Challenging the Adequacy of Service of Process – Necessary Steps to Avoid a Professional Liability Claim
Lawyers who routinely accept assignments from insurers to defend the insurer and its insured in civil matters will clearly be held to the special, higher standard of care applicable to lawyers who hold themselves out as specialists.1 If there was a time when insurance defense counsel could assume that longstanding relationships with the insurance industry made insurance defense work a “low risk” practice area when it comes to professional negligence claims, those days are gone.2
This article will discuss the steps defense counsel should take to meet the required standard of care in evaluating the sufficiency of service of process on a defendant.3
Step 1: Recognize the Client Harm Resulting From Mishandling Service Issues
Defense lawyers well know that harm will befall a client if the lawyer fails to consider the correctness of venue4 or inadvertently waives the right to have the plaintiff examined by a physician5 or fails to preserve issues for appellate review.6 Defense lawyers would do well to remember that a failure of defense counsel to identify and/or raise a defect in attempted service on an insurer or insured may subject one or both defendants to harm. If that harm occurs, defense counsel will be subject to liability for professional negligence.7
When a defendant appears in an action and does not properly object to personal jurisdiction, the objection to lack of personal service is waived.8 Indeed, if the defendant does not timely assert the defense, the need for any service of a summons is “dispensed with” and the court may exercise personal jurisdiction just as if the person had been properly served.9
In some cases, the harm caused by counsel’s failure to preserve the objection may be slight. For example, if an insurer and insured are both named as defendants, and the insured is properly served and the service defect relates solely to attempts to serve the insurer, the only practical effect of counsel’s failure to obtain dismissal of the improperly served insurer may be that the insurer remains on the case caption as a reminder to the jury that the individual defendant is covered by insurance. So too, if the defense lawyer fails to recognize or raise defects in service on an insured in a case where liability coverage is more than adequate, little practical harm may be done to the insured by the lawyer’s error.10
In other cases, however, the harm flowing from the defense lawyer’s failure to preserve and assert objections to service defects will be great. If the value of a plaintiff’s claim far exceeds the available liability insurance, counsel’s failure to discover a service defect, and consequent failure to obtain a dismissal of the insured, will expose the insured to financial harm regardless of whether the insurer is named and was properly served. Conversely, if the insured is not named or not amenable to suit, and plaintiff names only the insurer, a counsel’s failure to preserve a viable service of process defense to win dismissal of the insurer will leave the insurer exposed unnecessarily to a judgment.
Step 2: If in Doubt, Preserve the Defense in the Responsive Pleadings
When defense counsel is retained to defend an insurer and insured in a civil action, the suit assignment materials usually contain information concerning service of suit papers on the insured and/or on the company. Although the plaintiff’s lawyer may have had months to craft the complaint, defense counsel must interpose an answer for his clients within 45 days of service.11 With Wisconsin’s strict enforcement of the 45-day requirement for answer12, defense counsel may have to prepare and interpose an answer quickly and without the benefit of a complete investigation of the circumstances of the purported service. Because any objection to jurisdiction based on insufficient process or service of process will be waived if an answer is interposed without such an affirmative defense,13 the best practice when an answer is due but where adequacy of service is not obvious is to include an affirmative defense objecting to personal jurisdiction by reason of an insufficiency of process and/or insufficiency of service of process with respect to both insured and insurer unless defense counsel has indisputable evidence that proper service was made.14
Step 3: Quiz the Clients on Service
Insurers sometimes receive first notice of a suit when the insured contacts an insurance agent or the insurer’s claim department to report that he or she has been served. A simple statement to defense counsel that “the insured has been served” is then included in the suit assignment letter. Likewise, a statement may be included in the assignment letter indicating that the company has been served, such proper service on the insurer being assumed by the insurer itself because suit materials were duly left with the company agent designated for the receipt of process.
