Davidson v. Bank of New England, N.A. (In re Hollis)

86 B.R. 152, 1988 Bankr. LEXIS 814, 17 Bankr. Ct. Dec. (CRR) 756
CourtUnited States Bankruptcy Court, E.D. Arkansas
DecidedApril 25, 1988
DocketBankruptcy No. LR 85-1100 S; Adv. No. 87-523
StatusPublished
Cited by11 cases

This text of 86 B.R. 152 (Davidson v. Bank of New England, N.A. (In re Hollis)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Davidson v. Bank of New England, N.A. (In re Hollis), 86 B.R. 152, 1988 Bankr. LEXIS 814, 17 Bankr. Ct. Dec. (CRR) 756 (Ark. 1988).

Opinion

AMENDED AND SUBSTITUTED ORDER AND MEMORANDUM OPINION

MARY D. SCOTT, Bankruptcy Judge.

Now before the Court is a Motion to Dismiss the Trustee’s Complaint filed by the Bank of New England, N.A. (BNE). BNE contends that Trustee’s Complaint should be dismissed pursuant to Rules 4, 12(b)(2) and 12(b)(5) of the Federal Rules of Civil Procedure and Bankruptcy Rule 7012(b), for failure to obtain service of Complaint upon the proper party within the 120 day time limit stated in Rule 4(j), Federal Rules of Civil Procedure and Bankruptcy Rule 7004(a).

BNE also contends that the Complaint should be dismissed because the fraud allegations contained in the Trustee’s Complaint do not meet the specificity requirements of F.R.C.P. 9(b) and Bankruptcy Rule 7009.

The Court will first address the issue raised by Defendant of whether the case should be dismissed for failure to obtain service of the Complaint upon the proper party within the 120 day time limit as set out in F.R.C.P. 4(j) made applicable to adversary proceedings by Rule 7004(a) of the Rules of Bankruptcy Procedure.

F.R.C.P. 4(d)(3) and Bankruptcy Rule 7004(b)(3) state essentially identical procedures for obtaining proper service upon a domestic or foreign corporation or upon a partnership or other unincorporated association, requiring that the summons either be delivered personally or mailed to an officer, a managing or general agent, or to any other agent authorized by appointment or law to receive service of process. F.R.C.P. 4(j) further provides that a complaint should be dismissed, without prejudice, unless the party required to make service shows “good cause” why such service was not made.

The legislative history of this rule provides only one example of what constitutes “good cause,” i.e., “defendant’s evasion of service.” “Inadvertence or heedless non-service has consistently been held not to be “good cause” for failure to serve.” Philipp Bros., Inc. v. M/V Merkur Bay, 110 F.R.D. 443, 445 (D.Del.1986). The court in Ruley v. Nelson, 106 F.R.D. 514 (D.Nev.1985) stated that “Rule 4 is meant to be strictly construed [and that] plaintiff’s attorney is charged with the responsibility of obtaining prompt service of summons and complaint ... if service is not effected within 120 days after the filing of the complaint, the plaintiff has the burden of establishing “good cause” for the delay.” at 517. Because Rule 4 “provides no guidance as to what constitutes “good cause,” courts must determine on the facts of each case whether good cause has been shown.” Woods v. Partenreederei M.S. Yankee Clipper, 112 F.R.D. 115, 166 (D.Mass.1986).

The court in Baden v. Craig-Hallum, Inc., 115 F.R.D. 582, 587 (D.Minn.1987) found that good cause existed because plaintiff made attempts at service and “may have been justifiably confused” as to whom to serve as a result of defendant’s attorneys appearance at a motion hearing. In another case, the court excused the plaintiff’s failure to serve defendant in the required 120 days finding that the defendant’s actions “understandably lulled plaintiff into believing that service had been accomplished. Accordingly, I excuse plaintiff’s failure to serve [defendant] within 120 days of filing the complaint, and I authorize a new summons, which I direct plaintiff to serve on [defendant] forthwith.” Ditkof v. Owens-Illinois, Inc., 114 F.R.D. 104, 105 (E.D.Mich.1987). “The Federal Rules do not in any way suggest that a defendant may halfway appear in a case, giving plaintiff and the court the impression that he has been served, and, at the appropriate time, pull failure of service [154]*154out of the hat like a rabbit ...” Broadcast Music, Inc. v. M.T.S. Enterprises, 811 F.2d 278, 281 (5th Cir.1987). The court in Broadcast Music, went on to hold that defendants “through the actions of their counsel, voluntarily appeared in [the] case and waived the defense of insufficiency or failure of process.” at 281. Other courts have similarly held that authority of an attorney to act as an agent for service of process may “be implied from surrounding circumstances ...” Olympus Corp. v. Dealer Sales & Service, Inc., 107 F.R.D. 300, 305 (E.D.N.Y.1985). Also, see, United States v. Bosurgi, 343 F.Supp. 815 (S.D.N.Y.1972).

