Is It Time To Put Some Teeth Into The Resident Agent Statutes

Is It Time To Put Some Teeth Into The Resident Agent Statutes?

by on March 22nd, 2017 in Business & Corporate Law
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Last modified on June 30th, 2019 at 7:52 pm

It appears that corporate and limited liability company defendants have an advantage over plaintiffs if they are willing to avoid the resident agent statutory requirements or circumvent the requirements by using multiple layers of entity resident agents that have no entity officers or employees present at the resident office. Hopefully a change in the laws to level the playing field can be made to prevent those that are willing to abuse the system by not having a human being available that can easily be served for their resident agent.  This will possibly include the imposition of meaningful fines and sanctions. The legislature by its laws and the Florida Rules of Civil Procedure create the rights and obligations of the parties to a lawsuit so the interference of access to the judicial system and the right to present the merits of the case to the Court by avoiding service of process should not be tolerated and should be punished where warranted.

A member of the legislature reported a situation where Corporation A appointed Corporation B as its resident agent. Corporation B appointed Corporation C as its resident agent and Corporation C appointed Corporation A as its resident agent to complete the circle. I am waiting to see legislation on the subject. Another problem occurs when the resident agent uses office suites where the only person around is a receptionist who is employed by the owner of the office suites.

For corporations the resident agent requirements are:

(2) Every corporation shall keep the registered office open from 10 a.m. to 12 noon each day except Saturdays, Sundays, and legal holidays, and shall keep one or more registered agents on whom process may be served at the office during these hours. The corporation shall keep a sign posted in the office in some conspicuous place designating the name of the corporation and the name of its registered agent on whom process may be served.

§48.091 (2) Fla. Stat. (2017).

How frequently is that statute ignored or circumvented?

Two recent cases, Green Emerald Homes, LLC v. Nationstar Mortgage, LLC, 2017 WL 650961, (Fla. 2d DCA 2017) and Jupiter House, LLC v. Deutsche Bank National Trust Company, 198 So. 3d 1122 (Fla. 4th DCA 2016) demonstrate the problems and additional expense the plaintiff was put through because the defendant did not have a human being available who could be served.

In both cases the defendant had no one available to be served and the plaintiff had to comply with the tedious and time consuming process for substituted service on the Department of State by serving the Secretary of State. In both of these cases, because of an omission in the Florida Revised Limited Liability Act relating to service of process on a limited liability company which  appeared to provide the entire procedure necessary for substituted service, the defendants not only had to spend the time and money to comply with the substituted service statute, but also had to endure further cost and delay on appeal.

There are many protections and advantages provided to individuals by electing to operate as a corporation or a limited liability company. The ability to use subterfuge to avoid or delay service of process should not be one of them.

If you have encountered this situation and need legal help in serving a corporation, contact an experienced business litigation attorney.

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