When examining the circumstances of service, defense counsel should look behind statements in the assignment letter or in the initial claim materials and should specifically check out the details of purported service. During the initial phone conversation or office meeting with an insured, specifics about the insured’s receipt of process should be obtained. An insured who believes he or she was “served” (and who has so advised the insurer) might in fact have only received the papers second-hand through an attempted substituted service, and in fact under circumstances where such service was clearly insufficient.15 Likewise, an insured or insurer may have received purported suit papers in an appropriate fashion, but the summons which was delivered may itself have constituted “insufficient” process,16 or the process server may have lacked the authority to serve process in Wisconsin.17 Further, a proof of service may describe purported service on a person’s authorized agent,18 but defense counsel’s investigation may reveal that in fact no agency relationship existed at all.19
Accordingly, defense counsel must ask the right questions of the insured and the insurer to make sure that an authenticated copy of the Summons and Complaint was delivered to the client in a way sufficient to confer jurisdiction.20
Step 4: Demand Copies of Proofs of Service
The form of affidavits demonstrating the manner of service is prescribed by statute.21 Defense counsel should ask for copies of such proofs of service from plaintiff’s counsel and compare the sworn statements of the process server against the information obtained from the clients concerning the circumstances of service.22 In cases of purported substituted service, defense counsel should look to see if the affidavit demonstrates on its face that reasonable diligence was exercised before the affiant abandoned attempts at personal service.23 Further, the proof of service should be examined to see whether it contains sufficiently detailed descriptions of the service that it will give the plaintiff a presumption of proper service.24
Step 5: Seek Early Submission of the Issue to the Court to Avoid Post-Pleading Waiver of the Improper Service Defense
If defense counsel properly investigates the circumstances of service and raises the defense in a responsive pleading, the defense based on insufficient service can still be lost if counsel waits too long to submit the matter to the court for hearing. This could occur either because of a violation of the special statute governing the hearing on jurisdictional matters or by a violation of the scheduling order.
The special statute providing specifically for hearings on jurisdictional objections, Sec. 801.08 Wis. Stats., requires defense counsel to put the matter of improper service before the court on a priority basis, as it states that an objection to personal jurisdiction shall be heard by the court “in advance of any issue going to the merits of the case.” While merely conducting pre-trial discovery or appearing at court-mandated conferences will not cause the loss of a defendant’s right to later request a Sec. 801.08 hearing on personal jurisdiction matters,25 defense counsel risks waiver of such defense if counsel brings on a motion going to the merits before the Sec. 801.08 hearing takes place.26
Further, even in a case where pre-trial defense motions on the merits are not in order, defense counsel can lose the right to assert a timely-raised affirmative defense as to personal jurisdiction by failing to raise the matter at the scheduling conference. At the time of the scheduling conference, the court will ask the parties if dispositive motions are contemplated and will set a deadline for presenting any such motions.27 A defendant who raises an objection to the adequacy of service by affirmative defense but fails to bring a jurisdictional motion on for hearing within the time allowed by the scheduling order will likely be held to have abandoned that defense.
Step 6: Make a Winning Presentation at the Jurisdiction Hearing
Various legal and factual issues could be submitted to the court at a Sec. 801.08 hearing where the correctness of attempted service of process is to be determined. For example, the hearing may address such matters as whether a person accepting service for the defendant was in fact an agent for such purposes,28 whether purported service accomplished outside Wisconsin was done in a manner permitted by that state’s rules, even if they are different from those in Wisconsin,29 or whether a person accepting service was really a family member of the defendant.30
However, the most common basis for a hearing on the adequacy of service of process will involve the question of whether plaintiff has exercised “reasonable diligence” before abandoning attempts at personal service and settling for substituted service.31 At such a hearing a plaintiff must demonstrate that more than slipshod and haphazard attempts at personal service were made.32 Plaintiff must be able to demonstrate any leads or information reasonably calculated to make personal service possible were exhausted before substitute service was tried!33
The Wisconsin statute governing a pre-merits resolution of personal service issues is silent on the procedure to be used at any such hearing, except to say that factual issues are to be resolved by the court, not by a jury.34 However, there are a number of things which defense counsel must keep in mind to properly prepare for and successfully conduct such a Sec. 801.08 hearing.
