Locked door doesn’t stop service of lawsuit
Court of Appeals OK’s Secretary of State's Office as service substitute in debt action
Aaron Carlson Corporation agrees that it owes Alerus Financial nearly $1 million.
But the now defunct corporation claimed that it has not been served properly by Alerus in the financial institution’s attempt to collect that debt.
The Minnesota Court of Appeals disagreed. On Monday, in Alerus Financial v. Aaron Carlson Corporation, it said that Alerus’ service of process on the Minnesota Secretary of State under Minn. Stat. § 5.25 was effective, even though Alerus did not file an affidavit of nonservice until seven months after the event.
The District Court granted summary judgment to Alerus and the Court of Appeals affirmed in Monday’s precedential opinion.
“Because parties are not required to file an affidavit of attempted service on a foreign corporation with the court before effectuating substitute service on the Minnesota Secretary of State, we affirm,” wrote Judge Lucinda Jesson for the court.
“We have taken for granted that this was the law in Minnesota and are pleased to have it clarified by the Court of Appeals,” said Alerus’ attorney David Orenstein of Minneapolis.
Jesson was joined in the Aug. 9 opinion by judges James B. Florey and Tracy M. Smith.
Doors locked
Aaron Carlson Corporation (ACC) was an architectural woodworking company incorporated in Delaware and doing business in Minnesota. For 10 years, Alerus extended a revolving line of credit to ACC, eventually adding its owner and CEO as a personal guarantor. The loan matured in 2019. Somewhere around that time, ACC dissolved.
Alerus sued for breach of contract. The CEO of ACC filed a separate bankruptcy.
Alerus attempted to serve ACC at its registered Minnesota office but the building was locked and there was no way to communicate with anyone who may have been inside. Alerus then effected substitute service on the Secretary of State’s office.
Subsequently, ACC opposed summary judgment on the ground of insufficient service of process. Alerus then filed an affidavit detailing the process server’s attempt to serve ACC at its registered office seven months earlier.
The District Court said that the filing of an affidavit of nonservice was unnecessary for substitute service. The Court of Appeals said it had not found any Minnesota appellate caselaw determining whether a party must file an affidavit of attempted service before effectuating substitute service.
Substitute service authorized
The Court of Appeals agreed that there were no fact disputes with regard to the issue of service. It turned to Minn. Stat. § 5.25, subd 4 (a) (2), which provides for service by:
“… delivering to and leaving with the Secretary of State . . . one copy of [the lawsuit] and a fee of $50 in the following circumstances: . . . whenever a registered agent cannot be found at its registered office in this state, as shown by the return of the sheriff of the county in which the registered office is situated, or by an affidavit of attempted service by a person not a party[.]” (Emphasis by court.)
ACC argued this provision requires a party to file an affidavit of service before performing substitute service, while Alerus contended that an affidavit need not be filed at all.
The court said that the language does not require filing an affidavit at any particular time. The sole focus of the statute is service, the court said, adding:
“And it provides that substitute service of process on the Secretary of State may be effective for a voluntarily dissolved foreign corporation when an affidavit of attempted service confirms that the registered agent could not be served.”
Attorneys for ACC could not be reached for comment.