The broad language of a contract to rent a UPS box has allowed the owner of a liquor company to be served with a lawsuit, despite the complaint being served to the wrong box.
A Charleston federal judge found March 23 that UPS’s acceptance-of-service contract grants the authority to accept legal documents to the store itself, not merely the individual box.
The lawsuit in question claims California-based Rattleback LLC and its co-owner, Wynn Sanders, contracted with Charleston distiller Rational Spirits to supply materials, equipment and ingredients that would go into the production of Rattleback Rye, a new product the company wanted to distribute. The two companies contracted with Lost Spirits Distillery to handle the sales and marketing of the Rattleback Rye.
But after some of the ingredients for Rattleback Rye were found to be contaminated, the whiskey business went awry. Ultimately, none of the Rattleback Rye whiskey was produced.
Rational Spirits’ Oct. 14, 2016, lawsuit alleges that Rattleback and Wynn owe more than $660,000 to compensate the company for the allegedly agreed upon “minimum annual production” of Rattleback Rye under the contract.
Rational Spirits also claims Rattleback encouraged Lost Spirits to cut ties with Rational Spirits, so they could team up to compete with Rational Spirits.
Rational Spirits’ complaint alleges claims of breach of contract, willful/negligent misrepresentation, constructive fraud and civil conspiracy.
After Rational Spirits’ lawsuit was filed, Sanders moved to dismiss the case, alleging he was never properly served with the complaint. Rattleback and the company’s other co-owner Teron Wannberg initially made the same argument but conceded they had been served after Rational Spirits filed a response to their motions to dismiss.
However, Sanders moved ahead with his motion to dismiss on the theory that the process server charged with serving the summons and complaint delivered it to the wrong UPS box.
Both Rattleback and Sanders rented boxes at the same UPS store in Marina Del Rey, California. Sanders rented box 111, while Rattleback rents box 719. Contracts signed by Sanders and Rattleback at the time they rented the boxes included language authorizing the UPS store to act as their respective agents for service of legal documents.
According to the process server’s affidavit, he delivered a copy of the summons and complaint against Sanders to box 719—in other words, Rattleback’s box.
Based on that mistake, Sanders argues the complaint should be dismissed.
But U.S. District Judge Patrick Michael Duffy saw things differently.
Duffy said Sanders was technically correct that he contracted with UPS to rent only box 111 and that he never specifically authorized the UPS store to accept service for him at box 719.
However, the language of the acceptance-of-service authorization he signed at the time he rented box 111 is broader than what Sanders claimed, Duffy said. The authorization granted the authority to accept legal documents to the store itself.
“That authorization statement contains no language restricting its scope,” Duffy said. “Absent such restrictions, the fact that the process server mentioned the wrong mailbox in his service affidavit does not negate the fact that he handed Sanders’ copy of the summons and complaint to the UPS store employee.”
Duffy added that the broad language of the authorization meant the service was proper. Based on that finding, Duffy denied Sanders’ motion to dismiss.
That said, Duffy didn’t hand Rational Spirits a complete victory. The company had hoped to sanction Sanders for allegedly lying in his affidavit about his connection to the UPS store.
Duffy determined that while Sanders may have “provided an incomplete picture of the relevant facts” in his affidavit in support of his motion to dismiss, at this point in the case, he was hesitant to view it as anything worse than ill-advised gamesmanship. Duffy also narrowed some of Rational Spirits’ claims because they were insufficiently plead, though he left open the possibility that those claims could be revived in an amended complaint.
Rational Spirits’ attorney Clay Olson of Harper Whitwell in Charleston said he had to speak with his client before he could comment on Duffy’s decision. Olson did not respond by press time.
Jay Jones and John Fletcher of Barnwell Whaley Patterson and Helms in Charleston, who represent Rattleback and Sanders, did not respond to requests for comment.
The 10-page decision is Rational Spirits LLC v. Rattleback LLC (Lawyers Weekly No. 002-098-17). An opinion digest is available at sclawyerswseekly.com.
Follow Jeff Jeffrey on Twitter @SCLWJeffrey