Findings, Inc. v. LTD ( 1992 )


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  • USCA1 Opinion












    ____________________
    ____________________

    No. 90-1798
    No. 90-1798

    PRECISION ETCHINGS & FINDINGS, INC.,
    PRECISION ETCHINGS & FINDINGS, INC.,

    Plaintiff, Appellee,
    Plaintiff, Appellee,

    v.
    v.

    LGP GEM, LTD.,
    LGP GEM, LTD.,

    Defendant, Appellee,
    Defendant, Appellee,



    ______

    MAURICE C. FEIGER,
    MAURICE C. FEIGER,

    Defendant, Appellant.
    Defendant, Appellant.

    ____________________
    ____________________

    No. 91-1277
    No. 91-1277

    PRECISION ETCHINGS & FINDINGS, INC.,
    PRECISION ETCHINGS & FINDINGS, INC.,

    Plaintiff, Appellee,
    Plaintiff, Appellee,

    v.
    v.

    LGP GEM, LTD.,
    LGP GEM, LTD.,

    Defendant, Appellee,
    Defendant, Appellee,



    ______

    MAURICE C. FEIGER,
    MAURICE C. FEIGER,

    Defendant, Appellant.
    Defendant, Appellant.

    ____________________
    ____________________


    APPEALS FROM THE UNITED STATES DISTRICT COURT
    APPEALS FROM THE UNITED STATES DISTRICT COURT

    FOR THE DISTRICT OF RHODE ISLAND
    FOR THE DISTRICT OF RHODE ISLAND

    [Hon. Raymond J. Pettine, Senior U.S. District Judge]
    [Hon. Raymond J. Pettine, Senior U.S. District Judge]
    __________________________




















    ____________________
    ____________________

    Before
    Before

    Torruella, Circuit Judge,
    Torruella, Circuit Judge,
    _____________

    Timbers, Senior Circuit Judge,*
    Timbers, Senior Circuit Judge,*
    ____________________

    and Cyr, Circuit Judge.
    and Cyr, Circuit Judge.
    _____________

    ____________________
    ____________________



    Harold E. Krause for appellant, third-party defendant.
    Harold E. Krause for appellant, third-party defendant.
    ________________
    Richard D. Boriskin with whom Markoff & Boriskin was on brief for
    Richard D. Boriskin with whom Markoff & Boriskin was on brief for
    ___________________ __________________
    appellee, third-party plaintiff.
    appellee, third-party plaintiff.


    ____________________
    ____________________


    ____________________
    ____________________



















    *Of the Second Circuit, sitting by designation.
    *Of the Second Circuit, sitting by designation.



























    CYR, Circuit Judge. This appeal concerns the validity of a
    CYR, Circuit Judge.
    _____________

    default judgment entered by the district court notwithstanding a

    defect in the service of process which allegedly deprived the court of

    personal jurisdiction over the defendant-appellant. Precision Etch-

    ings & Findings, Inc. brought the present action in the United States

    District Court for the District of Rhode Island against LGP Gem, Ltd.

    ("LGP"). LGP filed a third party complaint against defendant-appel-

    lant Maurice Feiger. The third party complaint and summons were

    addressed to Feiger by certified mail, return receipt requested, at a

    Brooklyn, New York, street address, rather than to the particular

    apartment in which Feiger resided. The return receipt indicates that

    service was made upon an occupant of another apartment in the same

    apartment building. Default was entered against Feiger in April 1990,

    after he failed to answer LGP's complaint.

    On June 4, 1990, Feiger's New York counsel filed a motion to

    vacate the default, alleging insufficient service of process. Al-

    though New York counsel attempted to appear in behalf of Feiger before

    the United States Magistrate Judge at the June 4 hearing on LGP's

    claim for damages, he was not permitted to do so because Feiger had

    not retained local counsel as required by Rhode Island Local Rule

    5(b). Without addressing Feiger's motion to set aside the default,

    the magistrate judge made proposed findings of fact and recommended

    the entry of a default judgment against Feiger. The district court

    adopted the proposed findings and the disposition recommended by the

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    magistrate judge. Neither the magistrate judge nor the district court

    addressed Feiger's June 4 motion to set aside the default on the

    ground of insufficient service of process.

    On July 26, 1990, Feiger moved to vacate the default judgment,

    once again on the ground that he had never been properly served with

    process. Following a hearing, the motion to vacate was denied by the

    magistrate judge on the ground that Feiger "had sufficient and timely

    knowledge of the Third Party Complaint filed against him." Feiger

    promptly filed objections to the magistrate judge's recommended

    findings and disposition submitted by the magistrate judge. See 28
    ___

    U.S.C. 636(b) (1)(B).

