so. See Amdahl , 484 N.W.2d at 814 (finding the executive secretary of a corporation's president had at least implied authority because her written job description gave her the duty of controlling suits and legal paper flow and she had routinely accepted service of process for over ten years with the president's knowledge). Thus, although Auto-Owners received actual notice of the suit, Televentures did not comply substantially with rule 4 by leaving the summons and complaint with a receptionist who was not an agent impliedly authorized to accept service. See Larson v. New Richland Care Ctr. , 520 N.W.2d 480, 481-82 (Minn.App. 1994) (finding the plaintiff failed to comply substantially with rule 4 by leaving the summons and complaint with an administrative assistant despite the defendant's actual notice of the lawsuit).

Furthermore, implied authority depends on the intentions of the parties to the agency agreement. Derrick , 244 Minn. at 152, 69 N.W.2d at 130. It is irrelevant that the receptionist allegedly told the process server that she could accept process for the attorney and that the trial court found that the receptionist "holds a position which would lead a reasonable person to believe that she had authority to accept service of documents served upon attorneys at the firm." See Winkel , 433 N.W.2d at 139 (distinguishing implied authority from apparent authority, which rests on principles of estoppel and which is not an accepted relationship under rule 4); see also Duncan Elec. Co. , 325 N.W.2d at 812 (stating an employee's willingness to accept service is insufficient to establish the requisite implied authority when the corporation denies this authority). Televentures cites several cases from other jurisdictions in support of its general assertion that receptionists may receive service of process for their employers. Because these cases either do not concern service on a corporation or involve the other jurisdictions' dissimilar rules, we do not consider them. See Winkel , 433 N.W.2d at 139-40 (declining to consider cases from foreign jurisdictions having rules governing the service of process that differ substantially from those in Minnesota). Under these circumstances, Televentures failed to effectuate service on Auto-Owners when it attempted personal service on an attorney by leaving a copy of the summons and complaint with the law firm's receptionist. See id. at 140 (finding, as a matter of law, the trial court had no personal jurisdiction over the defendant given the lack of material evidence to establish an implied agency relationship for service-of-process purposes).

Reversed.