Opinion
Case No. 05-21478REF, Adv. No. 05-2123.
April 27, 2006
ORDER
AND NOW, this 27th day of April, 2006, it is ORDERED that the Motion filed by Defendant, Option One Mortgage Corporation, and joined in by Defendant, Wells Fargo Bank, N.A., solely in its capacity as Trustee of the Option One Mortgage Loan Trust 2000-1, To Reopen this Adversary Proceeding, To Vacate the Default Judgment entered on September 27, 2005, and To Dismiss this Adversary Complaint is GRANTED IN PART AND DENIED IN PART as follows:
The September 27, 2005 Order was entered by my predecessor, the Honorable Thomas M. Twardowski, based upon Option One's failure to respond to the complaint in this matter.
IT IS HEREBY ORDERED that the Motion To Vacate the Default Judgment entered against Defendants on September 27, 2005, is GRANTED because we find that the Summons and Complaint were not properly served upon Defendants, see Golden v. The Guardian (In re Lenox Healthcare, Inc.), 319 B.R. 819, 821-22 (Bankr. D. Del 2005); Sun Healthcare Group, Inc. v. Mead Johnson Nutritional (In re Sun Healthcare Group, Inc.), Adv. Proc. 01-7671, Adv. Proc. 01-7480, No. 99-03657 (MFW), 2004 WL 941190, at * 2 (Bankr. D. Del. April 30, 2004); see also Hemmerich Ind., Inc. v. Moss Brown Co., 114 F.R.D. 31, 32 (E.D. Pa. 1987); see also Gold Kist, Inc. v. Laurinburg Oil Co., 756 F.2d 14, 19 (3d Cir. 1985); and
We need not "reopen" this adversary proceeding to consider Defendants' motion to vacate the default judgment. Sun Healthcare Group, Inc. v. Mead Johnson Nutritional (In re Sun Healthcare Group, Inc.), Adv. Proc. 02-7671, Adv. Proc. 01-7480, No. 99-03657 (MFW), 2004 WL 941190, at *1 (Bankr. D. Del. April 30, 2004).
Fed R. Bankr. P. 7004(b)(3) requires that service by first class mail upon a domestic corporation be addressed to "the attention of an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process." Golden v. The Guardian (In re Lenox Healthcare, Inc.), 319 B.R. 819, 821-22 (Bankr. D. Del 2005);Sun Healthcare Group, Inc. v. Mead Johnson Nutritional (In re Sun Healthcare Group, Inc.), Adv. Proc. 01-7671, Adv. Proc. 01-7480, No. 99-03657 (MFW), 2004 WL 941190, at * 2 (Bankr. D. Del. April 30, 2004); see also Hemmerich Ind., Inc. v. Moss Brown Co., 114 F.R.D. 31, 32 (E.D. Pa. 1987). In the case before us, Plaintiff failed to follow this procedure. Instead, Plaintiff attempted to serve the Summons and Complaint upon each Defendant by first class mail addressed to a post office box. This procedure is ineffective. As recognized by the Bankruptcy Court in Lenox Healthcare, 319 B.R. at 821-22:
Rule 7004(b)(3) of the Federal Rules of Bankruptcy Procedure provides that service of process may be made by first class mail upon a corporation by addressing it to "the attention of an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process . . ." Fed.R.Bankr.P. 7004(b)(3). This requires that service of process be addressed to the appropriate party by name or by title. (citations omitted).
Because "nationwide service of process by first class mail is a rare privilege which should not be abused or taken lightly," courts have required strict compliance with Rule 7004(b)(3). (citation omitted). Courts vary on the specifics required: some courts require that it be addressed to a person by name, while others require that it be addressed by title. However, merely addressing it to a post office box is not sufficient.
Accordingly, we find that Plaintiff's failure to address the service of process to the attention of an officer or agent, either by name or by title, of each Defendant violated the requirements of Fed.R.Bankr.P. 7004(b)(3), and rendered Plaintiff's service of process ineffective. As the Third Circuit has held, "[A] default judgment entered when there has been no proper service of the complaint is, a fortiori, void, and should be set aside." Gold Kist, Inc. v. Laurinburg Oil Co., 756 F.2d 14, 19 (3d Cir. 1985), see also Sun Healthcare, 2004 WL 941190 at * 2. We therefore grant Defendants' Motion to Vacate the Default Judgment. We also find support for our decision in the general principle that default judgments are not favored and any doubts should be resolved in favor of setting aside the default and reaching a decision on the merits, Gross v. Stereo Component Systems, Inc., 700 F.2d 120, 122 (3d Cir. 1983).
IT IS FURTHER ORDERED that the Motion to Dismiss this Adversary Complaint is DENIED because good cause exists to deny Defendants' Motion in that we find no reason to find that Plaintiff acted in bad faith when he attempted to serve the Summons and Complaint upon Defendants and Defendants now have actual notice, knowledge, and receipt of the Complaint, see generally Sun Healthcare, 2004 WL 941190, at *3-5; and
IT IS FURTHER ORDERED that the default judgment entered by the Honorable Thomas M. Twardowski in this adversary proceeding on June 14, 2005, is hereby VACATED sua sponte as void because we find, for the reasons set forth in footnote 3, supra, that the Summons and Complaint were not properly served upon Defendants, which renders the June 14, 2005, default judgment void, see Lenox Healthcare, 319 B.R. at 821-22; Sun Healthcare, 2004 WL 941190, at * 2; see also Hemmerich Ind., 114 F.R.D. at 32;see also Gold Kist, 756 F.2d at 19; and
IT IS FURTHER ORDERED that each Defendant shall file, within twenty (20) days of the date of this Order, a pleading in response to the Complaint.
We find that Defendants have actual notice, knowledge, and receipt of the Complaint. Therefore, in the interests of preserving judicial resources and the resources of the parties, we shall not require the Clerk to issue an amended summons and we shall not require that Plaintiff serve an amended summons and complaint upon Defendants. Instead, we deem Defendants as having now been served with the Summons and Complaint and we direct that each Defendant file a response to the Complaint within twenty (20) days of the date of this Order.