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BOBER v. KOVITZ

September 14, 2005.

LAWRENCE BOBER, individually and on behalf of all others similarly situated, Plaintiff,
v.
KOVITZ, SHIFRIN, NESBIT, an Illinois professional corporation, RONALD J. KAPUTSKA, individually, ROBERT A. STERNBERG, individually, DAVID M. BENDOFF, individually, JOHN H. BICKLEY, III, individually, RICHARD W. HILLSBERG, individually, ROBERT B. KOGEN, individually, ALAN D. KOVITZ, individually, MATTHEW L. MOODHE, individually, ROBERT P. NESBIT, individually, LESTER OTTENHEIMER, individually, JORDAN I. SHIFRIN, individually, DIANE J. SILVERBERG, individually, GERALD J. SMOLLER, individually, JEFFREY S. YOUNGERMAN, individually, G.A.Z., INC., an Illinois corporation, LIEBERMAN MANAGEMENT SERVICES INC., an Illinois corporation, Defendants.



The opinion of the court was delivered by: RONALD GUZMAN, District Judge

MEMORANDUM OPINION AND ORDER

In this putative class action, plaintiff Lawrence Bober has sued defendants Kovitz, Shifrin and Nesbit, P.C. ("Kovitz, Shifrin and Nesbit" or "KSN"), Lieberman Management Services, Inc., and individual shareholders of Kovitz, Shifrin and Nesbit P.C., Ronald J. Kapustka, Robert A. Sternberg, David M. Bendoff, John H. Bickley, III, Richard W. Hillsberg, Robert B. Kogen, Alan D. Kovitz, Matthew L. Moodhe, Robert P. Nesbit, Jordan I. Shifrin, Diane J. Silverberg, Gerald J. Smoller, Lester Ottenheimer, and Jeffrey S. Youngerman for violating the Racketeering Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., and the Fair Debt Collections Practice Act ("FDCPA"), 15 U.S.C. § 1692 et seq., by collecting unauthorized payments from members of homeowners associations. Defendants move to dismiss the complaint pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(5) for improper service of process. The gist of the motion to dismiss is that service was ineffective because it was made on a person unauthorized to accept service of process for each named defendant. In the alternative, defendants move to strike portions of the complaint pursuant to Rule 12(f). For the reasons set forth below, the Court grants defendants' motion to dismiss the complaint due to improper service of process and denies as moot defendants' motion to strike.

DISCUSSION

  Rule 4 outlines the requirements for service of process in a federal action unless a statutory provision provides for an alternative method. Rule 4(k)(1)(D); Robinson Eng'g Co. Pension Plan & Trust v. George, 223 F.3d 445, 449-50 (7th Cir. 2000) (holding that Rule 4 applies to RICO causes of action because if "the [federal] statute does not set forth a method for serving process, service will be made under the appropriate subdivision of Rule 4."). Under Rule 4(h)(1), service of process on corporations is properly effected "by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process. . . ." FED. R. CIV. P. 4(h)(1). Service of process on a corporation may also be effected "pursuant to the law of the state in which the district court is located." Id. (citing FED. R. CIV. P. 4(e)(1)). Illinois law provides that "a private corporation can be served . . . by leaving a copy of the process with its registered agent or any officer or agent of the corporation found anywhere in the State. . . ." 735 ILL. COMP. STAT. 5/2-204 ("section 2-204").

  Pursuant to Rule 4(e)(2), an individual may be served: (1) "pursuant to the law of the state in which the district court is located, or in which service is effected;" (2) "by delivering a copy of the summons and of the complaint to the individual personally;" (3) "by leaving copies thereof at the individual's dwelling house or usual place of abode with some person of suitable age and discretion then residing therein;" or (4) "by delivering a copy of the summons and complaint to an agent authorized by appointment or by law to receive service or process." FED. R. CIV. P. 4(e)(2). In Illinois, an individual may be served:
(1) by leaving a copy of the summons with the defendant personally, [or] (2) by leaving a copy at the defendant's usual place of abode, with some person of the family or a person residing there, of the age of 13 years or upwards, and informing that person of the contents of the summons, provided the officer or other person making service shall also send a copy of the summons in a sealed envelope with postage fully prepaid, addressed to the defendant at his or her usual place of abode.
735 ILL. COMP. STAT. 5/2-203(a).

