Church-El v. Bank of New York, Not Reported in F.Supp.2d (2013)
`
`2013 WL 1190013
`Only the Westlaw citation is currently available.
`United States District Court,
`D. Delaware.
`
`Khyon Ernest CHURCH–EL, Plaintiff,
`v.
`BANK OF NEW YORK, as Trustee for the holders
`of asset-backed certificate series, Defendant.
`
`Civil No. 11–877 (NLH/
`KMW).
` | March 21, 2013.
`
`Attorneys and Law Firms
`
`Khyon Ernest Church–El, Wilmington, DE, pro se.
`
`Lisa Roberson Hatfield, Esquire, Morris/Hardwick/
`Schneider, LLC, Newark, DE, for Defendant.
`
`OPINION
`
`HILLMAN, District Judge.
`
`*1 This matter comes before the Court by way of Defendant
`Bank of New York's motion [Doc. No. 14] to set aside the
`Clerk's entry of default entered against it in this matter on
`July 23, 2012. Plaintiff Khyon Ernest Church–El opposes
`Defendant's motion and filed two separate motions [Doc.
`Nos. 11, 19] seeking the entry of a default judgment against
`Defendant. The Court has considered the parties' submissions,
`and decides this matter pursuant to Federal Rule of Civil
`Procedure 78.
`
`For the reasons expressed below, Defendant's motion to set
`aside the default is granted, and Plaintiff's motions for default
`judgment are denied.
`
`I. JURISDICTION
`Plaintiff brings this action alleging claims against Defendant
`for purported violations of the Fair Credit Reporting Act
`(hereinafter, “FCRA”), 15 U.S.C. § 1681 et seq., and the
`Fair Debt Collection Practices Act (hereinafter, “FDCPA”),
`15 U.S.C. § 1692 et seq. The Court exercises jurisdiction
`over Plaintiff's federal law claims under FCRA and FDCPA
`pursuant to 28 U.S.C. § 1331. See also 15 U.S.C. §§ 1681p,
`1692k(d) (allowing FCRA and FDCPA claims to “be brought
`
`in any appropriate United States district court without regard
`to the amount in controversy”).
`
`II. BACKGROUND
`Plaintiff filed the complaint in this action on September
`28, 2011 for a declaratory judgment, preliminary and
`permanent injunctive relief, and damages against Defendant
`for alleged violations of the Fair Credit Reporting Act and
`the Fair Debt Collection Practices Act “in connection with
`a purported mortgage appearing to be in foreclosure against
`the Plaintiff; the defendants' collection tactics in attempting
`to foreclose, and the defendants' refusal to remove or
`correct inaccuracies regarding [the mortgage], despite written
`correspondence specifying the inaccuracies and providing
`information that would facilitate a reasonable reinvestigation
`of the matter.” (Compl. [Doc. No. 1] ¶ 4.) Plaintiff requests
`that the Court “review the lower Court's Record, and the facts
`of the case recorded in the Recorder of Deeds Office(s), as
`well as the Secretary of State's Office(s), to make a case
`comparison, and issue a compensatory Judgment in his favor
`to equal at least 3 times the valuation of the original mortgage
`note,” plus punitive damages and injunctive relief. (Id. ¶ 19 .)
`
`On February 14, 2012, the Court ordered Plaintiff to show
`cause why the complaint should not be dismissed for failure
`to serve process upon Defendant within 120 days of the
`filing of the complaint pursuant to Federal Rule of Civil
`Procedure 4(m). (Order to Show Cause [Doc. No. 3] 1,
`Feb. 15, 2012). Plaintiff filed a response to the Order to
`Show Cause on March 6, 2012 indicating that Plaintiff sent
`a certified copy of the complaint to “Wittstadt & Wittstadt
`284 E. Main St. Newark, DE 19711 by United States Postal
`Service on the 28th day of September 2011” in care of Lisa
`Hatfield, Esquire, 1 and that he received a “Domestic Return
`Receipt with an Article Number of 7011 0470 0001 5071
`6738 as proof of the delivery [along with] an accompanying
`signature.” (Pl.'s Response [Doc. No. 4] ¶¶ 2–3.)
