Vega v. Autumnwood Homes, Inc.

Filing 16

ORDER & REASONS. It is ORDERED that Defendant's 13 Motion to Set Aside Entry of Default is GRANTED.It is FURTHER ORDERED that Plaintiff is hereby granted an additional 90 days from the entry of this Order to properly serve Defendant Autumnwood Homes, Inc. in conformity with the Federal Rules of Civil Procedure. Signed by Judge Carl Barbier. (gec)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

ORLANDO VEGA

CIVIL ACTION

VERSUS

NO: 16-751

AUTUMNWOOD HOMES, INC.

SECTION: “J”(1)

ORDER & REASONS
Before

the

Court

is

Defendant

Autumnwood

Homes,

Inc.’s

(Autumnwood) Motion to Set Aside Entry of Default (R. Doc. 13),
and a reply thereto filed by Plaintiff Orlando Vega (R. Doc. 15).
Having considered the motion and legal memoranda, the record, and
the applicable law, the Court finds that the motion should be
GRANTED.
FACTS AND PROCEDURAL BACKGROUND
This

suit

pertains

to

the

sale

of

allegedly

defective

immovable property and improvements. (R. Doc. 1.) Specifically,
Plaintiff alleges that he purchased property from Defendant and
that an occupancy permit not was issued to Defendant by the City
of New Orleans. Id. Plaintiff further alleges that the house
constructed on the property failed a city inspection. Id. On
January 28, 2016, Plaintiff filed suit against Defendant for
violations of Louisiana Civil Code Article 2545. (R. Doc. 1.) On
May 20, 2016, an entry of default was entered against Defendant
for failure to file a responsive pleading. (R. Docs. 6, 7.)

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Thereafter, Defendant filed a motion to set aside the entry of
default. (R. Doc. 13.) In short, Defendant argues that it was not
properly served under Federal Rule of Civil Procedure 4(h) or under
Louisiana Code of Civil Procedure Article 1261. (R. Doc. 13-4 at
2.) Plaintiff filed a timely opposition to Defendant’s motion and
argues that Plaintiff requested a waiver of service, which was
denied, and thereafter Defendant avoided service. (R. Doc. 15.)
Defendant’s motion is now before the Court on the briefs and
without oral argument.
LEGAL STANDARD AND DISCUSSION
A motion to set aside an entry of default is more commonly
granted than a motion to set aside a default judgment. In re OCA,
551 F.3d 359, 370 (5th Cir. 2008); Broadcast Music, Inc. v. M.T.S.
Enter., Inc., 811 F.2d 278, 282 (5th Cir. 1987) (“No person need
defend an action nor suffer judgment against him unless he has
been served with process and properly brought before the court.”).
“The court may set aside an entry of default for good cause. . .
.”

Fed.

R.

Civ.

P.

55(c).

Courts

consider

three

factors

to

determine whether “good cause” exists to set aside an entry of
default: (1) whether the default was willful; (2) whether the
plaintiff would be prejudiced; and (3) whether the defense is
meritorious. Hancock Bank v. Oller, No. 14-1300, 2016 WL 301695,
at *2 (E.D. La. Jan. 25, 2016). The burden of proof is on the party

2

asserting the sufficiency of the process and service at issue.
Shabazz v. City of Houston, 515 F. App’x 263, 264 (5th Cir. 2013).
Defendant Autumnwood is an Ohio corporation, authorized to do
business in Louisiana. (R. Doc. 13 at 1.) Plaintiff asserts that
he initially mailed a “Notice of a Lawsuit and Request to Waive
Service of a Summons via certified mail to Autumnwood at the
residence of Brad E. Halley, 25 Ravine Road, Powell, Ohio.” (R.
Doc. 15 at 1.) Mr. Halley is Autumnwood’s registered agent for
service of process. (R. Doc. 13 at 1.) Plaintiff claims that Mr.
Halley refused to waive formal service of process. Id. Plaintiff
then hired a local process server in Ohio to personally serve Mr.
Halley at his home. Id. The process server attempted to serve Mr.
Halley at his home, but Plaintiff alleges that Mr. Halley refused
to

answer

the

door

and

was

evading

service.

