Findings, Inc. v. LTD

• Court: Court of Appeals for the First Circuit
• Decided: October 19, 1992
• Docket: 90-1798
• Status: Published

Opinion

USCA1 Opinion

____________________
                                 ____________________

        No. 90-1798
        No. 90-1798

                         PRECISION ETCHINGS & FINDINGS, INC.,
                         PRECISION ETCHINGS & FINDINGS, INC.,

                                 Plaintiff, Appellee,
                                 Plaintiff, Appellee,

                                          v.
                                          v.

                                    LGP GEM, LTD.,
                                    LGP GEM, LTD.,

                                 Defendant, Appellee,
                                 Defendant, Appellee,

______

                                  MAURICE C. FEIGER,
                                  MAURICE C. FEIGER,

                                Defendant, Appellant.
                                Defendant, Appellant.

                                 ____________________
                                 ____________________

        No. 91-1277
        No. 91-1277

                         PRECISION ETCHINGS & FINDINGS, INC.,
                         PRECISION ETCHINGS & FINDINGS, INC.,

                                 Plaintiff, Appellee,
                                 Plaintiff, Appellee,

                                          v.
                                          v.

                                    LGP GEM, LTD.,
                                    LGP GEM, LTD.,

                                 Defendant, Appellee,
                                 Defendant, Appellee,

______

                                  MAURICE C. FEIGER,
                                  MAURICE C. FEIGER,

                                Defendant, Appellant.
                                Defendant, Appellant.

                                 ____________________
                                 ____________________

APPEALS FROM THE UNITED STATES DISTRICT COURT
                    APPEALS FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF RHODE ISLAND
                           FOR THE DISTRICT OF RHODE ISLAND

                [Hon. Raymond J. Pettine, Senior U.S. District Judge]
                [Hon. Raymond J. Pettine, Senior U.S. District Judge]
                                          __________________________

____________________
                                 ____________________

                                        Before
                                        Before

                              Torruella, Circuit Judge,
                              Torruella, Circuit Judge,
                                         _____________

                           Timbers, Senior Circuit Judge,*
                           Timbers, Senior Circuit Judge,*
                                    ____________________

                               and Cyr, Circuit Judge. 
                               and Cyr, Circuit Judge. 
                                        _____________

                                 ____________________
                                 ____________________

Harold E. Krause for appellant, third-party defendant.
            Harold E. Krause for appellant, third-party defendant.
            ________________
            Richard D. Boriskin with whom Markoff & Boriskin was on brief  for
            Richard D. Boriskin with whom Markoff & Boriskin was on brief  for
            ___________________           __________________
        appellee, third-party plaintiff.
        appellee, third-party plaintiff.

____________________
                                 ____________________

____________________
                                 ____________________

*Of the Second Circuit, sitting by designation.
        *Of the Second Circuit, sitting by designation.

CYR,  Circuit Judge.    This appeal  concerns  the validity  of  a
            CYR,  Circuit Judge.
                  _____________

        default  judgment  entered  by the  district  court  notwithstanding a

        defect in the service of process which allegedly deprived the court of

        personal jurisdiction  over the defendant-appellant.   Precision Etch-

        ings & Findings, Inc. brought the  present action in the United States

        District Court for the District of Rhode Island against LGP  Gem, Ltd.

        ("LGP").  LGP filed  a third party complaint against  defendant-appel-

        lant  Maurice Feiger.   The  third  party complaint  and summons  were

        addressed to Feiger by certified  mail, return receipt requested, at a

        Brooklyn,  New York,  street address,  rather than  to the  particular

        apartment in which Feiger resided.   The return receipt indicates that

        service was  made upon an  occupant of another  apartment in the  same

        apartment building.  Default was entered against Feiger in April 1990,

        after he failed to answer LGP's complaint.

