Bazarian International Financial Associates, L.L.C. v. Desarrollos Aerohotelco C.A., No. 1:13-cv-01981 (D.D.C. 2016) [click for opinion]

Plaintiff, an investment bank, filed a lawsuit against six foreign affiliated Defendants and one associated individual Defendant alleging breach of an investment banking agreement connected to the development and financing of a hotel in Aruba, and claiming fees Plaintiff alleged to be due thereunder.

Defendants sought to dismiss Plaintiff's first amended complaint for lack of personal jurisdiction, improper service and failure to state a claim. Defendants first argued that, because only one of the named Defendants was party to the investment banking agreement in question, which contained a forum selection clause for the District of Colombia, the other Defendants could not be bound by the agreement, the forum selection clause or the personal jurisdiction of the court.

The court disagreed, holding that: (i) the investment banking agreement was sufficiently broadly drafted so as to bind related entities; and (ii) Defendants were in fact sufficiently closely affiliated, and under common control and ownership, to be plausibly considered related entities. As such, the non-contracting Defendants were held to be subject to the forum selection clause and the personal jurisdiction of the court.

Defendants next argued that service of process by email on its U.S. counsel was insufficient under Fed. R. Civ. P. 4. Prior to such service, Plaintiff had made repeated efforts to serve process on Defendants. Plaintiff had attempted to serve the first named Defendant through State Department channels in accordance with the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters (the "Hague Convention"). This resulted in no progress or response from the Venezuelan authorities. After eight months and upon adding the remaining Defendants in their amended claim, Plaintiff sought, without success, to establish Defendants' registered addresses through searches of international business databases and enquiries of the Aruban authorities.

Plaintiff's efforts to locate and serve the Defendants culminated in Plaintiff moving for leave to effect alternative service on Defendants by way of email and registered mail to Defendants' shared counsel who was based in Florida. Defendants' counsel was known to Plaintiff due to an ongoing representation of Defendants in unrelated litigation in the U.S. District Court for the District of Connecticut. Plaintiff was granted leave by the court to effect service by email and registered mail on Defendants' shared counsel on the basis that the representation in the Connecticut matter meant that counsel were "presumably in regular contact with the Defendants." Defendants were subsequently served by Plaintiff in accordance with the court's order.

Defendants argued in their subsequent motion to dismiss that service was improper, because inadequate efforts had been made to serve process in accordance with the requirements of the Hague Convention, and that the service of process by email and registered mail on U.S. counsel in the U.S. was not an appropriate or recognized method for service on foreign defendants and was not designed to minimize offence to the laws of the Defendants' domicile (Venezuela, Aruba and Curacao).

The court again disagreed, finding service of process sufficient because: (i) service of process on foreign defendants via their U.S. counsel is a recognized and sanctioned means of alternative service under Rule 4, being "reasonably calculated to notify a defendant of the commencement of an action against him"; (ii) Rule 4 does not require the exhaustion of all other possible methods of service before a court may authorize service by "other means" such as service through counsel and service by email. In any case, the court held that Plaintiff had made sufficient attempts to comply with the Hague Convention in attempting to serve the first named Defendant before the claim was amended; and (iii) provided that the method of service was not expressly prohibited by international convention or the country of the Defendants' domicile, then service may be permitted by alternative means that would not be technically sufficient to effect service under the law of the Defendant's domicile.