Matt Friedman v. Nicholas Schiano

Case: 18-10742 Date Filed: 06/07/2019 Page: 1 of 26
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-10742
Non-Argument Calendar
________________________
D.C. Docket No. 9:16-cv-81975-BB
MATT FRIEDMAN,
an individual,
SCALE MEDIA INC.,
a New York corporation,
Plaintiffs - Appellees,
versus
NICHOLAS SCHIANO,
d.b.a. HotWireMedia.com,
M&M ENTERTAINMENT, INC.,
a Florida corporation,
BARMITZVAHS.COM, INC.,
a Florida corporation,
Defendants - Appellants.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(June 7, 2019)
Case: 18-10742 Date Filed: 06/07/2019 Page: 2 of 26
Before MARTIN, NEWSOM, and BRANCH, Circuit Judges.
PER CURIAM:
This appeal stems from the district court’s refusal to vacate an
approximately $1.3 million default judgment. The appeal turns on two issues:
(1) whether the defendant was properly served, and (2) whether the defendant had
good cause for failing to appear. The district court found, as a factual matter, that
the defendant was properly served. It further refused to set aside the default
judgment after concluding the defendant, despite knowing about the lawsuit, had
not adequately explained his months-long failure to contact the court. We affirm.
I.
A.
On December 8, 2016, Matt Friedman and his company, Scale Media, Inc.,
sued Nicholas Schiano and his companies, M&M Entertainment, Inc. and
Barmitzvahs.com, Inc. 1 Friedman asserted two causes of action, one common law
(defamation per se) and one statutory (violation of the Florida Deceptive and
Unfair Trade Practices Act). Friedman alleged that Schiano posted defamatory
messages on numerous websites, using words like “fraud,” “scam,” or “crime”
over 325 times to describe Friedman. Attached to the complaint were numerous
1
As will become clear, the relevant parties are Friedman and Schiano. For ease, and
because the two individuals had complete control over the other parties in this case, we generally
refer only to the individuals.
2
Case: 18-10742 Date Filed: 06/07/2019 Page: 3 of 26
instances of Schiano’s alleged defamation, including a screenshot of the Scale
Media webpage on which Schiano had superimposed a large warning sign that said
“SCAM” and the message “SCAMS ARE CRIMES | HELP STOP THEM.”
Friedman contended Schiano had falsely accused him of credit card fraud,
cybercrimes, Internet scams, phone sales fraud, theft, and hacking Schiano’s
website. As Friedman later explained at a hearing, “Schiano was essentially able
to flood the Internet with so many of these defamatory websites that if anyone
Googled [Friedman’s] name . . . all they would see would be fraud and scam
alerts.” The root of this animus? As Friedman tells it, the two men had previously
worked together, and when Friedman left to start his own related business, Schiano
did not take kindly to the competition.
Schiano did not answer or otherwise respond to the complaint. On January
6, 2017, the district court clerk entered a default against him. See Fed. R. Civ. P.
55(a). On the day of the default, the district court entered a preliminary injunction,
making findings of facts that Schiano’s statements constituted defamation per se
and requiring all defamatory messages be removed. Friedman moved, pursuant to
Rule 55(b) of the Federal Rules of Civil Procedure, 2 for a final default judgment.
2
Rule 55(b)(2) provides that if the plaintiff does not seek a sum certain, he must apply to
the court for a default judgment. The court may then “conduct hearings or make referrals—
preserving any federal statutory right to a jury trial—when, to enter or effectuate judgment, it
needs to: (A) conduct an accounting; (B) determine the amount of damages; (C) establish the
truth of any allegation by evidence; or (D) investigate any other matter.”
3
Case: 18-10742 Date Filed: 06/07/2019 Page: 4 of 26
The district court granted that motion and entered a final default judgment against
Schiano (and made its preliminary injunction permanent) on January 17, 2017.
On March 2, 2017, the district court held a hearing on damages. At that
hearing, Friedman informed the court that, although some of the websites had been
taken down, some websites remained live; Friedman was working with third-party
providers to take them down. Friedman testified that after he left to compete with
Schiano, Schiano “went berserk. When he found out that we had opened our own
company, his immediate reaction was to call me, my family, my mom, my dad, my
brother, harass us, telling us that he was going to destroy our lives, telling me he
was going to pay me a visit and hurt me.” Friedman also played a voicemail
message left by Schiano in which he said:
[Y]ou can be sure I’m a f—ing hell of a lot better at getting number
one results in f—ing Google then you’ll ever be. . . . I’m a f—ing
millionaire. I’m f—ing semi-retired. I got nothing better to do than
all day now to stay on the f—ing Internet and ruin your f—ing life.
