Milligan v. May

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

GREGORY S, MILLIGAN, * Plaintiff, * : * Civil No. 23-2691-BAH JOHN JEFFREY MAY, et al., * Defendants. . ¥ . * * * * * * * * * *, * * * MEMORANDUM OPINION Plaintiff Gregory S. Milligan brought suit against fifty-seven individuals and entities (collectively “Defendants”) seeking recovery of “net winnings” or “fictitious profits” Defendants allegedly received as a result of their investment in a multimillion-dollar Ponzi scheme,! ECF 1.7 Pending before the Court are Plaintiff's four Motions for Alternative Service (the “Motions”). See ECF 128 (motion for alternative service on Defendant Gary Day); ECF 129 (motion for alternative service on Defendants Ved Ishairzay and The Network Group LLC); ECF 130 (motion for alternative service on Defendants Cyrus Irani, Cyman Entertainment, and Barnwood Innovations), and ECF 132 (motion for alternative service on Defendant Gregg Eisenberg). Defendants have not responded as they have not yet been served. All filings include exhibits. The Court has reviewed all relevant filings and finds that no hearing is necessary. See Loc. R. 105.6 (D. Md. 2023). Accordingly, for the reasons stated below, Plaintiffs Motions are GRANTED in part and

Such suits are often referred to as “clawback” actions. See Wiand v.. Cloud, 919 F. Supp. 2d 1319, 1322 n.1 (M.D. Fla. 2013). The.Court references all filings by their respective ECF numbers and’ page numbers by the. ECF- generated page numbers at the top of the page.

DENIED in nerd Specifically, ECF 128 and ECF 132 are granted. ECF 129 and ECF 130 are denied without Prelude Plaintiff is granted an additional sixty (60) days to serve Defendants Ishairzay and Irani:* . I. BACKGROUND In this case, Plaintiff seeks to “provide ... recovery to [] defrauded investors and other

_ eligible claimants? who lost investments as part of a $345 million Ponzi scheme. ECF 1, at 1-2. Fifty-seven individuals and entities were named in the Complaint. ECF 1-1, at 14..On July 2, 2024, this Court granted Plaintiff's request for permission to file motions for substituted service on unserved defendants and directed Plaintiff to file such motions by Tuly 8, 2024, ECF 126. On July 8, 2024, Plaisift filed four motions for alternative service. After failing to effect service of process on ‘Gary Day, Ved Ishairzay and The Network Group LLC, Cyrus Irani, Cyman Entertainment, and Barnwood Innovations, and Gregg Bisenberg, Plaintiff asks this Court to authorize service My serving the summons and complaint to anyone over the age of sixteen at defendants’ last □□□ addresses or, if no one over sixteen is available, by service through regular and certified mail and by affixing the summons and complaint to the front door of defendants’ last known addresses. See ECF 128, at 2; ECF 129, at 2; ECF 130, at 2; ECF 132, at 2. II. LEGAL STANDARD Federal Rule of Civil Procedure 4(e)(2) provides that an individual may be served a summons and complaint by personal delivery, delivery to an agent authorized to receive service of process, or by avin a copy of each at the individual’s dwelling or usual place of abode with someone of stab age and discretion who resides there.” Federal Rule of Civil Procedure 4(e)(1) 3 Should Plaintiff remain unable to serve Defendants through good faith efforts under the statutorily prescribed means, Plaintiff is welcome to again seek an order permitting alternative service.

provides, in pertinent part, that an individual defendant may be served pursuant to “state law... in the state where the district court is located.” Fed R. Civ. P. A(e)(1); see also Hecker v. Garner, No. 22-cv-2152-JMC, 2023 WL 1415957, at *1 (D. Md. Jan. 31, 2023) (“[An] individual may be served by any means allowed by the state where the district court is located or the state where service is to be effected.”) (citations omitted). Under Maryland law, service of process may be effected upon an individual by personal delivery, “leaving a copy of the summons, complaint, and all other papers filed with it at the individual’s dwelling house or usual place of abode with a

resident of suitable age and discretion,” or by mailing these documents to the individual “by certified mail requesting: ‘Restricted Delivery--show to whom, date, address of detivery.”” Mad. Rule 2-121(a). This rule further provides that “sjervice by certified mail under this Rule is complete upon delivery.” Jd. Maryland Rule 2-121(b) applies when defendants are evading service, and provides that: . . When proof is made by affidavit that a defendant has acted to evade service, the court may order that service be made by mailing a copy of the summons, complaint, and all other papers filed with it to the defendant at the defendant’s last known residence and delivering a copy of each to a person of suitable age and discretion at the place of business of the defendant. Additionally, when “proof is made by affidavit that good faith efforts to serve the defendant pursuant to [Md. Rule 2-121(a)] have not succeeded and that service pursuant to [Md. Rule 2- - _121(b)] is inapplicable or impracticable, the court may order any other means of service that it deems appropriate in the circumstances and reasonably calculated to give actual notice.” Md. Rule 21210). □□