First of all, defense counsel must remember that while the burden of going forward and the burden of proof on jurisdictional issues at a Sec. 801.08 hearing is on the party who asserts jurisdiction,35 the plaintiff can make out aprima facie case and create a presumption of proper service by offering a sworn affidavit of a process server stating all of the facts necessary to show the process was properly served.36 Defense counsel must then either challenge the sufficiency of that affidavit to raise such presumption37 or overcome the presumption with contrary facts.
Further, defense counsel should go to any hearing on such motion ready for a full evidentiary hearing, regardless of whether the plaintiff has filed any proofs of service or other affidavits at all in opposition to the defendant’s jurisdictional motion. This is because it has been held that a plaintiff can insist on an evidentiary hearing and can present evidence at such evidentiary hearing on jurisdictional matters without first submitting any proof in affidavit form as a condition for obtaining such an evidentiary hearing.38 Defense counsel should therefore be ready to present live testimony and conduct such effective cross examination of the process server as will be necessary.39
Step 7: Promptly Consider Prospects for Appellate Review
While a plaintiff whose action against a defendant is dismissed for insufficient service will be able to appeal at once as a matter of right from such judgment of dismissal,40 the defense will have no corresponding right to take an appeal from an order denying a motion to dismiss on jurisdictional grounds.41 If defense counsel intends to seek appellate review of the order denying the jurisdictional challenge without waiting for the entire action to run its course, defense counsel must take action within 14 days of the order to seek an interlocutory appeal.42
Defense counsel who pays attention to the details of personal jurisdiction issues may protect a client from needless exposure in a civil action. In so doing through proper pleading, discovery and motion practice, defense counsel will be properly meeting that special standard of care required of insurance defense specialists.
Russell M. Ware is shareholder in the Milwaukee Office of O’Hagan, Smith & Amundsen, LLC. He specializes in the representation of defendants in civil matters, including matters involving professional negligence, insurance coverage and personal injury. He also devotes a substantial portion of his practice to service as a Mediator and Arbitrator in civil matters. He is a Past President of the Civil Trial Counsel of Wisconsin (CTCW) and is a member of the American Board of Trial Advocates (ABOTA), Federation of Insurance and Corporate Counsel (FICC) and the Wisconsin Academy of Trial Lawyers (WATL).
1 Duffy Law Office v. Tank Transport, Inc., 194 Wis. 2d 675, 535 N.W.2d 91 (Ct. App.1995); See also Wis. JI-CIVIL 1023.5 concerning “Professional Negligence: Legal – Status of Lawyer as Specialist Not in Dispute.”
2 The General Counsel for one insurer has noted the frequency of legal malpractice claims against insurance defense counsel has increased “dramatically.” Anne E. Thar, Defense Lawyers Face Growing Malpractice Risk, (87 Ill. B.J. 453 (1998)); see also Michael J. Brady, Defense Counsel’s Liability to Insurer for Excess Liability, (56 Fed’n Def. & Corp. Couns. Q. 49 (1998)).
For a recent discussion of the errors lawyers representing plaintiffs in personal injury matters often make, see Thomas J. Watson, Personal Injury Lawyers Beware, Wisconsin Lawyer, Dec., 2005, at. 26.
3 This article will not discuss defense counsel’s duty with respect to other jurisdictional issues, such as objections to personal jurisdiction based on a lack of grounds for personal jurisdiction (see Wis. Stats. § 801.05) or a lack of subject matter jurisdiction (Wis. Stats. § 801.04(1)). This article will discuss defense counsel’s attention to jurisdictional issues concerning plaintiff’s attempts to exercise jurisdiction over a defendant as authorized by Wis. Stats. § 801.04(2)(a) through service of a summons.
4 Under Wis. Stats. § 801.51, objection to improper venue must be included in the responsive pleading.
5 The time for a defendant to conduct a physical or mental examination of the plaintiff under Wis. Stats. § 804.10 will be circumscribed by a trial court’s scheduling order under Wis. Stats. § 802.10(3)(d) and (f).
