Improper Service of Process on a Minnesota Business

How Must a Lawsuit Be Served on a Minnesota Business?

A Minnesota corporation is served by delivering the summons and complaint to “an officer or managing agent, or to any other agent authorized expressly or impliedly or designated by statute to receive service of summons” (Minn. R. Civ. P. 4.03(c)). A statute adds the registered agent route for corporations, LLCs, and the other entity types it lists.

Under Minn. Stat. § 5.25, subd. 1, a process, notice, or demand required or permitted by law to be served on a covered entity may be served on “(1) the registered agent, if any; (2) if no agent has been appointed then on an officer, manager, or general partner of the entity; or (3) if no agent, officer, manager, or general partner can be found at the address on file with the secretary of state, the secretary of state as provided in this section.” For an LLC, an appointed agent “is an agent of the company for service of any process, notice, or demand required or permitted by law to be served on the company” (Minn. Stat. § 322C.0116, subd. 1).

Neither statute is the only route. Minn. Stat. § 5.25, subd. 8, states that “Nothing in this section limits the right of a person to serve any process, notice, or demand required or permitted by law to be served upon a business entity in another manner.” For LLCs, § 322C.0116, subd. 4, provides that “This section does not affect the right to serve process, notice, or demand in any other manner provided by law.” Two more requirements apply to serving a summons:

1. The complaint must come with the summons. “A copy of the complaint shall be served with the summons, except when the service is by publication as provided in Rule 4.04” (Minn. R. Civ. P. 3.02).
2. The person delivering must qualify. Under Minn. R. Civ. P. 4.02, “Unless otherwise ordered by the court, the sheriff or any other person not less than 18 years of age and not a party to the action, may make service of a summons or other process.”

What Makes Service on a Company Ineffective?

Service on a corporation is ineffective when the papers go to someone without actual authority to accept them for the corporation at the time of delivery. The Minnesota Supreme Court put the rule plainly: “Service of process in a manner not authorized by the rule is ineffective service” (Tullis v. Federated Mutual Insurance Co., 570 N.W.2d 309 (Minn. 1997)). A partnership or association sued under a common name is served differently, under Minn. R. Civ. P. 4.03(b): “by delivering a copy to a member or the managing agent of the partnership or association.”

Tullis involved a corporation served through an occupational therapist who had once been its executive director. The court asked whether the person has “the power to exercise independent judgment and discretion to promote the business of the corporation,” or holds a position “of sufficient rank or character to make it reasonably certain the corporation would be apprised of the service.” It held the therapist could not accept service. Two of its grounds, and its summary of earlier decisions, recur:

• Actual authority at the time of service controls. The court required “actual authority to accept service of process on behalf of the corporation at the time of service, regardless of any authority in existence before service was attempted.” It said the plaintiff had to look at the position the therapist held “at the time of service and the duties and responsibilities that accompany that position.”
• Front-desk roles have failed the test in earlier decisions. Summarizing those decisions, the court noted that “persons in the positions of administrative assistant, staff counselor at a halfway house, and office receptionist all have been found to lack the power to exercise independent judgment and discretion on behalf of the corporation.”
• An employee’s own say-so is not enough. The plaintiff relied on the therapist’s statement to the process server that he was the executive director. The court answered that “All authority must be traced to the principal’s dealings with the agent; it cannot be inferred from the agent’s dealings with third parties.”

Under the Rules of Civil Procedure, mail is another defect. The advisory committee comment to Rule 4.05 states that the rule “does not authorize service by mere mailing - it is necessary for the defendant to waive formal service and return the waiver-of-service form” (Minn. R. Civ. P. 4.05, 2018 comment). A committee comment explains the rule rather than adding to it, but it matches the rule’s text. A summons delivered without the complaint fails Rule 3.02 as well.

How Does Service Work When the Owner Is Sued Personally?

An owner named personally, for example on a guaranty, is served “by delivering a copy to the individual personally or by leaving a copy at the individual’s usual place of abode with some person of suitable age and discretion then residing therein” (Minn. R. Civ. P. 4.03(a)). The person who takes the papers at your home must live there.