`
`1
`
`FLisa Hatfield, Esq. serves as counsel for Defendant in
`this action.
`
`*2 By Order dated March 13, 2012, the Court found that
`“Plaintiff's method did not properly effect service upon
`Defendant” as required by Federal Rule of Civil Procedure
`4 and several provisions of the Delaware Code, including 8
`DEL. C. § 321 and 10 DEL. C. § 3111. (Order [Doc. No. 5]
`1, Mar. 13, 2012.) Accordingly, the Court granted Plaintiff
`an additional sixty (60) days from the date of the March
`13, 2012 Order to effect service upon Defendant. 2 (Id.)
`
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`Church-El v. Bank of New York, Not Reported in F.Supp.2d (2013)
`
`Approximately two months later, on May 15, 2012, Plaintiff
`filed an executed summons purporting to demonstrate service
`upon Defendant. (Summons [Doc. No. 8] 1.) The attached
`proof of service indicated that Conner D. O'Rourke, a special
`process server from O'Rourke Investigative Associates, Inc.,
`“served the rule to show cause ... [on] Scott LaScala,
`operations manager, who is designated by law to accept
`service of process on behalf of ... Bank of New York as
`Trustee for the Holders of Asset-backed Certificate Series
`2001–1F c/o Wittstadt & Wittstadt, P.A., at c/o Corporation
`Trust Co., 1209 Orange Street, Wilmington, DE, 19801 on ...
`5/10/2012 at 3:05 p.m.” (Proof of Service [Doc. No. 8] 2.)
`
`2
`
`On May 10, 2012, Plaintiff filed a second response to the
`Court's February 14, 2012 Order to Show again relying
`on his attempt to serve the complaint via certified mail,
`return receipt Article Number 7011 0470 0001 5071
`6738.
`
`Pursuant to the executed summons and proof of service, the
`Clerk of Court entered a docket notation indicating that Bank
`of New York was served on May 10, 2012 and Defendant's
`answer was due by May 31, 2012. (Text of May 15, 2012
`Docket Entry by Clerk of Court.) After Defendant's May
`31, 2012 deadline expired without the filing of an answer,
`Plaintiff, on July 18, 2012, requested that the Clerk of Court
`enter default against Defendant pursuant to Federal Rule of
`Civil Procedure 55(a). 3 (Request for Default [Doc. No. 9]
`1.) Plaintiff submitted an affidavit in support of his request
`swearing that a copy of the summons and complaint were
`served on May 10, 2012, as demonstrated by the proof of
`service filed on the docket, and that Defendant had failed to
`appear, plead or otherwise defend within the time allowed.
`(Aff. in Supp. of Entry of Default J. [Doc. No. 9] ¶¶ 3, 5.)
`
`3
`
`Rule 55(a) provides that “[w]hen a party against whom
`a judgment for affirmative relief is sought has failed to
`plead or otherwise defend, and that failure is shown by
`affidavit or otherwise, the clerk must enter the party's
`default.” FED. R. CIV. P. 55(a).
`
`In accordance with Plaintiff's affidavit and request, the Clerk
`of Court entered default on July 23, 2012. (Entry of Default
`[Doc. No. 10] 1.) The Clerk thereafter mailed a copy of the
`entry of default to Defendant at the following two addresses:
`(1) care of Wittstadt & Wittstadt, 284 E. Main Street, Newark,
`Delaware 19711; and (2) care of Corporation Trust Co., 1209
`Orange Street, Wilmington, Delaware 19801. (Id. at 2.)
`
`On July 26, 2012, Plaintiff filed his first motion [Doc. No. 11]
`for default judgment. Defendant then filed the present motion
`to set aside the default on October 23, 2012. After filing a
`brief [Doc. No. 17] opposing Defendant's motion, Plaintiff
`also filed a second motion [Doc. No. 19] seeking default
`judgment and a writ of execution. Thereafter, Defendant filed
`an objection [Doc. No. 20] to Plaintiff's second motion.
