Opinion
Civil Action No.: 99-73910
07-15-2015
UNITED STATES OF AMERICA, Plaintiff, v. SANDRA F. WILLHITE, Defendant.
Honorable Paul D. Borman
REPORT AND RECOMMENDATION TO DENY DEFENDANT'S OBJECTION TO GARNISHMENT [R. 18 ]
This is a student loan case in which the United States obtained a default judgment, in November 1999, against defendant Sandra Willhite in the amount of $918.23. [R. 1, 6]. The United States then applied for a writ of garnishment, which was granted. [R. 8, 9]. A renewed writ was granted in 2013, after which Willhite entered into a payment plan, according to the parties, and the garnishment was released. [R. 11, 12, 14]. She made eight payments under the plan and then stopped, she says due to financial constraints. Another writ was applied for and granted in early 2015. [R. 16]. Willhite requested a hearing on the writ, alleging for the first time that the debt was void because she was a minor at the time she signed the promissory note. [R. 18]. The matter was referred to this Court pursuant to 28 U.S.C. § 636(b)(3) and a hearing was held on April 14, 2015.
At the hearing, it was revealed during questioning that Willhite had not been residing at the address at which she was served with service of process for the original case. Instead, she stated that she received the complaint later when she returned to get her mail. The Court adjourned the hearing and ordered supplemental briefing on the issue of service. Both parties have since submitted their supplemental filings. For the reasons stated on the record and those set forth below, the Court RECOMMENDS that Willhite's objections to the writ, interpreted as a motion to set aside the default judgment, [R. 18 ] be DENIED.
A. Legal Standard
"A court may issue a writ of garnishment against property (including nonexempt disposable earnings) in which the debtor has a substantial nonexempt interest and which is in the possession, custody, or control of a person other than the debtor, in order to satisfy the judgment against the debtor." 28 U.S.C. § 3205(a). A party who claims exemption from a writ bears the burden of proving his entitlement thereto. 28 U.S.C. § 3014(b)(2); United States v. Sawaf, 74 F.3d 119, 122 (6th Cir. 1996). Here, Willhite does not claim an exemption from garnishment. Instead, she takes issue with the validity of the underlying debt, which this Court interprets as a motion to set aside the default judgment entered against her.
A default judgment may be set aside for any of the following reasons: (1) mistake, inadvertence, surprise or excusable neglect; (2) newly discovered evidence; (3) fraud, misrepresentation or other misconduct of the adverse party; (4) the judgment is void; (5) the judgment is satisfied, released or discharged; or (6) any other reason justifying relief. Fed. R. Civ. P 55 & 60(b). The Court must consider: (1) whether the Government will be prejudiced if the judgment is set aside; (2) whether Willhite has a meritorious defense; and (3) whether her culpable conduct led to the default. United Coin Meter Co. v. Seaboard Coastal Line R.R., 705 F.2d 839, 845 (6th Cir. 1983). After such consideration, the Court finds no reason to set aside the default judgment.
B. Analysis
1. Excusable Neglect
At the hearing, Willhite revealed upon questioning that she did not reside at the address where she was allegedly served with service of process in this case. While a review of the post-hearing briefing offers some support for Willhite's representation, the Court finds that Willhite has waived any objection to service of process and that, even assuming the truth of her claims, the lack of proper service does not constitute excusable neglect on the facts of this case.
Proper service of process, or waiver or forfeiture of the same, is required to confer personal jurisdiction over a named defendant. Murphy Bros. Inc. v. Mitchetti Pipe Stringing, Inc., 526 U.S. 344, 350 (1999). Without personal jurisdiction, the court "is powerless to proceed to an adjudication." Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999) (internal quotation marks and citation omitted). Waiver of the defense of defective service generally occurs when the party fails to raise the defense in its first responsive pleading. Fed. R. Civ. P. 12(b)(5), (g)(2), (h)(1).
However, the effectiveness of this rule is disrupted when judgment is rendered via default, such as in this case. "[D]efects in personal jurisdiction are not waived by default when a party fails to appear or to respond . . . until after the default judgment was entered." Gerber v. Riordan, 649 F.3d 514, 520 (6th Cir. 2011) (internal quotation marks and citation omitted). In such situations, the Court looks to whether the "defendant's conduct prior to raising the defense has given the plaintiff 'a reasonable expectation' that the defendant will defend the suit on the merits or whether the defendant has caused the court to 'go to some effort that would be wasted if personal jurisdiction is later found lacking.'" King v. Taylor, 694 F.3d 650, 659 (6th Cir. 2012) quoting Gerber, 649 F.3d at 519. The King court noted that it is relatively easy to find forfeiture of a service defense because such a defense does not concern fairness concerns; "service of process is simply the means by which a defendant receives notice of an action and is formally brought within a court's jurisdiction." King, 694 F.3d at 659.
