Opinion
Civil Action No. 3:01-CV-2327-R
February 27, 2002
FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Pursuant to the Orders of Reference, filed December 17, 2001, Plaintiffs Original Petition Application for Temporary Restraining Order, filed November 19, 2001, and Defendant's Motion to Dismiss, filed December 17, 2001, have been referred to this Court for hearing, if necessary, and for determination or recommendation. For the following reasons, the Court recommends that the motion to dismiss be DENIED without prejudice, that the Plaintiff's first attempt at service of process be quashed, and that the Plaintiff be given forty-five (45) days to effect proper service. Consequently, the Court further recommends that the application for temporary restraining order be held in abeyance pending the Plaintiffs effectuation of proper service on the Defendant.
I. Background A. Procedural History
The background facts come from Plaintiff's Original Petition and Application for Temporary Restraining Order, filed November 19, 2001; from Defendant's Motion to Dismiss . . . and Brief in Support Thereof, filed December 10, 2001; from Plaintiff's Memorandum in Opposition to Defendant's Motion to Dismiss . . . and Brief in Support Thereof, filed January 22, 2002; and from Plaintiff's Appendix to the Memorandum in Opposition to Defendant's Motion to Dismiss, filed January 22, 2002. The background facts are undisputed unless otherwise noted.
Plaintiff Virgie L. Grant-Brooks (Grant-Brooks) filed this pro se action against NationsCredit Home Equity Services Corporation (NationsCredit) on November 19, 2001. ( P.'s Orig. Pet. at 1.) Grant-Brooks seeks a temporary restraining order to enjoin a foreclosure sale of her home on the grounds that NationsCredit violated statutory requirements and committed fraud in inducing a secured transaction. ( Id. at 2; P.'s Memo. at 4-5.) The District Court ordered NationsCredit to respond to Grant-Brooks' original petition and application for temporary restraining order, and, on December 17, 2001, NationsCredit filed its response, which included a motion to dismiss. On January 3, 2002, the undersigned Magistrate Judge allowed Grant-Brooks to respond to the motion to dismiss within twenty days. On January 22, 2002, Grant-Brooks filed her memorandum in opposition to the motion to dismiss. Having reviewed the procedural history of the instant motions, the Court now turns to the facts that gave rise to the lawsuit.
B. Factual History
On November 9, 1998, Grant-Brooks and her husband, Ronnie Brooks, obtained a home equity loan in the amount of $180,800 from WMC Mortgage Corporation. ( P.'s App. at Ex. H.) On November 19, 1998, Grant-Brooks executed a deed of trust on the home to secure payment of the home equity note. ( P.'s Orig. Pet. at 2.) On April 13, 2000, WMC Mortgage assigned the note to NationsCredit; however, according to NationsCredit, Grant-Brooks thereafter defaulted on the payment of the note. ( P.'s Memo. at 3; D.'s Mot. at 2.) On July 18, 2000, Grant-Brooks filed for bankruptcy relief, but, on October 5, 2001, the United States Bankruptcy Court dismissed her case with prejudice to the refiling of the case for 180 days. ( Id.) On November 5, 2001, NationsCredit notified Ronnie Brooks of its intent to accelerate collection of the debt, and, on November 19, 2001, Grant-Brooks filed this action in the Northern District of Texas. ( Id.; P.'s Memo. at 4.)
Grant-Brooks argues that she only applied for a $22,000 home equity loan; however, the documents Grant-Brooks provides clearly state that the home equity loan amount was $180,800. (P.'s Orig. Pet. at 4.) Because this discrepancy goes to the heart of Grant-Brooks' charge of fraud against NationsCredit, the Court does not delve into it further at this time.
NationsCredit moves to dismiss the action. Specifically, NationsCredit asserts that: (1) the Court lacks subject matter jurisdiction because Grant-Brooks failed to raise a federal question, (2) the Court lacks personal jurisdiction over NationsCredit because Grant-Brooks issued insufficient process and service of process, (3) Grant-Brooks failed to state a claim upon which relief can be granted, and (4) Grant-Brooks failed to properly plead. ( D.'s Mot. at 2-10.) Although GrantBrooks refutes NationsCredit's grounds for dismissal, she nevertheless requests that she be allowed to cure any deficiencies that might exist in her process, in her service of process, or in her pleadings. ( P.'s Memo. at 2-4, 6.) Because the Court finds that it lacks personal jurisdiction over NationsCredit due to insufficient process and service of process, and because the Court nevertheless does not recommend dismissal of the case, the Court limits its analysis to NationsCredit's jurisdictional challenges and does not reach the application for temporary restraining order.
II. Lack of Subject Matter Jurisdiction
NationsCredit challenges this Court's subject matter jurisdiction on the basis that Grant-Brooks has failed to allege a federal question under 28 U.S.C. § 1331. ( D.'s Mot. at 2-3.) However, NationsCredit fails to recognize that Grant-Brooks alleges diversity jurisdiction under 28 U.S.C. § 1332. ( P.'s Orig. Pet. at 1; P.'s Memo. at 2.) "The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000 exclusive of interest and costs, and is between citizens of different states." 28 U.S.C.A. § 1332(a)(1). In the instant case, Grant-Brooks is a Texas resident, NationsCredit is a Florida corporation, and the amount in controversy exceeds $75,000. Therefore, this Court possesses subject matter jurisdiction under 28 U.S.C. § 1332.
