Morgan Stanley Smith Barney, LLC v. Gibraltar Private Bank & Trust Co.

Third District Court of Appeal
State of Florida
Opinion filed April 15, 2015.
Not final until disposition of timely filed motion for rehearing.
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No. 3D14-1001
Lower Tribunal No. 11-6292
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Morgan Stanley Smith Barney, LLC,
Appellant,
vs.
Gibraltar Private Bank & Trust Co.,
Appellee.
An appeal from the Circuit Court for Miami-Dade County, Jorge E. Cueto,
Judge.
Ciklin Lubitz Martens & O’Connell and A. Patricia Morales Christiansen
and Charles L. Pickett, Jr. (West Palm Beach), for appellant.
Arnstein & Lehr and Phillip M. Hudson III and Hilda Piloto, for appellee.
Before SUAREZ, ROTHENBERG, and SALTER, JJ.
SUAREZ, J.
Garnishee Morgan Stanley Smith Barney, LLC, (“Morgan Stanley”) appeals
from an order denying a motion for rehearing of its motion to quash service of
process and requiring Morgan Stanley to pay an amount equal to funds released by
it after disputed service of a Writ of Garnishment. We reverse.
The judgment creditor is Gibraltar Private Bank & Trust Co. (“Gibraltar”).
A Final Judgment of Foreclosure on certain properties held by the judgment
debtors was issued by the trial court and the subject properties were later sold at a
foreclosure sale for $1,600,100.00. Gibraltar was then owed $2,606,740.05, plus
post-judgment interest. Following the sale, the Clerk of Court issued a writ of
garnishment directed to Morgan Stanley, which held several accounts of the
judgment debtors. The process server handed the papers to Karen Mendez, an
employee at the Morgan Stanley branch in downtown Miami whose title is “Senior
Service Assistant,” and filed a return of process so indicating.1 Forty-five days
later, Gibraltar Bank contacted Morgan Stanley to ask when or if they were going
to respond to the writ of garnishment, and Gibraltar forwarded a copy of the writ to
Morgan Stanley. That same day, Morgan Stanley froze the appropriate accounts
pursuant to the writ. The following day, Morgan Stanley filed a motion to quash
1 The Return of Service reads, in pertinent part,
I . . . do hereby affirm that on the 15th day of August, 2013, at 11:30
am [sic], I: served a CORPORATION pursuant to F.S. 48.081, by
serving a true copy of the Writ of Garnishment; Plaintiff’s Motion for
Writ of Garnishment; Claim of Exemption and request for Hearing
Form with the date and hour of service endorsed thereon by me, to
KAREN MENDEZ, SENIOR SERVICE ASSISTANT of MORGAN
STANLEY SMITH BARNEY, LLC, at the address of . . . , and
informed said person of the content therein, in compliance with state
statutes.
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service of process, arguing that service on a low level hourly employee was
improper and service was defective.2 At issue is the time period between August
15, 2013, the date of the allegedly defective service, and October 17, 2013, the date
Morgan Stanley learned of the writ of garnishment and froze the subject accounts.
During that time period, assets from the subject accounts were withdrawn by the
judgment debtors.
On February 11, 2014, the trial court heard Morgan Stanley’s motion to
quash service of the writ. Ms. Mendez was present, but the trial court judge did
not hear testimony. The court summarily denied Morgan Stanley’s motion to
quash service of process. Morgan Stanley moved for rehearing, attaching Ms.
Mendez’s deposition transcript.3 The trial court denied the motion for rehearing.
The order denying motion for rehearing also ordered Morgan Stanley to pay to
Gibraltar an amount equal to the funds released from the subject accounts between
August 15 and October 18, 2013.
2 Interestingly, on October 28, 2014, Gibraltar Bank had the same writ of
garnishment served on Morgan Stanley’s proper resident agent for service of
process. Both parties agree that this service was proper, and that the amended
Final Judgment in Garnishment flowing from that is not at issue.
3 Ms. Mendez testified at her deposition that she was not an officer of Morgan
Stanley, was not a salaried employee, was paid by the hour, had no client contact
or management duties, and was essentially a person who performed wire transfers.
She testified that the process server handed her a sealed envelope and left, and she
assumed he was merely a courier. When she opened the envelope she saw that it
was a legal matter, and she forwarded the papers to the risk management officer.
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We review de novo the trial court’s ruling on a motion to quash service of
process. Hernandez v. State Farm Mut. Auto. Ins. Co., 32 So. 3d 695, 698 (Fla.
4th DCA 2010). Here, the return of service appears regular on its face, and thus
service of process is presumed to be valid. “If the return [of service] is regular on
its face, then the service of process is presumed to be valid and the party
challenging service has the burden of overcoming that presumption by clear and
convincing evidence.” Koster v. Sullivan, 40 Fla. L. Weekly S63, S64 (Fla. Feb. 5,
2015) (quoting Re-Emp’l Servs, Ltd. v. Nat’l Loan Acquisitions Co., 969 So. 2d
467, 471 (Fla. 5th DCA 2007)); Bank of Am., N.A. v. Bornstein, 39 So. 3d 500,
503 (Fla. 4th DCA 2010); see also Klosenski v. Flaherty, 116 So. 2d 767 (Fla.
