Opinion
NO. 2017 CA 0127
09-21-2017
STATE of Louisiana v. KEE FOOD, INC., Kassim Nagi, Tawfiq Ali Almansoob, Mohamed Nagi, Southla, LLC
Mark D. Plaisance, Thibodaux, LA, Attorney for Defendants–Appellants, Kee Food, Inc., Kassim Nagi, Mohamed Nagi, and Southla, LLC. Joseph L. Waitz, Jr., District Attorney, Ellen Daigle Doskey, Assistant District Attorney, Jason Paul Lyons, Assistant District Attorney, Houma, LA, Attorneys for Plaintiff–Appellee, State of Louisiana William F. Dodd, Houma, LA, Attorney for Plaintiff–Appellee, Terrebonne Parish Sheriffs Office Justin R. Austin, Baton Rouge, LA, Attorney for Plaintiff–Appellee, Coastal Commerce Bank
Mark D. Plaisance, Thibodaux, LA, Attorney for Defendants–Appellants, Kee Food, Inc., Kassim Nagi, Mohamed Nagi, and Southla, LLC.
Joseph L. Waitz, Jr., District Attorney, Ellen Daigle Doskey, Assistant District Attorney, Jason Paul Lyons, Assistant District Attorney, Houma, LA, Attorneys for Plaintiff–Appellee, State of Louisiana
William F. Dodd, Houma, LA, Attorney for Plaintiff–Appellee, Terrebonne Parish Sheriffs Office
Justin R. Austin, Baton Rouge, LA, Attorney for Plaintiff–Appellee, Coastal Commerce Bank
BEFORE: HIGGINBOTHAM, HOLDRIDGE, AND PENZATO, JJ.
HIGGINBOTHAM, J.
In this forfeiture proceeding, the defendants assert that the trial court erred in granting summary judgment in favor of the State because service of the State's motion for summary judgment was insufficient. Additionally, the defendants assert that the trial court erred in not dismissing the State's petition for forfeiture due to the State's failure to timely request that the matter be set for hearing.
FACTS AND PROCEDURAL HISTORY
Kassim Nagi and Tawfiq Ali Almansoob were arrested in June of 2013 as part of an investigation into the sale of synthetic cannabinoids on the premises of the convenience store, Kee Food, Inc. Subsequently, various funds were seized from multiple bank accounts related to Kee Food. A large amount of cash was also seized from inside the store premises and from a safe deposit box at Coastal Commerce Bank. Additionally, a constructive seizure of the premises was perfected by the State filing a lien in the Terrebonne Parish Public Records.
The Seizure and Controlled Dangerous Substances Property Forfeiture Act, La. R.S. 40:2601, et seq. , ("the act") allows law enforcement officials to seize illegal drugs and property constituting the proceeds of any drug-related conduct. Pursuant to the act on September 20, 2013, the State of Louisiana filed a petition for forfeiture in personam against Kee Food, Southla, LLC, the limited liability company that owned the premises from which Kee Food operated its store, Tawfiq, Kassim, and his father, Mohamed Nagi. Additionally, the State named numerous defendants in rem. According to the State's petition, the in personam defendants, individually and through Kee Food, operated a convenience store located at 6957 West Park Avenue in Houma, Louisiana, and on numerous occasions distributed synthetic cannabinoids as part of its business operations. The proceeds from the sale of the synthetic cannabinoids were kept in the cash register for the business as well as various other locations and were co-mingled with proceeds of legitimate sales of merchandise. Prior to the filing of the State's forfeiture petition, Mohamed returned to his native country of Yemen, where he has since remained.
Tawfiq was not a party to the motion for summary judgment that is the subject of this appeal.
In response to the State's petition, through counsel, Kee Food, Kassim, Mohamed, and Southla (hereinafter referred to collectively as the defendants) answered and asserted claims pursuant to La. R.S. 40:2610, seeking immediate release of the seized property and termination of any forfeiture proceedings. The defendants maintained that certain seized funds were from the sale of legitimate merchandise and were not derived from or connected to any illegal activity. In the claims submitted on behalf of Kee Food, Kassim acknowledged that he is the agent, manager, and part owner of Kee Food. Kassim, through a power of attorney executed by Mohamed, asserted claims on behalf of Mohamed. Additionally, through the power of attorney by Mohamed and the resolution of Southla, Kassim was allowed to act on behalf of Southla as it relates to any funds and/or property seized by the State of Louisiana and/or Terrebonne Parish. Kassim asserted claims on behalf of Southla.