            On  June 4,  1990, Feiger's  New York  counsel  filed a  motion to

        vacate  the default,  alleging insufficient  service of process.   Al-

        though New York counsel attempted to appear in behalf of Feiger before

        the  United States  Magistrate Judge  at the  June 4 hearing  on LGP's

        claim for damages,  he was not permitted  to do so because  Feiger had

        not  retained local  counsel as  required by  Rhode Island  Local Rule

        5(b).   Without addressing Feiger's  motion to set aside  the default,

        the magistrate  judge made proposed  findings of fact  and recommended

        the  entry of a default  judgment against Feiger.   The district court

        adopted the proposed findings and  the disposition recommended by  the

                                          3

magistrate judge.  Neither the magistrate judge nor the district court

        addressed Feiger's  June 4  motion to  set  aside the  default on  the

        ground of insufficient service of process.

            On July  26, 1990, Feiger  moved to vacate  the default  judgment,

        once again on the ground that  he had never been properly served  with

        process.  Following a hearing, the motion  to vacate was denied by the

        magistrate judge on the ground  that Feiger "had sufficient and timely

        knowledge of  the Third  Party Complaint filed  against him."   Feiger

        promptly  filed  objections  to  the  magistrate  judge's  recommended

        findings and  disposition submitted by  the magistrate judge.   See 28
                                                                        ___

        U.S.C.   636(b) (1)(B).

            The district  court determined  that Feiger  had actual  notice of

        the third  party complaint, notwithstanding  the fact that  the return

        receipt evidencing  service of the  summons and third  party complaint

        appeared to  have been signed  by an occupant of  another apartment in

        the three-apartment building where Feiger resided.  The district court

        accepted the magistrate  judge's recommendation and denied  the motion

        to vacate  the default judgment,  apparently on the basis  that actual

        notice  provided  a sufficient  basis  for  the  exercise of  personal

        jurisdiction over Feiger.*  Finally, the district court denied Feiger-

        's postjudgment  motion to set  aside the default judgment  and Feiger

        appealed.  

____________________

        *Neither the  magistrate judge  nor the  district court  discussed the
        *Neither the  magistrate judge  nor the  district court  discussed the
        legal requirements of service of process.
        legal requirements of service of process.

                                          4

A default judgment  entered by  a court  which lacks  jurisdiction

        over  the person  of  the  defendant is  void,  General Contracting  &
                                                        ______________________

        Trading Co. v. Interpole,  Inc., 940 F.2d 20, 21 n.1  (1st Cir. 1991),
        ___________    ________________

        and may be set aside at any time pursuant to Fed. R. Civ. P. 60(b)(4).
                             __ ___ ____

        See generally  11 C. Wright & A. Miller, Federal Practice & Procedure,
        ___ _________                            ____________________________

          2862 (1973).  Personal  jurisdiction is established either by proper

        service of process, see, e.g., Jardines Bacata,  Ltd. v. Diaz-Marquez,
                            ___  ____  ______________________    ____________

        878 F.2d 1555,  1559 (1st Cir. 1989)  ("[i]n the ordinary  course, the

        district court acquires jurisdiction over a  defendant only by service

        of process"),  or  by the  defendant's  waiver of  any  defect in  the

        service of process, see, e.g.,  General Contracting & Trading Co., 940
                            ___  ____   _________________________________

        F.2d  at 22  (personal  jurisdiction  may be  acquired  by consent  or

        implied from conduct).

            LGP elected to attempt service of process upon Feiger pursuant  to

        Fed. R. Civ. P.  4(c)(2)(c), in accordance with "the law  of the State

        in which  the district  court is held."   In  this case,  Rhode Island

        District Court Rule of Civil Procedure 4(d)(1), which is based on Fed.

        R. Civ. P.  4(d)(1), see Plushner  v. Mills, 429  A.2d 444, 445  (R.I.
                             ___ ________     _____

        1981), required service:

[u]pon  an individual  other than  an  incompetent person  by
            delivering a copy of the summons and complaint to him person-
                                                                  _______
            ally or  by leaving copies  thereof at his dwelling  house or
            ____ __                             __ ___ ________  _____ __
            usual place  of abode  with some person  of suitable  age and
            _____ _____  __ _____  ____ ____ ______  __ ________  ___ ___
            discretion then residing therein . . .
            __________ ____ ________ _______

        Dist. R. Civ. P. 4(d)(1) (emphasis added).