    The district court determined that Feiger had actual notice of

    the third party complaint, notwithstanding the fact that the return

    receipt evidencing service of the summons and third party complaint

    appeared to have been signed by an occupant of another apartment in

    the three-apartment building where Feiger resided. The district court

    accepted the magistrate judge's recommendation and denied the motion

    to vacate the default judgment, apparently on the basis that actual

    notice provided a sufficient basis for the exercise of personal

    jurisdiction over Feiger.* Finally, the district court denied Feiger-

    's postjudgment motion to set aside the default judgment and Feiger

    appealed.



    ____________________

    *Neither the magistrate judge nor the district court discussed the
    *Neither the magistrate judge nor the district court discussed the
    legal requirements of service of process.
    legal requirements of service of process.

    4

















    A default judgment entered by a court which lacks jurisdiction

    over the person of the defendant is void, General Contracting &
    ______________________

    Trading Co. v. Interpole, Inc., 940 F.2d 20, 21 n.1 (1st Cir. 1991),
    ___________ ________________

    and may be set aside at any time pursuant to Fed. R. Civ. P. 60(b)(4).
    __ ___ ____

    See generally 11 C. Wright & A. Miller, Federal Practice & Procedure,
    ___ _________ ____________________________

    2862 (1973). Personal jurisdiction is established either by proper

    service of process, see, e.g., Jardines Bacata, Ltd. v. Diaz-Marquez,
    ___ ____ ______________________ ____________

    878 F.2d 1555, 1559 (1st Cir. 1989) ("[i]n the ordinary course, the

    district court acquires jurisdiction over a defendant only by service

    of process"), or by the defendant's waiver of any defect in the

    service of process, see, e.g., General Contracting & Trading Co., 940
    ___ ____ _________________________________

    F.2d at 22 (personal jurisdiction may be acquired by consent or

    implied from conduct).

    LGP elected to attempt service of process upon Feiger pursuant to

    Fed. R. Civ. P. 4(c)(2)(c), in accordance with "the law of the State

    in which the district court is held." In this case, Rhode Island

    District Court Rule of Civil Procedure 4(d)(1), which is based on Fed.

    R. Civ. P. 4(d)(1), see Plushner v. Mills, 429 A.2d 444, 445 (R.I.
    ___ ________ _____

    1981), required service:


    [u]pon an individual other than an incompetent person by
    delivering a copy of the summons and complaint to him person-
    _______
    ally or by leaving copies thereof at his dwelling house or
    ____ __ __ ___ ________ _____ __
    usual place of abode with some person of suitable age and
    _____ _____ __ _____ ____ ____ ______ __ ________ ___ ___
    discretion then residing therein . . .
    __________ ____ ________ _______

    Dist. R. Civ. P. 4(d)(1) (emphasis added).




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    The Rhode Island service of process requirements were not met in

    the instant case since the return receipt indicates that the summons

    and complaint were neither delivered to Feiger "personally" nor "at

    his dwelling house or usual place of abode." Id. Instead, as the
    __

    district court noted, the return receipt indicates, at best, that the

    summons and complaint were delivered to an occupant of a different

    apartment at the same street address where Feiger's apartment is

    located. LGP contends, nonetheless, that actual notice of the third

    party action was sufficient under Rhode Island law to support the

    district court's exercise of personal jurisdiction over Feiger. The

    precise issue presented appears not to have been addressed by the

    Rhode Island courts.

    The Supreme Court of Rhode Island has "emphasized the principle

    that legislative enactments relating to service of process are to be

    followed and construed strictly, since jurisdiction of the court over

    the person of the defendant is dependent upon proper service having

    been made." Plushner, 429 A.2d at 445-446, quoting Barthlein v.
    ________ _________

    Ellis, 314 A.2d 426, 427 (R.I. 1974). "In construing [service of
    _____

    process] rules it has been [the Rhode Island] practice to look for

    guidance in the precedents of the federal courts, upon whose rules

    those of the [Rhode Island courts] are closely patterned." Id. at
    ___

    446, quoting Nocera v. Lembo, 298 A.2d 800, 803 (R.I. 1973). When the
    ______ _____

    defendant has received actual notice of the action, the Rhode Island

    courts, in conformity with the federal practice, have determined that

    service of process requirements are to be "broadly interpreted," id.
    ___

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    (citing federal cases), provided the interpretation is "a natural

    rather than an artificial one. . . ." Id. quoting Blackhawk Heating &
    ___ ___________________

