Frankenmuth Mutual Insurance v. ACO, Inc.

484 N.W.2d 718, 193 Mich. App. 389
CourtMichigan Court of Appeals
DecidedApril 6, 1992
DocketDocket 126067
StatusPublished
Cited by28 cases

This text of 484 N.W.2d 718 (Frankenmuth Mutual Insurance v. ACO, Inc.) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Frankenmuth Mutual Insurance v. ACO, Inc., 484 N.W.2d 718, 193 Mich. App. 389 (Mich. Ct. App. 1992).

Opinion

Sullivan, J.

Plaintiff insured a house subsequently damaged in a fire allegedly caused by a kerosene heater sold by defendant ACO, Inc., imported by defendant T.M.C. Manufacturing Co., Inc., and manufactured by defendant Toshiba Heating Appliances Co., Ltd. After paying its insured approximately $60,000 under the policy, plaintiff filed this subrogation action and obtained default judgments against Toshiba, for failing to answer a complaint mailed, untranslated, to its central office in Japan, and acó and T.M.C., for violation of discovery orders. After the court denied motions to set aside the judgments, the defendants appealed as of right. Toshiba claims that the court lacked jurisdiction because service of process was invalid. Aco and t.m.c. claim that the trial court abused its discretion in entering default judgments as discovery sanctions because there was neither a violation of an order nor a wilful violation of court rules. We reverse all three judgments.

*392 i

SERVICE OF PROCESS ON TOSHIBA.

The Hague Convention 1 governs service of process on Toshiba in this case. Toshiba is a Japanese corporation; plaintiff attempted service of English-language documents by certified mail at Toshiba’s principal office in Japan. Toshiba contends that this form of service does not comply with either the Hague Convention or the internal law of Japan, service in compliance with which the treaty recognizes as valid service. We agree and reverse with regard to Toshiba.

The Hague Convention is a multilateral treaty intended to provide a simpler way to serve process abroad, to assure that defendants sued in foreign jurisdictions will receive actual and timely notice of suit, and to facilitate proof of service abroad. Volkswagenwerk Aktiengesellschaft v Schlunk, 486 US 694, 698; 108 S Ct 2104; 100 L Ed 2d 722 (1988). The convention applies in all cases where there is occasion to transmit a judicial or extrajudicial document for service abroad, and its application is mandatory in all cases to which it applies. Id., p 699. By virtue of the Supremacy Clause, US Const, art VI, the convention preempts inconsistent methods of service prescribed by state law in all cases to which the convention applies. Id.

The convention establishes specific procedures to be followed in accomplishing service of process. Articles 2 through 6 provide for service through a central authority in each country. The central authority of any country may require that all documents to be served through it be translated *393 into the official language of that country. Hague Convention, art 5. Each signatory to the convention may ratify its provisions subject to conditions or objections. Id., art 21.

The United States and Japan are signatories to the convention. Japan requires translation into Japanese of documents submitted for service through its designated central authority, the Minister for Foreign Affairs. McClenon v Nissan Motor Corp in USA, 726 F Supp 822, 824, n 1 (ND Fla, 1989).

Plaintiff in this case made no effort to serve process on Toshiba through Japan’s central authority. Instead, plaintiff relies on Article 10 of the convention, which provides:

Provided the State of destination does not object, the present Convention shall not interfere with—
(a) the freedom to send judicial documents, by postal channels, directly to persons abroad,
(b) the freedom of judicial officers, officials or other competent persons of the State of origin to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination.
(c) the freedom of any person interested in a judicial proceeding to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination.

Japan objected to subparagraphs b and c, but has not objected to subparagraph a. Plaintiff contends, and the trial court agreed, that Article 10(a) permits service by direct mail in Japan on a Japanese defendant.

There are two lines of cases interpreting Article 10(a). Plaintiff relies on the cases that have permitted service of process by mail directly to the *394 defendant without going through the central authority and without translating the documents into the language of the destination country. The leading cases of this line are Ackermann v Levine, 788 F2d 830 (CA 2, 1986), and Shoei Kako Co, Ltd v Superior Court, 33 Cal App 3d 808; 109 Cal Rptr 402 (1973). 2 These courts reason that "[t]he reference to 'the freedom to send judicial documents by postal channels, directly to persons abroad’ would be superfluous unless it was related to the sending of such documents for the purpose of service. The mails are open to all.” Shoei Kako Co, p 821; Ackermann, p 839. They conclude that even though the word "service” is used in the other subsections of Article 10 and in other articles of the convention, its omission in Article 10(a) "must be attributed to careless drafting.” Ackermann, p 839.

The second line of authority, led by Bankston v Toyota Motor Corp, 889 F2d 172 (CA 8, 1989), and Suzuki Motor Co, Ltd v Superior Court, 200 Cal App 3d 1476; 249 Cal Rptr 376 (1988), 3 holds that the word "send” in Article 10(a) is not the equiva *395 lent of "service of process.” The court in Bankston, pp 173-174, adopted this position, summarizing it as follows:

The word "service” is specifically used in other sections of the Convention, including subsections Ob) and (c) of Article 10. If the drafters of the Convention had meant for subparagraph (a) to provide an additional manner of service of judicial documents, they would have used the word "service.” Subscribers to this interpretation maintain that Article 10(a) merely provides a method for sending subsequent documents after service of process has been obtained by means of the central . authority. [Citations omitted.]

We find this second line of authority more persuasive. We agree with the federal district court in McClenon, supra, p 826, that "it strains plausibility that the Conventions’ [sic] drafters would use the word 'send’ in Article 10(a) to mean service of process, when they so carefully used the word 'service’ in 10(b) and 10(c).” Although Toshiba has not offered direct proof of Japanese procedural law, it appears from authorities cited by other courts that internal Japanese law does not allow service of process by registered mail. Suzuki Motor Co, supra, pp 1480-1481; McClenon, supra, p 825. As the court noted in Suzuki Motor Co, supra, p 1481:

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484 N.W.2d 718, 193 Mich. App. 389, Counsel Stack Legal Research, https://law.counselstack.com/opinion/frankenmuth-mutual-insurance-v-aco-inc-michctapp-1992.