III. Lack of Personal Jurisdiction Due to Insufficient Process and Service of Process
NationsCredit challenges this Court's personal jurisdiction due to insufficient process and service of process. (D.'s Mot. at 3-6.) Before analyzing the merits of the challenge, the Court will first detail the relevant facts and legal standards.
A. Facts
Grant-Brooks attempted service of process on NationsCredit through certified mail. (P.'s App. at Ex. C.) In attempting service, Grant-Brooks mailed a copy of her original petition and application for temporary restraining order — without including the summons — to NationsCredit's Texas attorneys and to NationsCredit's Florida offices. (D.'s Mot. at 3-5; P.'s App. at Ex. C.) She addressed the certified mail as follows:
Brown Shapiro, LLP 4630 Fairmont #108 Pasadena, TX 77504
NationsCredit P.O. Box 19977 Jacksonville, FL 32245(P.'s App. at Ex. C.) Grant-Brooks has not offered an affidavit as proof of service.
B. Legal Standards
It is well established that a party may seek "dismissal in a pretrial motion based on any of the defenses set out in Rule 12(b) [of the Federal Rules of Civil Procedure]." Albany Ins. Co. v. Almacenadora, 5 F.3d 907, 909 (5th Cir. 1993) . Rules 12(b)(4) and 12(b)(5), respectively, provide defenses for insufficiency of process and insufficiency of service of process. Fed.R.Civ.P. 12(b)(4), 12(b)(5) . However, in addition to constituting grounds for dismissal in and of themselves, insufficient process and insufficient service of process also implicate a court's authority to exercise personal jurisdiction over a defendant. Murphy Brothers, Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 350 (1999) ("Before a . . . court may exercise personal jurisdiction over a defendant, the procedural requirement of service of summons must be satisfied.")
1. Federal Standards for Process and Service of Process
Rule 4(c)(1) states that "[a] summons shall be served together with a copy of the complaint." Fed.R.Civ.P. 4(c)(1); Amous v. Trustmark Nat'l Bank, 195 F.R.D. 607, 610 (N.D. Miss. 2000). Furthermore, Rule 4(h)(1) declares that service of process upon a corporation must be made upon "an officer, a managing or general agent, or . . . any other agent authorized by appointment or by law to receive service of process." Fed.R.Civ.P. 4(h)(1); Malone v. Williams Fried Chicken, No. 3:98-CV-0584-D, 1999 WL 288687, at 1 (N.D. Tex. May 4, 1999). However, Rule 4(h)(1) also allows service of process to be effectuated in accordance with Rule 4(e)(1), which states that service of process may be made "pursuant to the law of the state in which the district court is located, or in which service is effected." Fed.R.Civ.P. 4(e)(1); Malone, 1999 WL 288687, at 1. As such, the Court must now detail the relevant laws of Texas and Florida regarding service of process on corporations.
Texas is the state in which the district court is located, and Florida is a state in which service is alleged to have been effected. See Fed.R.Civ.P. 4(e)(1) .
2. Texas Standards for Process and Service of Process
Texas allows service of process on "[t]he president and all vice presidents of the corporation and the registered agent of the corporation." Tex. Bus. Corp. Act Art. 2.11(A). In Texas, sufficient process requires "a true copy of the citation with a copy of the petition attached thereto." Tex. R. Civ. P. 106(a)(2). Although Texas permits service of process via certified mail, return receipt requested, only the clerk of the court may serve process in this manner. Tex. R. Civ. P. 103, 106(a)(2) . Moreover, "[n]o person who is a party to or interested in the outcome of a suit shall serve any process." Tex. R. Civ. P. 103.
3. Florida Standards for Process and Service of Process
Florida allows service of process on the registered agent of a corporation or
"(a) on the president or vice president, or other head of the corporation; (b) in the absence of any person described in paragraph (a), on the cashier, treasurer, secretary, or general manager; (c) in the absence of any person described in paragraph (a) or paragraph (b), on any director; or (d) in the absence of any person described in paragraph (a), paragraph (b), or paragraph (c), on any officer or business agent residing in the state."Fla. Stat. Ann. § 48.081(1), § 48.081(3) (West 2001). In Florida, proper service requires "delivering a copy of [the summons] to the person to be served with a copy of the complaint, petition, or other initial pleading or paper." Fla. Stat. Ann. § 48.031(1)(a) (West 2001). Although Florida permits defendants to accept service of process by mail, only legally-authorized officers and courtappointed individuals may serve process. Fla. R. Civ. P. 1.070(b), 1.070(i) . Furthermore, court appointed individuals may not be "interested in the action." Fla. R. Civ. P. 1.070(b).