    Plumbing Co. v. Turner, 50 F.R.D. 144, 145 (D. Ariz. 1970).
    ____________ ______

    Neither federal precedent nor Rhode Island caselaw supports LGP's

    contention that actual notice of the filing of the third party com-

    plaint was sufficient to confer personal jurisdiction in these circum-

    stances. The federal courts have made it abundantly clear that actual

    notice itself, without more, is insufficient to satisfy the require-

    ments of Fed. R. Civ. P. 4(d)(1). See, e.g., Echevarria-Gonzalez v.
    ___ ____ ___________________

    Gonzalez-Chapel, 849 F.2d 24, 28 (1st Cir. 1988) ("[a]ctual notice and
    _______________

    simply naming the person in the caption of the complaint is insuffi-

    cient to subject a defendant to the jurisdiction of the district

    court"); see also Mid-Continent Wood Products, Inc. v. Harris, 936
    ___ ____ ___________________________________ ______

    F.2d 297, 301 (7th Cir. 1991) (citing cases). Although "minor" formal
    ______

    defects are excusable provided actual notice has been accomplished,

    see, e.g., Sanderford v. Prudential Ins. Co., 902 F.2d 897, 899 (11th
    ___ ____ __________ ___________________

    Cir. 1990) (district court not deprived of in personam jurisdiction by
    __ ________

    failure to include return date for responsive pleading in duly served
    ____ ______

    summons), the rule nevertheless must be accorded at least substantial

    compliance, see, e.g., Daly-Murphy v. Winston, 837 F.2d 348, 355 (9th
    ___ ____ ___________ _______

    Cir. 1987) (requiring "substantial compliance" with rule 4(d)(1));

    Zuckerman v. McCulley, 7 F.R.D. 739, 741 (E. D. Mo. 1947) ("[a]s we
    _________ ________

    read the cases, substantial compliance with the Rules prescribing

    manner of service is required") (emphasis added) (service on janitor
    ______ __ _______

    of building in which defendant resided not substantial compliance).

    7

















    It has been held directly that delivery of process to a different

    apartment in the same building is not sufficient service. Di Leo v.
    ______

    Shin Shu, 30 F.R.D. 56 (S.D.N.Y. 1961) (service on daughter of defen-
    ________

    dant who resided in separate apartment not sufficient).

    Neither the cases cited by LGP, nor any we have discovered,

    indicate that actual notice would suffice to cure the defect in the

    manner of service effected on Feiger. In Plushner v. Mills, 429 A.2d
    ________ _____

    at 446, the Rhode Island Supreme Court found that "actual notice"

    constituted substantial compliance where service of process was

    effected by delivery to defendant's daughter while she was at the
    __ ___

    defendant's residence, even though the daughter maintained a separate
    ___________ _________

    residence at the time. The court noted that the daughter possessed a

    key to the defendant's residence and had been placed in charge of the

    dwelling during her father's absence. Id. Since the court found that
    ___

    the daughter, therefore, was a "trusted member of defendant's house-
    ______ __ ___________ ______

    hold and that a substantial nexus existed between her and the defen-
    ____

    dant," it decided that she "could be considered to be 'residing

    therein' under a broad interpretation of Rule 4(d)(1), and such an

    interpretation is allowed when defendant receives actual notice." Id.
    ___

    (emphasis added). The undeveloped record in the instant case, on the

    other hand, simply cannot support a similarly "broad interpretation,"

    since no evidence was presented that the person to whom process was







    8

















    delivered was a member of Feiger's household, his landlord, or a

    person having any "substantial connection" with him.**

    Federal precedent and Rhode Island caselaw indicate only that the

    specific rules governing the precise manner of effecting service of

    process are to be given "broad interpretation" when the defendant has

    received "actual notice." Neither source of authority suggests that

    "actual notice" itself suffices, absent substantial compliance with

    the manner of service prescribed by rule. The present record does not

    enable a determination that there was substantial compliance with rule

    4(d)(1). Therefore, unless Feiger waived any defect in the service of

    process, the case must be remanded for further factfinding bearing on

    the issue of substantial compliance.