Schiano also asserted, in this voicemail and another, that he was forwarding
information to the police. Friedman further testified that Schiano would post
pictures of his family members (including his one-year old nephew), his parents’
addresses (including when they moved), and his bank account information. As he
put it, “There’s not anytime I get together with my family or anytime I see
anybody and this isn’t what they talk about. Every time, they ask me.” Schiano’s
remarks about Friedman came up when anyone Googled Friedman’s name,
4
Case: 18-10742 Date Filed: 06/07/2019 Page: 5 of 26
Friedman said, so he lost out on dates, friends, and business. In fact, Friedman
said, Schiano’s conduct resulted in Friedman closing his party-planning business
completely.
On April 28, 2017, the district court entered a judgment on damages, 3 fees,
and costs, awarding Friedman $640,000 in compensatory damages and $640,000 in
punitive damages.4 Pursuant to Fla. Stat. § 501.2105, the court also awarded
attorneys’ fees and costs in the amount of $30,535.08. The court expressly found
that Friedman had submitted “clear and convincing evidence . . . of intentional
misconduct sufficient to support an award of punitive damages.” The court
credited the testimony recounted above. It further found, as a matter of fact, that
Schiano had committed at least 64 separate instances of defamation, posting on at
least 30 different websites and defaming Friedman to at least 34 individuals.
B.
On March 23, 2017—before the damages award but well after the final
default judgment order—Schiano sent an email to the court. The email began: “I
did not receive notice of this law suit. I do not live at my home of record. I rent
my home to 3 different strangers.” He explained that he had learned of the lawsuit
3
The court limited the damages award to the defamation cause of action; to prevent the
possibility of double recovery, it did not permit recovery under the Florida Deceptive and Unfair
Trade Practices Act, as any damages would have arisen from the same harmful conduct.
4
Fla. Stat. § 768.72 authorizes punitive damages in cases involving “intentional
misconduct or gross negligence.”
5
Case: 18-10742 Date Filed: 06/07/2019 Page: 6 of 26
only because his email account had been shut down by the court’s injunction. He
asserted the things he posted online were true and insisted that “Friedman has
committed slander on me, not me on him.” Indeed, Schiano claimed Friedman had
falsely accused him of child molestation, rape, and drug addiction. He also
asserted “extreme financial hardship” and inability to afford an attorney.
Nevertheless, he requested “an appearance in court and an appeal to your January
6, 2016 order” (the preliminary injunction). 5
On May 19, 2017, Schiano, through counsel, filed a motion under Rule 60 of
the Federal Rules of Civil Procedure to vacate the default judgment and judgment
on damages and fees. To explain his late arrival to the case, Schiano contended he
was never properly served. The returns of service showed that the complaints and
other documents were served on Katya Skripova, a resident of 3840 N.E. 17th
Avenue, Oakland Park, Florida 33334 (“3840”). 6 Schiano claimed in his Rule 60
motion, and still does on appeal, that Skripova is a “virtual stranger” who
happened to be his tenant at 3840. Schiano asserted that “Skripova is a Russian
immigrant who speaks only broken English.” At the time of service, Schiano
claimed, he resided with his girlfriend at a different property. In addition, Schiano
5
It is worth noting that although Schiano later said he was an “internet guy” who never
checks his physical mail, he also “claimed that he never received [Friedman’s] November 23,
2016 demand letter because it was sent to his ‘spam’ email, which he claims to never check.”
6
Schiano is the registered agent of both corporate defendants, M&M Entertainment, Inc.,
and Barmitzvahs.com, Inc., and 3840 was the address of service for both corporations.
6
Case: 18-10742 Date Filed: 06/07/2019 Page: 7 of 26
made various arguments that he again presses on appeal and that we address
below.
The motion to vacate was fully briefed. As part of that briefing, Friedman
submitted an affidavit from the process server. The process server averred that he
confirmed 3840 was Schiano’s usual place of abode. He “specifically asked Ms.
Skripova whether Mr. Schiano resided at [3840] on the date of service. She
confirmed that he did.” When he asked whether Schiano was home, “Skripova
explained that while Mr. Schiano currently lived at [3840] with her that he was not
home at the moment, but was expected to return home later that afternoon.” And
“[w]hile Ms. Skripova had a slight foreign accent, it was apparent that she fully
understood and comprehended our discussion and the representations she was
making regarding Mr. Schiano residing at” 3840. Thus, the process server
believed Skripova understood when he explained “the nature of the documents
being served on her for Mr. Schiano,” and he believed her when “she confirmed
she would deliver them to Mr. Schiano.”