To pass constitutional muster, “notice must be ‘reasonably calculated, under all the □ circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.’” Yimilon Corp. v. Empowerment Just. Ctr. Corp., Civ.

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No. pKCaI36 2023 WL 5671616, at *3 (D. Md. Sept. 1, 2023) (citing Mullane v, Cent. Hanover Bank & Tr Co., 339 U.S. 306, 314 (1950) and Elmco Props., Inc. v. Second Nat'l Fed. Sav. Ass'n, 94 F.3d 914, 920-21 (4th Cir. 1996)). This Court has recognized that “[wJhile personal service is the preferred method, Maryland Rule 2-124{c} allows the Courts to customize a method of service specifically for the situation before it.” Fid. Nat'l Title Ins. Co. v. M&R Title, —

- Ine., Civ. No. 12-148-PWG, 2013 WL 12423808, at *2 (D. Md. Feb. 15, 2013). “When available, the combination of the two service options of mailing to the last known address and posting service on the door of ab address, sometimes referred to as ‘nail and mail,’ continuously has been found □ to provide the constitutionally required level of notice in a situation demanding alternative

_ service.” Jd. mi Court has approved of this method of service “when personal process servers attempted service! found that people were inside the residence, but ultimately, were unable to get those people to shswer the door or accept service.” Id.; see also Meade Communities, LLC vy. Calypso, Civ. wi 23-2736-EA, 2024 WL 3370964, at *2 (D. Md. Feb. 7, 2024) (granting defendant’s motion for alternative service where “a person who was more likely than not ‘(defendant] was white [defendant’s] last known residence at the time of each of the three attempts to serve her personally and each time this person refused to open the door and accept service”). I. ANALYSIS Tn this ce, Plaintiff requests the Court authorize service of a copy of the summons, together with a of the complaint, to anyone over the age of sixteen at each defendant’s residence, or, if no one over the age of sixteen is at the address, by affixing the summons and a copy of the complain securely to the front door or main entry of each defendant’s residence and mailing to each defendant via regular U.S. mail and Certified Mail, a copy of the order for substituted service the summons, and the complaint with a return receipt requested. See ECF 128,

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at 2; ECF 129, at 2; ECF 130, at 2; ECF 132, at 2. The Court will examine the facts presented in each affidavit to determine whether alternative service is warranted for each defendant. A. Defendant Gary W. Day Plaintiff hired a private process server, Leon Galliano, to effectuate service of process on Defendant Day at 27 Peppertree, Newport Beach, CA 92660. ECF 128-1, at 2. The address is located in a gated community, but Galliano was “able to gain access to the residence” on four different occasions. /d. During all four attempts at service, no one answered the door. /d, at 2-3. On the first attempt, Galliano observed visible mail addressed to Day inside the mailbox. Id. at 2. On the third attempt, Galliano observed lights on inside the house and a vehicle parked in the driveway, Jd. On the fourth attempt, Galliano observed the same vehicle parked in the driveway from the previous attempt. Jd. at 3. Galliano asserts that “Tpjersonal service is impractical because [Day] absents [himself] and thereby evades service.” Id. at 1. The affidavit sufficiently. contends that Day is physically present at this address and - evading service. Galliano asserts that 27 Peppertree, Newport Beach, CA is “defendant's usual place of abode,” ECF 128-1, at 2, the vehicle Galliano observed parked in the driveway on two separate occasions is registered to Gary Day, ECF 128-2, at 1, and Galliano observed mail addressed to Day inside the mailbox. ECF 128-1, at 2. On at least one occasion, lights were on inside the house and a vehicle registered to Day was parked in the driveway, but no one answered the door. See id. Alternative service is permitted “when personal process servers attempted service, found that people were inside the residence, but ultimately, were unable to get those people to answer the door or accept service.” Fid. Nat’l Title Ins. Co., 2013 WL 12423808, at *2. Because Galliano has unsuccessfully attempted service four different times and attested that personal service is impractical because “defendant absents [him]self,” this Court determines that