Kee Food was incorporated by Tawfiq, and Tawfiq was the registered agent with the Louisiana Secretary of State, but Tawfiq and Kassim maintain that Tawfiq sold Kee Food to Kassim and Mohamed. There is no documentation in the record to formally recognize the change in ownership.
On January 22, 2015, the defendants filed a motion to dismiss the civil forfeiture proceedings and for return of the seized property based on the State's failure to seek a hearing within sixty days of the service of the petition for forfeiture in accordance with La. R.S. 40:2612(G) and La. R.S. 40:2613(F). On April 20, 2015, the trial court signed a judgment denying the defendants' motion to dismiss. On June 15, 2015, the State filed a motion and order to set a trial date. Subsequently, counsel for the defendants withdrew from the case.
Prior to trial, the State filed a motion for summary judgment contending that the admissions, depositions, and records from the criminal matter proved that no genuine issue of material fact remained. On May 18, 2016, the State's motion for summary judgment was personally served on Kassim, individually and on behalf of Mohamed, Kee Food and Southla at the Terrebonne Parish Criminal Justice Complex where Kassim was awaiting his criminal trial for charges related to the sale and distribution of synthetic cannabinoids.
After a hearing in which Kassim appeared in proper person, the trial court granted summary judgment in favor of the State and entered a judgment forfeiting the funds and property at issue to the State. It is from this judgment that the defendants appeal contending that: 1) because Mohamed's power of attorney did not specifically appoint Kassim as an agent for service of process, service on Kassim was without legal effect and the summary judgment is absolutely null; 2) because the record is silent as to service on Kassim, the summary judgment against him is absolutely null; and 3) the trial court erred by not dismissing the matter for untimeliness as the State failed to seek a hearing within 60 days as required by La. R.S. 40:2612(G).
LAW AND ANALYSIS
I. Service of Process
The defendants assert that the judgment rendered in favor of the State is null because service of process on the motion for summary judgment was without legal effect as to Mohamed, Kee Food, and Southla since Kassim was not Kee Food or Southla's agent for service of process, and the power of attorney did not specifically appoint Kassim as Mohamed's agent for service of process. Additionally, the defendants contend that service of process on Kassim was not properly made under La. Code Civ. P. art. 1235.1, which provides for service on an incarcerated individual.
Initially, the defendants argued that there was no evidence in the record to demonstrate that service was made on Kassim; however, subsequent to the lodging of the appeal, the appellate record was supplemented with a service return showing personal service on Kassim.
A motion for summary judgment is a contradictory proceeding that requires service of process. La. Code Civ. P. arts. 1313 and 1314. However, a party complaining of insufficient service must file a declinatory exception and request a ruling on the exception prior to submitting to a hearing on the merits of the motion for summary judgment. Strickland v. Board of Sup'rs of Louisiana State Univ. and Agr. a nd Mech. College, 432 So.2d 964, 966 (La. App. 4th Cir. 1983) ; LeBlanc v. Landry, 371 So.2d 1276, 1278-1279 (La. App. 3d Cir. 1979). A party who fails to file an exception of insufficient service and appears and argues the merits of a motion for summary judgment waives the right to object to improper service. La. Code Civ. P. art. 925 ; In Re Medical Review Panel for Claim of Brunet, 578 So.2d 1011, 1013 (La. App. 4th Cir. 1991). The exception must be in writing. See La. Code Civ. P. art. 924. In this matter, Kassim failed to file a declinatory exception raising the objection of insufficiency of service of process prior to appearing and arguing the motion for summary judgment filed by the State. Kassim also failed to orally object to service of process at the hearing on the motion for summary judgment. Thus, Kassim waived the right to object to improper service on him.
Next, we consider whether personal service of the motion for summary judgment on Kassim on behalf of Mohamed, Kee Food, and Southla was proper. Generally, a question regarding the sufficiency of service cannot be raised for the first time on appeal, but rather should be raised in a suit to annul the judgment. La. Code Civ. P. arts. 925, 928, and 2002 ; Corte v. Cash Technologies, Inc., 2002-0846 (La. App. 1st Cir. 4/2/03), 843 So.2d 1162, 1166 ; Boyce Machinery Corp. v. Interstate Paving Corp., 356 So.2d 505, 506–507 (La. App. 1st Cir. 1977). The practical effect behind requiring a defendant to bring an action in nullity is to permit the introduction of additional evidence as to the mode and execution of service of process. However, in this matter although defendants did not raise the issue, the trial court had before it all relevant evidence and thoroughly considered whether service of the motion for summary judgment on Kassim, on behalf of Mohamed, Kee Food, and Southla was sufficient.