After briefing and oral argument (at which Schiano testified), the district
court denied the motion to vacate the default judgment. The court first explained
that, despite Schiano’s request, Rule 55(c) of the Federal Rules of Civil Procedure
was an improper basis for vacating the judgment. That Rule provides, “The court
may set aside an entry of default for good cause, and it may set aside a final default
7
Case: 18-10742 Date Filed: 06/07/2019 Page: 8 of 26
judgment under Rule 60(b).” Although the clerk had automatically entered a
default in the case, the court had directed the clerk to enter a default judgment,
which Rule 55(c) itself says is evaluated for vacatur under Rule 60(b). Thus, the
court explained, Schiano needed to meet one of the six bases for relief under Rule
60(b).7 The court noted two of those bases potentially applied here: the judgment
being void for lack of personal jurisdiction (Rule 60(b)(4)), or “mistake
inadvertence, surprise, or excusable neglect” (Rule 60(b)(1)). 8
With respect to Rule 60(b)(4) and personal jurisdiction, the court found
Schiano had been properly served. Because the verified returns of service were
valid on their face, the court found that Schiano bore the burden under Florida law
of proving by clear and convincing evidence that 3840 was not his usual place of
abode at the time of service. The court concluded he did not meet that burden.
Although Schiano and his girlfriend submitted affidavits and Schiano testified he
7
The six bases are: (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 (whether previously called intrinsic
or extrinsic), 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;”
and (6) “any other reason that justifies relief.”
8
The court explained that a “party [] cannot seek relief under both Rule 60(b)(1) and
Rule 60(b)(6),” the Rule’s “catch-all provision.” See Solaroll Shade & Shutter Corp. v. Bio-
Energy Sys., Inc., 803 F.2d 1130, 1133 (11th Cir. 1986) (“Although 60(b)(6) provides a residual
equitable authority for vacating judgments, this Court consistently has held that 60(b)(1) and
(b)(6) are mutually exclusive.”).
8
Case: 18-10742 Date Filed: 06/07/2019 Page: 9 of 26
had not been living at 3840 during the relevant time, the court expressly found the
evidence was not credible.
Rather, evidence in the record indicated Schiano was aware of the lawsuit in
January of 2017. For example, a January 17, 2017, email from a webhost asked
Schiano to remove sites named in the court order—an email to which Schiano
responded the same day. Schiano also received an email on February 16, 2017,
that confirmed receipt of a fax Schiano had sent the day before regarding the “legal
lock” on Barmitzvahs.com. “Thus, not only was Schiano well aware of the Court’s
orders and injunctions, he was actively emailing his service providers and
inquiring about what he could do about them.” In contrast, the court found “no
reason to doubt the veracity of the process server’s affidavit or the statements of
Ms. Skripova contained within them.” Summarizing, the district court noted that
although Schiano offered “self-serving affidavits and testimony to support
Schiano’s position that he did not live at [3840] at the time of service, the Court
finds that such evidence lacks credibility in light of other, objective evidence in the
record that suggests [Schiano] had knowledge of the lawsuit as early as January
2017.”
With respect to excusable neglect pursuant to Rule 60(b)(1), the court
examined the totality of the circumstances. It noted that Schiano would suffer
serious financial loss, which weighed in his favor. But the court also noted that it
9
Case: 18-10742 Date Filed: 06/07/2019 Page: 10 of 26
had calculated the damages following notice and a full evidentiary hearing, so it
rejected Schiano’s claim he would prevail on the merits. Schiano continued to
support his truth defense only through his own conclusory assertions in his March
23, 2017, email to the district court. The court further explained that Friedman
would suffer prejudice if the judgment were vacated, as “setting aside the Court’s
orders and judgments would result not only in re-litigating the case, but also in the
reactivation of at least thirty defamatory websites that this Court has already found
caused [Friedman] reputational and monetary harm.” Finally, for reasons
recounted above, the court also concluded Schiano had not given good cause for
failure to make a timely appearance. Beyond service of the complaint, Friedman
sent copies of the following to 3840: motion for entry of clerk’s default; motion for
preliminary injunction; motion for default judgment; motion for contempt; and
supplemental memorandum on damages. From the date of service, it took Schiano
over three months to contact the court and over five months to file his motion;
from the date of the January 17, 2017, email to the webhost, it took Schiano more
than two months to reach out to the court and more than four months to file the
motion; and from the date of the February 15, 2017, fax, it took Schiano over a
month to reach out to the court and more than three months to file the motion. In
any of the scenarios, the court found the delay was not excusable.
10
Case: 18-10742 Date Filed: 06/07/2019 Page: 11 of 26
The district court also found it notable that Schiano “represented to various
government agencies” that 3840 was his address and the address of the registered
agent of the corporate defendants. Active filings with the Florida Department of
State indicated that 3840 was the “principal place of business, registered agent
address, and mailing address” of the corporate defendants. As recently as
“February 7, 2017, Schiano named himself the registered agent for
BarMitzvahs.com, Inc. and specified [3840] as the mailing address for the
corporation and the registered agent.”9 As the registered agent for the corporate
defendants “Schiano had, and continues to have, an obligation to keep the
authorities apprised of the registered agent and registered office for service, and to
be available for such service.”
The court concluded: “To vacate the judgments even though [Schiano]
make[s] a hollow claim that [he] did not receive mail at [his] last known address
would be to reward [him] for [his] failure to adhere to [his] obligations.” Thus, the
court found no excusable neglect and declined to vacate the judgment.
