Opinion
99 CV 857 (ILG)
November 30, 2001
MEMORANDUM ORDER
In this student loan case, defendant Charles Folabit ("Folabit") moves the Court for an Order vacating a default judgment entered against him on April 14, 1999. Folabit asserts that he was "never properly served with any court papers or documents regarding this matter." (Memorandum of Law in Support of the Motion to Vacate Default Judgement [sic] ("Def. Mem.") at 1.) For the reasons set forth below, Folabit's motion is granted.
BACKGROUND
The government commenced this action on February 12, 1999, based on a delinquent student loan made to Folabit in 1979. (See Opposition to Vacation of Judgment ("Opp.") Ex. A.) On February 26, 1999, the government filed an affidavit of service, indicating that copies of the summons and complaint were delivered to "'JANE' Folabit, relative" at "581 Madison Street, Brooklyn, New York," on February 25, 1999, and that copies of the summons and complaint were mailed to Folabit at that same address on February 26, 1999. (See id.) No answer was filed on behalf of Folabit, and the government therefore moved for a default judgment in early April 1999. The Court granted the motion on April 14, 1999.
On February 5, 2000, the government moved for a writ of garnishment, seeking to garnish funds held by Folabit in a bank account at the Ledge Light Federal Credit Union ("Ledge Light"). No opposition from Folabit was filed, and thus the Court granted the motion on February 8, 2000. The writ of garnishment was served on Ledge Light shortly thereafter. On March 8, 2000, however, Ledge Light wrote to the Clerk of the Court, indicating that, although Folabit previously had a bank account at Ledge Light, the account was closed. Accordingly, there was nothing at Ledge Light to be garnished.
More than a year passed before the government next acted. Sometime in 2001, the government apparently received a copy of Folabit's credit report, indicating both a new address and a new employer for Folabit. (See Opp. ¶¶ 7-8.) Accordingly, on July 13, 2001, the government once again moved for a writ of garnishment, this time seeking to garnish wages earned by Folabit at his new employer, Phoenix Diversified ("Phoenix"). Folabit did not oppose the government's motion. The Court granted the motion on July 16, 2001. Approximately 25% of Folabit's bi-weekly paycheck — amounting to approximately $256.37 — began to be garnished on or about August 26, 2001. (See Answer of Garnishee Phoenix Diversified at 2-3.)
Obviously unhappy at the prospect of losing one-quarter of his wages, Folabit now moves the Court for an Order vacating the default judgment entered against him. Folabit states that "the reason why I am entitled to [such] relief . . . is the following: I was never properly served with any court papers or documents regarding this matter. Plaintiff claimed court papers were sent to 581 Madison St., Brooklyn on February 26th, 1999. I moved out of this address in 1997. Besides, I was out of the country January, February and March of 1999." (Def. Mem. at 1.)
The government has opposed Folabit's motion. The government states that the address used for service, 581 Madison Street, Brooklyn, New York, was Folabit's "last known address on file" when service was effected. (See Opp. ¶ 4.) The government also contends that Folabit was obligated, under 20 U.S.C. § 1077, to update the government with his current address; therefore, the government argues that Folabit should be estopped from asserting that service was improper. (See id.)
DISCUSSION
In evaluating a motion to vacate a default judgment, the court considers whether default was willful, whether defendant has a meritorious defense, and the level of prejudice that may occur to nondefaulting party if relief is granted. S.E.C. v. McNulty, 137 F.3d 732, 738 (2d Cir. 1998); United We Stand America, Inc. v. United We Stand, America New York, Inc., 128 F.3d 86, 89 (2d Cir. 1997). However, if service upon a defendant was improper, the court lacks personal jurisdiction over that defendant, and a default judgment entered against him must be vacated. Triad Energy Corp. v. McNell, 110 F.R.D. 382, 385 (S.D.N.Y. 1986).United States v. Cally, 197 F.R.D. 27, 28 (E.D.N.Y. 2000). In Cally, the Court was faced with nearly the exact same situation presented to this Court. There, the government attempted to collect on a defaulted student loan, and served the defendant at an address at which the defendant claimed he no longer resided when service was effected. 197 F.R.D. at 28. Even though an affidavit of service had been properly filed, and even though the defendant's allegation concerning his residence was "contained in an unsworn document," the court found that there was "a question as to the existence of personal jurisdiction over [the defendant]," especially given that the arguments of the pro se defendant were to be construed liberally. Id. at 28-29.