With these legal standards in mind, the Court now turns to the merits of the motion to dismiss for lack of personal jurisdiction.
C. Analysis
As noted above, NationsCredit challenges this Court's personal jurisdiction due to insufficiency of process and service of process. (D.'s Mot. at 3-6.) Specifically, NationsCredit contends that: (1) Grant-Brooks failed to serve the summons, (2) Grant-Brooks failed to serve process on an individual authorized to accept service of process, and (3) Grant-Brooks failed to make an affidavit as proof of service. ( Id.) Grant-Brooks, on the other hand, alleges that she mailed the process to the address designated by NationsCredit pursuant to the security instruments s notice provision. ( P.'s Memo. at 3.) In the alternative, Grant-Brooks requests that she be allowed to cure any deficiencies in her process or service of process. ( Id. at 4.)
The Federal Rules of Civil Procedure, as well as the laws of Texas and Florida, all require a properly-executed summons (or the equivalent) to be served upon the defendant in order for process to be sufficient. Fed.R.Civ.P. 4(c)(1); Tex. R. Civ. P. 106(a)(2); Fla. Stat. Ann. § 48.031(1)(a) (West 2001). In the instant case, it is undisputed that Grant-Brooks not only failed to serve a properly-executed summons, but that she failed to serve any summons at all. Additionally, the Federal Rules of Civil Procedure, as well as the laws of Texas and Florida, all require service to be made upon designated individuals who are authorized to accept service of process on behalf of the corporation. Fed.R.Civ.P. 4(h)(1); Tex. Bus. Corp. Act art. 2.11(A); Fla. Stat. Ann. § 48.081(1), § 48.081(3) (West 2001). In the instant case, it is undisputed that Grant-Brooks failed to serve process on any individual who is authorized to accept service of process on behalf of NationsCredit. "Before a . . . court may exercise personal jurisdiction over a defendant, the procedural requirement of service of summons must be satisfied." Murphy Brothers, Inc., 526 U.S. at 350 (1999). As such, this Court lacks personal jurisdiction over NationsCredit. Grant-Brooks argues that she mailed process to the address that NationsCredit provided pursuant to the notice provision of the security instrument. (P.'s Memo. at 3.) However, this argument does not address the lack of summons, nor does it address Grant-Brooks' failure to serve an individual who is authorized to accept service of process on behalf of NationsCredit. As such, Grant-Brooks' argument that she properly served NationsCredit under the terms of the security instrument is without merit, and it does not affect this Court's conclusion that it lacks personal jurisdiction over NationsCredit.
With respect to proof of service, Rule 4(1) requires proof of service in the form of an affidavit. Fed.R.Civ.P. 4(1). Although there is no dispute that Grant-Brooks failed to make such proof of service, Rule 4(1) also states that "[f]ailure to make proof of service does not affect the validity of the service." Fed.R.Civ.P. 4(1). Therefore, NationsCredit's final contention does not bolster this Court's determination that it lacks personal jurisdiction due to insufficient process and service of process.
However, despite the Court's finding that it lacks personal jurisdiction over NationsCredit, dismissal of a case is not appropriate where "there is a reasonable prospect that plaintiff ultimately will be able to serve defendant properly." 5A WRIGHT MILLER, FEDERAL PRACTICE AND PROCEDURE § 1354, at 289 (West 1990). Indeed, dismissal is not appropriate unless "there is no reasonably conceivable means of acquiring jurisdiction over the person of a defendant." Stanga v. McCormick Shipping Corp., 268 F.2d 544, 554 (5th Cir. 1959) (noting that dismissal is not appropriate where there has been only one attempt at service of process). Rather, the Court has the discretion to quash the defective service of process and allow the plaintiff another opportunity to effect proper service of process. Cross v. City of Grand Prairie, No. 3:96-CV-0446-P, 1998 WL 133143, at 7 (N.D. Tex. Mar. 17, 1998) (citing Montalbano v. Easco Hand Tools, Inc., 766 F.2d 737, 740 (2d Cir. 1985)).
Therefore, NationsCredit's motion to dismiss should be DENIED without prejudice to the refiling of the motion once proper service is effected. Furthermore, Grant-Brooks' first attempt at service of process should be quashed. Finally, because Grant-Brooks has made only one attempt at service of process and because her deadline for properly serving NationsCredit has not yet expired under Rule 4(m), Grant-Brooks should be given forty-five (45) days to effect proper service on NationsCredit.
Grant-Brooks filed her original petition and application for temporary restraining order on November 19, 2001; therefore, her 120 days to effect proper service under Rule 4(m) does not expire until March 19, 2002.
IV. Recommendation
For the foregoing reasons, the Court recommends that the Defendant's motion to dismiss be DENIED without prejudice to the refiling of the motion once proper service is effected, that the Plaintiff's first attempt at service be quashed, and that the Plaintiff be allowed forty-five (45) days to effect proper service of process. Consequently, the Court further recommends that Grant-Brooks' application for temporary restraining order be held in abeyance pending Grant-Brooks' effectuation of proper service on NationsCredit.