In re: 701 Mariposa Project, LLC

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: July 31, 2014
• Docket: CC-13-1329-KuBlPa
• Status: Published

Opinion

FILED JUL 31 2014 1 SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL 2 OF THE NINTH CIRCUIT

3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. CC-13-1329-KuBlPa ) 6 701 MARIPOSA PROJECT, LLC, ) Bk. No. SV 12-11486-MT ) 7 Debtor. ) ______________________________) 8 ) SHERRIE KEYS, ) 9 ) Appellant, ) 10 ) v. ) OPINION 11 ) 701 MARIPOSA PROJECT, LLC, ) 12 ) Appellee. ) 13 ______________________________) 14 15 Argued and Submitted on June 26, 2014 at Pasadena, California 16 Filed – July 31, 2014 17 _____________ 18 Appeal from the United States Bankruptcy Court for the Central District of California 19 Honorable Maureen A. Tighe, Bankruptcy Judge, Presiding 20 21 22 Appearances: Appellant Sherrie Keys argued pro se; G. Bryan Brannon argued for appellee 701 Mariposa Project, 23 LLC. 24 25 Before: KURTZ, BLUMENSTIEL*, and PAPPAS, Bankruptcy Judges. 26 27 * The Honorable Hannah L. Blumenstiel, Bankruptcy Judge for 28 the Northern District of California, sitting by designation. 1 KURTZ, Bankruptcy Judge: 2 3 INTRODUCTION 4 Pursuant to Rule 3004,1 debtor 701 Mariposa Project, LLC 5 filed a proof of claim on behalf of Sherrie Keys. 701 Mariposa 6 then filed an objection to that claim, which the bankruptcy court 7 sustained based in part on Keys’ failure to respond to the claim 8 objection. Roughly four months later, Keys filed a motion 9 seeking to set aside the disallowance of her claim, but the 10 bankruptcy court denied that motion. Keys appeals from the 11 denial of her motion. 12 The bankruptcy court’s order disallowing Keys’ claim is void 13 because the bankruptcy court did not have personal jurisdiction 14 over Keys. Keys never filed a proof of claim, nor did she 15 participate in any way in the bankruptcy case before she filed 16 her motion to set aside, so she never consented to the bankruptcy 17 court exercising jurisdiction over her or her claim. 18 Furthermore, 701 Mariposa’s service of process by mail on Keys 19 did not comply with Rule 7004(b)(1). 20 As a result, the bankruptcy court should have granted Keys’ 21 motion and should have set aside the order disallowing Keys’ 22 claim. Therefore, we REVERSE and REMAND. 23 FACTS 24 701 Mariposa is a limited liability company that was formed 25 1 26 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and 27 all Rule references are to the Federal Rules of Bankruptcy Procedure. All Civil Rule references are to the Federal Rules of 28 Civil Procedure.

2 1 for the purpose of taking title to a single asset: a twenty-four- 2 unit apartment building located on Mariposa Avenue in Los 3 Angeles, California.2 701 Mariposa purchased the property at a 4 nonjudicial foreclosure sale that took place in July 2011. 701 5 Mariposa took title subject to the senior liens of Pacific 701 6 Mariposa, LLC. 7 Keys is one of the former occupants of the apartment 8 building. According to Keys, she duly and timely paid $600 9 monthly rent to an organization called People in Progress 10 (“PIP”). In turn, PIP was obligated to pay rent to the prior 11 owner of the apartment building, 709 South Mariposa, Inc., 12 pursuant to a lease agreement. At some point, PIP stopped making 13 rent payments to 709 South Mariposa. In May 2011, PIP vacated 14 the apartment building and notified the other building occupants, 15 including Keys, that it was discontinuing its affordable housing 16 program and that the occupants would need to leave. 17 In August 2011, within days of its acquisition of the 18 apartment building, 701 Mariposa hired a new property manager. 19 According to 701 Mariposa, the new property manager, Pearson 20 Management, immediately was confronted with a number of serious 21 problems including unpaid utility bills, uncollected garbage, 22 unrepaired fixtures and plumbing, and nonpaying occupants. 23 Pearson Management, 701 Mariposa explains, took immediate steps 24 2 To facilitate our review and our recitation of facts, the 25 Panel has reviewed the papers the parties filed in Keys’ district 26 court lawsuit and in 701 Mariposa’s bankruptcy cases. While many of these papers were not included in the parties’ excerpts of 27 record, we can and do take judicial notice of the filing and contents of these papers. See O’Rourke v. Seaboard Sur. Co. (In 28 re E.R. Fegert, Inc.), 887 F.2d 955, 957–58 (9th Cir. 1989).

