2 UNITED STATES DISTRICT COURT 3 DISTRICT OF NEVADA 4 * * * 5 Rusty Ennis-White & Jonathon Ennis- Case No. 2:23-cv-01863-APG-DJA 6 White, individually and as legal spouses,
7 Plaintiff, Order
8 v.
9 Nationwide Mutual Insurance Company, an Ohio company; Caesars Entertainment 10 Corporation, a Delaware company; Christopher Johnson, an individual; Flamingo Las Vegas 11 Operating Company, LLC, a Nevada limited liability company; Arch Indemnity Insurance 12 Company, a Missouri company; Broadspire Services, Inc., a Delaware company, 13 Defendants. 14 15 16 Before the Court are Plaintiffs’ motion for entry of clerk’s default (ECF No. 20) and 17 Defendant Arch Indemnity Insurance Company’s motion to quash service of process and set aside 18 default (ECF No. 25). Plaintiffs move for entry of Clerk’s default because Arch failed to plead or 19 otherwise defend against the first amended complaint despite being served on November 13, 20 2023. (ECF No. 20 at 2). Plaintiffs assert that they served Arch via CSC – Lawyers 21 Incorporating Service Company and attach an affidavit of service. (Id. at 2, 10). Nationwide then 22 removed the action to federal court on November 13, 2023. (ECF No. 1). But Arch has not 23 responded in the federal court action. 24 Arch asserts that Plaintiffs’ service was improper because Plaintiffs did not serve Arch 25 under Nevada Revised Statute (NRS) § 680A.250, which requires that foreign insurance 26 companies be served exclusively through the Nevada Commissioner of Insurance. (ECF No. 27 27 at 2). Arch moves to quash Plaintiffs’ service of process on those grounds and to set aside 1 Plaintiffs argue that NRS 680A.250 does not apply to their case because they are not bringing an 2 insurance claim, but instead bring claims “more akin to business tort.” (ECF No. 30 at 2). 3 Because the Court finds that service was improper, it denies Plaintiffs’ motion for entry of clerk’s 4 default and grants in part and denies in part Arch’s motion to quash service, set aside entry of 5 default, and dismiss. 6 I. Legal standard. 7 The Court lacks jurisdiction over defendants who have not been properly served. SEC v. 8 Ross, 504 F.3d 1130, 1138-39 (9th Cir. 2007). Accordingly, Federal Rules of Civil Procedure 9 12(b)(4) and 12(b)(5) permit a court to dismiss an action for process deficiencies. Fed. R. Civ. P. 10 12(b)(4)-(5); Manalastas v. Joie de Vivre Kabuki, LLC, No. 23-cv-03957-HSG, 2024 WL 11 390042, at *1 (N.D. Cal. Jan. 31, 2024). Rule 12(b)(4) enables the defendant to challenge the 12 substance and form of the summons, and 12(b)(5) allows the defendant to attack the manner in 13 which service was, or was not, attempted. Manalastas, 2024 WL 390042, at *1. When the 14 validity of service is contested, the burden is on the plaintiff to prove that service was valid under 15 Rule 4. Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004). If the plaintiff is unable to satisfy 16 this burden, the Court has the discretion either to dismiss the action or to allow it to remain on file 17 but quash the service of process. Fuentes v. Nat’l Tr. Co. Deutsche Bank, No. 22-cv-04953-BLF, 18 2023 WL 2278701 at *2 (N.D. Cal. February 27, 2023). “So long as a party receives sufficient 19 notice of the complaint, Rule 4 is to be ‘liberally construed’ to uphold service.” Travelers Cas. & 20 Sur. Co. of Am. v. Brenneke, 551 F.3d 1132, 1135 (9th Cir. 2009) (quoting Chan v. Soc’y 21 Expeditions, Inc., 39 F.3d 1398, 1404 (9th Cir. 1994)). However, “neither actual notice nor 22 simply naming the defendant in the complaint will provide personal jurisdiction absent 23 ‘substantial compliance with Rule 4.’” Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986). When 24 a case is removed to federal court, the sufficiency of the service of process prior to removal is 25 governed by state law. Whidbee v. Pierce County, 857 F.3d 1019, 1023 (9th Cir. 2017). 26 Under Nevada law, foreign insurers must be served with process through the Insurance 27 Commissioner. King v. Mut. of Omaha Ins. Co., No. 2:18-cv-01821-JCM-CWH, 2019 WL 1 insurance in this state, each insurer must appoint the Commissioner as its attorney in fact to 2 receive service of legal process issued against the insurer in this state.” Nev. Rev. Stat. 3 § 680A.250(1). “Service of such process against a foreign or alien insurer must be made only by 4 service thereof upon the Commissioner.” Nev. Rev. Stat. § 680A.250(3). Additionally, “service 5 must be made by delivering to and leaving with the [Nevada] Division [of Insurance], one copy of 6 the process, together with the fee therefor…” Nev. Rev. Stat. § 680A.260(1). When service is 7 made in the statutorily mandated manner, service is complete when the Division forwards the 8 process with the date and time of service on the Division to the person currently designated to 9 receive the copy as provided by specific statute and then the insurer gets an additional ten days to 10 answer. Nev. Rev. Stat. § 680A.260(2)-(3). “A ‘foreign’ insurer is one ... [f]ormed under the 11 laws of any jurisdiction other than [Nevada].” Nev. Rev. Stat. § 679A.090(2)(a). 12 Rule 55 of the Federal Rules of Civil Procedure provides a mechanism for obtaining a 13 default judgment against a party who has failed to plead or otherwise respond to claims brought 14 against it. King, 2019 WL 2518116, at *2. Where this failure is “shown by affidavit or 15 otherwise,” the clerk must enter that party’s default under Fed. R. Civ. Proc. 55(a). “The court 16 may set aside an entry of default for good cause.” Id. at 55(c). “Good cause” is determined 17 through three factors: (1) whether the plaintiff will be prejudiced; (2) whether the defendant has a 18 meritorious defense; and (3) whether culpable conduct of the defendant led to the default. Falk v. 19 Allen, 739 F.2d 461, 463 (9th Cir. 1984). This test is disjunctive, and proof of any of these three 20 factors may justify setting aside the default. See Brandt v. American Bankers Insurance Co. of 21 Florida, 653 F.3d 1108, 1111 (9th Cir. 2011). 22 Overarching these factors is the Ninth Circuit’s stated policy favoring adjudication of 23 disputes on their merits, Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986), with doubts 24 resolved in favor of setting aside the default. Schwab v. Bullock’s, Inc., 508 F.2d 353, 355 (9th 25 Cir. 1974).
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2 UNITED STATES DISTRICT COURT 3 DISTRICT OF NEVADA 4 * * * 5 Rusty Ennis-White & Jonathon Ennis- Case No. 2:23-cv-01863-APG-DJA 6 White, individually and as legal spouses,
7 Plaintiff, Order
8 v.
