By: Charles B. Jimerson, Esq. and John Rutledge, JD Candidate
To bring a suit against a foreign corporation, or anyone for that matter, the court must be a “proper venue” for the suit. Essentially, just because a state has jurisdiction does not mean that a plaintiff can pick whichever court he wants. Without a proper venue, the lawsuit cannot proceed. As long as venue is proper (meaning the specific court can hear the case), it is the plaintiff’s decision on where to bring the suit. The venue choice can be a distinct advantage for a plaintiff. The plaintiff’s choice in venue affects the convenience (or lack thereof) for a defendant as it dictates where experts, witnesses and all relevant personnel for a lawsuit will have to travel. Furthermore, venue also determines the “pool” from which the jury will be selected from in the case of a jury trial.
Proper Venue for a Foreign Corporation
For venue to be “proper” for a foreign corporation doing business in Florida, the action must be brought in a county where the corporation has an “agent or other representative” designated to receive service or the county where the cause of action occurred. Fla. Stat. § 47.051. To satisfy due process concerns, foreign corporations conducting business in Florida are required to have a designated registered agent (for the purposes of this post, he will just be referred to as “registered agent”) to be served with lawsuits. Fla. Stat. § 48.091. Because venue needs to be either in the same county as this registered agent or the county where the cause of action occurred, strategic placing of the corporation’s registered agent can somewhat diminish the plaintiff’s advantage of choosing the venue.
A Foreign Corporation Can Be Served Through Registered Agent Until It Successfully Withdraws From the State of Florida
As previously stated, a lawsuit cannot proceed unless the venue selected is proper. Serving a corporation’s designated registered agent is considered serving the corporation itself, and thus the corporation must answer the complaint or face the possibility of a default judgment. However, this arrangement is not permanent. Foreign corporations can withdraw from doing business within Florida, thus revoking the registered agent’s authority to accept any type of service. Fla. Stat. § 607.1520. To do so, the corporation must apply for a certificate of withdrawal from Florida’s Department of State. But, as I’m sure you’ve experienced one way or another, applications through a public entity are not instantaneous. What about the time between a foreign corporation’s application for withdrawal and the actual receiving of the certificate? In Florida, the foreign corporation can be served through the registered agent until the corporation has physically received the certificate of withdrawal. Vrchota Corp. v. Kelly, 42 So. 3d 319 (Fla. 4th DCA 2010).
In Vrchota, the plaintiff filed suit on June 12 and served the defendant through its registered agent on June 19 for suit in Palm Beach County. However, the defendant, who was a foreign corporation, applied for a certificate of withdrawal from the State of Florida on June 8th. The trial court denied the corporation’s motion to transfer venue.
The corporation appealed and argued that as soon as their application was sent, the agent’s authority to be served was revoked and any subsequent service was improper. To be clear, this case was not about the merits of the plaintiff’s claim. The defendant corporation was not saying that they could not be sued, but instead were arguing that after their application for withdrawal, they could no longer be sued in the State of Florida.
Although the corporation had applied for withdrawal before the relevant litigation began, the 4th DCA still held venue to be proper. Interpreting Fla. Stat. § 607.1520, the court determined that the agent’s authority to be served was not revoked until the “certificate of withdrawal is issued by the Department of State.” Thus, because the Department of State had not yet issued the certificate of withdrawal to the foreign corporation, the registered agent’s authority to be served had not yet been officially revoked and venue was in Palm Beach. The court subsequently agreed with the trial court and found venue to be proper.
What Does This Mean Moving Forward?
While the difference between applying for a certificate of withdrawal and actually receiving it may seem tedious, the Vrchota case demonstrates that the distinction can be very important. After a foreign corporation has received its certificate of withdrawal, it would be very difficult for the corporation to be sued in Florida. But, until the Florida Department of State has issued this certificate, the corporation is still able to be served through the registered agent.
Although the Vrchota case came from the 4th DCA, it is considered to be law throughout the entire state until another DCA or the Florida Supreme Court has a conflicting opinion. Also, per Fla. Stat. § 48.091, the foreign corporation is required to keep a registered agent in Florida until it has officially withdrawn from the state. This essentially forces any foreign corporation to be at the mercy of the Department of State until they receive the all-so-important certificate of withdrawal. Until the corporation receives this certificate, they can be served in the state of Florida.
Because of the importance of receiving the certificate of withdrawal, foreign corporations in Florida would be wise to prepare for any possible litigation until the Department of State has officially issued their certificate of withdrawal. Venue choice can be a huge bargaining chip for settlement negotiations, as litigating away from home carries a large cost of doing business.