Here, Willhite never even affirmatively raised the defense of defective service. Her request for hearing raised only an objection as to the legality of the underlying promissory note, which was the substance of her argument at the hearing. The issue of proper service only came to light during court questioning. Willhite's affirmative participation in the hearing without affirmatively raising the issue of defective service renders that defense waived. Wells v. Rhodes, 592 Fed. Appx. 373, 377-78 (6th Cir. 2014) (pro se party's affirmative appearance and participation in evidentiary hearing constitutes waiver of defense of defective service).
Furthermore, to the extent a waived defense could possibly still constitute excusable neglect, Willhite nevertheless admitted during the hearing that she did receive the complaint, and subsequently spoke with a man about the matter and questioned the validity of the debt. She represented that she did not hear anything after this, but did not claim that she took any further action or attempt to learn of her obligations or rights prior to default. The Court finds no excusable neglect on these facts.
2. Meritorious Defense
The Court further finds that Willhite does not possess a meritorious defense. As noted above, she has waived any defense she may have had with regard to service of process. Further, Willhite's argument that the loan agreement upon which this case is based is void ab initio because she was a minor on the date she signed the promissory note, fails. Willhite admitted that her birthdate was September 21, 1958. Although she alleges she signed the document in 1975 at the latest, the promissory note shows it was signed on September 22, 1976, making Willhite eighteen years of age on the date of execution of the note. [Appx. A, attached hereto]. Because Willhite has no meritorious defense, the default judgment should not be set aside.
At the conclusion of the hearing the United States tendered to the Court copies of the promissory note, the certificate of service regarding the service of the complaint and summons and the certificate of service of the default judgment, all of which are appended to this Report and Recommendation. --------
D. Prejudice to Plaintiff
Finally, the Court finds that the United States would be prejudiced by setting aside the default judgment sixteen years after it was entered, especially in light of the United States' attempts to engage Willhite in a payment plan in an attempt to satisfy the debt, and especially in light of Willhite's lack of a meritorious defense.
For these reasons and those stated on the record, the Court RECOMMENDS that Willhite's objections to garnishment, interpreted as a motion to set aside the default judgment [R. 18], should be DENIED. Dated: July 15, 2015
Detroit, Michigan
s/Elizabeth A. Stafford
ELIZABETH A. STAFFORD
United States Magistrate Judge
NOTICE TO THE PARTIES REGARDING OBJECTIONS
Either party to this action may object to and seek review of this Report and Recommendation, but must act within fourteen days of service of a copy hereof as provided for in 28 U.S.C. § 636(b)(1) and Fed.R.Civ.P. 72(b)(2). Failure to file specific objections constitutes a waiver of any further right of appeal. Thomas v. Arn, 474 U.S. 140 (1985); Howard v. Secretary of HHS, 932 F.2d 505 (6th Cir. 1991); United States v. Walters, 638 F.2d 947 (6th Cir. 1981). Filing objections which raise some issues but fail to raise others with specificity will not preserve all objections that party might have to this Report and Recommendation. Willis v. Secretary of HHS, 931 F.2d 390, 401 (6th Cir. 1991); Smith v. Detroit Fed'n of Teachers Local 231, 829 F.2d 1370, 1373 (6th Cir. 1987). A copy of any objection must be served upon this Magistrate Judge. E.D. Mich. LR 72.1(d)(2).
Each objection must be labeled as "Objection #1," "Objection #2," etc., and must specify precisely the provision of this Report and Recommendation to which it pertains. Not later than fourteen days after service of objections, the non-objecting party must file a response to the objections, specifically addressing each issue raised in the objections in the same order and labeled as "Response to Objection #1," "Response to Objection #2," etc. The response must be concise and proportionate in length and complexity to the objections, but there is otherwise no page limitation. If the Court determines that any objections are without merit, it may rule without awaiting the response.
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served upon counsel of record and any unrepresented parties via the Court's ECF System to their respective email or First Class U.S. mail addresses disclosed on the Notice of Electronic Filing on July 15, 2015.
s/Karri Sandusky for
MARLENA WILLIAMS
Case Manager
APPENDIX
Image materials not available for display. Hon. PAUL D. BORMAN PROOF OF SERVICE
Barbara B. Savage, being duly sworn, deposes and says she is not a party to the above litigation, she is employed by SHERMETA, CHIMKO & KILPATRICK, P.C., and on December 8, 1999, she did mail a copy of Clerk's Entry of Default and Clerk's Entry of Judgment by Default to: Sandra F. Willhite
19973 Marx Street
Detroit, MI 48203
by placing same in a sealed envelope with first class postage fully prepaid and depositing same in a United States Mail Receptacle located in Rochester, Michigan.
/s/_________
Barbara B. Savage
Subscribed and sworn to before me this 8th day of December, 1999.
/s/_________
Rebecca M. Carroll, Notary Public
Macomb County, Michigan
My commission expires: 9/22/03