9 Nationwide Mutual Insurance Company, an Ohio company; Caesars Entertainment 10 Corporation, a Delaware company; Christopher Johnson, an individual; Flamingo Las Vegas 11 Operating Company, LLC, a Nevada limited liability company; Arch Indemnity Insurance 12 Company, a Missouri company; Broadspire Services, Inc., a Delaware company, 13 Defendants. 14 15 16 Before the Court are Plaintiffs’ motion for entry of clerk’s default (ECF No. 20) and 17 Defendant Arch Indemnity Insurance Company’s motion to quash service of process and set aside 18 default (ECF No. 25). Plaintiffs move for entry of Clerk’s default because Arch failed to plead or 19 otherwise defend against the first amended complaint despite being served on November 13, 20 2023. (ECF No. 20 at 2). Plaintiffs assert that they served Arch via CSC – Lawyers 21 Incorporating Service Company and attach an affidavit of service. (Id. at 2, 10). Nationwide then 22 removed the action to federal court on November 13, 2023. (ECF No. 1). But Arch has not 23 responded in the federal court action. 24 Arch asserts that Plaintiffs’ service was improper because Plaintiffs did not serve Arch 25 under Nevada Revised Statute (NRS) § 680A.250, which requires that foreign insurance 26 companies be served exclusively through the Nevada Commissioner of Insurance. (ECF No. 27 27 at 2). Arch moves to quash Plaintiffs’ service of process on those grounds and to set aside 1 Plaintiffs argue that NRS 680A.250 does not apply to their case because they are not bringing an 2 insurance claim, but instead bring claims “more akin to business tort.” (ECF No. 30 at 2). 3 Because the Court finds that service was improper, it denies Plaintiffs’ motion for entry of clerk’s 4 default and grants in part and denies in part Arch’s motion to quash service, set aside entry of 5 default, and dismiss. 6 I. Legal standard. 7 The Court lacks jurisdiction over defendants who have not been properly served. SEC v. 8 Ross, 504 F.3d 1130, 1138-39 (9th Cir. 2007). Accordingly, Federal Rules of Civil Procedure 9 12(b)(4) and 12(b)(5) permit a court to dismiss an action for process deficiencies. Fed. R. Civ. P. 10 12(b)(4)-(5); Manalastas v. Joie de Vivre Kabuki, LLC, No. 23-cv-03957-HSG, 2024 WL 11 390042, at *1 (N.D. Cal. Jan. 31, 2024). Rule 12(b)(4) enables the defendant to challenge the 12 substance and form of the summons, and 12(b)(5) allows the defendant to attack the manner in 13 which service was, or was not, attempted. Manalastas, 2024 WL 390042, at *1. When the 14 validity of service is contested, the burden is on the plaintiff to prove that service was valid under 15 Rule 4. Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004). If the plaintiff is unable to satisfy 16 this burden, the Court has the discretion either to dismiss the action or to allow it to remain on file 17 but quash the service of process. Fuentes v. Nat’l Tr. Co. Deutsche Bank, No. 22-cv-04953-BLF, 18 2023 WL 2278701 at *2 (N.D. Cal. February 27, 2023). “So long as a party receives sufficient 19 notice of the complaint, Rule 4 is to be ‘liberally construed’ to uphold service.” Travelers Cas. & 20 Sur. Co. of Am. v. Brenneke, 551 F.3d 1132, 1135 (9th Cir. 2009) (quoting Chan v. Soc’y 21 Expeditions, Inc., 39 F.3d 1398, 1404 (9th Cir. 1994)). However, “neither actual notice nor 22 simply naming the defendant in the complaint will provide personal jurisdiction absent 23 ‘substantial compliance with Rule 4.’” Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986). When 24 a case is removed to federal court, the sufficiency of the service of process prior to removal is 25 governed by state law. Whidbee v. Pierce County, 857 F.3d 1019, 1023 (9th Cir. 2017). 