6 An appellate court may refuse to consider issues not properly raised in the trial court. Terpstra v. Soiltest, Inc., 63 Wis. 2d 585, 593, 218 N.W.2d 129 (1974); Rizzoto v. Cincinnati Ins. Co., 2003 WI App. 59, ¶24, 261 Wis. 2d 581, 659 N.W.2d 476.
7 A lawyer who subjects a named but improperly served defendant to the jurisdiction of the court without the permission of that defendant will be subject to liability to that defendant for harm sustained. Cleveland v. Hopkins, 55 Wis. 387, 13 NW 225 (1882) In Cleveland, the lawyer appeared for the improperly-served defendant at the request of a third party, but without the knowledge or permission of the defendant, and allowed the case to go to judgment against that defendant.
8 Wis. Stats. § 802.06(8)(a).
9 See Wis. Stats. § 801.06 and sec. 801.04(2)(b).
10 Cases where a failure to challenge propriety of service causes actual harm to a defendant will usually be those where the purported commencement of the action through the filing of the action and the service of the suit papers occurs near the time when the statute of limitations will expire on the claim. If the dismissal of the defendant, albeit without prejudice, occurs after the statute has expired, an attempted re-commencement of the action against the defendant will be met with a statute of limitations defense. If the plaintiff files an action early in the period allowed for commencing the action, and the defense obtains a dismissal of one or both defendants on adequacy-of-service grounds at a time well within the time allowed for commencement of such an action, the action can be recommenced within the remaining period provided by law and service of the new summons and complaint could be accomplished.
Note also that a defendant which exits from an action because of the plaintiff’s inadequate attempts at service could be brought back into the action as a third-party defendant by remaining defendants or, if the case arises in tort, even sued later by another defendant in a separate contribution action. See Wis. Stats. § 893.92.
11 Wis. Stats. § 802.06(1).
12 A failure to answer within 45 days will be forgiven only upon a showing of “excusable negligent.” Wis. Stats. § 801.15(2).
13 Wis. Stats. § 802.06(8)(a). Under § 801.06, a waiver of the defense authorizes the court to exercise personal jurisdiction over the defendant in the absence of any service of a summons.
Note, however, that if two different insurers answer separately for a single insured, the defense of preserved if it is included in either answer.Honeycrest Farms, Inc. v. Brave Harvestore Systems, Inc., 200 Wis. 2d 256. 546 NW 2d 192 (Ct. App. 1996)
Note also that a defendant may assert the objection to jurisdiction by motion instead of by responsive pleading, but must file the motion within 45 days of service of the Summons and Complaint to avoid being found in default. Wis. Stats. § 802.06(2)(b).
14 Even if defense counsel learns after raising the defense that proper service was accomplished, such counsel should run no risk of being sanctioned under Wis. Stats. § 802.05(2), if the affirmative defense was included in the answer to avoid an improvident waiver of the defense under circumstances where the correctness of the service is not clear. For example, when defense counsel has insufficient time to complete an investigation of service issues before interposing an answer, and cannot clearly confirm the propriety of service, using the defense could hardly be seen as being motivated by an “improper purpose” under § 802.05(2)(a). Further, if defense counsel is told by the insured that papers were left at the insured’s home under circumstances indicating an attempt at substituted service under Wis. Stats. § 801.11(1)(b), but counsel has no evidence that the process server had made the required multiple attempts at personal service sufficient to constitute “reasonable diligence,” then including an objection to jurisdiction in a timely answer should be seen as a permissible “factual contention” likely to have evidentiary support under § 802.05(2)(c) or a permissible “legal contention” which was “warranted by existing law.”
Note that if counsel raises the inadequacy of service and is later given convincing evidence by plaintiff’s counsel that service was proper, defense counsel will have 21 days – a “safe harbor” – to withdraw any objection to jurisdiction without fear of court sanction. See § 802.05(3)(a).
For a discussion of the new version of Wis. Stats. § 802.05, effective July 1, 2005, see Bernard J. McCartan, Federal Rule 11 Comes to Wisconsin, Wisconsin Civil Trial Journal, Summer 2005, at 5.