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affixing the summons, a copy of the complaint, and a copy of the order for substituted service securely to the ‘ont door or main entry of Day’s residence and mailing a copy of the aforementioned documents, with a return receipt requested, via regular U.S. mail and Certified Mail, is appropricte and reasonably calculated to give actual notice to Defendant Day.’ B. Defendant Ved Ishairzay Plaintiff hired a private process server, Mark Willett, to effectuate service of process on Defendant airy at 6923 Indus Valley Circle, Parish, FL 34219.° ECF 129-1, at 1. Willett attempted service on two occasions. Jd. Willett indicated that on the first attempt, there was “[n]o answer[,] no cars? Id, During the second attempt, the front door was “wide open,” so Willett knocked on the seen door and a woman came to’the door. Id Willett asked if Ishairzay was home and the wofhan “looked over her shoulder and said she didn’t know him.” Jd. She then backed away ton the door, but admitted in response to Willett’s questioning that Ishairzay was her son. Jd. She bated that Ishairzay did not live at the residence and was “not able to talk about him.” Jd. She sis to take Willett’s card when he “tried to give her [his] card to give to [Ishairzay].” fd. According to Willett, the home is not owned by Ishairzay. Jd. □ Plaintiff seeks substituted service “[b]ecause (i} Plaintiffs prior attempts to serve Defendants have be unsuccessful, and (ii) because Plaintiff:has established that Defendants Ved Ishairzay, Individually and on behalf of The Network Group, LLC reside at the 6923 Indus Valley I, | Plaintiff also requests that the Court authorize service of a copy of the summons together with a copy of the complaint to anyone over the age of sixteen at Day’s property. ECF 128, at 2. However, the Court finds that the “nail and mail” method is appropriate under these circumstances and “continuously has been found to provide the constitutionally required level of notice in a situation demanding alternative service.” Fid. Nat'l Title Ins. Co.,2013 WL 12423808, at *2. > Plaintiff filed a Jhoion for alternative service on Defendant Ishairzay individually and on behalf of The Network Group, LLC. ECF 129, at 1. &

Cir., Parish, FL 34219 address[.]” ECF 129, at 2, However, Plaintiff has not established that

Ishairzay resides at the above-referenced address. In fact, Willett’s affidavit expressly states that the home is not owned by Ishairzay. ECF 129-1, at 1. Additionally, the woman who claimed to be Ishairzay’s mother said Ishairzay does not live at that residence. Jd Moreover, Willett only attempted to effectuate service two times, and the first time, there were “no cars” around. Id. Thus, Plaintiff has not demonstrated that service by traditional means is impracticable. Without more, Willett’s encounter with the woman at the residence is insufficient to warrant alternative service, especially given that she stated that Ishairzay ‘did not live there. Under these circumstances, Plaintiff's motion for alternative service on Ishairzay is denied without prejudice, and Plaintiff directed to serve Ishairzay with any method authorized by the federal or applicable state rules. . C. . Defendant Cyrus Irani Plaintiff hired a private process server, Leon Galliano, to effectuate service of process on Defendant Irani at 112 Surfside Ave., Unit B112, Surfside, CA, 90743. ECF 130-1, at 1-2. Galliano attempted service on three different occasions. Jd. at 2. The address is in a secured residential community. /d. During the first attempt at service, Galliano “spoke to a security guard who confirmed that Cyrus Irani does reside[] at the provided address.” Jd, Galliano was then able

to gain access but received no answer at the door. /d. Galliano attempted service two additional times but received no answer each time. Jd. at 2-3. During all three attempts, Galliano did not observe any activity at the residence. See id. (affirming that “[t]he home had no activity and was [quiet.], no activity was observed, and “[i]t was dark and quiet, no activity seen or heard”).

