COA: Admission by Defendants That They Received Summons and Complaint is Sufficient for Proper Service

On Tuesday the Court of Appeals held that an individual defendant can be properly served even if they don't accept service of the summons and complaint; the defendant just needs to personally receive it from the party who was actually served.  The case is Washington v. Cline et al.

Plaintiff Frankie Washington was imprisoned for six years on charges of assault with a dangerous weapon, attempted robbery with a dangerous weapon, assault and battery, and attempted first-degree sex offense, and these charges were vacated by the COA due to violations of Washington’s right to a speedy trial. Frankie Washington and his son Frankie Jr. brought multiple claims against various officials of Durham, the City of Durham, and the State of North Carolina related to Frankie Sr.'s  imprisonment, including constitutional violations, malicious prosecution, negligence, negligent and intentional infliction of emotional distress, conspiracy, and supervisory liability.

The trial court dismissed  Plaintiffs' claims for insufficient service of process.  Defendants were served via FedEx, a designated delivery service.  However, one defendant was served by delivery of the package to his minor grandson who was playing in the front yard; another received the FedEx package after it had been left at her front doorstep; and several others were served by leaving the package with an employee for the City’s Police Department who was responsible for “receiving materials and supplies delivered to the Police
Department for use in its operations.”  All these defendants admitted in affidavits that they personally received the summons and complaint.

Plaintiffs appealed the trial court's dismissal of their Complaint.  Defendants argued that a designated delivery service must personally serve natural persons or service agents with specific authority to accept service with the summons and complaint in order to sufficiently “deliver to the addressee" under Rule 4(j)(1)(d) and N.C. Gen. Stat. § 1-75.10(a)(5).   The COA found that the plain language of N.C. Gen. Stat. § 1-75.10 allows a plaintiff to prove service by designated delivery service with evidence that copies of the summons and complaint were “in fact received” by the addressee, and it's not necessary to show that the delivery service agent personally served the individual addressee.  Thus, the Court noted, "the crucial inquiry is whether addressees received the summons and complaint, not who physically handed the summons and complaint to the addressee."  The COA further noted that the fact that the legislature failed to include a personal delivery requirement in Rule 4(j)(1)(d) when it did so in other subsections throughout the statute indicated its intention to exclude it, and Plaintiffs provided sufficient evidence in the form of delivery receipts and affidavits pursuant to Section 1-75.10 to prove that all defendants-appellees except the City were properly served under Rule 4(j)(1)(d). The COA unanimously found that Plaintiffs properly served all defendants except the City of Durham, and reversed the trial court’s dismissal of the claims against them.  The summons and complaint issued to the City were not addressed to either the mayor, city manager, or clerk as required by Rule 4(j)(5)(a), and were instead addressed to the City Attorney, which was insufficient to confer jurisdiction over the City. The only evidence plaintiffs provided that the City was properly served was a newspaper article wherein the mayor mentioned the lawsuit (which could indicate that he in fact received the summons and complaint).  Even though the mayor had actual notice of the lawsuit, this wasn't enough to give the Court jurisdiction over the City.

COA: Parties Facing Dismissal of Note Enforcement Action Should Clearly Plead the Chain of Title, and Request that Any Dismissal of The Complaint be Without Prejudice.

Tuesday the Court of Appeals made clear that, in order to avoid dismissal, parties seeking to enforce a note need to make a clear showing that they're the holder.  The Court also reminded litigants that they should take measures in advance to avoid a dismissal with prejudice.  The case is First Federal Bank v. Aldridge.

Plaintiff First Federal Bank ("FFB") sought enforcement of two promissory notes executed by defendant Aldridge. Both of the notes identified Aldridge as the borrower and “Cape Fear Bank” as the lender. FFB was not referenced in either note.  FFB attached an affidavit to its complaint that included a statement from an employee familiar with the books and records related to the notes, and that the notes were in default.  The trial court dismissed the Complaint with prejudice on the grounds that FFB had failed to sufficiently plead that it was the holder.

The Court found that "evidence that a plaintiff is the holder of a promissory note, or has otherwise acquired the rights of the holder, is an essential element of a cause of action upon such note."  Because neither the text of the complaint nor the affidavit indicated that FFB had acquired the debt from Cape Fear Bank or was otherwise entitled to enforce them as a holder in due course, the COA found that FFB had not demonstrated its right to enforce promissory notes which were executed by Aldridge with a third party bank, and affirmed the trial court's dismissal of the Complaint.   The COA also noted that if FFB had been a payee or endorsee of the notes that were attached to the Complaint, it would have been the prima facie owner and holder. Here, FFB did not plead that the notes had been assigned or transferred to it from the third party bank.

FFB also argued that dismissing its Complaint with prejudice was inequitable, and that it should have had an opportunity to amend the Complaint.  Noting that the decision to dismiss an action with or without prejudice is subject to an abuse of discretion standard, and that the party whose claim is being dismissed has the burden to show it deserves a "second chance," the COA found that the dismissal was proper because the record contained no evidence that Plaintiff sought to amend the complaint during the hearing or afterward, nor did it move for a dismissal without prejudice.