`
`III. DISCUSSION
`Federal Rule of Civil Procedure 55(c) provides that the Court
`“may set aside an entry of default for good cause, and ... may
`set aside a default judgment under Rule 60(b).” FED. R. CIV.
`P. 55(c). Accordingly, pursuant to Rule 60(b), a defendant
`may move to set aside a default judgment, and the Court may
`grant such relief for any of the following reasons:
`
`*3 (1) mistake, inadvertence, surprise, or excusable
`neglect;
`
`(2) newly discovered evidence that, with reasonable
`diligence, could not have been discovered in time to
`move for a new trial under Rule 59(b);
`
`(3) fraud ..., misrepresentation, or misconduct by an
`opposing party;
`
`(4) the judgment is void;
`
`(5) the judgment has been satisfied, released or discharged;
`it is based on an earlier judgment that has been reversed
`or vacated; or applying it prospectively is no longer
`equitable; or
`
`(6) any other reason that justifies relief.
`
`FED. R. CIV. P. 60(b).
`
`Generally, entries of default and default judgments are
`disfavored by the courts, and when a defendant moves to
`set aside the entry of default or a default judgment the law
`therefore “require[s] doubtful cases to be resolved in favor
`of the party moving to set aside the default judgment ‘so
`that cases may be decided on their merits.’ “ United States
`v. $55,518.55 in U.S. Currency, 728 F.2d 192, 194–95 (3d
`Cir.1984) (citation omitted). Moreover, the “decision to set
`aside the entry of default pursuant to Fed.R.Civ.P. 55(c) and
`a default judgment pursuant to Fed.R.Civ.P. 60(b) is left
`primarily to the discretion of the district court.” Id. at 194
`(footnotes omitted).
`
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`Church-El v. Bank of New York, Not Reported in F.Supp.2d (2013)
`
`A distinction exists, though, “between a default standing
`alone and a default judgment.” Feliciano v. Reliant Tooling
`Co., Ltd., 691 F.2d 653, 656 (3d Cir.1982). While a default
`judgment may be set aside according to the provisions of
`Rule 60(b), “[l]ess substantial grounds may be adequate for
`setting aside a default than would be required for opening a
`judgment.” Id. Accordingly, “ ‘(a)ny of the reasons sufficient
`to justify the vacation of a default judgment under Rule 60(b)
`normally will justify relief from a default entry and in various
`situations a default entry may be set aside for reasons that
`would not be enough to open a default judgment.’ “ Id. (citing
`10 C. Wright & A. Miller, Federal Practice and Procedure, §
`2696 at 334 (1973)).
`
`In the Third Circuit, “it is well established that a district court
`ruling on a motion to set aside a default under Rule 55(c)
`or a default judgment under Rule 60(b)(1), must consider
`the following three factors: (1) whether the plaintiff will
`be prejudiced; (2) whether the defendant has a meritorious
`defense; and (3) whether the default was the result of the
`defendant's culpable conduct.” Gold Kist, Inc. v. Laurinburg
`Oil Co., 756 F.2d 14, 19 (3d Cir.1985) (citing Hritz v. Woma
`Corp., 732 F.2d 1178, 1181 (3d Cir.1984); $55,518.55 in
`U.S. Currency, 728 F.2d at 195). However, a district court
`need not “resort to an analysis of th[e]se factors in” every
`instance “because they apply only when the default judgment
`was authorized and the only question before the district court
`is whether to exercise its discretion to set aside the default .”
`Gold Kist, 756 F.2d at 19 (explaining that a district court errs
`as a matter of law in refusing to set aside a default where the
`default judgment was improperly entered).
`
`*4 The Third Circuit and multiple district courts within the
`Circuit have recognized that an entry of default or a default
`judgment can be set aside if it was not properly entered at
`the outset, including circumstances where proper service of
`the complaint is lacking. See, e.g., Petrucelli v. Bohringer
`and Ratzinger, 46 F.3d 1298, 1304 (3d Cir.1995) (noting that
`where “a default judgment ... [is] entered when there [is]
`not ... proper service, the judgment is, a fortiori, void, and
`should be vacated.”); Gold Kist, 756 F.2d at 19; Perkins v.