5

The Rhode Island service  of process requirements were not met  in

        the instant case  since the return receipt indicates  that the summons

        and complaint were  neither delivered to  Feiger "personally" nor  "at

        his dwelling  house or usual  place of abode."   Id.  Instead,  as the
                                                         __

        district court noted, the return  receipt indicates, at best, that the

        summons and  complaint were  delivered to an  occupant of  a different

        apartment at  the  same street  address  where Feiger's  apartment  is

        located.  LGP  contends, nonetheless, that actual notice  of the third

        party  action was  sufficient under  Rhode Island  law to  support the

        district court's exercise  of personal jurisdiction over Feiger.   The

        precise  issue presented  appears not  to have  been addressed  by the

        Rhode Island courts.  

            The Supreme  Court of Rhode Island  has "emphasized the  principle

        that legislative enactments  relating to service of process  are to be

        followed and construed  strictly, since jurisdiction of the court over

        the person  of the defendant  is dependent upon proper  service having

        been  made."   Plushner, 429  A.2d  at 445-446,  quoting Barthlein  v.
                       ________                                  _________

        Ellis,  314 A.2d  426, 427 (R.I.  1974).   "In construing  [service of
        _____

        process] rules  it has  been [the Rhode  Island] practice to  look for

        guidance in  the precedents  of the federal  courts, upon  whose rules

        those  of the [Rhode  Island courts] are  closely patterned."   Id. at
                                                                        ___

        446, quoting Nocera v. Lembo, 298 A.2d 800, 803 (R.I. 1973).  When the
                     ______    _____

        defendant has received  actual notice of the action,  the Rhode Island

        courts, in conformity  with the federal practice, have determined that

        service of process requirements are  to be "broadly interpreted,"  id.
                                                                           ___

                                          6

(citing  federal cases),  provided the  interpretation  is "a  natural

        rather than an artificial one. . . ."  Id. quoting Blackhawk Heating &
                                               ___         ___________________

        Plumbing Co. v. Turner, 50 F.R.D. 144, 145 (D. Ariz. 1970).
        ____________    ______

            Neither federal precedent nor Rhode  Island caselaw supports LGP's

        contention that  actual notice of the  filing of the  third party com-

        plaint was sufficient to confer personal jurisdiction in these circum-

        stances.  The federal courts have made it abundantly clear that actual

        notice itself, without more,  is insufficient to satisfy the  require-

        ments of Fed. R.  Civ. P. 4(d)(1).  See, e.g.,  Echevarria-Gonzalez v.
                                            ___  ____   ___________________

        Gonzalez-Chapel, 849 F.2d 24, 28 (1st Cir. 1988) ("[a]ctual notice and
        _______________

        simply  naming the person in the caption  of the complaint is insuffi-

        cient  to subject  a defendant  to  the jurisdiction  of the  district

        court"); see  also Mid-Continent  Wood Products,  Inc. v.  Harris, 936
                 ___  ____ ___________________________________     ______

        F.2d 297, 301 (7th Cir. 1991) (citing cases).  Although "minor" formal
                                                                        ______

        defects  are excusable provided  actual notice has  been accomplished,

        see, e.g.,  Sanderford v. Prudential Ins. Co., 902 F.2d 897, 899 (11th
        ___  ____   __________    ___________________

        Cir. 1990) (district court not deprived of in personam jurisdiction by
                                                   __ ________

        failure to include return date  for responsive pleading in duly served
                                                                   ____ ______

        summons),  the rule nevertheless must be accorded at least substantial

        compliance, see, e.g., Daly-Murphy v.  Winston, 837 F.2d 348, 355 (9th
                    ___  ____  ___________     _______

        Cir. 1987)  (requiring  "substantial compliance"  with rule  4(d)(1));

        Zuckerman v. McCulley,  7 F.R.D. 739, 741  (E. D. Mo. 1947)  ("[a]s we
        _________    ________

        read  the cases,  substantial compliance  with  the Rules  prescribing

        manner  of service is required")  (emphasis added) (service on janitor
        ______  __ _______

        of  building in which  defendant resided not  substantial compliance).