15 Note substituted service on an individual is permitted in lieu of personal service only if “reasonable diligence” is first used in attempting personal service. Wis. Stats. § 801.11(1)(b). Note also that the papers must be left with a competent member of the insured’s family who is at least 14 years of age and that the recipient of the papers must be informed of the contents of the papers. Wis. Stats. § 801.11(1)(b)1.
16 See American Family Mut. Ins. Co. v. Royal Ins. Co. of Amer., 167 Wis. 2d 524, 481 NW 2d 629 (1992), where service of an unauthenticated photocopy of an authenticated Summons and Complaint was insufficient to confer jurisdiction over a defendant.
17 See Bendimez v. Neidermire, 222 Wis. 2d 356, 588 N.W.2d 55 (1998), where the process server was a non-Wisconsin resident and so was not authorized by Wis. Stats. § 801.10(1)., to serve Wisconsin process.
18 Wis. Stats. § 801.11(1)(d)., permits service on an agent authorized by appointment or by law to accept service.
19 See Mared Industries, Inc. v. Mansfield, et al., 2005 WI 5, 277 Wis. 2d 350, 690 N.W.2d 835. In Mared, where plaintiff claimed to have served an agent of the defendant as permitted under Wis. Stats. § 801.11(1)(d), it was held that the agent must have actual authority to accept service of process and that a showing of “apparent authority” is insufficient. 2005 WI at 6. See also Richards v. First Union Securities, Inc., 2006 WI 55, concerning the meaning of “managing agent” under Wis. Stats. § 801.11(5)(a).
20 For a discussion of what a process server must do to satisfy the “reasonable diligence” test, before abandoning attempts at personal service and resorting to mere substituted service, see, Welty v. Heggy, 124 Wis. 2d 318, 369 N.W.2d 763 (1985), West v. West, 82 Wis. 2d 158, 202 N.W.2d 87 (1978), Danielson v. Brody, 71 Wis. 2d 424, 238 N.W.2d 531 (1976), Heaston v. Austin, 47 Wis. 2d 67, 176 N.W.2d 309 (1970), and Beneficial Finance Co. v. Lee, 37 Wis. 2d 263, 155 N.W.2d 153 (1967).
21 Wis. Stats. § 801.10(4).
22 Defense counsel may be able to look at proofs of service without notice to plaintiff’s counsel by looking in the court file, if plaintiff’s counsel has filed the proofs of service as required by Wis. Stats. § 801.10(3).
23 For example, process servers frequently will show the components of service fees right on the proof of service, so multiple attempts at personal service will sometimes be evident from a listing of itemized mileage charges. A statement in the proof of service that “reasonable diligence” has been exercised in attempting personal service is not mandated; only the “when, where and with whom” must be enclosed in the affidavit. Heaston v. Austin, 47 Wis. 2d 67, 73, 176 N.W.2d 309 (1970).
24 If an affidavit contains “facts necessary” to show it was duly served, a presumption of proper service will arise and the burden of proof will be on the party challenging service at any jurisdictional hearing. Wis. Stats. § 891.18.; Danielson v. Brody Seating Co., 71 Wis. 2d 424, 428, 238 N.W.2d 531 (1976). If any of the “facts necessary” to show due service are lacking, the affidavit will not be presumptive proof of due service. Id. In Danielson, lack of clarity as to the identity of the person with whom papers were left precluded a plaintiff’s attempt to rely on the presumption of due service.
25 Danielson, supra, 71 Wis. 2d at 427, 428, 238 N.W.2d at 533; Honeycrest Farms, Inc. v. Brave Harvestore Systems, Inc., 200 Wis. 2d 256, 546 N.W.2d 192 (Ct. App. 1996). Note that if a default judgment has been entered, and the defendant is moving to vacate the judgment on the grounds that service of process was inadequate, the burden of proof will be on the defendant moving to vacate. Richards v. First Union Securities, Inc., 2006 WI 55.