    Unlike the absence of subject matter jurisdiction, the defense of

    lack of personal jurisdiction may be waived by express submission,


    ____________________

    **Moreover, the Plushner court relied in part on a federal case,
    **Moreover, the Plushner court relied in part on a federal case,
    ________
    Nowell v. Nowell, 384 F.2d 951 (5th Cir. 1967), cert. denied, 390 U.S.
    Nowell v. Nowell, 384 F.2d 951 (5th Cir. 1967), cert. denied, 390 U.S.
    ______ ______ ____ ______
    956 (1968), which held that the federal service of process rule was
    956 (1968), which held that the federal service of process rule was
    satisfied by service upon the defendant's landlady, due to the "sub-
    satisfied by service upon the defendant's landlady, due to the "sub-
    stantial nexus" between landlord and tenant. In Plushner, the Rhode
    stantial nexus" between landlord and tenant. In Plushner, the Rhode
    ________
    Island Supreme Court explicitly called attention to the fact that
    Island Supreme Court explicitly called attention to the fact that
    Nowell had distinguished between service upon the landlord and "ser-
    Nowell had distinguished between service upon the landlord and "ser-
    ______
    vice upon a neighboring tenant . . . [because] the substantial nexus
    vice upon a neighboring tenant . . . [because] the substantial nexus
    that exists between tenant and landlord does not exist between tenants
    that exists between tenant and landlord does not exist between tenants
    themselves." Plushner, 429 A.2d at 446, quoting Nowell, 384 F.2d at
    themselves." Plushner, 429 A.2d at 446, quoting Nowell, 384 F.2d at
    ________ ______
    953.
    953.
    Similarly, Lavey v. Lavey, 551 A.2d 692 (R.I. 1988), another case
    Similarly, Lavey v. Lavey, 551 A.2d 692 (R.I. 1988), another case
    _____ _____
    in which the defendant was found to have had "actual notice" of the
    in which the defendant was found to have had "actual notice" of the
    lawsuit, provides no support for LGP's position. The Lavey court
    lawsuit, provides no support for LGP's position. The Lavey court
    _____
    found that a residence, at which the defendant had dinner daily and
    found that a residence, at which the defendant had dinner daily and
    occasionally showered, watched television and picked up mail, could be
    occasionally showered, watched television and picked up mail, could be
    included within a broad interpretation of "dwelling house or . . .
    included within a broad interpretation of "dwelling house or . . .
    usual place of abode. . . ." Id. at 694-695. The present record is
    usual place of abode. . . ." Id. at 694-695. The present record is
    ___
    insufficiently developed to support such a finding.
    insufficiently developed to support such a finding.

    9

















    conduct, or failure to assert the defense. See Neirbo Co. v. Bethle-
    ___ __________ _______

    hem Shipbuilding Corp., 308 U.S. 165, 168 (1939); General Contracting
    ______________________ ___________________

    & Trading Co., 940 F.2d at 22; Marcial Ucin, S.A. v. SS Galicia, 723
    _____________ __________________ __________

    F.2d 994, 996 (1st Cir. 1983). As Feiger assiduously attempted to

    assert the defense before the district court, we find no waiver.

    Feiger first raised the defense by motion on June 4, 1990, the

    day of the scheduled hearing on LGP's claim for damages, thereby

    precluding waiver under Fed. R. Civ. P. 12(h)(1). See Roque v. United
    ___ _____ ______

    States, 857 F.2d 20, 21 (1st Cir. 1988); Glater v. Eli Lilly & Co.,
    ______ ______ ________________

    712 F.2d 735, 738 (1st Cir. 1983). At no time did Feiger expressly

    submit to the exercise of jurisdiction by the district court. More-

    over, Feiger's conduct did not constitute participation in, or encour-

    agement of, the district court proceedings so as to amount to waiver

    by conduct. See United States use of Combustion Systems Sales, Inc.
    ___ ____________________________________________________

    v. Eastern Metal Products & Fabricators, Inc., 112 F.R.D. 685, 687
    ____________________________________________

    (M.D.N.C. 1986) (collecting cases and concluding that though cases

    present "markedly different situations, [they] have the common factors

    of dilatoriness and participation in, or encouragement of, judicial

    proceedings"); see also General Contracting & Trading Co., 940 F.2d at
    ___ ____ _________________________________

    22 (collecting cases). Feiger did not participate in any hear-

    ing,*** see, e.g., Wyrough & Loser, Inc. v. Pelmor Laboratories,
    ___ ____ _______________________ ____________________

    ____________________

    ***Feiger's unsuccessful attempt to participate in the June 4 hearing
    ***Feiger's unsuccessful attempt to participate in the June 4 hearing
    on LGP's claim for damages was not a waiver, since New York counsel
    on LGP's claim for damages was not a waiver, since New York counsel
    stated explicitly that he intended to challenge the sufficiency of
    stated explicitly that he intended to challenge the sufficiency of
    service of process at the hearing. See Marcial Ucin, 723 F.2d at 997
    service of process at the hearing. See Marcial Ucin, 723 F.2d at 997
    ___ ____________
    ("general appearance by a defendant does not constitute a waiver of
    ("general appearance by a defendant does not constitute a waiver of
    the defense of lack of jurisdiction over the person").
    the defense of lack of jurisdiction over the person").