9
“What’s more,” said the district court, “in two separate filings with the Broward County
Property Appraiser, Schiano provided [3840] as his personal mailing address. . . . In fact,
Schiano claimed [3840] as his legal homestead, a status for which he obtained tax benefits from.
. . . A warranty deed executed in February 2017 also shows that Schiano identified [3840] as his
then-current address. Corporate Defendants, and Schiano in particular, cannot expect to hold
[3840] out to the public to be their legal address—and receive benefits from doing so—without
accepting the concomitant responsibilities.”
11
Case: 18-10742 Date Filed: 06/07/2019 Page: 12 of 26
Schiano then moved to alter or amend the judgment under Rule 59(e) of the
Federal Rules of Civil Procedure—a request the district court denied in a written
order. This appeal followed.
II.
Schiano first challenges the default judgment, asserting it is void for lack of
valid service of process and lack of personal jurisdiction.
A.
“We review the district court’s ruling on a Rule 60(b)(4) motion to set aside
default judgment for voidness de novo.” Architectural Ingenieria Siglo XXI, LLC
v. Dominican Republic, 788 F.3d 1329, 1337 (11th Cir. 2015). We review for
clear error any factual findings regarding sufficiency of service. See Fed. R. Civ.
P. 52(a)(6); 10 Prewitt Enters., Inc. v. Org. of Petrol. Exporting Countries, 353 F.3d
916, 920 (11th Cir. 2003). “When findings are based on determinations regarding
the credibility of witnesses, Rule 52(a) demands even greater deference to the trial
court’s findings; for only the trial judge can be aware of the variations in demeanor
and tone of voice that bear so heavily on the listener’s understanding of and belief
in what is said.” Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 575
(1985).
10
“Findings of fact, whether based on oral or other evidence, must not be set aside unless
clearly erroneous, and the reviewing court must give due regard to the trial court’s opportunity to
judge the witnesses’ credibility.” Fed. R. Civ. P. 52(a)(6).
12
Case: 18-10742 Date Filed: 06/07/2019 Page: 13 of 26
B.
Rule 4(e) of the Federal Rules of Civil Procedure governs service of process
within a judicial district of the United States. Under Rule 4(e)(1), an individual
may be served 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.” In this case, that state is Florida, whose service-of-process
statute provides, “Service of original process is made by delivering a copy of it to
the person to be served with a copy of the complaint, petition, or other initial
pleading or paper or by leaving the copies at his or her usual place of abode with
any person residing therein who is 15 years of age or older and informing the
person of their contents.” Fla. Stat. § 48.031(1)(a). A corporation may be served
by serving its registered agent. Id. § 48.081(3)(a). “If the address for the
registered agent . . . is a residence . . ., service on the corporation may be made by
serving the registered agent . . . in accordance with s. 48.031.” Id. § 48.081(3)(b).
The process server served Schiano via substitute service on his tenant,
Skripova. Schiano makes much of the fact that Skripova was merely a “rental
tenant” who had no relation to him or his corporations. But the Florida statute
requires only that service be effected on “any person,” 15 years of age or older,
13
Case: 18-10742 Date Filed: 06/07/2019 Page: 14 of 26
“residing” at the defendant’s usual place of abode. Fla. Stat. § 48.031(1)(a).11 A
tenant, unlike a temporary houseguest, is a person “residing therein” for purposes
of the statute. Cf. Magazine v. Bedoya, 475 So. 2d 1035, 1035 (Fla. 3d DCA 1985)
(holding a six-week visit was long enough to be a “person residing therein” for
purposes of § 48.031(1)(a)).
The question, then, is whether 3840 was Schiano’s “usual place of abode”—
where he physically lived at the time of service. See Shurman v. Atl. Mortg. & Inv.
Corp., 795 So. 2d 952, 956 (Fla. 2001). “While a plaintiff bears the ultimate
burden of proving valid service of process, a ‘return of service that is regular on its
face is presumed to be valid absent clear and convincing evidence presented to the
contrary.’” Robles-Martinez v. Diaz, Reus & Targ, LLP, 88 So. 3d 177, 179 (Fla.
3d DCA 2011) (quoting Telf Corp. v. Gomez, 671 So. 2d 818, 818 (Fla. 3d DCA
1996)) (internal citation omitted). “Regular on its face” means the return of
service attests to all the information required by the service statute. See id. at 180.
This information includes a defendant’s usual place of abode. See id.; Busman v.
State, Dep’t of Revenue, 905 So. 2d 956, 957–58 (Fla. 3d DCA 2005) (requiring
11
The statute previously required substitute service on “some person of the family over
fifteen years of age.” See Wakeman v. Farish, 356 So. 2d 1323, 1324 (Fla. 4th DCA 1978)
(quoting Fla. Stat. § 48.031 (1975)). That the Florida Legislature amended it to say “any person”
severely undermines Schiano’s argument.
14
Case: 18-10742 Date Filed: 06/07/2019 Page: 15 of 26
defendant to present clear and convincing evidence that place of regular-on-its-face
service was not usual place of abode).