3 1 to rectify these problems. 2 Apparently, Pearson Management’s initial management efforts 3 included an attempt to evict Keys. While Pearson’s initial 4 eviction attempt was not successful, Keys eventually was evicted 5 in September 2012. 6 In July 2012, Keys filed a lawsuit in the United States 7 District Court against Pearson, 701 Mariposa and others seeking 8 over $4.5 million in compensatory and punitive damages. 9 According to Keys, the defendants’ alternate efforts to evict her 10 or to persuade her to relocate were all part of a pattern and 11 practice designed to force out of the building the occupants 12 brought in by PIP, who were predominantly minorities paying 13 below-market-rate rent, and to replace them with white tenants 14 willing and able to pay market-rate rents of double or triple 15 what the PIP tenants were paying. Keys asserted that this 16 pattern and practice violated local, state and federal law. 17 Meanwhile, 701 Mariposa filed its first chapter 11 18 bankruptcy case in August 2011, which was dismissed in February 19 2012. 701 Mariposa filed its second chapter 11 case later that 20 same month. As reflected in 701 Mariposa’s schedules, its only 21 significant asset was the apartment building. 22 In April 2012, the bankruptcy court set a claims bar date of 23 June 10, 2012. 701 Mariposa served notice of the claims bar date 24 on its scheduled creditors, but Keys did not receive this notice 25 because she was not a scheduled creditor. 701 Mariposa did not 26 initially list Keys as creditor in its bankruptcy schedules, nor 27 did 701 Mariposa amend its schedules either before or after Keys 28 filed her $4.5 million district court lawsuit.

4 1 However, 701 Mariposa did file a notice of bankruptcy filing 2 in the district court lawsuit in August 2012, which was served on 3 Keys. In addition, pursuant to Rule 3004, 701 Mariposa filed 4 that same month a $4.5 million proof of claim on Keys’ behalf. 5 701 Mariposa attached to the proof of claim a copy of Keys’ 6 district court complaint. 7 701 Mariposa then filed, in October 2012, an objection to 8 the proof of claim. In that objection, 701 Mariposa asserted 9 that Keys’ claim should be disallowed not only as untimely but 10 also because the claim had no merit factually or legally. 701 11 Mariposa further asserted that the claim should be disallowed 12 because Keys was suing 701 Mariposa in the district court in 13 violation of the automatic stay. 14 Based on 701 Mariposa’s notice of bankruptcy filing, the 15 district court entered an order directing Keys to file either a 16 request for voluntary dismissal of 701 Mariposa from the district 17 court lawsuit or a motion for relief from stay seeking permission 18 from the bankruptcy court to proceed with the district court 19 lawsuit as against 701 Mariposa. 20 Keys never complied with the district court’s order. 21 Instead, on November 5, 2012, she filed a motion seeking an 22 extension of time to comply with the district court’s order. In 23 the process of requesting this relief, Keys admitted that she had 24 received email notice of 701 Mariposa’s claim objection and that 25 she was aware the claim objection had been set for hearing on 26 November 29, 2012. Furthermore, she attached to her district 27 court extension motion a copy of 701 Mariposa’s claim objection. 28 Keys never filed a response to 701 Mariposa’s claim