The Minnesota Supreme Court defined that residence requirement in Jaeger v. Palladium Holdings, LLC, 884 N.W.2d 601 (Minn. 2016). There, a notice of foreclosure that had to be served like a summons was handed to the owner’s adult son at the owner’s townhome. The son checked on the property but lived about a mile away. The court held that “the person accepting the service must have lived in the named recipient’s place of abode permanently or for an extended period at the time when the process server attempts service,” and it found the service ineffective.

That holding reaches situations owners face. A relative who only stops by, or a contractor working at the house, does not live there in the sense the rule requires, although the court said in a footnote that residency “will depend on the facts and circumstances of each case.” Papers left at your office for you personally are not abode service at all, because the rule speaks of your “usual place of abode.”

When Does Actual Notice Not Fix Defective Service in Minnesota?

Actual notice does not fix defective substitute service at a home, the Minnesota Supreme Court held in Jaeger. The court stated generally that “By using the word “shall” to describe its requirements, Rule 4.03 mandates strict compliance with its terms.” It held, for substitute service at a home, that “because substitute service is subject to strict compliance regardless of the circumstances, it is irrelevant whether the intended recipient receives actual notice of the action.”

For service on a corporation, Tullis said, citing an earlier decision, that “actual notice of the lawsuit will not subject defendants to personal jurisdiction without substantial compliance with Rule 4.03.” In a footnote, Jaeger listed that Tullis sentence among statements “no more binding on us than the statement from” an earlier case, noting that “none of these cases involved substitute service.”

In Patterson v. Wu Family Corp., 608 N.W.2d 863 (Minn. 2000), the plaintiff conceded “that his complaint was not properly served,” although, as the court noted in a footnote, the defendant “does not dispute that he received the summons and complaint.” In its waiver discussion, the court wrote: “We have not treated service of process as a mere technicality, as it serves the important function of actual, formal notice to the defendant of the action.”

For a business owner, receiving the papers does not by itself show that service was proper. What the rules ask is who received them, in what role, at what place, and with what in the envelope.

How Is the Improper-Service Defense Raised?

The defense is raised by a motion to dismiss before answering or in the answer itself. Minn. R. Civ. P. 12.02 lists “insufficiency of service of process” among the defenses that may be made by motion, and “A motion making any of these defenses shall be made before pleading if a further pleading is permitted.”

Two waiver rules follow. Under Minn. R. Civ. P. 12.07, a party that makes a Rule 12 motion “but omits therefrom any then available defense or objection which this rule permits to be raised by motion, that party shall not thereafter make a motion based on the defense or objection so omitted, except a motion as provided in Rule 12.08(b) hereof on any of the grounds there stated.” Minn. R. Civ. P. 12.08(a) then states that the service defense “is waived (1) if omitted from a motion in the circumstances described in Rule 12.07, or (2) if it is neither made by motion pursuant to this rule nor included in a responsive pleading or an amendment thereof permitted by Rule 15.01 to be made as a matter of course.”

The first response has a clock. Minn. R. Civ. P. 12.01 provides: “Defendant shall serve an answer within 21 days after service of the summons upon that defendant unless the court directs otherwise pursuant to Rule 4.043.” Check the current text of Rule 12.01 before relying on this period. If you are unsure whether the papers count as service, I suggest calendaring the date as if they do, because a missed answer date creates a default risk that the service argument may not cure.

The business carries the proof. “Once the plaintiff submits evidence of service, a defendant who challenges the sufficiency of service of process has the burden of showing that the service was improper” (Shamrock Development, Inc. v. Smith, 754 N.W.2d 377 (Minn. 2008), a service-by-publication case, citing an earlier decision). The plaintiff’s evidence is the proof of service, which under Minn. R. Civ. P. 4.06 “shall state the time, place, and manner of service.” A motion answers those three facts with sworn statements, including one from the person who received the papers about that person’s actual role. I suggest writing down who received the papers, that person’s title and duties, and where and when it happened, while memories are fresh. The defense sits beside other grounds for a motion to dismiss.

What Conduct Waives the Defense After It Is Raised?

