MAS Litigation Trust v. Plastech LDM (In re Meridian Automotive Sys.-Composite Ops., Inc., Case No. 05-11168 (MFW), Adv. Pro. No. 07-51195 (KG), 2007 WL 4292130 (Bankr. D. Del. Dec. 5, 2007) (Judge Kevin Gross)
The trustee of the litigation trust for the estate of debtor Meridian Automotive Systems, Inc. attempted to serve an adversary complaint by naming and serving an entity that does not exist, and addressed such service to an incorrect address and without addressing service to an officer or agent of the defendant. On the putative defendant’s motion, the United States Bankruptcy Court for the District of Delaware dismissed the complaint, finding that service did not comport with the requirements of Fed. R. Bankr. P. 7004(b)(3).
On April 23, 2007, the trustee of the litigation trust for the estate of debtor Meridian Automotive Systems, Inc. commenced an adversary proceeding in the United States Bankruptcy Court for the District of Delaware seeking to avoid and recover $5,582,544.79 in payments that Meridian allegedly paid to “Plastech LDM.” Plastech Engineered Products, Inc. filed a motion to dismiss, alleging that Plastech LDM did not exist, and that service was otherwise improper. The trustee alleged that it named Plastech LDM in good faith. The trustee also noted that it learned that LDM Technologies was acquired by Plastech in 2004, and it sought to amend the complaint to name LDM Technologies, Inc. n/k/a Plastech Engineered Products as the proper defendant.
The trustee served the original summons and complaint on:
Plastech LDM
2200 Garrison
Dearborn, MI 48124
Plastech Engineered Products, Inc. contended that service was defective because it (i) was made on an entity that did not exist; (ii) was attempted at an incorrect address; and (iii) was not directed to an officer or agent of the corporation.
Under Fed. R. Bankr. P. 7004(b)(3), service on a corporation may be made “by mailing a copy of the summons and complaint to the attention of an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process . . . .” The summons and complaint was not directed to any such individual. Also, the plaintiff made no attempt to cure its defective service.
The trustee contended that it named Plastech LDM as a defendant in good faith, based on information it received from Plastech. However, the Court held that good faith was of no importance because even if the trustee had directed service to the correct defendant at a proper address, it still failed to direct service to an officer or agent, as required by Fed. R. Bankr. P. 7004(b)(3). The Court noted that it has held consistently that compliance with the literal requirements of Fed. R. Bankr. P. 7004(b)(3) is necessary, and further noted that numerous other courts have strictly applied Fed. R. Bankr. P. 7004(b)(3) and the analogous Fed. R. Civ. P. 4.
The Court noted that under former Bankruptcy Rule 704(h), erroneous service could be salvaged if there was “no material prejudice result[ing] therefrom to the substantial rights of the party against whom the process issued.” However, Fed. R. Bankr. P. 7004(b)(3) does not contain that language. Moreover, in Grand Entertainment Group v. Star Media Sales, the Third Circuit held that notice cannot validate otherwise defective service. Grand Entm’t Group v. Star Media Sales, 988 F.2d 476, 492 (3d Cir. 1993).
The Court also pointed out that the plaintiff had ample time to cure this defect, but failed to do so. Plastech Engineered Products, Inc. filed its motion to dismiss on May 24, 2007. The period to effect service of the complaint expired on August 21, 2007. In the intervening 90 days, the plaintiff took no action to cure the defect in service. For all these reasons, the Court granted the motion to dismiss.