Id.

Thereafter,

Plaintiff sent a process server to serve Mr. Halley at Autumnwood’s
place of business at 640 Bear Run Lane, Lewis Center, Ohio. Id. at
2. Mr. Halley was not present when the process server attempted
service. 1 The process server attempted to serve an individual at
Autumnwood’s place of business, but this individual refused to
accept service on behalf of Autumnwood or Mr. Halley. Thereafter,

1 Defendant submitted the affidavit of Matthew Wyman in support of its motion.
Mr. Wyman was the person Plaintiff’s process server attempted to serve,
presumably believing Mr. Wyman was an Autumnwood employee. Mr. Wyman declares
that he is not an employee of Autumnwood and was not authorized to receive any
papers on behalf of Mr. Halley. (R. Doc. 13-3.)

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the process server taped the service of process documents on the
outside of Autumnwood’s office.
Defendant argues that it was not properly served pursuant to
Rule 4(h) of the Federal Rules of Civil Procedure. Defendant did
not address the three “good cause” factors to set aside an entry
of default. However, if Defendant was not properly served, “good
cause” exists and the entry of default shall be set aside. See
Smith v. Woman’s Hosp., No. 14-500, 2015 WL 2357127, at *4 (M.D.
La. May 15, 2015). Rule 4(h) of the Federal Rules of Civil
Procedure governs service of a domestic corporation. Fed. R. Civ.
P. 4(h). Rule 4(h) provides in relevant part:
Unless federal law provides otherwise or the defendant’s
waiver
has
been
filed,
a
domestic
or
foreign
corporation, or a partnership or other unincorporated
association that is subject to suit under a common name,
must be served:
(1) in a judicial district of the United States:
(A) in the manner prescribed by Rule 4(e)(1) for
serving an individual; or
(B) by delivering a copy of the summons and of the
complaint to an officer, a managing or general agent,
or any other agent authorized by appointment or by
law to receive service of process and--if the agent
is one authorized by statute and the statute so
requires--by also mailing a copy of each to the
defendant
Defendant has not waived formal service of process. (R. Doc. 15 at
1.) Further, Plaintiff has not demonstrated nor argued that he has
complied with Rule 4(h)(1)(B). See (R. Doc. 15.) Thus, unless
Plaintiff

has

properly

served

4

Defendant

pursuant

to

Rule

4(h)(1)(A) and Rule 4(e)(1), then the entry of default shall be
set aside.
Rule 4(e)(1) provides that an individual may be served by
“following state law for serving a summons in an action brought in
courts of general jurisdiction in the state where the district
court is located or where service is made.” Fed. R. Civ. P.
4(e)(1). Because this Court is located in Louisiana, Louisiana
Code of Civil Procedure Article 1261 governs service on domestic
or foreign corporations. Article 1261 provides:
(A) Service of citation or other process on a domestic
or foreign corporation is made by personal service on
any one of its agents for service of process.
(B) If the corporation has failed to designate an agent
for service of process, if there is no registered agent
by reason of death, resignation, or removal, or if the
person attempting to make service certifies that he is
unable, after due diligence, to serve the designated
agent, service of the citation or other process may be
made by any of the following methods:
(1) By personal service on any officer, or director,
or on any person named as such in the last report
filed with the secretary of state.
(2) By personal service on any employee of suitable
age and discretion at any place where the business of
the corporation is regularly conducted.
(3) By service of process under the provisions of R.S.
13:3204, if the corporation is subject to the
provisions of R.S. 13:3201.
(C) Service of citation or other process on a bank is
made pursuant to R.S. 6:285(C).
La. Code Civ. Proc. art. 1261. Thus, service on Autumnwood is
proper under the Louisiana Code of Civil Procedure if made by
personal service on its agent for service of process. Plaintiff
has not demonstrated that this occurred. In fact, Plaintiff makes
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clear that he has not served Mr. Halley, Defendant’s agent for
service of process. But service would also be proper on Autumnwood
by personal service on any employee of suitable age and discretion
where Autumnwood regularly conducts business. However, the person
served at Autumnwood’s place of business was not an employee of
Autumnwood. See (R. Doc. 13-2.) Accordingly, Plaintiff has not
properly served Defendant pursuant to the Louisiana Code of Civil
Procedure.
Service would also be proper under Federal Rule 4(e)(1) if
Plaintiff followed the procedures set forth in the state where
service was made, i.e., Ohio. Fed. R. Civ. P. 4(e)(1). Rule 4.2(F)
of the Ohio Rules of Civil Procedure provides that service of
process upon a domestic or foreign corporation shall be made by
“serving the agent authorized by appointment or by law to receive
service of process; or by serving the corporation at any of its
usual