A business waives a service defense it has raised when it asks the court to decide the merits before giving the court a chance to rule on service. In Patterson, the defendant pleaded insufficient service in his amended answer, then moved for partial summary judgment on several claims without moving to dismiss. The Minnesota Supreme Court held that “once a defendant affirmatively invokes the court’s power to determine the merits of all or part of a claim, the defendant cannot then deny the court’s jurisdiction over him based on defective service.”

The same opinion marks the safe side of the line. “While participating in litigation through discovery and responding to an opposing party’s motions are not sufficient to waive the defense,” a request for a decision on the merits is. The court added that “a defendant is free to proceed on the merits of a case without fear of waiving the defense so long as the court has been provided an opportunity to determine the validity of the defense.”

The Minnesota Supreme Court described the general test in Peterson v. Eishen, 512 N.W.2d 338 (Minn. 1994), a default paternity case: a defendant “submits to the jurisdiction of the court, although improperly served, only where the defendant has taken some affirmative step invoking the power of the court or implicitly recognizing its jurisdiction.” I suggest asking the court to rule on service before filing any motion for a ruling on the claims, because the order of those two requests can decide whether the defense survives.

What Happens If a Business Ignores Papers It Believes Were Not Properly Served?

Ignoring the papers lets the plaintiff seek a default judgment, and the company then has to prove the service defect to undo it. Under Minn. R. Civ. P. 55.01, when a party “has failed to plead or otherwise defend within the time allowed therefor by these rules or by statute, and that fact is made to appear by affidavit, judgment by default shall be entered against that party.”

If service truly was defective, the judgment is open to attack. That route can close if your business already challenged service, lost, and did not appeal. In Zions First National Bank v. World of Fitness, Inc., 280 N.W.2d 22 (Minn. 1979), a defendant moved to quash service, lost, did not appeal, and then had a default judgment entered against him. The court held he could not vacate it, because “the defendant here may not relitigate the issue of effective service on a motion to vacate after he has been fully and fairly heard on that issue.” Minn. R. Civ. P. 60.02 lists “The judgment is void” as a ground for relief, and in Hengel v. Hyatt, 252 N.W.2d 105 (Minn. 1977), where papers were left at the defendant’s father’s home, the Minnesota Supreme Court said that “If the judgment is void for lack of jurisdiction, it must be set aside without regard to such factors as the existence of a meritorious defense.”

Minn. R. Civ. P. 60.02 also says “The motion shall be made within a reasonable time, and for reasons (a), (b), and (c) not more than one year after the judgment, order, or proceeding was entered or taken.” Check the current text of Rule 60.02 before relying on these periods. In Peterson the Minnesota Supreme Court said that “there is no time limit for commencing proceedings to set aside a judgment void for lack of jurisdiction over the subject matter or over the parties.” The court declined to rule on “whether this case presents extraordinary circumstances justifying a departure from the general rule that void judgments can be vacated at any time.” Later, in Bode v. Minnesota Department of Natural Resources, 612 N.W.2d 862 (Minn. 2000), a case about a judgment void for lack of subject matter jurisdiction, the court concluded that “direct attacks on a judgment based on lack of subject matter jurisdiction must be brought within a reasonable time.” I suggest moving to vacate as soon as your company learns of a judgment, because Rule 60.02 calls for a reasonable time and Bode applied that limit to one kind of void judgment.

Three facts make ignoring the papers a poor bet:

1. The court decides the facts. In Hengel, the court noted that “The place of one’s abode presents a fact question.” A judge may believe the process server’s affidavit over your account, and under Shamrock the burden is yours. Minn. R. Civ. P. 60.02 also lists “(a) Mistake, inadvertence, surprise, or excusable neglect” as a ground. Hengel addressed that ground too before affirming. Citing an earlier decision, Hengel said that “the movant must show excusable neglect or mistake and establish that he has a meritorious defense and that he has acted with due diligence.” I suggest raising that ground alongside the void argument, because it gives the court a second route if it finds the service valid.
2. The judgment stays in force while you challenge it. Minn. R. Civ. P. 60.02 states that “A Rule 60.02 motion does not affect the finality of a judgment or suspend its operation,” so vacating a judgment in Minnesota leaves the judgment working against your company until the court rules.
3. Secretary of State service can reach an old address. When service runs through the Secretary of State, it must immediately forward the papers by certified mail “in care of the agent of the business entity, at its registered office in this state as it appears in the records of the secretary of state” (§ 5.25, subd. 6). Subdivision 6 uses other addresses for a company that has withdrawn from Minnesota, whose authority to do business here has been revoked, or that has never been authorized to do business here. An outdated registered office can mean your company never sees papers served in a way the statute allows. I suggest keeping that filing current, because that is the address the statute uses.