Louisiana Code of Civil Procedure Article 1314(A) provides that a pleading that is required to be served, but may not be served under Article 1313 because it sets a court date, shall be served by the sheriff by service on the adverse party in any manner permitted under Articles 1231 through 1266, by personal service on the counsel of record of the adverse party, or by delivery of a copy of the pleading to the clerk of court, if there is no counsel of record and the address of the adverse party is not known. The obvious purpose of Articles 1313 and 1314 is to fulfill the constitutional requirements of due process notice, as set forth in Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950). See Rawley v. Rawley, 357 So.2d 286, 289 (La. App. 1st Cir.), writ denied, 357 So.2d 1154 (La. 1978), cert denied, 439 U.S. 968, 99 S.Ct. 459, 58 L.Ed.2d 427 (1978). At a minimum, the words of the due process clause require that deprivation of life, liberty, or property by adjudication be preceded by notice and opportunity for hearing appropriate to the nature of the case. Mullane, 70 S.Ct. at 656–657.
The power of attorney executed by Mohamed in favor of Kassim allowed Kassim to act in the name of and on behalf of Mohamed, "[t]o appear before all courts and to prosecute, defend, or compromise and settle by agreement, arbitration, or otherwise to sign all pleadings and do all things necessary to obtain writs of attachment, sequestration and injunction and to take appeals and, in such instances, to furnish the requisite security bond." Although Mohamed gave a power of attorney to Kassim that included the ability to assert claims on behalf of Mohamed, it was not specific enough to permit Kassim to accept service on behalf of Mohamed. Louisiana Code of Civil Procedure article 5251(2) defines "agent for service of process" as the "agent designated by a person or by law to receive service of process in actions and proceedings brought against him in the courts in this state." A general power of attorney that permits an agent to represent another in matters of litigation, which does not specifically designate an agent for service of process, is insufficient to constitute such a designation and service on that agent is without effect. Barnett v. Barnett, 45,721 (La. App. 2d Cir. 12/22/10), 56 So.3d 1044, 1051. See McClure v. A. Wilbert's Sons Lumber & Shingle Co., 232 So.2d 879, 883 (La. App. 1st Cir. 1970) (finding no agent for service of process where there was no express designation).
Service on the corporation, Kee Food and the limited liability company (LLC), Southla is governed by specific provisions of the Code of Civil Procedure. Because the State's motion for summary judgment set a hearing, service had to be accomplished in one of the following manners: by the sheriff by service on the adverse party in any manner permitted under Articles 1231 through 1266; by personal service on the counsel of record of the adverse party; or by delivery of a copy of the pleading to the clerk of court, if there is no counsel of record and the address of the adverse party is not known. Louisiana Code of Civil Procedure articles 1261, 1262, and 1266 provide the process for service on a corporation or an LLC. Article 1261 regarding corporations and article 1266 regarding LLCs, provide service of process should be made by personal service on one of its agents for service of process. Service of the citation or other process may be made by other methods if the corporation or LLC failed to designate an agent for service of process, if there is no registered agent by reason of death, resignation, or removal, or if the person attempting to make service certifies that he is unable, after due diligence, to serve the designated agent. A plaintiff must first make a diligent effort to serve a corporation or LLC's registered agent for service of process before using an alternative form of service on a corporation or LLC. See Brooks v. Terry, 608 So.2d 1047, 1050 (La. App. 1st Cir.), writ denied 609 So.2d 829 (La. 1992). The record reflects that the State never attempted service of the motion for summary judgment on Kee Food or Southla's registered agent for service of process.
Louisiana Code of Civil Procedure article 2002 clearly states that a judgment may be annulled where service was not made as required by law. Service of process directed to a corporate defendant and made on one other than the person authorized to accept service is illegal and without effect. Such service is tantamount to no service. Conner v. Continental Southern Lines, Inc., 294 So.2d 485, 487 (La. 1974). Accordingly, as the service of process on Mohamed, Kee Food, and Southla was not made as required by law, the portions of the judgment rendered in favor of the State against Mohamed, Kee Food and Southla are annulled.