26 Under Nevada law, foreign insurers must be served with process through the Insurance 27 Commissioner. King v. Mut. of Omaha Ins. Co., No. 2:18-cv-01821-JCM-CWH, 2019 WL 1 insurance in this state, each insurer must appoint the Commissioner as its attorney in fact to 2 receive service of legal process issued against the insurer in this state.” Nev. Rev. Stat. 3 § 680A.250(1). “Service of such process against a foreign or alien insurer must be made only by 4 service thereof upon the Commissioner.” Nev. Rev. Stat. § 680A.250(3). Additionally, “service 5 must be made by delivering to and leaving with the [Nevada] Division [of Insurance], one copy of 6 the process, together with the fee therefor…” Nev. Rev. Stat. § 680A.260(1). When service is 7 made in the statutorily mandated manner, service is complete when the Division forwards the 8 process with the date and time of service on the Division to the person currently designated to 9 receive the copy as provided by specific statute and then the insurer gets an additional ten days to 10 answer. Nev. Rev. Stat. § 680A.260(2)-(3). “A ‘foreign’ insurer is one ... [f]ormed under the 11 laws of any jurisdiction other than [Nevada].” Nev. Rev. Stat. § 679A.090(2)(a). 12 Rule 55 of the Federal Rules of Civil Procedure provides a mechanism for obtaining a 13 default judgment against a party who has failed to plead or otherwise respond to claims brought 14 against it. King, 2019 WL 2518116, at *2. Where this failure is “shown by affidavit or 15 otherwise,” the clerk must enter that party’s default under Fed. R. Civ. Proc. 55(a). “The court 16 may set aside an entry of default for good cause.” Id. at 55(c). “Good cause” is determined 17 through three factors: (1) whether the plaintiff will be prejudiced; (2) whether the defendant has a 18 meritorious defense; and (3) whether culpable conduct of the defendant led to the default. Falk v. 19 Allen, 739 F.2d 461, 463 (9th Cir. 1984). This test is disjunctive, and proof of any of these three 20 factors may justify setting aside the default. See Brandt v. American Bankers Insurance Co. of 21 Florida, 653 F.3d 1108, 1111 (9th Cir. 2011). 22 Overarching these factors is the Ninth Circuit’s stated policy favoring adjudication of 23 disputes on their merits, Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986), with doubts 24 resolved in favor of setting aside the default. Schwab v. Bullock’s, Inc., 508 F.2d 353, 355 (9th 25 Cir. 1974). It is within the court’s discretion whether to set aside a default. O’Connor v. State of 26 Nev., 27 F.3d 357, 364 (9th Cir. 1994). The court’s discretion is especially broad when it is the 27 clerk’s entry of default that is being set aside, rather than a default judgment. Id. 1 |) UL. Discussion. 2 The Court denies Plaintiffs’ motion for entry of clerk’s default, and grants in part Arch’s 3 || motion to quash service, set aside default, and dismiss. The parties do not dispute that Arch is a 4 || foreign insurer and thus service upon it falls within the purview of NRS 680A.250. Plaintiffs 5 || simply argue that, because they are not bringing insurance claims and because Arch had notice of 6 || the lawsuit, the Court should equitably consider their service accomplished. However, Plaintiffs 7 || provide no authority to support their requested relief. 8 The Court thus grants Arch’s motion to quash service in part. It grants that motion in part 9 || regarding Arch’s request that the Court quash service. The Court will give Plaintiffs another 10 || opportunity to properly serve Arch. It denies that motion regarding Arch’s request to set aside the 11 || clerk’s entry of default as moot because the Clerk has not yet entered default in this case. It also 12 || denies Arch’s request that the Court dismiss Plaintiff's complaint because Arch has received 13 || notice of the complaint even though it has not been properly served, as evidenced by its motion 14 || practice. The Court denies Plaintiffs’ motion for entry of clerk’s default given the service 15 || deficiencies. 16 17 IT IS THEREFORE ORDERED that Plaintiffs’ motion for entry of clerk’s default 18 || (ECF No. 20) is denied. 19 IT IS FURTHER ORDERED that Arch’s motion to quash service of process, set aside 20 || default, and dismiss (ECF No. 25) is granted in part and denied in part. It is granted in part 21 || regarding Arch’s request that the Court quash service. The Court will give Plaintiffs another 22 || opportunity to properly serve Arch. Arch’s motion is denied in all other respects. 23 IT IS FURTHER ORDERED that the Court will give Plaintiffs until June 5, 2024 to 24 || serve Arch under Federal Rule of Civil Procedure 4(m) 25 26 DATED: March 7, 2024 QD O 27 ~——_¥ DANIEL J. ALBREGTS 28 UNITED STATES MAGISTRATE JUDGE