6 Plaintiff filed a motion for alternative service on Defendant Irani individually and on behalf of Barn Wood Innovations, LLC and Cyman Entertainment. ECF 130, at 1. □ . ,

! : Here, Plaintiff has not shown that the Court’s intervention is necessary yet. The affidavit submitted by the cos server merely shows that service was attempted three times, but there is no evidence that | is evading service, such that Maryland Rule 2-212(b) or (c) come into effect. In fact, Galliano | ered that on the first attempt, “(t]he home had no activity and was [quiet,]” on the second stomp he did not “observe any activity,” and on the third attempt, “[i]t was dark and . quiet, no activity Leen or heard.” ECF 130-1, at 2-3. Without more, Plaintiff has not demonstrated that Irani is sin to evade service or that the traditional methods of service are impracticable. The affidavit sin Sy shows that Irani was not home on the three occasions Galliano attempted service. Accordingly, Plaintiffs motion for alternative service on Irani is denied without □ prejudice, and Plaintif is directed to serve Irani with any method authorized by the federal or applicable state rules. D. Defendant Gregg Eisenberg Plaintiff hired a private process server, Louis Jones, to effectuate service of process on Defendant Eisenberg at 10292 Grosvenor Place, Rockville, MD, 20852. ECF 132-1, at 1. Jones attempted to effectuate service on three different occasions. Jd. During the first attempt, the “driveway was chit and “[t]he house appeared dark.” Jd. Jones left a notice on the door for Eisenberg. Ja. uring the second attempt, the driveway was “still empty,” and the house “still appeared dark.” The previous notice was still on the door. /d On the third attempt, the

_ driveway was empty, the house was still dark, but the “previous note had been removed.” Jd. Jones then left othe notice for Eisenberg. /d. Jones affirmed that “future efforts are not apt to be successful.” la Plaintiff also notes that.Maryland property records reflect the owner of the - property to be “Renee Sampson Eisenberg, the saine last name as Defendant Greg Eisenberg.” ECF 132, 12.0 :

Based on the evidence presented in Jones’s affidavit, it is clear that Eisenberg likely lives at the address, has knowledge of the suit against him, and is evading service. On three different occasions, Jones attempted service. ECF 132-1, at 1. On two different occasions, Jones left a notice on the door. Jd. What is more, someone removed the notice in between Jones’s first and third visits to the residence. Id. Further, Maryland property records show that the house isowned =

_ by someone with the same last name as Defendant. ECF 132-2, at 1. Under the circumstances, the Court agrees with Jones that he has “demonstrated due diligence” and that “future efforts are

. not apt to be successful.” ECF 132-1, at 1. Accordingly, service by regular and certified mail, along with affixing the summons, complaint, and order for substituted service to Eisenberg’s front door, is appropriate and reasonably calculated to give actual notice to Eisenberg. Mullane, 339 USS. at 314.7

IV. CONCLUSION . In light of the foregoing, it is hereby ORDERED that Plaintiff's Motions for Alternative

- Service (ECFs 128, 129, 130, and 132) are GRANTED in part and DENIED in part. ECF 128 and □ ECF 132 are granted. ECF 129 and ECF 130 are denied without prejudice.

It is further ORDERED that within fourteen (14) days of this Order, Plaintiff shall serve Defendants Day and Eisenberg by regular and certified mail and by posting the summons, complaint, documents filed with the complaint, and order authorizing substituted service at Day : and Eisenberg’s residences. Service of process upon Day and Bisenberg shall be deemed complete

7 Plaintiff also requests that the Court authorize service of a copy of the summons and complaint to anyone over the age of sixteen at Defendant Eisenberg’s property. ECF 132, at 2. However, the Court finds that the “nail and mail” method is appropriate under these circumstances and “continuously has been found to provide the constitutionally required level of notice in a situation demanding altérnative service.” Fid. Nat’l Title Ins. Co., 2013 WL 12423808, at *2.

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30 days after the fn complaint, documents filed with the complaint, and order authorizing substituted sve are mailed and posted. . It is sah ORDERED that Plaintiff shall serve Defendants Ishairzay and Irani with any method suo by the Federal Rules of Civil Procedure or applicable state rules. This Court □ _ previously stead the service deadline to fourteen (14) days after the ruling on the motions for substituted senile See ECF 126. The Court modifies this extension of time and instead grants Plaintiff an seta sixty (60) days to serve Defendants Ishairzay and Irani. It is rut ORDERED that the Clerk of the Court shall mail a copy of this Order to the last known sdareee of the defendants.

A vow implementing Order will issue.

Dated: October 21, 2024 /s/ Brendan A. Hurson United States District Judge

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