II. Timeliness of Setting a Hearing
In their final assignment of error, defendants contend that the trial court erred in its previous ruling denying defendants' motion to dismiss the petition for forfeiture since the State failed to bring the matter to hearing within sixty days after service of the petition as mandated by La. R.S. 40:2612(G). In a judicial in rem forfeiture proceeding, the district attorney is required to bring a verified petition for forfeiture to a hearing on the claim within sixty days after service of the petition, unless continued for good cause. Louisiana Revised Statute 40:2613(F) provides that an owner of or interest holder in property that has been ordered forfeited and whose claim is not precluded may file a claim within thirty days after initial Notice of Pending Forfeiture or after notice under Subsection E of this Section, whichever is earlier. If the State does not stipulate to the claim, the court shall hold the hearing and determine the claim without a jury and in the manner provided for in rem judicial forfeiture actions, as provided in Section 2612.
The trial court's denial of defendants' motion to dismiss the petition as untimely is interlocutory in nature and generally not appealable. However, when an unrestricted appeal is taken from a final judgment, the appellant is entitled to seek review of all adverse interlocutory rulings, in addition to review of the final judgment. Cajun Constructors, Inc. v. EcoProduct Solutions, LP, 2015-0049 (La. App. 1st Cir. 9/18/15), 182 So.3d 149, 155, writ denied, 2015-1908 (La. 11/20/15), 180 So.3d 1287.
--------
In State v. Nourallah, 98-1651 (La. 7/2/98), 721 So.2d 900, after the trial court ordered that the claimants' property be returned based on the State's failure to request a hearing within the sixty day time limit set forth in La. R.S. 40:2612(G), the court of appeal denied the State's application for supervisory writs. The supreme court granted the writ application and "remanded to the court of appeal for briefing, argument and an opinion in light of United States v. $8,850.00 [in U.S. Currency], 461 U.S. 555, 103 S.Ct. 2005, 76 L.Ed.2d 143 (1983)." In $8,850 in U.S. Currency, supra, the Court held that the balancing test set forth in Barker v. Wingo, 407 U.S. 514, 92 S.Ct. 2182, 33 L.Ed.2d 101 (1972), provides the relevant framework for determining the reasonableness of a delay in filing a forfeiture action. In Barker, the court developed the following four-pronged test to determine whether a government delay has abridged a defendant's right to a speedy trial: (1) the length of the delay; (2) the reason for the delay; (3) the defendant's assertion of his right; and (4) the prejudice to the defendant. Barker, 407 U.S. at 530, 92 S.Ct. at 2192.
It is undisputed that the present matter was not brought to hearing within sixty days after service of the petition. The petition for forfeiture was filed on September 20, 2013, and on January 22, 2015, the defendants filed a motion to dismiss the civil forfeiture proceedings. In the present case, the most important factor to consider is the reason for delay. There were multiple reasons for the delay, including defendants' motion to re-transfer the forfeiture petition to the division in which it was originally allotted rather than to the same division in which the criminal case was pending, and the subsequent filing of the writ with this court, which was not ruled on until August 6, 2014. Additionally, the State filed a motion to compel discovery and in response, on October 31, 2014, defendants filed a motion to stay the proceedings until the criminal matter was resolved. The trial court judgment denying the motion to stay was signed on January 10, 2015. On January 22, 2015, just twelve days after the judgment was signed regarding the motion to stay, the defendants filed the motion to dismiss the civil forfeiture proceedings for failure to timely set the matter for hearing. Having considered the reasons for delay as well as the other factors laid out in Barker, we find no manifest error in the trial court's denial of the defendants' motion to dismiss.
CONCLUSION
For the foregoing reasons, the portions of the trial court judgment against Kassim Nagi are affirmed. Specifically, the portions of the judgment forfeiting to the State, $11,283.83 seized from Coastal Commerce Bank Account No. 1086107 in the name of Kassim Nagi, and $590,005.00 seized from a Coastal Commerce Bank safe deposit box in the name of Kassim Nagi are affirmed.
All portions of the judgment forfeiting money to the State that was in the name of or owned by Mohamed, Kee Food, Inc., or Southla, LLC are annulled. Specifically, the portions of the judgment in favor of the State forfeiting $1,021.42 seized from Coastal Commerce Bank Account No. 350538 in the names of Kassim Nagi and Mohamed Nagi, $29,580.54 seized from Coastal Commerce Bank Account No. 125641 in the name of Kee Food, Inc., $12,131.62 seized from Coastal Commerce Bank Account No. 179747 in the name of Kee Food, Inc., $95,890.92 cash seized from inside the Kee Food Store premises, $348,302.92 in cash seized from Coastal Commerce Bank Account No. 1078757 in the name of Southla, LLC, and the property and improvements located at 6957 West Park Avenue in Houma, Louisiana owned by Southla, LLC are annulled. All costs of the proceedings are to be divided between the State of Louisiana and Kassim Nagi.