Wednesday, July 30, 2014

The Importance of Maintaining Correct Registered Office/Registered Agent Information

The Importance of Maintaining Correct Registered Office/Registered Agent Information

       A decision rendered by the Kentucky Court of Appeals last week reinforces the importance of maintaining current registered office/agent information with the Kentucky Secretary of State, as well as current principal place of business information.  In this instance, a corporation failed to satisfy each of these obligations.  Ultimately, it was saddled with a default judgment, which judgment was not set aside on the basis of “excusable neglect.”  Bradford White Corp. v. Kentucky Farm Bureau Ins. Co., No. 2013-CA-001549-MR (Ky. App. July 25, 2014) (Not to be published).

      Kentucky Farm Bureau Insurance brought a subrogation claim against Bradford White Corporation based upon a defective water heater that Bradford White had manufactured.  Bradford White is a Pennsylvania corporation qualified to transact business in Kentucky.

      Service was attempted on Bradford White not less than four times including at the registered office/agent it identified on its filings with the Pennsylvania Secretary of State and as well through the Kentucky Secretary of State via the registered office/agent identified on the Certificate of Authority.  All of these efforts were unsuccessful, the certified mail containing the summons and the complaint being in each instance returned as undeliverable.  The trial court issued a default judgment against Bradford White.  Ultimately, by some mechanism not recounted in the decision, Bradford White became aware of the default entered against it and sought to have the default judgment set aside on the basis of “excusable neglect.”

      The Court of Appeals, affirming the trial court on an abuse of discretion standard, was having none of an argument of “excusable neglect.”  Rather the Court of Appeals found that Bradford White had repeatedly failed to update its address, as well as its registered office/agent information, with the Pennsylvania and Kentucky Secretaries of State.  Ultimately:

Bradford White’s lack of actual knowledge [of the lawsuit] was not caused by the plaintiff, Secretary of State, or the post office.  Rather, it was caused by Bradford White’s willful ignorance or negligence.

       The lesson is simple – a company obligated to maintain registered office/agent information with the Secretary of State, as well as current information as to the principal place of business address, is rendering itself subject to a default judgment if it fails to do so.  The failure to keep those records current will not be a defense to the failure to receive actual notice of a suit.

      All that said, the Court of Appeals did somewhat (greatly) overstate the effect of a certain statute.  Essentially, the Court described the failure to maintain current registered office/agent and principal office address information as being “criminal,” citing KRS § 14A.2-030(2).  This is an overstatement of the statute.  That provision provides for misdemeanor treatment of the execution and delivery to the Secretary of State for filing of a document when it is known that the contents thereof are not true.  This provision applies only at the time information is filed; it is inapplicable to the obligation to keep information current.

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