                                          7

It  has been held  directly that  delivery of  process to  a different

        apartment in the same building is  not sufficient service.  Di Leo  v.
                                                                    ______

        Shin Shu, 30 F.R.D. 56 (S.D.N.Y.  1961) (service on daughter of defen-
        ________

        dant who resided in separate apartment not sufficient).

            Neither  the cases  cited  by LGP,  nor  any we  have  discovered,

        indicate that  actual notice would suffice  to cure the defect  in the

        manner of service effected on Feiger.  In Plushner v. Mills,  429 A.2d
                                                  ________    _____

        at  446, the  Rhode Island  Supreme Court  found that  "actual notice"

        constituted  substantial  compliance  where  service  of  process  was

        effected  by delivery  to defendant's  daughter while  she was  at the
                                                                        __ ___

        defendant's  residence, even though the daughter maintained a separate
        ___________  _________

        residence at the time.  The court  noted that the daughter possessed a

        key to the defendant's residence and had been placed in charge  of the

        dwelling during her father's absence.  Id.  Since the court found that
                                               ___

        the  daughter, therefore, was a  "trusted member of defendant's house-
                                                  ______ __ ___________ ______

        hold and that a substantial  nexus existed between her and  the defen-
        ____

        dant,"  it decided  that  she  "could be  considered  to be  'residing

        therein' under  a broad  interpretation of Rule  4(d)(1), and  such an

        interpretation is allowed when defendant receives actual notice."  Id.
                                                                           ___

        (emphasis added).  The undeveloped record in  the instant case, on the

        other  hand, simply cannot support a similarly "broad interpretation,"

        since no evidence was  presented that the person  to whom process  was

8

delivered  was a  member of  Feiger's  household, his  landlord, or  a

        person having any "substantial connection" with him.**

            Federal precedent and Rhode  Island caselaw indicate only that the

        specific rules  governing the precise  manner of effecting  service of

        process are to be given  "broad interpretation" when the defendant has

        received  "actual notice."  Neither  source of authority suggests that

        "actual  notice" itself suffices,  absent substantial  compliance with

        the manner of service prescribed by rule.  The present record does not

        enable a determination that there was substantial compliance with rule

        4(d)(1).  Therefore, unless Feiger waived any defect in the service of

        process, the case must be  remanded for further factfinding bearing on

        the issue of substantial compliance.

            Unlike the absence of subject matter jurisdiction, the defense  of

        lack of  personal jurisdiction may  be waived  by express  submission,

____________________

        **Moreover,  the Plushner  court relied  in  part on  a federal  case,
        **Moreover,  the Plushner  court relied  in  part on  a federal  case,
                         ________
        Nowell v. Nowell, 384 F.2d 951 (5th Cir. 1967), cert. denied, 390 U.S.
        Nowell v. Nowell, 384 F.2d 951 (5th Cir. 1967), cert. denied, 390 U.S.
        ______    ______                                ____  ______
        956 (1968),  which held that the  federal service of process  rule was
        956 (1968),  which held that the  federal service of process  rule was
        satisfied by service  upon the defendant's landlady, due  to the "sub-
        satisfied by service  upon the defendant's landlady, due  to the "sub-
        stantial nexus" between  landlord and tenant.  In  Plushner, the Rhode
        stantial nexus" between  landlord and tenant.  In  Plushner, the Rhode
                                                           ________
        Island  Supreme Court  explicitly  called attention  to the  fact that
        Island  Supreme Court  explicitly  called attention  to the  fact that
        Nowell had distinguished  between service upon the landlord  and "ser-
        Nowell had distinguished  between service upon the landlord  and "ser-
        ______
        vice upon a  neighboring tenant . . . [because]  the substantial nexus
        vice upon a  neighboring tenant . . . [because]  the substantial nexus
        that exists between tenant and landlord does not exist between tenants
        that exists between tenant and landlord does not exist between tenants
        themselves."   Plushner, 429 A.2d at  446, quoting Nowell, 384 F.2d at
        themselves."   Plushner, 429 A.2d at  446, quoting Nowell, 384 F.2d at
                       ________                            ______
        953.
        953.
            Similarly, Lavey v. Lavey, 551 A.2d 692 (R.I. 1988), another  case
            Similarly, Lavey v. Lavey, 551 A.2d 692 (R.I. 1988), another  case
                       _____    _____
        in which the  defendant was found to  have had "actual notice"  of the
        in which the  defendant was found to  have had "actual notice"  of the
        lawsuit,  provides no  support for  LGP's position.   The  Lavey court
        lawsuit,  provides no  support for  LGP's position.   The  Lavey court
                                                                   _____
        found  that a residence,  at which the defendant  had dinner daily and
        found  that a residence,  at which the defendant  had dinner daily and
        occasionally showered, watched television and picked up mail, could be
        occasionally showered, watched television and picked up mail, could be
        included within  a broad interpretation  of "dwelling house  or . .  .
        included within  a broad interpretation  of "dwelling house  or . .  .
        usual place of abode. . .  ."  Id. at 694-695.  The  present record is
        usual place of abode. . .  ."  Id. at 694-695.  The  present record is
                                       ___
        insufficiently developed to support such a finding.
        insufficiently developed to support such a finding.