`Delaware DHSS/DSSC, No. 12–50, 2012 WL 4482801, at
`*1, 4, 7 (D.Del. Sept. 27, 2012) (recommending defendant's
`motion to vacate entry of default be granted and plaintiff's
`motion for default judgment be denied where service had
`“not yet been technically effectuated”); Mettle v. First Union
`Nat'l Bank, 279 F.Supp.2d 598, 603 (D.N.J.2003) (concluding
`sufficient good cause existed for setting aside default entered
`against a defendant where there was not proper service of
`
`the summons and complaint); Shomide v. ILC Dover LP,
`No. 03–1019, 2006 WL 2042969, at *5 (D. Del. (denying
`plaintiff's motion for default judgment because defendant was
`not properly served).
`
`IV. ANALYSIS
`While Defendant's motion addresses each of the factors
`relevant for setting aside the July 23, 2012 entry of default
`—prejudice to plaintiff, meritorious defenses, and culpable
`conduct—the motion also argues that service was never
`properly effected upon Defendant in this action. (Mot. to Set
`Aside Default [Doc. No. 14] ¶ 10.) To the extent Defendant
`was not properly served with the summons and complaint,
`good cause may exist for setting aside the default without
`further consideration of the Gold Kist factors. Mettle, 279
`F.Supp.2d at 603. Thus, as a threshold matter, the Court
`examines whether service was properly effected in this case.
`
`Federal Rule of Civil Procedure 4(h) proscribes the proper
`methods for effecting service of process on a corporation,
`such as Defendant Bank of New York. 4 Rule 4(h) provides
`in pertinent part that a domestic corporation subject to suit
`under a common name must be served in a judicial district of
`the United States:
`
`4
`
`Although not made clear in the complaint, Defendant's
`motion affirmatively indicates that Bank of New York is
`a Delaware corporation. (Mot. to Set Aside Default [Doc.
`No. 14] ¶ 3.) Accordingly, Federal Rule 4(h) governs
`service of Defendant in this case.
`
`(A) in the manner prescribed by Rule 4(e)(1) for serving
`an individual; or
`
`(B) by delivering a copy of the summons and
`of the complaint to an officer, a managing or
`general agent, or any other agent authorized by
`appointment or by law to receive service of process
`and—if the agent is one authorized by statute and
`the statute so requires—by also mailing a copy of
`each to the defendant[.]
`
`Fed.R.Civ.P. 4(h).
`Effecting service of process under Rule 4(h)(1)(B) requires
`personal service of the summons and complaint to one of the
`following: (1) an officer of the corporation; (2) a managing
`or general agent; or (3) any other agent authorized to receive
`service on behalf of the corporation. Effecting service of
`process under Rule 4(h)(1)(A) requires a plaintiff to serve
`
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`Church-El v. Bank of New York, Not Reported in F.Supp.2d (2013)
`
`the summons and complaint consistent with the method
`proscribed in Rule 4(e)(1). Rule 4(e)(1) governs service of
`an individual defendant and permits a plaintiff to serve by
`“following state law for serving a summons in an action
`brought in courts of general jurisdiction in the state where the
`district court is located or where service is made[.]”
`
`*5 Under Delaware law, service of process on a corporation
`
`shall be made by delivering a copy
`personally to any officer or director
`of the corporation in this State, or
`the registered agent of the corporation
`in this State, or by leaving it at the
`dwelling house or usual place of abode
`in this State of any officer, director or
`registered agent (if the registered agent
`be an individual), or at the registered
`office or other place of business of the
`corporation in this State.