5 1 objection. After the November 29, 2012 hearing date, the 2 bankruptcy court sustained the claim objection and disallowed 3 Keys’ claim for the reasons stated in the claim objection and 4 based on Keys’ failure to respond. The court entered its order 5 disallowing Keys’ claim on December 4, 2012. 6 The docket from the district court lawsuit and the documents 7 filed therein demonstrate that Keys was aware of the bankruptcy 8 court’s order disallowing her claim by no later than December 12, 9 2012, when she replied to a December 6, 2012 opposition and a 10 December 6, 2012 judicial notice request filed by 701 Mariposa in 11 the district court lawsuit. 701 Mariposa’s December 6, 2012 12 district court filings specifically refer to and attach a copy of 13 the bankruptcy court’s December 4, 2012 order disallowing Keys’ 14 claim. 15 Even so, Keys did not seek relief from the bankruptcy 16 court’s December 4, 2012 claim disallowance order until over four 17 months later, when she filed her motion to set aside that order. 18 Keys once again admitted in that motion that she had actual 19 notice of 701 Mariposa’s claim objection and the date set for the 20 hearing thereon. The only relevant grounds Keys stated in 21 support of the motion were insufficient service of process and 22 the violation of her due process rights. 23 After 701 Mariposa responded to the reconsideration motion, 24 the bankruptcy court held a hearing on the motion on June 28, 25 2013, at which the court adopted its tentative ruling as its 26 final ruling. The court found that Keys’ actual notice of the 27 claim objection was sufficient to satisfy the minimal 28 requirements of due process. As for the asserted defective

6 1 service of process, the bankruptcy court found that Keys was 2 evicted from the apartment building in September 2012. The court 3 further found that the apartment building no longer was Keys’ 4 “dwelling house or usual place of abode” as specified in Rule 5 7004(b)(1) and therefore 701 Mariposa’s service of process was 6 defective. Nonetheless, the court found that 701 Mariposa’s 7 service of process, in conjunction with Keys’ actual notice, met 8 the “substantial compliance standard” for service of process and 9 thus was sufficient to give the bankruptcy court personal 10 jurisdiction over Keys. Consequently, the bankruptcy court 11 denied Keys’ motion to set aside, and Keys timely appealed. 12 JURISDICTION 13 The bankruptcy court had subject matter jurisdiction 14 pursuant to 28 U.S.C. §§ 1334 and 157(b)(2)(B). We have 15 appellate jurisdiction under 28 U.S.C. § 158. We discuss below 16 the bankruptcy court’s personal jurisdiction over Keys. 17 ISSUE 18 Was the order disallowing Keys’ claim void either because 19 Keys was denied due process or because the bankruptcy court 20 lacked personal jurisdiction over Keys? 21 STANDARDS OF REVIEW 22 Whether notice was sufficient for due process purposes is 23 reviewed de novo. See Frates v. Wells Fargo Bank, N.A. (In re 24 Frates), 507 B.R. 298, 301 (9th Cir. BAP 2014). To the extent 25 the underlying facts are undisputed, the bankruptcy court’s 26 determination regarding personal jurisdiction also is reviewed de 27 novo. See Travelers Cas. & Sur. Co. of Am. v. Brenneke, 551 F.3d 28 1132, 1135 (9th Cir. 2009). To the extent certain facts

7 1 regarding service of process are disputed, those facts are 2 reviewed under the clearly erroneous standard. See S.E.C. v. 3 Internet Solutions for Business Inc., 509 F.3d 1161, 1165 (9th 4 Cir. 2007). 5 Findings of fact are clearly erroneous if they are 6 “illogical, implausible, or without support in the record.” Retz 7 v. Samson (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010). 8 DISCUSSION 9 Keys has argued in relevant part that 701 Mariposa’s service 10 of the claim objection was defective. Keys presses this argument 11 on appeal even though she has admitted (a number of times) that 12 she actually knew of the claim objection well before November 29, 13 2012 – the date set for the hearing on the claim objection. 14 According to Keys’ own declaration testimony, she found out about 15 the claim objection and the hearing date from an email that she 16 received from 701 Mariposa’s counsel on October 15, 2012. 17 Furthermore, the record establishes that she had received a full 18 copy of the claim objection by no later than November 8, 2012. 19 On that date, she filed papers in the district court lawsuit to 20 which she attached a copy of the claim objection. 21 As Keys notes and the bankruptcy court found, 701 Mariposa 22 served Keys at her address in the apartment building, but Keys no 23 longer was living in the apartment building at that time because 24 she had been evicted in September 2012. These factual findings 25 have not been challenged on appeal, so we accept them as true. 26 See Sachan v. Huh (In re Huh), 506 B.R. 257, 272 (9th Cir. BAP 27 2014) (en banc). Because 701 Mariposa did not serve Keys at her 28 “dwelling house or usual place of abode,” 701 Mariposa’s