                                          9

conduct, or failure to assert the defense.  See Neirbo Co.  v. Bethle-
                                                    ___ __________     _______

        hem Shipbuilding Corp., 308 U.S.  165, 168 (1939); General Contracting
        ______________________                             ___________________

        & Trading Co.,  940 F.2d at 22; Marcial Ucin, S.A.  v. SS Galicia, 723
        _____________                   __________________     __________

        F.2d 994,  996 (1st Cir.  1983).  As  Feiger assiduously  attempted to

        assert the defense before the district court, we find no waiver.  

            Feiger first  raised the defense  by motion on  June 4, 1990,  the

        day  of the  scheduled hearing  on  LGP's claim  for damages,  thereby

        precluding waiver under Fed. R. Civ. P. 12(h)(1).  See Roque v. United
                                                           ___ _____    ______

        States, 857 F.2d 20,  21 (1st Cir. 1988);  Glater v. Eli Lilly  & Co.,
        ______                                     ______    ________________

        712  F.2d 735, 738 (1st  Cir. 1983).  At  no time did Feiger expressly

        submit  to the exercise of jurisdiction by  the district court.  More-

        over, Feiger's conduct did not constitute participation in, or encour-

        agement of, the district  court proceedings so as to  amount to waiver

        by conduct.   See United States use of Combustion  Systems Sales, Inc.
                      ___ ____________________________________________________

        v. Eastern  Metal Products  & Fabricators, Inc.,  112 F.R.D.  685, 687
           ____________________________________________

        (M.D.N.C. 1986)  (collecting cases  and concluding  that though  cases

        present "markedly different situations, [they] have the common factors

        of  dilatoriness and participation  in, or encouragement  of, judicial

        proceedings"); see also General Contracting & Trading Co., 940 F.2d at
                       ___ ____ _________________________________

        22  (collecting cases).    Feiger  did not  participate  in any  hear-

        ing,***  see,  e.g., Wyrough  &  Loser, Inc.  v.  Pelmor Laboratories,
                 ___   ____  _______________________      ____________________
                            
        ____________________

        ***Feiger's unsuccessful attempt to participate in  the June 4 hearing
        ***Feiger's unsuccessful attempt to participate in  the June 4 hearing
        on LGP's claim  for damages was not  a waiver, since New  York counsel
        on LGP's claim  for damages was not  a waiver, since New  York counsel
        stated explicitly  that he  intended to challenge  the sufficiency  of
        stated explicitly  that he  intended to challenge  the sufficiency  of
        service of  process at the hearing.  See Marcial Ucin, 723 F.2d at 997
        service of  process at the hearing.  See Marcial Ucin, 723 F.2d at 997
                                             ___ ____________
        ("general appearance  by a defendant  does not constitute a  waiver of
        ("general appearance  by a defendant  does not constitute a  waiver of
        the defense of lack of jurisdiction over the person").
        the defense of lack of jurisdiction over the person").