Meeting the burden of showing the existence of “good cause” is difficult. Mere inadvertence of plaintiffs counsel does not meet the test of “good cause.” Wei v. State of Hawaii, 763 F.2d 370, 372 (9th Cir.1985). It has also been determined that “a showing that defendants have not been prejudiced by a delay in service does not appear to aid plaintiff to avoid a timeliness bar under Rule 4(j).” Quann v. Whitegate-Edgewater, 112 F.R.D. 649, 661 (D.Md.1986). “Even receipt of actual notice does not remedy ... technically defective service ...” In re Valeu, 53 B.R. 549, 553 (Bkrptcy.D.N.D.1985).

This Court recognizes that any meaningful waiver must be knowingly made and that “[generally, a motion to extend time to respond gives no hint that the answer will waive personal jurisdiction defects, and is probably best viewed as a holding maneuver while counsel consider how to proceed.” Benny v. Pipes, 799 F.2d 489, 493 (9th Cir.1986).

However, this Court believes it has discretion with regard to deciding whether to dismiss this action on the basis of improper service. “Both counsel have been diligent in citing cases supporting their positions ... Clearly, whatever I decide can be supported by case law. The trick is to do justice.” In re Furimsky, 40 B.R. 350, 354 (Bkrptcy.D.Ariz.1984).

The Court believes justice can best be done by denying the defendant’s motion to dismiss for improper service. The Court finds that “good cause” existed for the failure to serve the proper party within the time limits set out in the rules. The Court finds, under all the circumstances surrounding the filing of this action and resulting Motions for extensions of time to file preliminary motions it was reasonable for Plaintiff to believe that service had been accomplished. The Court further finds that justice would not be served by granting the Motion to Dismiss after actions of the Defendant reasonably gave the Plaintiff the impression that service had been made. As noted earlier, “dismissal [is not] invariably required where service is ineffective. Under such circumstances, the court has discretion to either dismiss the action, or quash service but retain the case.” Haley v. Simmons, 529 F.2d 78, 79 (8th Cir.1976).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Wilson Family Foods, Inc. v. Brown (In Re Brown)
457 B.R. 919 (M.D. Georgia, 2011)
Griff v. Marsh (In Re Marsh)
449 B.R. 431 (N.D. Georgia, 2011)
Ramsay v. G.C. Evans Sales & Manufacturing Co.
196 B.R. 114 (E.D. Arkansas, 1996)
Flexi-Van Leasing, Inc. v. Perez (In Re Perez)
173 B.R. 284 (E.D. New York, 1994)
Dederick & Himlie, P.A. v. DuFour (In Re DuFour)
153 B.R. 853 (D. Minnesota, 1993)
In re Gerrald
151 B.R. 215 (W.D. Arkansas, 1993)
Parson v. Cole (In Re Cole)
142 B.R. 140 (N.D. Texas, 1992)
Bell v. Collins (In Re Collins)
137 B.R. 754 (E.D. Arkansas, 1992)
In Re Hollis and Co.
86 B.R. 152 (E.D. Arkansas, 1988)

Cite This Page — Counsel Stack

Bluebook (online)
86 B.R. 152, 1988 Bankr. LEXIS 814, 17 Bankr. Ct. Dec. (CRR) 756, Counsel Stack Legal Research, https://law.counselstack.com/opinion/davidson-v-bank-of-new-england-na-in-re-hollis-areb-1988.