8 1 attempted service of process by mail did not comply with the 2 requirements of Rule 7004(b)(1). 3 Based on this defective service of process, Keys in essence 4 asserts two things: (1) that she was denied due process; and (2) 5 that, as a result of 701 Mariposa’s defective service of process, 6 the bankruptcy court did not have personal jurisdiction over 7 her.3 8 Both of Keys’ assertions – lack of due process and lack of 9 personal jurisdiction – implicate Rule 60(b)(4), which applies to 10 Keys’ motion to set aside. See United Student Funds, Inc. v. 11 Wylie (In re Wylie), 349 B.R. 204, 209 (9th Cir. BAP 2006) (“when 12 reconsideration under Rule 3008 is sought after the . . . appeal 13 period has expired, the motion is subject to the constraints of 14 FRCP 60(b) as incorporated by Rule 9024.”). If either of Keys’ 15 assertions is true, then the December 2012 claim disallowance 16 order was void, and the bankruptcy court should have granted 17 Keys’ motion to set aside. See Owens–Corning Fiberglas Corp. v. 18 Ctr. Wholesale, Inc. (In re Ctr. Wholesale, Inc.), 759 F.2d 1440, 19 1448 (9th Cir. 1985); see also S.E.C. v. Ross, 504 F.3d 1130, 20 1139 (9th Cir 2007) (“A judgment entered without jurisdiction 21 over the defendant is void.”). We will address each of Keys’ 22 assertions in turn. 23 1. Lack of Due Process 24 The due process requirements for notice are relatively 25 26 3 We have construed Keys’ pro se appeal briefs liberally, 27 in accordance with Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990), partially overruled on other grounds 28 by, Bell Atl. Corp. v. Twombly, 550 U.S. 544, 562–63 (2007).

9 1 minimal; they merely require notice “reasonably calculated, under 2 all the circumstances, to apprise interested parties of the 3 pendency of the action and afford them an opportunity to present 4 their objections.” Mullane v. Cent. Hanover Bank & Trust Co., 5 339 U.S. 306, 314 (1950). 6 We understand that Keys may not have received all of the 7 notices regarding the commencement of the bankruptcy case and the 8 claims bar date contemplated under the Bankruptcy Code and the 9 Rules, but Keys simply cannot parlay these procedural defects 10 into a due process violation concerning 701 Mariposa’s claim 11 objection. Keys has admitted that she had actual notice of the 12 claim objection and the hearing thereon. Furthermore, she had a 13 full copy of the claim objection papers at least three weeks 14 before the date set for the claim objection hearing. These facts 15 are more than sufficient to satisfy the due process requirements 16 with respect to the claim objection proceedings. See generally 17 United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 272 18 (2010). Thus, Keys’ due process argument lacks merit. 19 2. Lack of Personal Jurisdiction 20 Effective service of process, made in compliance with Rule 21 7004 and Civil Rule 4, is a prerequisite to the bankruptcy court 22 exercising personal jurisdiction over a litigant. Marciano v. 23 Fahs (In re Marciano), 459 B.R. 27, 37 (9th Cir. BAP 2011); 24 Morris Motors v. Peralta (In re Peralta), 317 B.R. 381, 386 (9th 25 Cir. BAP 2004). As the Ninth Circuit has put it, “[b]efore a 26 federal court may exercise personal jurisdiction over a 27 defendant, the procedural requirement of service of [process] 28 must be satisfied.” Rubin v. Pringle (In re Focus Media Inc.),