places

of

business

by

a

method

authorized

under”

Rule

4.1(A)(1); “or by serving an officer or a managing or general agent
of the corporation.” Ohio Rev. Code § 4.2(F). As described above,
Plaintiff did not serve Defendant’s agent for service of process,
nor has Plaintiff argued or demonstrated that he properly served
an officer or a managing or general agent of Autumnwood. Thus, to
have properly served Autumnwood pursuant to the Ohio Rules of Civil
Procedure, Plaintiff must have properly served Autumnwood pursuant
to Ohio Rule 4.1(A)(1). Rule 4.1(A)(1) provides that a corporation
6

may be served at any of its usual places of business by United
States certified or express mail, or by commercial carrier. Ohio
Rev. Code § 4.1(A)(1); Meyer v. GMAC Mortg., No. 06-877, 2007 WL
2773653 (Ohio Ct. App. Sept. 25, 2007). Plaintiff has not argued
nor demonstrated that he has issued service by certified or express
mail, nor that he has issued service by common carrier. Further,
Plaintiff has not demonstrated that taping documents to the outside
of Autumnwood’s place of business was proper under the Ohio Rules
of Civil Procedure. Thus, the entry of default must be set aside.
See Shabazz, 515 F. App’x at 264 (“The burden of proof is on the
party asserting the sufficiency of the process and service at
issue.”).
Defendant has not argued Plaintiff’s complaint be dismissed
without prejudice for improper service. However, Rule 4(m) of the
Federal Rules of Civil Procedure provides that, “[i]f a defendant
is not served within 90 days after the complaint is filed the
court—on motion or on its own after notice to the plaintiff—must
dismiss the action without prejudice against that defendant or
order that service be made within a specified time.” Fed. R. Civ.
P. 4(m). Plaintiff filed his complaint on January 28, 2016, thus
the

ninety-day

period

has

expired.

Accordingly,

the

Court

exercises its discretion to grant Plaintiff an additional ninety
(90) days to properly serve Defendant Autumnwood in accordance
with the Federal Rules of Civil Procedure. This Order shall serve
7

as notice to Plaintiff that if service is not properly executed on
Defendant Autumnwood, Plaintiff’s claims may be dismissed without
prejudice. See Lindsey, 101 F.3d at 446.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant’s Motion to Set Aside
Entry of Default (R. Doc. 13) is GRANTED.
IT IS FURTHER ORDERED that Plaintiff is hereby granted an
additional ninety (90) days from the entry of this Order to
properly serve Defendant Autumnwood Homes, Inc. in conformity with
the Federal Rules of Civil Procedure. This Order shall stand as
notice to Plaintiff pursuant to Rule 4(m) of the Federal Rules of
Civil

Procedure

that

if

service

is

not

properly

executed

on

Defendant, Plaintiff’s claims may be dismissed without prejudice.
New Orleans, Louisiana this 9th day of November, 2016.

____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

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