The returns in this case were regular on their face: they named Schiano (in
his individual capacity or as a registered agent); they stated the documents that
were delivered; they identified Skripova as a co-resident 15 years of age or older to
whom the documents were delivered; and they listed 3840 as Schiano’s usual place
of abode. The burden thus shifted to Schiano to invalidate the returns via clear and
convincing evidence.
Clear and convincing evidence “must be of such weight that it produces in
the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the
truth of the allegations sought to be established.” Slomowitz v. Walker, 429 So. 2d
797, 800 (Fla. 4th DCA 1983). Under this exacting standard, we cannot say the
district court clearly erred in concluding that Schiano failed to prove that 3840 was
not his usual place of abode.
“The burden of proof in a Rule 60(b)(4) motion rests with the defendant.” In
re Worldwide Web Sys., Inc., 328 F.3d 1291, 1298–99 (11th Cir. 2003). As
Schiano admits, the only affidavits regarding where Schiano lived at the time were
his and his girlfriend’s. But the district court expressly found the affidavits not
credible. In particular, the court found that “not only was Schiano well aware of
the Court’s orders and injunctions, he was actively emailing his service providers
15
Case: 18-10742 Date Filed: 06/07/2019 Page: 16 of 26
and inquiring about what he could do about them.” “On the other hand, the Court
has no reason to doubt the veracity of the process server’s affidavit or the
statements of Ms. Skripova contained within them.” These findings are due
significant deference, in light of our standard of review and what Florida law
requires Schiano to produce in order to invalidate the return of service.
Schiano says the process server’s post-service affidavit was “dubious” on its
face. He speculates that the process server did not have enough time to evaluate
whether Skripova understood the nature of the documents. 12 But the district court
did not need to agree with that speculation, nor did it need to agree with the
unsupported, contested assertion that Skripova spoke only “broken English.”
Likewise, Schiano’s argument that Skripova’s status as a tenant “clearly and
convincingly” shows 3840 was not Schiano’s usual place of abode because “very
often when an owner rents out his or her property the owner resides somewhere
else” is unsupported and unconvincing.
Schiano also suggests the evidence he presented was “unimpeached.” To
the contrary, Friedman submitted a plethora of evidence in support of his
contention that 3840 was Schiano’s usual place of abode, and Schiano’s driver
license—issued on November 16, 2016, 26 days before service—listed 3840 as his
12
Schiano states the affidavit was based on hearsay from declarant Skripova, although he
does not seem to argue that the hearsay itself invalidates the affidavit.
16
Case: 18-10742 Date Filed: 06/07/2019 Page: 17 of 26
address. The district court further noted that a “warranty deed executed in
February 2017 [] shows that Schiano identified [3840] as his then-current address.”
Schiano also identified 3840 as his homestead and received concomitant tax
benefits. 13 And “in two separate filings with the Broward County Property
Appraiser, Schiano provided [3840] as his personal mailing address.” The
corporate defendants’ “active filings with the Florida Department of State indicate
that [3840] is their principal place of business, registered agent address, and
mailing address.” Accordingly, Schiano’s evidence was not “unimpeached.”
13
Schiano argues in Part I of his reply brief that Friedman took the opposite position on
Schiano’s homestead in bankruptcy proceedings, which Schiano initiated in January of 2018.
Specifically, Schiano contends the trustee took the position, which Friedman joined, that Schiano
was not living at 3840 but was instead living with his girlfriend. Schiano says we should
judicially estop Friedman from taking a contrary position in this proceeding. As a threshold
matter, the bankruptcy court authorized Schiano to pursue this appeal, relieving him from the
automatic stay. See Doc. 22 at 2, No. 18-10928-JKO (S.D. Fla. Bankr.). As to Schiano’s
argument, the time periods in the two cases are different, and the “conflict” in positions is
nebulous at best. In a May 16, 2018, meeting of creditors, Schiano claimed to be living at 3840.
See Doc. 116 at 14, No. 18-10928-JKO (S.D. Fla. Bankr.). He also said that he was living there
when he filed for bankruptcy but that, in the preceding months, he “could have been living” at
3840, or he “could have been living with [his] girlfriend” because he goes “back and forth.” Id.
at 17–18. What matters here is whether he lived at 3840 at the time of service in this lawsuit:
December 12, 2016. These portions of the bankruptcy proceedings do not shine any further light
on that issue or on Friedman’s position on it.
But all of that is beside the point. We decline to consider Schiano’s estoppel argument as
it was raised for the first time in Schiano’s reply brief. “It is well settled that a party cannot
argue an issue in its reply brief that was not preserved in its initial brief.” Tallahassee Mem’l
Reg’l Med. Ctr. v. Bowen, 815 F.2d 1435, 1446 n.16 (11th Cir. 1987). Schiano filed his initial
brief on August 6, 2018. Yet Friedman took his allegedly inconsistent position on July 12, 2018.
