Improper Service Vacates|$11.8 Million Default

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     LAS VEGAS (CN) – A federal judge Monday vacated an $11.8 million default judgment against a Canadian technology firm and a former board member due to improper service of summons.
     U.S. District Judge Philip M. Pro set aside a default judgment against former ISee3D board member Ilya Sorokin, for Panliant Financial’s improper service of summons.
     Pro gave Panliant until Jan. 6 to show why the complaint should not be dismissed without prejudice, for failure to meet an Aug. 5, 2013 deadline for serving ISee3D.
     ISee3D is a Canadian company that owns several patents and “specialized knowhow” for using a single lens to capture 3D images for home entertainment, professional industries, consumer electronics and other applications, according to BusinessWeek.
     Panliant, in an affidavit of service, said it served ISee3D on Feb. 6 by leaving the summons in a mail slot at ISee3D’s registered office address.
     Nevada-based Panliant accused ISee3D, Sorokin of state and federal RICO violations, fraud, misrepresentation, unjust enrichment and breach of fiduciary duties. The August 2012 lawsuit arose from a consulting contract between ISee3D and Panliant.
     Panliant filed an amended complaint in December 2012, and the court gave Panliant until Aug. 5, 2013, to complete service to all defendants.
     Panliant filed an affidavit of service claiming the summons and amended complaint were “served on Sorokin on July 18, 2013, ‘by leaving [it] with the gate/guard doorman'” at a New York apartment building, Pro says in his summary of the case.
     Sorokin says the apartment is a corporate apartment “‘leased by ActForex'” and “‘used by out-of-town company executives and occasionally clients, when they come to New York City,'” according to the judge. Sorokin says his permanent residence at the time of service was in Connecticut.
     “Sorokin argues leaving the summons and amended complaint with the doorman at a building where he does not maintain his permanent residence does not constitute personal service under Federal Rule of Civil Procedure 4(e),” Pro wrote.
     Because the summons was served at the New York apartment, Sorokin says, he did not learn of the case until March or April 2014.
     Panliant claims Nevada law “permits service of process on a guard at a guard gate who denies access to a residence,” Pro wrote. Panliant also argues that federal law allows service at the New York apartment due to Sorokin’s having “more than one dwelling.”
     Panliant on March 25 entered a motion for default judgment against Sorokin and ISee3D, saying they had been served and missed their respective Aug, 8, 2013, and Feb. 27, 2014, deadlines to appear or respond.
     The clerk entered the default judgment against both defendants, and Panliant moved for an $11,864,246.66 judgment against them. Sorokin opposed the motion, while ISee3D did not respond, Pro wrote.
     “Sorokin’s failure to answer was not culpable,” Pro found. “He has a good faith explanation for his failure to answer the Amended Complaint by the deadline because Sorokin contends that service of process on the doorman at the New York City corporate apartment was improper.”
     Sorokin also claims that the amended complaint does not allege facts that demonstrate the court has jurisdiction over him or that he directed ISee3D’s business activities in Nevada.
     Pro granted Sorokin’s motion to vacate the clerk’s default judgment and denied Panliant’s motion for default judgment.