`
`8 Del. C. § 321(a). Section 321(a) further provides that
`where “the registered agent [ is] a corporation [as opposed
`to an individual], service of process upon it as such agent
`may be made by serving, in this State, a copy thereof on
`the president, vice-president, secretary, assistant secretary
`or any director of the corporate registered agent.” 5 Id.;
`see also Thompson v. Target Stores, 501 F.Supp.2d 601,
`603 (D.Del.2007) (“Delaware law allows for service of
`process upon a corporation by personal delivery to any
`officer, director, or registered agent in the State, leaving it
`at the dwelling house or usual place of abode of any such
`officer, director, or registered agent, or leaving it at the
`registered office or other place of business of the corporation
`in Delaware.”); Bailey v. ACME/ASCO/Albertson's Inc., No.
`05A–04–006–PLA, 2006 WL 496139, at *2 (Del.Super.Ct.
`Feb. 21, 2006) (“Methods for service of process against a
`corporation are specified in both Rule 4(f)(III) and in 8 Del.
`C. § 321(a) and provide that service on a corporation may
`be accomplished by delivering a copy of the summons and
`complaint to any officer, managing or general agent, or by
`leaving the copy at the registered office or other place of
`business of the corporation.”)
`
`5
`
`Section 321(c) further provides that service upon a
`corporation “may also be made in accordance with §
`3111 of Title 10 or any other statute or rule of court.”
`8 Del. C. § 321(c). Pursuant to 10 Del. C. § 3111,
`“[a]ctions may be brought against any corporation, at law
`or in chancery, by summons. Process may be served on
`
`the president, or head officer, if residing in the State,
`and if not, on any officer, director, or manager of the
`corporation.” Similarly, Delaware Superior Court Rule
`of Civil Procedure 4(f)(1)(III) provides that service upon
`a corporation shall be made by personally “delivering
`copies of the summons, complaint and affidavit, if any,
`to an officer, a managing or general agent or to any other
`agent authorized by law to receive service of process[.]”
`
`Pursuant to the Federal Rules of Civil Procedure, Delaware
`state law, and Delaware court rules, Plaintiff was required
`to personally serve Defendant by delivering a copy of
`the summons and complaint in this action to either an
`officer, director, or registered agent of Defendant in the
`state of Delaware. 6 It appears that Plaintiff engaged the
`services of O'Rourke Investigative Associates, Inc. for this
`purpose, presumably at great personal expense. Plaintiff
`asserts that “[t]he credibility of Mr. O'Rourke serves as
`effective testimony to the plaintiff's proper effectuation
`of service upon the defendant[.]” (Pl.'s Mandatory Reply
`to Def.'s Mot. to Set Aside Default J. [Doc. No. 17]
`(hereinafter, “Pl.'s Opp'n”), 8.) The proof of service signed by
`Connor O'Rourke indicates that service was made upon Scott
`LaScala, operations manager at Corporation Trust Company
`at 1209 Orange Street, Wilmington, Delaware, in care of
`Wittstadt and Wittstadt, P.A. (Proof of Service [Doc. No. 8]
`2.)
`
`6
`
`To the extent Plaintiff continues to assert that Defendant
`was properly served via copies of the summons and
`complaint sent to Defense counsel via certified mail, the
`Court previously found such service to be insufficient,
`and it remains so at this time. (Order [Doc. No. 5] 1,
`Mar. 13, 2012) (finding Plaintiff's service method did
`not properly effect service under Federal Rule of Civil
`Procedure 4 and several provisions of the Delaware
`Code, including 8 DEL. C. § 321 and 10 DEL. C. § 3111).
`
`Despite Plaintiff's efforts, at this time the record reflects that
`personal service was never made on Defendant as required
`under the pertinent rules and statutes set forth above. After
`the Clerk of Court entered default against Defendant, a copy
`of the default was mailed to Defendant in care of Corporation
`Trust Company at the 1209 Orange Street address on July
`23, 2012. Approximately four days later, the Clerk of Court
`received a notice from Scott LaScala informing the Court
`that he was returning the Entry of Default in this action
`because “Bank of New York is not listed on our records
`or on the records of the State of DE.” (Notice [Doc. No.