1959) (holding that a presumption of valid service arises from evidence of a return
of service which is regular on its face); Montano v. Montano, 472 So. 2d 1377,
1378 (Fla. 3d DCA 1985. Morgan Stanley had to demonstrate the invalidity of the
service of process by clear and convincing evidence before the motion to quash
could be granted. See Travelers Ins. Co. v. Davis, 371 So. 2d 702, 703 (Fla. 3d
DCA 1979).
With that in mind, we look to section 48.081, Florida Statutes (2013), which
provides the method for service of process on a corporation. The statute directs
that process is to be served on specified officers of the corporation or, in their
absence, on any director or, in their absence, on any officer or business agent. Id.4
To bind a corporation for jurisdictional purposes, a return of service must show the
absence of all officers of a superior class designated in the statute before resort is
had to service upon an officer or agent of an inferior class. See Space Coast Credit
Union v. The First, F.A., 467 So. 2d 737, 739 (Fla. 5th DCA 1985). If this
requirement is not met, a court's jurisdiction is not perfected, and any judgment
entered is void. Id. at 740. As an alternative to any of these, service may be
perfected on the registered agent designated by the corporation to accept service of
process. See § 48.081(3), Fla. Stat. (2013). The object of section 48.081 is to have
service made upon someone who is held responsible by the corporation, “and it
contemplates that service shall be made, whenever possible, upon the more
responsible officers before resorting to service upon one of the inferior officers or
agents of the corporation. Bornstein, 39 So. 3d at 503 (finding service was
defective where server delivered documents to bank teller without first determining
that a superior officer was unavailable); Nat'l Safety Assoc., Inc. v. Allstate Ins.
Co., 799 So. 2d 316, 317 (Fla. 2d DCA 2001) (finding service was invalid when
the return of service failed to show the absence of all superior officers); Saridis v.
Vista St. Lucie Ass'n, Inc., 804 So. 2d 372, 373 (Fla. 4th DCA 2001) (affirming
quashal of service of process on corporation where the affidavit filed by the
process server noted that service was effected on a corporate employee, referred to
“F.S. 48.081(3)” but said nothing more); Nationsbanc Mortg. Corp. v. Gardens N.
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Condo. Ass'n, Inc., 764 So. 2d 883, 885 (Fla. 4th DCA 2000) (holding service on
random employee of corporation was facially void because the affidavit did not
contain any statement supporting the necessity for the substitute service); Sunrise
Assisted Living, Inc. v. Ward, 719 So. 2d 1218, 1220 (Fla. 2d DCA 1998) (finding
service on corporation void where the return of service did not reflect any attempt
to serve the officers or directors specified in the statute).
In her deposition Ms. Mendez testified that she is an hourly wage employee,
she is not an officer of the corporation, she is not a manager, she does not
supervise other personnel, she does not have any direct client contact, and she is
not the registered agent for service of process on the corporation. It appears from
the record that Ms. Mendez was none of the persons indicated in the statute as an
acceptable corporate representative to accept service of process. She is not,
contrary to Gibraltar’s argument, a “business agent” authorized to accept service of
process pursuant to section 48.081(5), where “business agent” refers to someone
having general authority to act for the corporation and whose duties are closely
related to those of the officers of the corporation. Bornstein, 39 So. 3d at 504
(citing Int'l Steel Truss Co. v. Artec Grp., Inc., 824 So. 2d 340, 342 (Fla. 2d DCA
2002), and Se. Mail Transport, Inc. v. Amoco Oil Co., 402 So. 2d 522, 524 (Fla.
1st DCA 1981) (“For purposes of service of process, a business agent has been
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held to be the person who represents the corporation and who officially speaks for
it in the local business affairs of the corporation.”)).
Gibraltar did not ensure that the writ of garnishment was served on a
corporate officer, manager, or registered agent for service of process pursuant to
section 48.081 – any of whom could have easily been determined prior to service.
It is apparent that Gibraltar had the knowledge and means to effect proper service
of process on the correct corporate representative from the outset, because it
immediately re-served the writ of garnishment on Morgan Stanley’s registered
agent for service of process. See § 48.091, Fla. Stat. (2013) (designation of
registered agent and registered office). We conclude that Morgan Stanley
sustained its burden to demonstrate by clear and convincing evidence that
Gibraltar’s August 15, 2013, service of process on the corporation was defective.
We reverse the order denying rehearing that requires Morgan Stanley to pay
the equivalent of the funds that were removed from the accounts during the period
at issue, and we remand with directions to grant Morgan Stanley’s motion to quash
the August 15, 2013 service of process.
Reversed and remanded with directions.
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