10 1 387 F.3d 1077, 1081 (9th Cir. 2004) (quoting Omni Capital Int’l, 2 Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987)). 3 Generally speaking, the service of process prerequisite to 4 personal jurisdiction applies in contested matters the same as 5 it does in adversary proceedings. See Rule 9014(b)(requiring 6 service of contested matter motions in the same manner that a 7 summons and complaint must be served under Rule 7004); see also 8 In re Frates, 507 B.R. at 302 (stating that, “when a particular 9 creditor’s rights are at issue,” the bankruptcy rules require 10 more than the minimal notice required to satisfy due process 11 concerns). Accord, Beneficial Cal., Inc. v. Villar (In re 12 Villar), 317 B.R. 88, 93-94 (9th Cir. BAP 2004). 13 Claims objections undoubtedly are contested matters subject 14 to the requirements of Rule 9014. See Advisory Committee Notes 15 accompanying Rules 3007 and 9014. However, unlike most contested 16 matters, claims objections are subject to a specific Rule stating 17 in part as follows: “A copy of the objection [to claim] with 18 notice of the hearing thereon shall be mailed or otherwise 19 delivered to the claimant . . . at least 30 days prior to the 20 hearing.” Rule 3007(a). 21 In the past, the Panel has offered conflicting views 22 regarding whether Rule 3007(a)’s mailing/delivery requirements 23 are in addition to or in lieu of Rule 7004’s service 24 requirements. Compare United States v. Levoy (In re Levoy), 182 25 B.R. 827, 834 (9th Cir. BAP 1995), with Jorgenson v. State Line 26 Hotel, Inc. (In re State Line Hotel, Inc.), 323 B.R. 703, 711-12 27 (9th Cir. BAP 2005), vacated as moot, 242 Fed.Appx. 460, 462 (9th 28 Cir. 2007). Nonetheless, regardless of whether Rule 7004’s

11 1 service requirements ordinarily apply when a creditor files a 2 proof of claim and an interested party objects thereto, we hold 3 that they do apply when, as here, the creditor has not filed a 4 proof of claim, has not otherwise participated in the bankruptcy 5 case, and has not otherwise engaged in any conduct that could be 6 construed as consent to the bankruptcy court’s personal 7 jurisdiction. We further hold that when, as here, Rule 7004’s 8 service requirements have been contravened, the bankruptcy court 9 lacks personal jurisdiction over the creditor. 10 In the vast majority of cases, it is beyond dispute that the 11 bankruptcy court has personal jurisdiction over any creditor 12 whose proof of claim has been objected to because the creditor 13 consents to the bankruptcy court’s personal jurisdiction by 14 filing a proof of claim, thereby enabling the bankruptcy court to 15 allow or disallow the claim and to determine the creditor’s 16 entitlement (if any) to share in distributions from the 17 bankruptcy estate. See Katchen v. Landy, 382 U.S. 323, 334-35 18 (1966) (stating that “[b]y presenting their claims respondents 19 subjected themselves to all the consequences that attach to an 20 appearance” and that “a creditor who offers a proof of claim and 21 demands its allowance is bound by what is judicially 22 determined”); Tucker Plastics, Inc. v. Pay’N Pak Stores, Inc. (In 23 re PNP Holdings Corp.), 99 F.3d 910, 911 (9th Cir. 1996) (holding 24 that creditor consented to bankruptcy’s personal jurisdiction by 25 filing proof of claim). 26 But when, as here, the creditor has not filed a proof of 27 claim, has not otherwise participated in the bankruptcy case, and 28 has not otherwise engaged in any conduct that could be construed