`12] 1.) It is apparent from the face of LaScala's letter that
`he is not any officer or director for Defendant Bank of
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`Church-El v. Bank of New York, Not Reported in F.Supp.2d (2013)
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`New York. Accordingly, service upon Corporation Trust
`Company through LaScala could only presumably constitute
`an attempt by Plaintiff to serve Defendant's registered or
`general agent. However, LaScala's letter demonstrates that
`Corporation Trust Company does not serve as Defendant
`Bank of New York's managing, general or registered agent
`in any manner. (Notice [Doc. No. 12] 1; Def.'s Objection
`to Pl.'s Mot. for Default J. [Doc. No. 20] ¶ 9.) Therefore,
`serving Corporation Trust Company with the summons and
`the complaint in this action was insufficient to effect service
`of process on Defendant Bank of New York.
`
`*6 Consequently, as there has not yet been proper service
`of the summons and complaint upon Defendant, the Court
`finds that sufficient “good cause” exists for setting aside the
`default entered on July 23, 2012, against Defendant Bank of
`New York. 7 See Gold Kist, 756 F.2d at 19; Petrucelli, 46
`F.3d at 1304; Perkins, 2012 WL 4482801, at *7; Mettle, 279
`F.Supp.2d at 603; Shomide, 2006 WL 2042969, at *5. Having
`determined good cause exists to set aside the default based on
`the absence of proper service, the Court need not examine the
`Gold Kist factors regarding prejudice to Plaintiff, meritorious
`defenses, and culpable conduct of Defendant. 756 F.2d at 19.
`Accordingly, the Court grants Defendant's motion to set aside
`the July 23, 2012 Entry of Default. Furthermore, because
`default judgment cannot be entered where the summons and
`complaint has not properly been served, Plaintiff's motions
`for default judgment are denied. See Shomide, 2006 WL
`2042969, at *5.
`
`7
`
`To the extent Plaintiff's opposition brief could be
`construed to argue that Defendant's actual notice of the
`present suit obviates the need for proper service, the
`Third Circuit has previously recognized that “notice
`cannot by itself validate an otherwise defective service.
`Proper service is still a prerequisite to personal
`jurisdiction.” Grand Entm't Group, Ltd. v. Star Media
`
`Sales, Inc., 988 F.2d 476, 492 (3d Cir.1993). Therefore,
`the fact that Defendant is aware of the present suit does
`not excuse Plaintiff from properly effectuating service
`pursuant to Federal Rule of Civil Procedure 4.
`
`Having found that Plaintiff has not yet effected service of the
`summons and the complaint, the Court notes that Plaintiff has
`failed to comply with Federal Rule of Civil Procedure 4(m)
`which requires service within 120 days of the filing of the
`complaint. Here, Plaintiff's complaint was filed on September
`28, 2011. It is clear that Plaintiff's failure to serve Defendant
`at this point is well beyond the 120 day limit of Rule 4(m). In
`cases where a defendant has not been timely served, the Rule
`permits the Court to dismiss the action without prejudice or
`order that service be made within a specified time. Petrucelli,
`46 F.3d at 1305 (noting that under Rule 4(m) “the district
`court may, in its discretion, extend time even absent a finding
`of good cause.”) In light of Plaintiff's diligent, although
`improper and insufficient, attempts to serve Defendant up
`to this point, the Court will extend Plaintiff's time to effect
`service of process for an additional sixty (60) days. Plaintiff
`is on notice that this is the final extension of time the Court
`will grant in order to serve the summons and complaint in
`this action. If Plaintiff fails to properly and timely serve
`Defendant within sixty days from the date of this Opinion
`and its accompanying Order, Plaintiff's complaint will be
`dismissed without prejudice pursuant to Rule 4(m).
`
`V. CONCLUSION
`For the foregoing reasons, Defendant's motion to set aside
`the default [Doc. No. 14] is granted, and Plaintiff's motions
`[Doc. Nos. 11, 19] for default judgment are denied. An Order
`consistent with this Opinion will be entered.
`
`All Citations
`
`Not Reported in F.Supp.2d, 2013 WL 1190013
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`End of Document
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`© 2015 Thomson Reuters. No claim to original U.S. Government Works.
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` © 2015 Thomson Reuters. No claim to original U.S. Government Works.
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