Keystone Building Systems, Inc., Appellant, vs. Skarphol Construction Group, Inc., et al., Defendants, Eagle Creek Villas LLC, Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-1649

 

 

Keystone Building Systems, Inc.,
Appellant,
 
vs.
 
Skarphol Construction Group, Inc., et al.,
Defendants,

Eagle Creek Villas LLC,
Respondent.

 

 

Filed May 18, 2004

Affirmed
Crippen, Judge*

 

Scott County District Court

File No. 2003-04806

 

 

George O. Ludcke, Tracey L. Baubie, Jennifer M. Waterworth, Kelly & Berens, P.A., 3720 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for appellant)

 

Kay Nord Hunt, Lommen, Nelson, Cole & Stageberg, P.A., 2000 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for respondent)

 

            Considered and decided by Hudson, Presiding Judge, Anderson, Judge, and Crippen, Judge.

U N P U B L I S H E D   O P I N I O N

CRIPPEN, Judge

            Appellant challenges the district court's dismissal of its action to foreclose on a mechanic's lien for lack of personal jurisdiction due to its failure to properly serve respondent.  Because there is no merit in appellant's assertion that substantial compliance with service requirements is sufficient, we affirm.

FACTS

            Appellant Keystone Building Systems, Inc. (Keystone) is a construction and building subcontractor selected to produce wall panels and framing installation for Creekside Estates, a condominium project in Prior Lake.  Eagle Creek Development LLC, formerly Eagle Creek Villas LLC, owned the project.  In January 2001, respondent Eagle Creek Villas LLC changed its name to Eagle Creek Development LLC (Eagle Creek), by filing an amendment to its articles of organization with the Minnesota Secretary of State.

            Appellant supplied labor and materials to the Creekside Estates project through March 5, 2002, even though fewer than 20% of appellant's invoices were paid.  Appellant also incurred the costs of subcontract labor for installation of materials.  After a dispute over payment arose, appellant filed a mechanic's lien statement in the office of the Scott County Recorder.

            After settlement negotiations were exhausted, appellant filed the complaint to foreclose on its lien.  Appellant's former counsel, who commenced this action, examined a number of documents to determine the correct owner of the property on which appellant had performed work, including a copy of the plat of Creekside Estates, and the project's development contract with the City of Prior Lake.  Each of these documents was signed or filed after Eagle Creek's official name change, but either identified Eagle Creek by its former name, Eagle Creek Villas LLC, or was signed by John E. Mesenbrink, as "Chief Manager" of "Eagle Creek Villas LLC." 

            Appellant's original counsel also represented a different party in its settlement negotiations with Eagle Creek for a similar claim.  The settlement check came to counsel from Eagle Creek Development, LLC.  In a faxed letter from Eagle Creek's counsel to appellant's former counsel proposing settlement terms, Eagle Creek's counsel referred to his client as "Eagle Creek Development, LLC." 

            Appellant filed suit against Eagle Creek one day before the statute of limitations ran.  See Minn. Stat. 514.12, subd. 3. (2002) (establishing a statute of limitations of one year from the last item of the claim in an action to foreclose on a mechanic's lien).  This filing occurred more than two years after Eagle Creek's change of name.

            Appellant's counsel retained Metro Legal Services to serve Eagle Creek with the summons and complaint.  The process server to whom the task was assigned first attempted to serve Eagle Creek at its registered office.  Eagle Creek's office secretary told the process server that neither of the two principals, Gensmer and Mesenbrink, were likely to be available to be served with process at the registered office by March 5, which was the last day of the statute of limitations on the claim. 

            On March 4, 2003, the process server called Mesenbrink's cell phone and spoke with him about serving the summons and complaint on him.  Mesenbrink asked that the process server call back around 5:00 p.m. because he would then have a better idea of his schedule, but when the server called at 5:10 p.m., Mesenbrink did not answer his phone.  The process server left a message requesting that Mesenbrink return the call.  When no return call had been received by 9:00 the next morning, the process server made another unsuccessful service attempt at Eagle Creek's office. 

            The same morning, Scott Gray of Metro Legal called the secretary of state's office after failing to find a listing for Eagle Creek Villas, LLC, on their website.  Gray learned of the Eagle Creek change of name that occurred two years earlier.  No attempt was made to serve process to the secretary of state's office using Eagle Creek's official name; instead, appellant's process servers and attorneys focused on attempting to serve Mesenbrink at his home that evening.  After failing to find Mesenbrink at home at 7:43 p.m. on March 5, contact was again attempted at 9:15 p.m.  Mesenbrink still was not at home, but the server left a copy with Mesenbrink's 16-year-old daughter.  The Scott County Sheriff personally served Mesenbrink on March 12.

            The district court subsequently granted Eagle Creek's motion to dismiss count one of the complaint (mechanic's lien) for lack of personal jurisdiction on account of insufficient service of process on Eagle Creek. 

D E C I S I O N

            Appellant argues that by attempting personal service on Messenbrink, and when it was unable to serve him personally, by leaving service of process with his daughter, it effectively accomplished service on Eagle Creek. 