  It is undisputed that service in this case was not made upon an officer, managing agent, or general agent of a corporation, a registered agent of corporation, an individual named in the lawsuit, or at any individual's dwelling house or usual place of abode. What remains then, is a question of agency. That is, whether service was made upon a person who qualifies either as an agent of a corporation authorized by appointment or by law to receive service of process, as described in the Federal Rules of Civil Procedure; an agent of the corporation, as described in the Illinois Code of Civil Procedure; or an agent authorized by appointment or by law to receive service of process, as described in the federal rules for service upon an individual.

  The testimony in this regard at the hearing on the motion to dismiss was in great conflict. As an initial matter, the Court finds that defendant Kovitz, Shifrin and Nesbit is and was at the time it was served with process, an Illinois limited liability corporation, and not a partnership. The individual KSN defendants all were members of the firm and maintained an office at the same address. According to plaintiff, service upon KSN was effected on September 2, 2004 by Joanne D'amato. Ms. D'amato testified that she delivered one complaint and fourteen summonses to the receptionist at the offices of KSN. At the time, she was accompanied by Ms. Francine Schwartz, plaintiff's attorney, Ms. Schwartz's daughter and son. Ms. D'amato introduced herself to the receptionist, who was in a wheelchair, as a process server and informed her that the law firm was a party being sued. Ms. D'amato asked the receptionist if she had the authority to accept service of process for the law firm and informed her that the summons and complaint were directed to Mr. Sternberg. According to Ms. D'amato, the receptionist indicated that she had authority, accepted the envelope with the summons and complaint and stated that it was her job to accept the summons and complaint and that she would take them back to Mr. Sternberg. The receptionist refused to call Mr. Sternberg to the reception area to receive the documents himself. Ms. D'amato's testimony was corroborated to a large extent by the declaration of Ms. Schwartz.

  Claudia Dickman's testimony as to what happened at the time of the service is completely different. Ms. Dickman admits that she was the receptionist at KSN when the documents were delivered. At that time, she had been with the law firm for approximately two and one half years. When she commenced her employment, she was instructed as to her responsibilities by a former employee who was familiar with the receptionist's duties. According to Ms. Dickman, the firm had a policy that she was authorized to accept only summons and complaint in mortgage foreclosure lawsuits. In all other cases, she was to call the attorney to whom the process was directed to come to the reception area and accept receipt. If the attorney was unavailable, or unwilling to come forward, then she would refuse the summons and inform the process server to return on another day. The firm received a large number of lawsuit documents regarding mortgage foreclosures because many of the attorneys in the firm represented condominium and homeowners associations and/or were registered agents under Illinois law for service of process upon the associations. These associations, because of their interest in the lands, were often named as defendants in foreclosure actions. Ms. Dickman testified that she was able to tell whether or not a lawsuit was a foreclosure both by asking the process server and sometimes by looking at the complaint. She emphasized that she was only authorized to accept service if the lawsuit was a foreclosure and the attorney for the firm was being served as the registered agent for one of the defendants in the foreclosure lawsuit. As to the events on the particular day, Ms. Dickman testified that the process server did not identify herself as a process server, was accompanied by two children, but not by another woman, did not identify the papers she delivered as a summons and complaint and did not inquire as to whether or not she, Ms. Dickman, was authorized to receive service of summons in a lawsuit against the partnership. Because the documents were not identified as legal process, she never looked inside the envelope when she received it. The delivery was made at approximately 5:00 p.m. on a Thursday just before closing time. After she received the envelope, Ms. Dickman turned off the lights, closed the office doors, and, on her way out, took the envelope to the office of the managing shareholder and then left for the day. In short, Ms. Dickman contradicted almost everything Ms. D'amato said about how the documents were served.

  Ms. Dickman's testimony regarding the policy and practice of KSN was corroborated by the testimony of Gregory Oakes, a deputy sheriff in the civil division of the Lake County Sheriff's Office engaged in serving summons and complaint in civil lawsuits. As a deputy sheriff, Mr. Oakes testified that for the last few years he has been serving legal process on KSN on the average of two to three times per week. The large majority of these lawsuits have been mortgage foreclosures in which a homeowners association or condominium association is a named party and the registered agent for the association is one of the attorneys in the firm. On such occasions, Ms. Dickman routinely accepts service of summons on behalf of the registered agent. On approximately two occasions he has served summons upon KSN in lawsuits in which the firm itself was named as a party to the lawsuit. On each of these occasions, Ms. Dickman refused to accept service of the documents and instead called one of the attorneys out to the front desk area to accept service of the documents. Mr. Oakes has never served the firm itself as a party by merely leaving the summons and complaint with the receptionist. Ms. Dickman's testimony regarding the policy and practice of KSN was also corroborated by almost all of the individual defendants, each of whom testified.

