Zappin v. Supple

Background

The Clerk of Court entered default against J. Richard Supple, Jr. and Hinshaw & Culbertson LLP (“H&C”) on October 21, 2020. The defendants moved to set aside the default, arguing that they had not been properly served and that the court lacked personal jurisdiction over them. In the alternative, they argued that the default should be set aside under the factors described in Enron Oil Corp. v. Diakuhara.

Zappin also moved to set aside the entry of default and asked the court to order the defendants to answer the Amended Complaint. He separately asked the court to treat the defendants as served or to hold an evidentiary hearing about service. The defendants moved to dismiss the Amended Complaint under Federal Rules of Civil Procedure 4(m), 12(b)(2), 12(b)(5), and 12(b)(6).

Magistrate Judge’s Report

The motions were referred to Magistrate Judge Fox. His March 10, 2021 Report and Recommendation found that service of process was insufficient as to both defendants. It recommended granting the requests to set aside the default in part, denying dismissal under Rules 4(m), 12(b)(2), and 12(b)(5), and denying the request for an evidentiary hearing. The report’s remaining recommendations were not addressed in this order.

Court’s Analysis

No party objected to the recommendation to vacate the defaults, and the district court found that its factual and legal bases were not clearly erroneous or contrary to law. The court therefore adopted that recommendation.

The court also adopted the finding that service on Supple and H&C was insufficient. Because proper service is required for personal jurisdiction, the court stated that there was no personal jurisdiction over the defendants at that time.

The court found that Zappin had not shown good cause for a mandatory extension of the service deadline. Although he had tried to serve the defendants, the court found that his efforts did not follow appropriate procedures, that he had rejected an opportunity for service by the U.S. Marshals Service, and that he had not timely requested an extension. The defendants would not be prejudiced by an extension because they had actual notice of the lawsuit.

The court nevertheless found that the factors supported a discretionary extension. The court stated that the statute of limitations would likely bar refiling, although there was insufficient information for a full determination; the defendants had actual notice; there was no evidence that they had concealed the service defect; and they would not be prejudiced by an extension.

Order

The court ordered that the Report and Recommendation was adopted in part and modified in part. The motions to set aside the entry of default were granted in part, and the portions seeking to vacate the defaults were granted. The entries of default were vacated.

The defendants’ request to dismiss the Amended Complaint for lack of personal jurisdiction was denied without prejudice. The order stated that the remainder of the Report and the defendants’ motion to dismiss would be considered if Zappin properly effected service. Zappin was ordered to serve the defendants within 30 days and to file a letter explaining the service method, supported by a notarized affidavit. The order warned that the case could be dismissed for failure to prosecute if proper service was not completed within that period.

Zappin’s requests for relief other than setting aside the entry of default were denied without prejudice. His motion for an evidentiary hearing on service of process was denied as moot.