12 1 as consent to the bankruptcy court’s personal jurisdiction, 2 personal jurisdiction principles dictate that federal courts 3 cannot exercise jurisdiction over a litigant in the absence of 4 proper service of process. See Omni Capital Int’l, Ltd., 484 5 U.S. at 104. 6 For this reason, “[a] person is not bound by a judgment in a 7 litigation to which he or she has not been made a party by 8 service of process.” Mason v. Genisco Technology Corp., 960 F.2d 9 849, 851 (9th Cir. 1992); see also Taylor v. Sturgell, 553 U.S. 10 880, 884 (2008). Similarly, when a federal court lacks personal 11 jurisdiction over a litigant, that litigant “is always free to 12 ignore the judicial proceedings, risk a default judgment, and 13 then challenge that judgment on jurisdictional grounds in a 14 collateral proceeding.” Ins. Corp. of Ir., Ltd. v. Compagnie des 15 Bauxites de Guinee, 456 U.S. 694, 706 (1982). 16 Even though claims objections do not ordinarily generate 17 personal jurisdiction issues, the bankruptcy court here 18 apparently realized that, because Keys had not filed a proof of 19 claim or otherwise participated in the bankruptcy case, the issue 20 Keys raised in her motion about the sufficiency of service of the 21 claims objection implicated the personal jurisdiction of the 22 court. That is why the bankruptcy court felt compelled to 23 discuss the substantial compliance doctrine, which under certain 24 circumstances excuses minor technical defects in service of 25 process. See Borzeka v. Heckler, 739 F.2d 444, 446–48 (9th Cir. 26 1984). Under the substantial compliance doctrine, a federal 27 court need not dismiss a complaint for insufficient service of 28 process based on technical defects in service of process when:

13 1 (a) the party that had to be served personally received actual notice, (b) the defendant would suffer no 2 prejudice from the defect in service, (c) there is a justifiable excuse for the failure to serve properly, 3 and (d) the plaintiff would be severely prejudiced if his complaint were dismissed. 4 5 Whale v. United States, 792 F.2d 951, 953 (9th Cir. 1986) 6 (quoting Borzeka, 739 F.2d at 447). 7 The bankruptcy court concluded that 701 Mariposa had met the 8 requirements of the substantial compliance doctrine. The court 9 found, based on Keys’ own admissions, that she had actual notice 10 of both the bankruptcy filing and the claim objection 11 proceedings. In addition, the bankruptcy court found that 701 12 Mariposa had a justifiable excuse for its defective service. As 13 the court pointed out, well after her eviction in September 2012, 14 Keys continued to state in papers filed in the district court 15 litigation that she lived in the apartment building. We have no 16 issue with these findings. 17 However, the bankruptcy court’s findings regarding prejudice 18 are problematic. The court in essence found that each party 19 potentially would be subject to prejudice depending on how it 20 ruled on the reconsideration motion but that the equities tipped 21 in favor of 701 Mariposa because Keys did not take any steps to 22 remedy her automatic stay violation (her continuing prosecution 23 of the district court lawsuit) after she learned of 701 24 Mariposa’s second bankruptcy filing. This is not the type of 25 assessment the substantial compliance standard calls for. On its 26 face, the standard requires “no prejudice” to the party subjected 27 to the defective service of process (in this instance, Keys) and 28 “severe prejudice” to the party whose request for relief is

14 1 subject to dismissal for insufficient service of process (in this 2 instance, 701 Mariposa). The bankruptcy court did not find that 3 these specific criteria had been met, and that by itself should 4 have prevented the court from applying the substantial compliance 5 doctrine. 6 Furthermore, we disagree with the bankruptcy court’s finding 7 regarding the prejudice to 701 Mariposa that would arise if the 8 court did not excuse the defective service of process. The only 9 prejudice the court found was the obligation 701 Mariposa would 10 have to “administer” Keys’ $4.5 million claim in the absence of 11 the court’s order disallowing Keys’ claim. In this instance, by 12 “administer” the court in essence meant that 701 Mariposa would 13 be forced to address Keys’ claim on the merits if Keys were 14 allowed to proceed with her challenge to the merits of 701 15 Mariposa’s claim objection. The Ninth Circuit has held that 16 being denied a “quick victory” and instead having to defend the 17 merits of a claim typically constitutes little or no prejudice. 18 See Bateman v. U.S. Postal Serv., 231 F.3d 1220, 1224–25 (9th 19 Cir. 2000). In short, we hold that the bankruptcy court’s 20 finding regarding the prejudice to 701 Mariposa was clearly 21 erroneous. 22 The biggest problem with the bankruptcy court’s substantial 23 compliance determination concerns whether the bankruptcy court 24 should have applied the doctrine in this context at all. From 25 our review of the cases applying the doctrine, it appears that 26 the Ninth Circuit only has permitted the doctrine to be used as a 27 shield to protect plaintiffs from the dismissal of their 28 complaints based on technical defects in service of process.