  D'amato testified that on the next day, September 3, 2004, she served the defendant, Lieberman Management Services, Inc., in much the same manner as KSN. She was accompanied by the same people and informed the young lady, presumably the receptionist, that she was there to serve summons and complaint upon Lieberman Management Services Inc. She also confirmed that the person had authority to accept service of process. The young lady responded by telling her that she was the only one there to accept the documents and that she did have authority to do so. Again, this testimony, in general, was corroborated by the testimony of attorney Schwartz. Also again, this testimony was contradicted in almost all respects by the person who actually received the documents, Jennifer Rosenblum. Ms. Rosenblum testified that she was working as a temporary employee for Lieberman Management Services, Inc. substituting for an executive administrative assistant on September 3, 2004 when the documents were delivered. On that day, the office had closed early because of the Labor Day holiday weekend. When the documents arrived at approximately 4:00 p.m. she was the only one in the office. She was neither the receptionist nor was she substituting for the receptionist. It was not her job to man the front desk as a receptionist, nor was she authorized to accept service of process. At approximately 4:00 p.m. she remained after closing to finish some work, when she happened to see a woman and two children by the front door of the office. She opened the door and informed them that the office was closed and they would have to come back on Tuesday. The woman asked for an officer who was not in. She then asked Ms. Rosenblum if she would take a package for him. Ms. Rosenblum agreed and took the envelope that was handed to her. Ms. D'amato did not inform Ms. Rosenblum that the documents in the envelope constituted a summons and complaint or that the delivery involved a lawsuit in any way. Ms. Rosenblum delivered the envelope with the documents to the desk of the company officer immediately, although, because of the holidays, that person did not actually see the documents until three days later.

  The Court finds the testimony presented on behalf of the defendants to this lawsuit more credible. Thus, the record establishes that service was attempted as to KSN and the individual defendants by leaving an envelope containing one complaint and fourteen summonses with a receptionist not specifically authorized to accept service of summons for the firm or the individual defendant members of the firm, without inquiry as to whether or not the person being served was authorized to receive such service. The recipient was not informed, and thus was not aware, that the envelope contained services of process. Nevertheless, the documents were promptly delivered to the managing member of the firm.

  With regard to defendant Lieberman Management Services Inc., the record establishes that service was attempted by delivering an envelope containing a summons and complaint to a temporary worker who was not authorized specifically to receive such documents on behalf of the corporation, without any announcement as to the nature of the documents and without inquiry as to whether or not the person receiving them was authorized to accept service of process. Again, the documents were promptly delivered to the desk of a corporate officer.

  In Iosello v. Lexington Law Firm, this Court stated:
In Illinois, a corporation may be served by (1) leaving a copy of the complaint and summons with the corporation's registered agent or any officer or agent found anywhere within the state; or (2) in any other manner permitted by law. 735 ILCS 5/2-204. Plaintiff suggests that a receptionist who is in charge of receiving papers for a corporation is a proper agent for service of process. Generally, the sheriff's return is prima facie evidence of service which can be set aside only by clear and satisfactory evidence. Island Terrace Apartments v. Keystone Serv. Co., Division of Cole Coin Operated Laundry Equip., Inc., 341 N.E.2d 41, 43-44 (Ill.App. Ct. 1975). However, when a corporation is the defendant, the sheriff's return is not conclusive as to the fact of agency. Id. Most likely agency is not within the personal knowledge of the officer and therefore, it may be disputed by a denial. Id. "Where the agency of the person named on the return is disputed, the defendant has the burden of proving that the individual served was not a proper person to receive service." Id.
Iosello v. Lexington Law Firm, No. 03 C 987, 2003 WL 21920237, at *3 (N.D.Ill.Aug. 7, 2003). To quash service of summons left upon a corporate employee, the defendant must establish by conclusive evidence that the person served was not a proper person for service of summons. Millard v. Castle Baking Co., 161 N.E.2d 483, 484 (Ill. 1959).

  Whether a clerk, typist, or receptionist is an appropriate agent for service of summons is a factual question. See Citicorp Sav. of Ill. v. Rucker, 69 ...


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