Simon PLC Attorneys & Counselors – January 2024 Memorandum
When is it proper to use the Secretary of State to serve an LLC in Illinois?
Chicago, IL. It’s commonly known amongst Illinois attorneys that the Secretary of State’s office may be used in certain circumstances to serve an LLC. What is not as well-known is when this is appropriate. The Illinois Appellate court recently addressed such an issue when they ruled on an appeal of the trial court’s order quashing service on an LLC that was effectuated through the Secretary of State’s office.
In the recent opinion Michelle Amaba and Christopher Cozza v. RFJ Land Management, LLC 2023 IL App (1st) 220549 the First District Court of Appeals analyzed both statutory law and past precedent to clarify the requirements for proper service on an LLC.
In Amaba, approximately a year after having default judgment entered again them, the defendants filed a motion to quash service claiming plaintiff failed to serve defendant’s registered agent at the address that was listed with the Secretary of State.
Plaintiff filed a complaint for breach of contract and attempted to serve the defendant. Plaintiff searched the Illinois Secretary of State’s website and discovered the last listed address for both the company and its registered agent was in Wauconda, Illinois. Upon discovering the address, plaintiff placed the complaint and summons with the sheriff’s office for service. The sheriff’s office made one attempt to serve but stated on the service affidavit that “no resident here is associated with [the defendant]” and the neighbors “have no idea who [defendant] is.”
Upon receiving the sheriff’s affidavit of non-service, plaintiff conducted a skip trace but could not identify an alternate address for the defendant. As such, plaintiff properly filed an affidavit of compliance for service of the Secretary of State, stating the registered agent “cannot with reasonable diligence be found at the registered office in Illinois” and that a copy of the notice was mailed to defendant’s last known address. Plaintiff then served process on the secretary of state later that week.
At hearing, the trial court granted the defendant’s motion claiming the single attempt to serve the defendant’s registered agent did not constitute reasonable diligence by plaintiff and therefore service was not proper. Plaintiff filed an appeal the day of the trial court’s ruling.
On appeal, the appellate court began its analysis with a review of the code of civil procedure, noting that 735 ILCS 5/2-206 governed service on private corporations. The court observed that Section 2-204 provides that “a private corporation may be served (1) by leaving a copy of the process with its registered agent or any officer or agent of the corporation found anywhere in the State, or (2) In any other manner now or hereafter permitted by law. A private corporation may also be notified by publication and mail in like manner and with life effects as individuals.”
Seeing as to how the corporation was not served via its registered agent or through publication, the court next turned its attention to whether there was “any other manner now or hereafter permitted by law” with which to serve the defendant. As argued by the plaintiff, the Limited Liability Company Act provides for an alternate method of serving LLC’s. The court then turned its attention to the Illinois Limited Liability act and its relevant parts, noting:
805 ILCS 180/1-50 states:
(a) Any process, notice, or demand required or permitted by law to be served upon either a limited liability company or foreign limited liability company shall be served either upon the registered agent appointed by the limited liability company or upon the Secretary of State as provided in this Section.
(b) The Secretary of State shall be irrevocably appointed as an agent of a limited liability company upon whom any process, notice, or demand may be served under any of the following circumstances:
…
(2) Whenever the limited liability company’s registered agent cannot with reasonable diligence be found at the registered office in this State or at the principal place of business stated in the articles of organization.
(c) Service under section (b) shall be made by the person instituting the action by doing all of the following:
(1) Serving on the Secretary of State, or on any employee having responsibility of administering this Act, a copy of the process, notice or demand together with any papers required by law to be delivered in connection with service and paying the fee prescribed by article 50 of this Act.
(2) Transmitting notice of the service on the Secretary of State and a copy of the process, notice or demand and accompanying papers to the limited liability company being served, by registered or certified mail:
(A) at the last registered office of the limited liability company shown by the records on file in the Office of the Secretary of State; and
(B) at the address the use of which the person instituting the action, suit, or proceeding knows or, on the basis of reasonable inquiry, has reason to believe is most likely to result in actual notice.
(3) Attaching an affidavit of compliance with this section, in substantially the form that the Secretary of State may by rule or regulation prescribe, to the process, notice, or demand.
As the court noted in its statement of facts, it is undisputed that the plaintiff served the Secretary of State’s office with a copy of the process and transmitted notice of the service on the Secretary of State at the last registered office of the limited liability company shown by the records on file in the Office of the Secretary of State, and provided an affidavit to this effect. The only remaining question was whether plaintiff complied with 805 ILCS 180/1-50 (b)(2) and exercised “reasonable diligence” in locating the registered agent at the registered office. This requirement had not been previously reviewed by the court with respect to the Limited Liability Act. The court noted, however, that a nearly identical provision was reviewed with respect to the Business Corporation Act of 1983 and the court looked to this prior decision for guidance.
In the case Dutch Farm Meats, Inc. v. Horizon Foods, Inc., 275 Ill. App. 3d 322 (1995), the court considered the issue of compliance with service requirements under the Business Corporation Act of 1983. The court ultimately found that the plaintiff exercised reasonable diligence in its single attempt to serve the defendant, stating “Nothing in the statute required a plaintiff to seek out the new location of the registered agent once the agent abandons or moves from the registered office and fails to notify the Secretary of State of the new address. Nor does the phrase ‘reasonable diligence’ require attempted service on a corporate officer or other agent” Id at 326.
Relying on the ruling in Dutch, the Amba court found “the same logic applies to section 1-50(b)(2) of the [the Limited Liability Act] where language of section 1-50(b)(2) is nearly identical to section 5.25(b)(2) of the Business Corporation Act of 1983.” Thereby, following the rational in Dutch, the court found plaintiffs exercised reasonable diligence in finding defendant’s registered agent at the registered office in strict compliance with section 1-50(b)(2). As such plaintiff fully complied with the service requirement under Illinois Law and the ruling of the trial court was overturned.
This opinion clarifies that if an LLC defendant moves without updating its address with the Secretary of State’s office, service of the LLC via the Secretary of State is proper so long as at least one attempt to serve an LLC at the reported address is made and all other notice requirements of 805 ILCS 180/1-50 are met. Plaintiff is under no further obligation to continue to seek out the defendant in order to provide them with actual notice of the action.
We at Simon LLC have a full understanding of the Illinois rules of civil procedure and can assist you with all your Illinois litigation needs.
N.B. Not Legal Advice: Please contact us if you would like to discuss the facts and circumstances of your specific matter. Simon PLC Attorneys & Counselors expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this memorandum. The information contained herein may not reflect current legal developments and is provided without any knowledge as to the recipient’s location, industry, identity or specific circumstances. No recipients of this content, clients or otherwise, should act, or refrain from acting, on the basis of any content included in this memorandum without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the jurisdiction for which the recipient’s legal issue(s) involve. The application and impact of relevant laws varies from jurisdiction to jurisdiction, and our attorneys do not seek to practice law in states, territories and foreign countries where they are not properly authorized to do so.