See Doc. 125 at 1, No. 18-10928-JKO (S.D. Fla. Bankr.). In addition, the district court
considered the homestead issue in its order, and as Schiano himself points out, Friedman argued
the issue strenuously in the district court. Schiano therefore could have made his judicial
estoppel argument in his initial brief. That Friedman pressed the homestead issue in his response
brief did not “open the door,” as Schiano argues, for him to introduce evidence of separate
proceedings in his reply.
17
Case: 18-10742 Date Filed: 06/07/2019 Page: 18 of 26
Nevertheless, that Schiano plainly knew of the lawsuit in January of 2017
does not obviate the need for proper service. Although service of process is about
notice, even defendants who otherwise acquire notice still have a right to be
properly served. Cf. McDaniel v. FirstBank Puerto Rico, 96 So. 3d 926, 928 (Fla.
2d DCA 2012) (quoting Shurman, 795 So. 2d at 954) (“Because of the
fundamental constitutional implications of service of process, ‘statutes governing
service of process are to be strictly construed and enforced.’”). But the district
court did not solely rely on Schiano’s knowledge of the lawsuit. The court was
entitled to credit the process server’s affidavit and the documentary evidence
against Schiano, and it was allowed to discredit Schiano’s testimony, especially in
light of its viewing it firsthand. See Anderson, 470 U.S. at 575. It analyzed the
record and concluded Schiano did not carry his heavy burden of rebutting the
facially valid return of service with clear and convincing evidence.14
The district court’s judgment is not void, and we therefore affirm the district
court’s denial of Schiano’s Rule 60(b)(4) motion.
III.
14
The district court erroneously stated, offhand, that Schiano did not contest Skripova’s
status as a co-resident, a point on which Schiano spends three pages of his initial brief. But the
error is meaningless because the district court considered the other evidence and concluded that
Schiano did, in fact, reside at 3840—which would have made him Skripova’s co-resident.
18
Case: 18-10742 Date Filed: 06/07/2019 Page: 19 of 26
Schiano also contends the district court erred in not finding good cause to
excuse his default. He contends the district court should have applied Rule 55(c)
instead of Rule 60(b)(1).
A.
“We review the district court’s denial of a Rule 60(b)(1) motion to set aside
a default judgment for excusable neglect for an abuse of discretion.” Architectural
Ingeneria, 788 F.3d at 1338. We also review for abuse of discretion a denial of a
motion under Rule 55(c). See Compania Interamericana Export-Import, S.A. v.
Compania Dominicana de Aviacion, 88 F.3d 948, 951 (11th Cir. 1996).
B.
1.
Schiano contends the district court should have construed his March 23,
2017, email as a motion to vacate the judgment. If the court had done so, the
argument goes, the “motion to vacate” would have been entered before the court’s
final judgment on damages. Thus, the court would have evaluated the motion
under Rule 55(c), whose “good cause” standard is more lenient than Rule 60(b)’s
“excusable neglect” standard.15
15
Nevertheless, Schiano relies heavily on our unpublished decision in Safari Programs,
Inc. v. CollectA International Limited, 686 F. App’x 737 (11th Cir. 2017), a Rule 60(b) case.
There, we explained that “the district court abused its discretion by failing to consider all
relevant factors and by failing to properly evaluate the factors that it did consider.” Id. at 744.
We found that the district court failed to consider relevant precedent. Id. Here, the district court
evaluated all relevant Rule 60(b) factors, and even distinguished the Safari opinion in denying
19
Case: 18-10742 Date Filed: 06/07/2019 Page: 20 of 26
Schiano relies chiefly on Dassault Systemes, SA v. Childress, 663 F.3d 832
(6th Cir. 2011), where the Sixth Circuit explained that its precedents require a
court to determine damages before entering a final default judgment. Id. at 839.
Here, the district court clerk entered a default on January 6, 2017, and the district
court entered its final default judgment on liability, along with its permanent
injunction, on January 17, 2017. But the judgment determining damages and fees
was not entered until April 28, 2017—more than a month after Schiano’s March
23, 2017, email.
We need not decide which of the district court’s judgments was truly “final”
so as to trigger Rule 60(b). Nor do we need to decide whether the district court
abused its discretion in declining to consider the March 23, 2017, email as a
motion to vacate. The reason is simple: Schiano fails to show good cause under
Rule 55(c), let alone excusable neglect under Rule 60(b). Cf. Vanderberg v.
Donaldson, 259 F.3d 1321, 1326 (11th Cir. 2001) (“We [] need not decide whether
Schiano’s Rule 59(e) motion. Our own review convinces us that Safari is indeed distinguishable.