    10

















    Inc., 376 F.2d 543, 547 (3d Cir. 1967) (finding waiver where defendant
    ____

    attended preliminary injunction hearing), seek affirmative relief,

    see, e.g., General Contracting & Trading Co., 940 F.2d at 23-24
    ___ ____ ____________________________________

    (bringing independent action arising out of same transactional core

    constitutes implied submission), or lend an appearance of submission

    through extended inaction, see, e.g., Marcial Ucin, 723 F.2d at 997
    ___ ____ ____________

    (waiver found after defendant filed appearance, attended depositions,

    and waited four years before raising defense).

    Feiger justly cannot be deemed to have submitted to the jurisdic-

    tion of the district court by filing objections to the magistrate

    judge's proposed findings and recommended disposition as was required

    by 28 U.S.C. 636(b)(1) and Fed. R. Civ. P. 72(b) in order to pre-

    serve his right to de novo review of the recommended disposition. The
    __ ____

    magistrate judge did not address Feiger's specific challenge to the

    sufficiency of service of process, nor determine the manner of service

    sufficient under Rhode Island law. Thus, Feiger surely would have

    been found to have waived the right to de novo review by the district
    __ ____

    court had he not objected to the recommended disposition as required

    by section 636(b)(1) and rule 72(b). See Park Motor Mart, Inc. v.
    ___ ______________________

    Ford Motor Co., 616 F.2d 603 (1st Cir. 1980). In these circumstances,
    ______________

    Feiger's objections impliedly reaffirmed his consistent opposition to

    the district court's exercise of personal jurisdiction before the







    11

















    magistrate judge.**** It would represent a distortion of the waiv-

    er doctrine to construe Feiger's objections to the proposed findings

    and recommended disposition as a waiver of the right to contest

    personal jurisdiction, especially since Feiger vigorously pursued the

    service of process issue before the magistrate judge from the outset

    and the magistrate judge made no specific finding that the manner of

    service effected on Feiger was sufficient. Rather, by raising the

    service of process issue in the June 4 and July 26 motions filed with

    the magistrate judge and again in his postjudgment motion to the

    district court under rule 60(b)(4), Feiger promptly, plainly and

    consistently preserved his personal jurisdiction defense based on

    defective service of process.

    The default judgment is vacated and the case is remanded to the
    __________________________________________________________________

    district court for further proceedings consistent with this opinion;
    ______________________________________________________________________

    costs to appellant.
    __________________






    ____________________

    ****When Feiger filed objections to the magistrate judge's proposed
    ****When Feiger filed objections to the magistrate judge's proposed
    findings and recommended disposition, he requested that the district
    findings and recommended disposition, he requested that the district
    court "conduct a new hearing with all parties present and represented
    court "conduct a new hearing with all parties present and represented
    so that the facts in this very complicated commercial transaction can
    so that the facts in this very complicated commercial transaction can
    be brought before the Court and an appropriate decision made." In the
    be brought before the Court and an appropriate decision made." In the
    circumstances of the present case, Feiger's statement did not "un-
    circumstances of the present case, Feiger's statement did not "un-
    equivocally show an intention to submit to the district court's
    equivocally show an intention to submit to the district court's
    jurisdiction." Jardines Bacata, Ltd., 878 F.2d at 1559 (waiver of
    jurisdiction." Jardines Bacata, Ltd., 878 F.2d at 1559 (waiver of
    ______________________
    right to challenge personal jurisdiction may be found only if there is
    right to challenge personal jurisdiction may be found only if there is
    no other reasonable explanation of the conduct). On June 4, Feiger
    no other reasonable explanation of the conduct). On June 4, Feiger
    had challenged the sufficiency of service of process; he reasserted
    had challenged the sufficiency of service of process; he reasserted
    the same defense on July 26. There was no unequivocal showing of an
    the same defense on July 26. There was no unequivocal showing of an
    intention to submit to the jurisdiction of the district court.
    intention to submit to the jurisdiction of the district court.

    12