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Substitute Service Procedures of Maryland Rule 2-124(o) Satisfy the Requirement of Due Process

Rhema, LLC v. Foresite, LLC
(November 10, 2015) Court of Special Appeals of Maryland
by Matthew J. McCloskey, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.mdcourts.gov/appellate/unreportedopinions/2015/1274s14.pdf

In a recent opinion, the Court of Special Appeals reaffirmed that the substitute service procedures of Maryland Rule 2-124(o) are constitutionally sufficient. In 2011, Rhema, LLC purchased a parcel of land located in Prince George’s County (the “property”). Subsequently, John Foretia, the organizer, sole member, and resident agent of Rhema, formed another organization, Ambondem LLC, in which he was again the sole member and resident agent. No interest in the property was ever transferred to Ambondem.

In 2013, Foresite, LLC entered into a “Building Construction/Renovation Agreement” entitled, “Ambondem Catering Center, Forestville, Maryland” to create a catering facility for Ambondem. The agreement provided that it was “[b]y and between Foresite LLC . . . hereinafter referred to as ‘Builder’, and John Foretia of Ambondem, LLC . . . (hereinafter referred to as ‘Owner’).” The 2012 Application for Plan Examination and Permit, filed in the Prince George’s County Permit Office, listed Rhema and Mr. Foretia as the “Property Owner.” “Ambondem Catering Ctr.” was listed as “Occupant.” The Prince George’s County commercial use permit, issued before the contract was executed, listed Rhema, LLC as the property owner.

Foresite performed substantial work on the property. When the work was at least 75-80% complete, Foresite sent Mr. Foretia a letter stating: “The total amount earned under Foresite, LLC’s undertaking to the date hereof is $1,532,846.73 of which $808,221.38 is due and unpaid as of the date hereof.” As a result, Foresite filed a petition for a mechanic’s lien on the property, naming Rhema as the property owner, and the Circuit Court issued a show cause order. Three (3) employees of a process serving businesses executed an affidavit attesting that they attempted to server Mr. Foretia at his home address on two (2) separate days. On the second attempt to do so, an individual at the residence informed them that Mr. Foretia was present at the house, but then returned and informed the server that Mr. Foretia was actually not present. Consequently, the process servers believed Mr. Foretia was evading service, and served process on the State Department of Assessments and Taxation (SDAT) pursuant to Maryland Rule 2-124(o). The SDAT forwarded service to Mr. Foretia via certified mail. Mr. Foretia never accepted the certified mail.

Foresite and the three (3) process servers appeared at the show cause hearing, but nobody appeared on behalf of Rhema. Accordingly, the Circuit Court entered a lien in the amount requested by Foresite. Several weeks later, Rhema moved to vacate the lien, arguing that it did not have notice of the proceedings until after the Court’s final order, that Foresite had not met its obligations under the contract, and that Foresite had defrauded Rhema by billing it for work Foresite had not actually completed. Rhema subsequently filed an answer to Foresite’s petition. The Circuit Court ultimately denied the motion to vacate, reasoning that Rhema had been appropriately served pursuant to Rule 2-124(o) and had failed to rebut the prima facie case established by Foresite. Rhema appealed.

On appeal, Rhema first argued that the substitute service on the SDAT was constitutionally defective. The Court disagreed. It noted that Rule 2-124(o) is only applicable in limited circumstances, such as when service on a resident agent is unsuccessfully attempted on two (2) separate days. Despite Rhema’s protestations that Foresite had waited until three (3) days prior to the deadline to serve it before attempting service, the Court cited a litany of cases in which the procedures of Rule 2-124(o) had been held to comply with the requirements of due process. Here, Foresite attempted in good faith to serve Rhema on two (2) separate occasions, and Rhema had also refused to accept the certified mail that was duly mailed by the SDAT. Under these circumstances, there was no violation of due process.

Rhema also argued that the court erred in entering the mechanic’s lien because the contract at issue was between Foresite and Ambondem, and that Rhema was not the “owner” of the property for the purposes of establishing the mechanic’s lien because Ambondem was a tenant of the property. The Court rejected this argument. There was no evidence that Ambondem had any ownership interest in the property or a tenancy of any kind, and Rhema’s filings before the Circuit Court indicated that it changed course to make this argument only after it had filed its motion to vacate. Where, however, Foresite had established a prima facie case for a mechanic’s lien, the lack of evidence supporting Rhema’s argument to the contrary was insufficient to defeat Foresite’s petition. Consequently, the Court affirmed the judgment of the Circuit Court.