For instance, in Safari, the “foreign defendant unfamiliar with litigation in United States courts”
sent a letter to the court one day after the clerk entered a default. Id. at 741, 745. Here,
Schiano—a domestic defendant who had long been aware of the litigation—sent an email two
and a half months after the clerk entered the default. Cf. Sloss Indus. Corp. v. Eurisol, 488 F.3d
922, 935 (11th Cir. 2007) (“The longer a defendant—even a foreign defendant—delays in
responding to a complaint, the more compelling the reason it must provide for its inaction when
it seeks to set aside a default judgment.”). More importantly, in Safari, the defendant “contended
that the judgment should be reopened . . . because [the plaintiff’s] filing of a duplicative lawsuit
against [the defendant] . . . was confusing and led [the defendant] to believe that [the plaintiff]
had abandoned the first case and intended to proceed with the second.” 686 F. App’x at 741.
Nothing similar happened here.
20
Case: 18-10742 Date Filed: 06/07/2019 Page: 21 of 26
Rules 15(a) and 59(e)’s more lenient standard applies to this pro se Rule 60(b)
motion: Plaintiff cannot even satisfy the Rule 15(a) abuse of discretion standard,
much less the more stringent Rule 60(b) standard.”).
Before we address that point, we note some problems with Schiano’s email-
as-a-motion theory. “[A]lthough we are to give liberal construction to the
pleadings of pro se litigants, ‘we nevertheless have required them to conform to
procedural rules.’” Albra v. Advan, Inc., 490 F.3d 826, 829 (11th Cir. 2007)
(quoting Loren v. Sasser, 309 F.3d 1296, 1304 (11th Cir. 2002)). An ex parte
email sent directly to a district judge is not an accepted method of filing a motion
under Rule 5 of the Federal Rules of Civil Procedure or under Rule 5.1 of the
Local Rules of the United States District Court for the Southern District of Florida.
Indeed, Rule 5(a)(1)(D) of the Federal Rules of Civil Procedure requires motions,
except those that may be validly heard ex parte, to be served on every party in a
case. Moreover, the March 23, 2017, email cannot be interpreted as a “motion” on
behalf of the corporate defendants because it is well settled that corporations may
appear only through attorneys. See Osborn v. Bank of U.S., 22 U.S. (9 Wheat.)
738, 830 (1824) (“A corporation, it is true, can appear only by attorney. . . .”);
accord Szteinbaum v. Kaes Inversiones y Valores, C.A., 476 So. 2d 247, 248 (Fla.
3d DCA 1985) (“It is well recognized that a corporation, unlike a natural person,
cannot represent itself and cannot appear in a court of law without an attorney.”).
21
Case: 18-10742 Date Filed: 06/07/2019 Page: 22 of 26
The district court stated that “the Court informed [Schiano] following his
email that the corporate Defendants could not file responses without
representation.” Schiano refers to the district court’s characterization as “a blatant
misstatement of fact.” In support of this truculent assertion, Schiano emphasizes
his testimony that the clerk’s office, not the judge, told him the corporate
defendants needed to be represented. Schiano suggests that it is somehow
significant that the courthouse staff and not the district judge told him that the
corporate defendants must be represented. Regardless, because Schiano does not
contest he had been expressly warned, we are not persuaded.
2.
Nevertheless, even if we were to conclude the district court abused its
discretion in not construing Schiano’s email as a motion to vacate, Schiano still
would not prevail on such a motion because he fails to demonstrate good cause.
Under Rule 55(c), a district “court may set aside an entry of default for good
cause . . . .” “We recognize that ‘good cause’ is not susceptible to a precise
formula, but some general guidelines are commonly applied. Courts have
considered whether the default was culpable or willful, whether setting it aside
would prejudice the adversary, and whether the defaulting party presents a
meritorious defense.” Compania Interamericana, 88 F.3d at 951 (citation
omitted). “[I]f a party willfully defaults by displaying either an intentional or
22
Case: 18-10742 Date Filed: 06/07/2019 Page: 23 of 26
reckless disregard for the judicial proceedings, the court need make no other
findings in denying relief.” Id. at 951–52.
