Summary
finding service on the Virgin Islands Housing Authority improper under Fed. R. Civ. P. 4(j) because there was no proof of service on the Governor
Summary of this case from Oliver v. V.I. Bureau of Internal RevenueOpinion
Civil No. 2008-73.
April 9, 2009
Flavia E. Logie, Esq., St. Croix, U.S.V.I., For the plaintiff. Ava Penn, Pro se defendant. Banco Popular De Puerto Rico, Pro se defendant. Virgin Islands Housing Finance Authority, successor in interest to the Government of the Virgin Islands Department of Housing, Parks, and Recreation, Pro se defendant. The Comfort Zone, Inc. Pro se defendant.
ORDER
The United States Department of Agriculture Rural Housing Service f/k/a Farmers Home Administration (the "USDA") initiated this debt and foreclosure action in May 2008. The USDA alleges that it loaned money to Ava Penn in September 1994 in exchange for a promissory note and a mortgage on Penn's property on St. Thomas, U.S. Virgin Islands. In March 1996 and April 2005, Penn allegedly executed Reamortization and Deferral Agreements in favor of the USDA, thereby modifying her mortgage payments. According to the USDA, Penn is in default on her obligations.
The USDA commenced this action to collect the debt Penn allegedly owes and to foreclose its mortgage on Penn's property. The USDA alleges that Banco Popular De Puerto Rico ("Banco Popular") and the Virgin Islands Housing Finance Authority, successor in interest to the Government of the Virgin Islands Department of Housing, Parks, and Recreation ("VIHA"), both have liens on the property subordinate to that of the USDA. The USDA further alleges that Banco Popular's mortgage secures other indebtedness of The Comfort Zone, Inc.
The record sheds little light on the circumstances of that indebtedness as well as the relationship of The Comfort Zone to this litigation. The summons, however, issued to The Comfort Zone indicates that Penn is its president.
The record contains documents purporting to show proof of service on all four defendants. The record does not reflect that any of the defendants have appeared in this matter. Default has not been entered against any of the defendants.
In December 2008, the USDA moved for default judgment against the defendants. That motion is pending. In March 2009, the USDA filed an amended motion for default judgment. That motion is also pending.
In its amended motion, the USDA asserts that this Court denied the USDA's first default judgment motion based on the USDA's failure to prove that the defendants were not in military service. The record does not substantiate that assertion. In fact, there is no evidence in the record that the Court has ruled on either of the USDA's default judgment motions.
Rule 55 of the Federal Rules of Civil Procedure sets forth a two-step process for a party seeking default judgment. A plaintiff must first obtain an entry of default from the clerk of the court, and then he may seek an entry of default judgment. See Fed.R.Civ.P. 55; Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986); Meehan v. Snow, 652 F.2d 274, 276 (2d Cir. 1981); see also 10A Fed. Prac. Proc. Civ. 3d § 2682 ("Prior to obtaining a default judgment under either Rule 55(b)(1) or Rule 55(b)(2), there must be an entry of default as provided by Rule 55(a).").
Here, the USDA seeks default judgment against parties without having obtained entries of default against those parties. Because obtaining an entry of default is the necessary predicate to a grant of default judgment, the USDA's motion for default judgment must be denied. See, e.g., Hagen v. Sisseton-Wahpeton Cmty. Coll., 205 F.3d 1040, 1042 (8th Cir. 2000); Peak v. District of Columbia, 236 F.R.D. 13, 15 (D.D.C. 2006) (denying a motion for default judgment where the plaintiff had not first sought an entry of default).
Furthermore, the documents that purport to show proof of service on The Comfort Zone and Banco Popular do not demonstrate compliance with Federal Rule of Civil Procedure 4(h). That rule provides that a corporation must be served "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[.]" Fed.R.Civ.P. 4(h). Here, the document purporting to show proof of service on The Comfort Zone does not specifically indicate the person on whom a copy of the summons and the complaint was served. Instead, that document states only that service of process was made on "the defendant" at a certain address. Similarly, the document purporting to show proof of service on Banco Popular states that process was served on "Lorraine Violet (Clerk) at BPPR Altona Branch St. Thomas VI 00802."
The document purporting to show proof of service on VIHA likewise appears not to comply with Federal Rule of Civil Procedure 4(j)(2), which provides that a "state-created governmental organization that is subject to suit must be served by . . . delivering a copy of the summons and of the complaint to its chief executive officer[.]" Fed.R.Civ.P. 4(j)(2). Here, the document submitted by the USDA states that VIHA was served by leaving a copy of the summons and the complaint with Julio Rhymer — whose association with VIHA is not indicated — and not the Governor of the Virgin Islands. See 48 U.S.C. 1591 ("The executive power of the Virgin Islands shall be vested in an executive officer whose official title shall be the 'Governor of the Virgin Islands'."). Furthermore, that document is unsworn and therefore fails to comply with Federal Rule of Civil Procedure 4(1).
Rule 4(1) provides that "[u]nless service is waived, proof of service must be made to the court. Except for service by a United States marshal or deputy marshal, proof must be by the server's affidavit." Fed.R.Civ.P. 4(1).
Federal Rule of Civil Procedure 4(m) requires the court to dismiss an action without prejudice if a defendant is not served within 120 days after the complaint is filed. See Fed.R.Civ.P. 4(m). That rule also authorizes the court to extend the time for service for an appropriate period if the plaintiff shows good cause for its failure to properly serve. See id.; see also Petrucelli v. Bohringer Ratzinger, 46 F.3d 1298, 1305-06 (3d Cir. 1995). Good cause requires "a demonstration of good faith on the part of the party seeking an enlargement and some reasonable basis for noncompliance within the time specified in the rules." MCI Telecomms. Corp. v. Teleconcepts, Inc., 71 F.3d 1086, 1097 (3d Cir. 1995) (citation omitted).
For the reasons stated above, it is hereby
ORDERED that the USDA shall show cause in writing, no later than 5:00 p.m. on April 22, 2009, why this matter should not be dismissed with respect to Banco Popular, VIHA and The Comfort Zone for lack of timely service; and it is further
ORDERED that the USDA's motion and amended motion for default judgment are DENIED without prejudice.