15 1 See, e.g., Whale, 792 F.2d at 953; Borzeka, 739 F.2d at 446–48. 2 The Ninth Circuit has not, based upon our research, permitted 3 plaintiffs to use the doctrine as a sword against defaulting 4 defendants who seek to set aside a default judgment based on 5 defective service of process. 6 We acknowledge that the Ninth Circuit in other decisions has 7 stated that, when the defendant receives sufficient notice, the 8 service of process rules generally should be liberally construed 9 to uphold service. See Brenneke, 551 F.3d at 1135 (citing Chan 10 v. Soc’y Expeditions, Inc., 39 F.3d 1398, 1404 (9th Cir. 1994)); 11 United Food & Commercial Workers Union v. Alpha Beta Co., 736 12 F.2d 1371, 1382 (9th Cir. 1984). Nonetheless, the Ninth Circuit 13 also has stated that “neither actual notice nor simply naming the 14 defendant in the complaint will provide personal jurisdiction 15 without substantial compliance with [Civil] Rule 4.” Brenneke, 16 551 F.3d at 1135 (emphasis added) (quoting Benny v. Pipes, 799 17 F.2d 489, 492 (9th Cir. 1986)). 18 As a matter of law, we do not consider 701 Mariposa’s 19 service by mail of its claim objection at the apartment building 20 from which Keys had been evicted, combined with service by email, 21 sufficient to qualify as substantial compliance with the service 22 by mail requirements set forth in Rule 7004(b)(1), which require 23 service by mail at the “individual’s dwelling house or usual 24 place of abode or to the place where the individual regularly 25 conducts a business or profession.” In In re Villar, we 26 explained that service of process by mail for the purpose of 27 establishing personal jurisdiction over a litigant is a “rare 28 privilege which should not be abused or taken lightly.” In re

16 1 Villar, 317 B.R. at 93. We further explained that “[w]here the 2 alternative to service by mail is hiring a process server to 3 serve the papers in person, it seems like a small burden to 4 require literal compliance with the rule.” Id. (quoting In re 5 Schoon, 153 B.R. 48, 49 (Bankr. N.D. Cal. 1993)). 6 Under these circumstances, service by mail of Keys at an 7 address where she used to live simply is not substantial 8 compliance with Rule 7004(b)(1). 9 Finally, the Supreme Court has indicated that, when the 10 bankruptcy court has an “arguable basis” for exercising 11 jurisdiction, a defect in that jurisdiction does not render the 12 trial court’s judgment void for purposes of a subsequent motion 13 under Civil Rule 60(b)(4). Espinosa, 559 U.S. at 271. But the 14 decisions Espinosa cited in support of the arguable basis 15 doctrine indicate that the doctrine arises in the context of 16 subject matter jurisdiction and not in the context of personal 17 jurisdiction. We decline to extend the arguable basis doctrine 18 to the bankruptcy court’s determination here that it had personal 19 jurisdiction over Keys. To do so would bring our decision into 20 conflict with other Supreme Court precedent stating that 21 litigants always may collaterally raise personal jurisdiction 22 defects. See Compagnie des Bauxites de Guinee, 456 U.S. at 706 23 (“A defendant is always free to ignore the judicial proceedings, 24 risk a default judgment, and then challenge that judgment on 25 jurisdictional grounds in a collateral proceeding.”). 26 CONCLUSION 27 For the reasons set forth above, we REVERSE and REMAND. On 28 remand, the bankruptcy court should enter an order granting Keys’

17 1 motion to set aside the court’s claim disallowance order.4 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 4 In its appeal briefs, 701 Mariposa requested that 25 sanctions be imposed against Keys for filing a frivolous appeal. 26 701 Mariposa’s sanctions request did not comply with Rule 8020, which contemplates a separately filed motion. In any event, 27 because Keys has prevailed in this appeal, we would have denied 701 Mariposa’s sanctions request even if it had been properly 28 brought before us.