The existence of jurisdiction is a question of law and is subject to de novo review on appeal.  Northwest Airlines, Inc. v. Friday, 617 N.W.2d 590, 592 (Minn. App. 2000) (citing Stanek v. A.P.I., Inc., 474 N.W.2d 829, 832 (Minn. App. 1991), review denied, Minn. Oct. 31, 1991)).  "When reviewing a pretrial order dismissing for lack of personal jurisdiction, [this court takes] the plaintiff's allegations and evidence supporting jurisdiction as true.  In doubtful cases, [this court resolves] the jurisdictional question in favor of retaining jurisdiction."  Id. (citations omitted).  A determination of whether service of process was proper is also a question of law.  Amdahl v. Stonewall Ins. Co., 484 N.W.2d 811, 814 (Minn. App. 1992).  

            Minn. Stat. § 322B.876, subd. 1 (2002), states the statutory requirements for effective service of process on a limited liability corporation, demanding service on a registered agent, a manager, or the secretary of state.  Appellant's service on Mesenbrink's daughter at his home is not a proper method of service as designated by the statute.  Minn. R. Civ. P. 4.03 allows for personal service "by leaving a copy at the individual's usual place of abode with some person of suitable age and discretion then residing therein," but this provision expressly applies only for service upon an individual.

            Although the rules of procedure do not specifically designate a method of service upon a limited liability company, they address the requirements of proper service upon various other types of business entities including corporations, public corporations, associations, and partnerships, and do not allow for service by leaving a copy at the manager's abode with a person of suitable age and discretion in any of those instances.

            The district court correctly cited to a case that closely parallels this case, but involving a public corporation, where the supreme court ruled that personal service on the wife of the chairman of the school board did not constitute proper service on the school district under Minn. R. Civ. P. 4.03(e).  See Obermeyer v. School Board, Indep. Sch. Dist. No. 282, 312 Minn. 580, 251 N.W.2d 707 (1977).  Because there is specific statutory direction as to what constitutes proper service on a limited liability company, appellant will be held to serving process in compliance with that explicitly stated method. 

            Appellant's argument begins with the claim, as a matter of fact, that its failure to accomplish lawful service is due to the conduct of respondent.  Appellant first argues that it made every attempt to comply with the statutory requirements but was thwarted by Mesenbrink's intentional avoidance of service.  Appellant alleges that Mesenbrink led appellant's process servers to believe he would cooperate with service but then disappeared, and therefore, it used personal service on Mesenbrink's daughter only as a last resort. But appellant misstates the record by concluding that Messenbrink intentionally avoided all efforts to serve him personally; he merely failed to return one phone call made late in the afternoon on the day before the statute of limitations ran. 

            There is equal lack of merit in appellant's further assertion that its efforts to serve the secretary of state were defeated because Eagle Creek misrepresented its name in property title records.  Appellant examined several documents that were misleading as to Eagle Creek's official name, including a title report, a plat map, and a development contract.  But the title report also showed a mortgage and a mechanic's lien that used Eagle Creek's new name.  Moreover, appellant's counsel received a faxed letter that used the new name, and the same counsel previously concluded negotiations for settlement of a separate lien in which respondent's correct name was repeatedly used.  Given the opportunities appellant had to discover the new name used by Eagle Creek, it is not evident that service on the secretary of state was made impossible by misdirection on the part of the respondent. 

            The district court further determined that appellant could have served Eagle Creek through the secretary of state because its process servers learned of Eagle Creek's actual registered name before the statute of limitations had expired.  Appellant argues that service through the secretary of state on the final day of the statute of limitations period was impossible, citing Minn. Stat. § 514.11 (2002), which provides that the summons starting a mechanic's lien foreclosure action must "state that the complaint has been filed with the court administrator and shall be of no effect unless such complaint be in fact so filed."

            Appellant asserts that filing a new pleading before the end of the day was impossible.  But appellant provides no reason why it could not have affected service through the secretary of state and then subsequently amended its complaint to reflect the appropriate name of the party.  "A party may amend a pleading once as a matter of course at any time before a responsive pleading is served . . . ."  Minn. R. Civ. P. 15.01.  Although the parties debate whether appellant learned of Eagle Creek's official name in the morning or afternoon of the last day of the statute of limitations, in either case appellant's lawyers learned of the name change with time remaining in the day to properly serve the secretary of state.  As the district court concluded, service through the secretary of state remained an option at appellant's disposal even on the final day before the statute of limitations expired. 

Ultimately, appellant urges this court to find personal jurisdiction under a substantial compliance standard.  Initially, as previously stated, it is evident that appellant did not exhaust all legitimate attempts at service.  It is especially evident that appellant could have properly served Eagle Creek through the secretary of state on March 5, once it had properly identified its official name.

            Minnesota appellate courts have upheld substantial compliance with service rules, premised on actual notice of the complaint, only in cases of attempted abode service on individuals, permitted under Minn. R. Civ. P. 4.03(a).  See Tullis v. Federated Mut. Ins. Co., 570 N.W.2d 309, 311 (Minn. 1997); Thiele v. Stich, 425 N.W.2d 580, 584 (Minn. 1988).  Appellant cites to no authority and there is none permitting application of such an exception to attempted service on a limited liability company.   

            Additionally, appellant argues on appeal that the statute of limitations for the mechanic's lien foreclosure action was tolled by Mesenbrink's purposeful avoidance of service and the company's continued and misleading use of its former name after the name had been legally changed.  At no point did appellant make this argument in the district court.  This court will not consider matters not argued and considered in the court below.  Thiele, 425 N.W.2d at 582. 

            Affirmed.

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.