Mayor and City Council of Baltimore v. Prime Realty Associates, LLC (Ct. of Appeals)

Filed: May 12, 2020

Opinion by: J. Getty

Holding:  The Court of Appeals held that the Circuit Court for Baltimore City erred in invalidating the order ratifying the sale of Respondent’s vacant property on due process grounds.  The Court of Appeals held that Maryland Rule 3-124(o) allows for substituted service of process on a LLC by service on the State Department of Assessments and Taxation (“SDAT”) and satisfies a litigant’s due process rights. 

Facts:  Petitioner Mayor and City Council of Baltimore initiated a receivership action against Respondent Prime Realty Associates LLC, when the property owned by Respondent remained vacant and its condition deteriorated.  The Petitioner made several attempts to serve Respondent’s resident agent at the address on record with SDAT.  After unsuccessful attempts, Petitioner made substitute service on SDAT pursuant to Maryland Rules 3-124(o).  Respondent’s participation in this matter did not occur until the court-appointed receiver sold the property and the sale was ratified by the District Court of Maryland for Baltimore City.  Respondent moved to vacate the sale arguing that it had not been adequately served, violating its due process rights.  The District Court denied Respondent’s motion and Respondent appealed.  The Circuit Court for Baltimore City vacated the sale of property holding that Respondent’s due process rights were violated as Petitioner had knowledge of an alternative address for Respondent’s resident agent, having previously mailed notices to that known address. 

Analysis:  The Court of Appeals examined the history of substituted service pursuant to Maryland Rule 3-124(o).  The review demonstrates a policy decision of the General Assembly and of the Courts for efficiency in judicial procedures involving service of process.  In reviewing the first known challenge to Maryland Rule 3-124(o) on due process grounds, the Court concluded that substituted service upon SDAT is a practical method of service which affords litigants their due process rights.  LLC’s enjoy privileges such as tax benefits and liability protections in return for the company fulfilling its statutory obligations.  Specifically, LLC’s are obligated to keep accurate information including addresses for its principal office and resident agent.  Maryland Rule 3-124(o) is not the default method of service for LLC’s.  Rather, substitute service is only available in three limited circumstances, including after two good faith attempts to serve the resident agent have failed.  Once SDAT receives service it is required to forward a copy of the process and notice to the party at their last known mailing address or principal place of business.  Respondent’s failure to comply with its statutory obligation to accurately update its information and address on SDAT did not invalidate Petitioner’s attempts of service and therefore did not constitute a due process violation.

The full opinion is available in PDF.