26 Note Wis. Stats. § 801.08 doesn’t say whether it is the parties alone should bring on jurisdictional issues for early resolution or whether the court on its own motion should make sure that jurisdictional motions are handled in advance of any other issue “going to the merits.” The statute is constructed in the passive tense – the issues “shall be heard” in advance of any issue going to the merits. However, the Court of Appeals in Honeycrest Farms, Inc. v. Brave Harvestore Systems, Inc., 200 Wis. 2d 256, 546 N.W.2d 192 (Ct. App. 1992), advised trial courts as a matter of “good practice” to address any jurisdictional issue as soon as possible.
27 See Wis. Stats. § 802.10(3) (c). Note the Wisconsin Judicial Bench Book (Vol. II, Civil, P. CV 3-2) (1993) recommends that trial judges conducting a § 802.10 scheduling conference discuss with the parties the need for any hearing on matters raised as affirmative defenses in the answer. One such matter will be a claimed lack of personal jurisdiction occasioned by an insufficiency of process or service of process. See Wis. Stats. § 802.06(2)(a).
28 See § 801.11(1)(d) and Mared Industries, Inc. v. Mansfield, et al., 2005 WI 5, 277 Wis. 2d 350, 690 N.W.2d 835.
29 Wis. Stats. § 801.11(1)(b)2.
30 Wis. Stats. § 801.11(1)(b)1.
31 Defense counsel must remember that unless a person has an agent in fact or appointed by operation of law as authorized to accept service on behalf of defendant (Wis. Stats. § 801.11(1)(d)) a reasonably diligent effort at personal service is the indispensable starting point for all attempts at substituted service. Wis. Stats. § 801.11(1)(a)–(c).
32 Beneficial Finance Co. v. Lee, 37 Wis. 2d 263, 155 N.W.2d 153 (1967).
33 West v. West, 82 Wis. 2d 158, 262 N.W.2d 87 (1978). Defense counsel can no doubt suggest any number of things a process server must do to exercise reasonable diligence, such as making multiple visits to a defendant’s residence, asking persons on the premises where the defendant is, when the defendant will return, who else would have information on the whereabouts of the defendant, etc. See Heaston v. Austin, 47 Wis. 2d 67, 176 N.W.2d 309 (1970) and Beneficial Finance Co. v. Lee, 37 Wis. 2d 263, 155 N.W.2d 153 (1967) concerning the need for multiple trips to a defendant’s residence. See Welty v. Heggy, 124 Wis. 2d 318, 369 N.W.2d 763 (1985) and West, supra, concerning what inquiries should be made in order to exercise “reasonable diligence”.
34 See Wis. Stats. § 801.08 (1).
35 Bielfeldt v. St. Louis Fire Door Co., 90 Wis. 2d 245, 279 N.W.2d 464 (1979); Merco Distrib. Corp. v. O & R Engines, Inc., 71 Wis. 2d 792, 239 N.W.2d 97 (1976)
36 Wis. Stats. § 891.18.
37 See Danielson v. Brody Seating Co., 71 Wis. 2d 424, 238 N.W.2d 531 (1976), where the affidavit of the process server was found insufficient to raise any presumption of proper service.
38 Bielfeldt v. St. Louis Fire Door Co., 90 Wis. 2d 245, 279 N.W.2d 464 (1979); Henderson v. Milex Products, Inc., 125 Wis. 2d 141, 270 N.W.2d 291 (Ct. App. 1985). Note in Bielfeldt and in Henderson the jurisdictional issue involved grounds for jurisdiction, rather than the manner of service of process.
39 Defense counsel has the right to conduct discovery on jurisdictional issues, and so can depose the process server concerning the circumstances of service. See Wis. Stats. § 804.01(2) and Bielfeldt v. St. Louis Fire Door Co., 90 Wis. 2d 245, 279 N.W.2d 464 (1979).
40 Heaton v. Independent Mortuary Corp., 97 Wis. 2d 379, 294 N.W.2d 15 (1980), citing Wis. Stats. § 808.03(1).
41 Heaton, supra n. 39; Grulkowski v. State of Wisconsin, 97 Wis. 2d 615, 294 N.W.2d 43 (1980).
42 See § 808.03(2) and § 809.50(1), Wis. Stats. See also Heaton v. Independent Mortuary Corp., 97 Wis. 2d 379, 294 N.W.2d 15 (1980).