                                          10

Inc., 376 F.2d 543, 547 (3d Cir. 1967) (finding waiver where defendant
        ____

        attended  preliminary injunction  hearing),  seek affirmative  relief,

        see,  e.g., General  Contracting  &  Trading Co.,  940  F.2d at  23-24
        ___   ____  ____________________________________

        (bringing  independent action arising  out of same  transactional core

        constitutes implied submission),  or lend an appearance  of submission

        through extended  inaction, see, e.g.,  Marcial Ucin, 723 F.2d  at 997
                                    ___  ____   ____________

        (waiver found after defendant filed appearance,  attended depositions,

        and waited four years before raising defense).

            Feiger justly cannot be deemed to have submitted to the  jurisdic-

        tion  of the  district court  by filing  objections to  the magistrate

        judge's  proposed findings and recommended disposition as was required

        by 28 U.S.C.   636(b)(1)  and Fed. R. Civ. P.  72(b) in order to  pre-

        serve his right to de novo review of the recommended disposition.  The
                           __ ____

        magistrate judge  did not address  Feiger's specific challenge  to the

        sufficiency of service of process, nor determine the manner of service

        sufficient under  Rhode Island  law.  Thus,  Feiger surely  would have

        been found to have waived the right to de novo  review by the district
                                               __ ____

        court had he  not objected to the recommended  disposition as required

        by  section 636(b)(1) and  rule 72(b).   See Park Motor  Mart, Inc. v.
                                                 ___ ______________________

        Ford Motor Co., 616 F.2d 603 (1st Cir. 1980).  In these circumstances,
        ______________

        Feiger's objections impliedly reaffirmed his consistent  opposition to

        the  district court's  exercise of  personal  jurisdiction before  the

11

magistrate judge.****   It would  represent a distortion of  the waiv-

        er doctrine to  construe Feiger's objections to  the proposed findings

        and  recommended disposition  as  a  waiver of  the  right to  contest

        personal jurisdiction, especially since  Feiger vigorously pursued the

        service of process  issue before the magistrate judge  from the outset

        and the magistrate  judge made no specific finding that  the manner of

        service effected  on Feiger  was sufficient.   Rather, by  raising the

        service of process issue in the June 4 and July 26  motions filed with

        the  magistrate judge  and again  in  his postjudgment  motion to  the

        district  court  under  rule 60(b)(4),  Feiger  promptly,  plainly and

        consistently  preserved his  personal  jurisdiction  defense based  on

        defective service of process.

            The default  judgment is vacated and  the case is  remanded to the
            __________________________________________________________________

        district court for  further proceedings consistent with  this opinion;
        ______________________________________________________________________

        costs to appellant.  
        __________________

____________________

        ****When  Feiger filed objections  to the magistrate  judge's proposed
        ****When  Feiger filed objections  to the magistrate  judge's proposed
        findings and recommended  disposition, he requested that  the district
        findings and recommended  disposition, he requested that  the district
        court "conduct a new hearing  with all parties present and represented
        court "conduct a new hearing  with all parties present and represented
        so that the facts in  this very complicated commercial transaction can
        so that the facts in  this very complicated commercial transaction can
        be brought before the Court and an appropriate decision made."  In the
        be brought before the Court and an appropriate decision made."  In the
        circumstances  of the  present case,  Feiger's statement did  not "un-
        circumstances  of the  present case,  Feiger's statement did  not "un-
        equivocally  show  an intention  to  submit  to the  district  court's
        equivocally  show  an intention  to  submit  to the  district  court's
        jurisdiction."   Jardines Bacata,  Ltd., 878 F.2d  at 1559  (waiver of
        jurisdiction."   Jardines Bacata,  Ltd., 878 F.2d  at 1559  (waiver of
                         ______________________
        right to challenge personal jurisdiction may be found only if there is
        right to challenge personal jurisdiction may be found only if there is
        no other  reasonable explanation of  the conduct).  On  June 4, Feiger
        no other  reasonable explanation of  the conduct).  On  June 4, Feiger
        had challenged the  sufficiency of service  of process; he  reasserted
        had challenged the  sufficiency of service  of process; he  reasserted
        the same defense on  July 26.  There was no  unequivocal showing of an
        the same defense on  July 26.  There was no  unequivocal showing of an
        intention to submit to the jurisdiction of the district court.
        intention to submit to the jurisdiction of the district court.

                                          12