How Should a Business Choose Among Its Options After Defective Service?

A business with a service defect can raise it, accept service, answer with the defense preserved, or talk with the plaintiff, and the right choice depends on what the defect is worth in your case. The plaintiff can try again, because the case is commenced against your company on the date the summons is properly served (Rule 3.01(a)). Under Minn. R. Civ. P. 3.01(c), a case can also be commenced earlier, “when the summons is delivered for service to the sheriff in the county where the defendant resides,” but “such delivery shall be ineffectual unless within 60 days thereafter the summons is actually served on that defendant or the first publication thereof is made.” Check the current text of Rule 3.01 before relying on this period. A defect gains value when time matters to the plaintiff: in Patterson, the district court had found that “the statute of limitations barred Patterson from further pursuit of his complaint by proper service of process,” although the Supreme Court reversed on waiver.

Each option has a different cost and benefit:

1. Move to dismiss for insufficient service. This can end the case if the plaintiff cannot serve again in time, and it can buy time otherwise. Its cost is a motion that may only lead to a second, correct service. If the court denies the motion, Minn. R. Civ. P. 12.01 provides that “the responsive pleading shall be served within 14 days after service of notice of the court’s action,” so the answer comes due soon after the ruling. Check the current text of Rule 12.01 before relying on this period.
2. Accept service through a waiver. A plaintiff may request a waiver under Rule 4.05(a). Under Minn. R. Civ. P. 3.01(b), signing it commences the case “at the date of signing a waiver of service pursuant to Rule 4.05.” Under Minn. R. Civ. P. 4.05(e), “Waiving service of a summons does not waive any objection to personal jurisdiction or to venue.” Under Minn. R. Civ. P. 4.05(b), if a defendant in the United States fails without good cause to sign and return a waiver “requested by a plaintiff located within the United States,” the court must impose “the expenses later incurred in making service” and “the reasonable expenses, including attorney’s fees, of any motion required to collect those service expenses.”
3. Answer on the merits and keep the defense. Minn. R. Civ. P. 12.02 states that “No defense or objection is waived by being joined with one or more defenses or objections in a responsive pleading or motion,” so the answer can include the service defense. Under Patterson, asking the court to rule on it before asking for any ruling on the merits keeps the defense alive.
4. Talk with the other side. An owner-to-owner conversation about the underlying dispute can resolve it without anyone litigating service. In Peterson, one contact with the opposing party did not submit the defendant to the court’s jurisdiction, because the defendant had no contact with the court: “In the absence of some contact with the court, we hold that Eishen did not submit to the jurisdiction of the court.” The same opinion gave as an example of submission a defendant who “had obtained extensions of time within which to move or answer, filed a motion to compel arbitration, appealed the denial of that motion and obtained court approval of a bond.” A conversation about service itself may prompt a correct service.

A related surprise: because service, not filing, commences a Minnesota case, your company can face a lawsuit that has not been filed with the court. The service rules on this page apply to it the same way.

Improper Service and Your Next Step

Improper service of process gives a Minnesota business a real defense, and how and when the business raises it can decide whether it survives. I suggest checking who received the papers, in what role, where, and with what in the envelope against Rule 4.03 and § 5.25, because those facts decide whether the defense exists. If it does, I suggest raising it in your first motion or answer. I also suggest moving to dismiss for it before, or with, any motion asking for a ruling on the merits, because missing either step can waive it under Rule 12.08(a) or Patterson. These steps are part of how I approach business litigation for Minnesota companies.

If papers reached your company in a way that may not meet these rules, you can email [email protected] with a brief description. I can then start an intake and conflict check before you send any confidential documents.