Judge Spatt's analysis in Cally applies with even greater force in this case, because the presumption of effective service normally attaching to a properly filed affidavit of service, see Howard Johnson Int'l, Inc. v. Wang, 7 F. Supp.2d 336, 339 (S.D.N.Y. 1999), is substantially weakened by the facts in this case. First, the affidavit of service merely lists 581 Madison Street, Brooklyn, New York, as the location where the summons and complaint were delivered. It is clear, however, that 581 Madison Street is an apartment building, and that Folabit, when he resided there, lived in apartment 3F in that building. (See Opp. Ex. A.) Yet the affidavit of service nowhere indicates that the summons and complaint were delivered to a person in apartment 3F. For service to be effective at "multi-unit residences, a process server must ordinarily deliver the summons and complaint to the defendant's own apartment." Fed. Home Loan Mortgage Corp. v. 666 St. Nicholas Assocs., No. 94 Civ. 4537, 1995 WL 628998, at *3 (S.D.N.Y. Oct. 25, 1995) (citations omitted). Furthermore, the government concedes that the person to whom these documents were delivered, "Jane Folabit, relative," would not give her name to the process server, and may well have had no relation to Folabit whatsoever. (See Opp. ¶ 4.) This fact casts grave doubt that the summons and complaint were delivered to an individual in apartment 3F. Perhaps more importantly, however, these facts indicate that there is no reason to believe that this individual — who refused to give her name and who was christened by the process server as a relative of Folabit — had any connection with Folabit whatsoever, or could be entrusted to deliver the summons and complaint to Folabit.
The government argues that service was proper because a Ledge Light bank statement from February of 1998, upon which the government allegedly relied in attempting service, lists Folabit's address as 581 Madison Sweet, Apartment 3F. (See Opp. ¶ 9 Ex. A.) But that bank statement indicates that the bank account was closed; at a minimum, this suggests corroboration that Folabit moved prior to February of 1998, as he contends. In addition, the Court notes that Folabit did not appear in this action until funds were recently garnished from his Phoenix paychecks. Folabit's failure to appear previously suggests that he never received copies of the summons and complaint; thus, it is fair to infer that he did not reside at the 581 Madison Street address on February 25, 1999, when service was allegedly effected.
The government's argument that 20 U.S.C. § 1077 estops Folabit from arguing that he did not live at the address where service was effected is specious. Section 1077 merely relates to the insurability of student loans by the federal government, although that section does state that, in order for a loan to be insurable, it must be made to a student who agrees to notify the lender promptly of any change of address. See 20 U.S.C. § 1077 (a)(1). The government has failed to cite any caselaw construing Section 1077 as requiring borrowers to keep the government updated on their addresses, and the Court has failed to locate any case which supports the government's argument. In fact, the government raised the very same argument it raises here in Cally, but, in that case, Judge Spatt found that jurisdiction had been properly challenged despite the government's argument that the borrower was obliged to notify the government of address changes. See 197 F.R.D. at 28-29. Simply put, "potential defendants ordinarily have no affirmative duty to keep those who might sue them abreast of their whereabouts." F.D.I.C. v. Scotto, No. 97-CV-1631, 1998 WL 357324, at *2 (N.D.N.Y. June 29, 1998) (citation omitted).
The Court notes that the government is represented in this action by the same law firm that represented the government in the Cally action.
CONCLUSION
For the foregoing reasons, service was not properly effected under either Rule 4(e)(1) or Rule 4(e)(2) of the Federal Rules of Civil Procedure. Therefore, Folabit's motion is granted, and the default judgment entered on April 14, 1999, is vacated. Because the Court's July 16, 2001 Writ of Garnishment was predicated on the April 14, 1999 default judgment, that Writ of Garnishment is also vacated. Accordingly, the United States is directed to reimburse to Folabit all funds garnished from Phoenix Diversified, pursuant to the July 16, 2001 Writ of Garnishment, with all deliberate speed.
Rule 4(e)(2) requires delivery of the summons and complaint to a person of suitable age and discretion at the defendant's "dwelling house or usual place of abode." Under Rule 4(e)(1), service may be effected in accordance with the laws of the forum state. Under New York Civil Practice Law and Rules Section 308(2), service requires delivery of the summons and complaint to a person of suitable age and discretion at the defendant's "dwelling place or usual place of adobe."
SO ORDERED.