First, Schiano has not demonstrated he had a meritorious defense. 16 Schiano
continues to insist on appeal that he had a valid truth defense to the defamation
claim. Yet he supports this assertion by citing only to contested documentary
evidence, including attachments to Friedman’s complaint—items the district court
expressly found defamatory as a matter of fact. An appellant “cannot establish a
meritorious defense simply by pointing to an alternate interpretation of []
testimony.” In re Worldwide Web Sys., 328 F.3d at 1296–97. It follows that an
appellant cannot establish a meritorious defense simply by pointing to factual
evidence already considered and rejected by the district court. There must be some
16
The parties argue over whether truth is an absolute defense to defamation under Florida
law. Florida’s Constitution provides, “In all criminal prosecutions and civil actions for
defamation the truth may be given in evidence. If the matter charged as defamatory is true and
was published with good motives, the party shall be acquitted or exonerated.” Fla. Const. art. 1
§ 4 (emphasis added). Florida courts, as we have previously noted, have interpreted this
provision to mean that truth is not an absolute defense in a defamation action; “good motives”
are also required. Finch v. City of Vernon, 877 F.2d 1497, 1504 (11th Cir. 1989) (“In Florida,
truth is not always an absolute defense to defamation. In order to avoid liability, a ‘good motive’
must also be shown.” (quoting Lewis v. Evans, 406 So. 2d 489, 492 n.2 (Fla. 2d DCA 1981)); see
also id. (“Armstrong does not assert that the evidence was insufficient for the jury to conclude he
acted with ill will.”). Schiano responds pointing to an unpublished federal district court case in
which the court opined that “[s]ubstantial truth is a complete defense to defamation, regardless of
the motives of the defamer. It is a common tenet of First Amendment law that true statements
are inactionable.” Carroll v. TheStreet.com, Inc., No. 11-CV-81173, 2014 WL 5474061, at *11
(S.D. Fla. July 10, 2014). In light of Finch, the Carroll court incorrectly remarked that the
“good motive” requirement “is not recognized” by the federal courts. Nevertheless, we need not
resolve this potential constitutional conflict. We simply note that the district court found
Schiano’s “defamation of Plaintiffs was malicious and committed with the specific intent of
causing harm to Plaintiffs.”
23
Case: 18-10742 Date Filed: 06/07/2019 Page: 24 of 26
analysis demonstrating why the district court erred. Such analysis is absent here.
The district court correctly concluded that Schiano failed to make the required
“affirmative showing of a defense that is likely to be successful.” Doc. 108 at 14
(quoting In re Worldwide Web Sys., 328 F.3d at 1296).
The district court was also correct in concluding that Friedman would be
prejudiced if it set aside the default judgment. As the court explained in its
November 14, 2017, order, “It has been almost a year since Plaintiffs filed their
Verified Complaint. While Defendants were idle, Plaintiffs and the Court devoted
significant time and resources in adjudicating Plaintiffs’ substantive claims.” The
court was, however, incorrect in stating that the defamatory websites it had
enjoined would necessarily be reactivated if the default judgment were set aside;
the court could have reinstated its preliminary injunction. But that issue is
tangential to the real prejudice Friedman would suffer: the cost of relitigating a
matter already decided when Schiano has offered no new evidence and no excuse
for his months-long delay in failing to appear. Indeed, Schiano still fails to offer a
good reason for his failure to timely appear. Schiano learned of the lawsuit by
January 17, failed to file anything with the court until March 23, and offered no
reason for the delay. We note that it would be perfectly reasonable to conclude
that Schiano exhibited a “reckless disregard for the judicial proceedings,” which
24
Case: 18-10742 Date Filed: 06/07/2019 Page: 25 of 26
would be sufficient on its own to bar him from relief. See Compania
Interamericana, 88 F.3d at 951–52.
Schiano asserts, again relying on Dassault, that the district court should have
resolved any “ambiguity” in his favor and concluded he learned of the lawsuit on
February 16, 2017, the date of his second record communication regarding the
lawsuit. He does so notwithstanding the January 17, 2017, email from his webhost
telling him to “remove all sites named in the court order”—an email to which he
responded an hour later not with “what court order?” but with “I need a day to
open a hosting account . . . . I will email you when that is complete.” Even
accepting Schiano’s assertion on appeal that he learned of this lawsuit “[c]irca
February 2017”—indeed, even assuming, arguendo, that he learned of the lawsuit
on the last day of the month—we cannot see why he would need more than three
weeks to contact the court when he argues so stridently that his livelihood
depended on these websites.
Finally, we concur with the practical concerns the district court articulated:
“Corporate Defendants, and Schiano in particular, cannot expect to hold [3840] out
to the public to be their legal address—and receive benefits from doing so—
without accepting the concomitant responsibilities.” “To vacate the judgments
even though Defendants make a hollow claim that they did not receive mail at their
25
Case: 18-10742 Date Filed: 06/07/2019 Page: 26 of 26
last known address would be to reward them for failure to adhere to their
obligations.”
In short, Schiano has failed to demonstrate good cause.
***
As we once remarked in reversing a district court for setting aside a default
judgment:
The district court, in granting the defendants’ motion to set aside the
default and the default judgment, provided no reason for granting the
motion other than its belief that the case ought to be decided on the
merits. This is certainly a noble sentiment; inherent in the adversary
system of justice is the idea that each side ought to be heard prior to a
court’s entry of final judgment. However, that same system requires
that the court have the power to compel parties to appear before it.
The threat of default (and default judgment) is the court’s primary
means of compelling defendants in civil cases to appear before the
court. If these defaults could be put aside without cause, the threat of
default would be meaningless, and courts would lose much of their
power to compel participation by civil defendants.
African Methodist Episcopal Church, Inc. v. Ward, 185 F.3d 1201, 1203 (11th Cir.
1999). This case perfectly illustrates that point.
The judgment of the district court is AFFIRMED. 17
17
Friedman’s motion to strike is DENIED as moot.
26