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Law School Case Brief

Fonar Corp. v. Tariq Contracting - 885 F. Supp. 56 (E.D.N.Y. 1995)

Rule:

The test with regard to the propriety of service of process on a foreign corporation through a local agent is whether the company served is so related to the defendant that it may be justly inferred that the defendant will have notice of the action.

Facts:

Plaintiff Fonar Corporation is a manufacturer is engaged in the manufacture and distribution of Magnetic Resonance Imaging (MRI) systems used for medical diagnostic purposes. Fonar filed an action for fraud and breach of contract against defendant distributors, Tariq Contracting, Inc. (TCI) and Applied Medical Systems, Inc. (AMS), failure and refusal to pay the final two installments due on the purchase price of a MRI system. TCI is a Saudi Arabian sole proprietorship with its principal place of business in Al Khobar, Saudi Arabia. AMS is a Massachusetts corporation with its principal place of business in Cambridge, MA. The two distribtors were owned and operated by members of the same family. TCI filed a motion to dismiss the amended complaint for improper service of process, allegedly because service was made to AMS' president, Yasmeen Husain, in Cambridge, MA. Ms. Husain is the daughter of Khald Husain, TCI's president. Desite Ms. Husain's signature appeared on the sales agreement between Fonar and TCI, as TCI's vice-president,TCI asserted that Ms. Husain had no authority to accept service on behalf of TCI.

Issue:

Is the service made to relative of a defendant foreign corporation proper even if the family member is not designated to accept service of process?

Answer:

Yes.

Conclusion:

The Court denied the motion to dismiss, holding that service upon the daughter, who was held out as the foreign distributor's vice president and local representative, was proper even though she was not specifically designated by it to accept service of process.

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