Lotus Industries, LLC et al v. City of Detroit et al

Filing 36

OPINION and ORDER Granting in Part and Denying in Part Defendants Rule 12(b)(5) Motions and Extending Time for Plaintiffs to Property Effect Service re 19 MOTION to Dismiss, 14 MOTION to Dismiss Under FRCP 12b1, 12b2, 12b5 and 12b6. Signed by District Judge Sean F. Cox. (JMcC)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Lotus Industries, et al.,
Plaintiffs,
v.

Case No. 17-13482

City of Detroit, et al.,

Sean F. Cox
United States District Court Judge

Defendant.
______________________________/
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS RULE 12(b)(5) MOTIONS AND EXTENDING
TIME FOR PLAINTIFFS TO PROPERLY EFFECT SERVICE
In October 2017, Plaintiffs filed this suit against multiple defendants, including the City
of Detroit and Michigan Secretary of State Ruth Johnson. But Plaintiffs never properly served
these defendants, either before the 90-day period to do so expired or after the Court issued a
show cause order. Now, the City and Secretary Johnson have moved to dismiss, asserting
(among other reasons) insufficient service of process under Rule 12(b)(5). Plaintiffs implore the
Court not to dismiss the case and ask for additional time to effect service.
For the reasons below, the Court finds that Plaintiffs failed to properly serve the City and
Secretary Johnson and that they have not shown good cause for this failure. But the Court will
nevertheless exercise its discretion to allow Plaintiffs additional time to properly effect service.
BACKGROUND
Plaintiffs–Lotus Industries, LLC, individuals Christopher Williams and Robert Davis,
and the non-profit corporation A Felon’s Crusade for Equality, Honesty, and Truth–filed this suit
on October 25, 2017 against various defendants, including the City of Detroit and Michigan
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Secretary of State Ruth Johnson (Doc. # 1). The clerk issued a summons two days later (Doc.
# 3). Yet Plaintiffs failed to serve Defendants within 90 days or request an extension.
On January 31, 2018, the Court ordered Plaintiffs to show cause why the case should not
be dismissed for failure to prosecute (Doc. # 6). In response, Plaintiffs claimed that they did not
serve Defendants because they believed a settlement agreement could be reached before the 90day service period expired (Doc. # 7). This did not occur. Plaintiffs then set out to rectify this
error by serving the summons and complaint on Defendants by certified mail. They also filed a
proof of service as to all Defendants, attaching return certified mail receipts for Secretary
Johnson and the City of Detroit (Doc. # 8).
The City and Secretary Johnson then moved to dismiss under, among other things, Rule
12(b)(2) and 12(b)(5), asserting lack of personal jurisdiction and insufficient service of process
(Doc. # 14, 19). Plaintiffs have responded (Doc. # 29, 30). The Court shall decide the motions
on the briefs, the issues having been adequately presented therein. LR 7.1(f)(2).
ANALYSIS
“Before a federal court may exercise personal jurisdiction over a defendant, the
procedural requirement of service of summons must be satisfied.” Omni Capital Int’l Ltd. v.
Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987). Actual knowledge of the action is not
enough, the requirements of Rule 4(m) must be satisfied. See Friedman v. Estate of Presser, 929
F.2d 1151, 1156 (6th Cir. 1991). A motion to dismiss under Rule 12(b)(5) challenges the mode
of serving a summons and complaint. See Nafziger v. McDermott Int’l, Inc., 467 F.3d 514, 52021 (6th Cir. 2006).
Here, Plaintiffs concede that they did not properly serve the City or Secretary Johnson in

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compliance with Rule 4 of the Federal Rules of Civil Procedure. So, the Court presently lacks
personal jurisdiction over these defendants. But, if Plaintiffs can show good cause for their
failure to effect service, the Court “must extend the time for service for an appropriate period.”
Fed. R. Civ. P. 4(m). If not, the Court has two options: it may dismiss the action without
prejudice against these defendants or it may order that service be made within a specified time.
Id.; Henderson v. United States, 517 U.S. 654, 662 (1996) (observing that, under Rule 4(m),
“courts have been accorded discretion to enlarge the [90-day] period even if there is no good
cause shown.”) (quotations omitted).
It is, of course, Plaintiffs’ burden to show good cause. Friedman, 929 F.2d at 1157. They
have not done so. Their claim that they were seeking to settle the case is no excuse for failing to
serve Defendants; Plaintiffs could have easily served them in a timely manner while continuing
to pursue a settlement. And even when they finally attempted to serve Defendants (which did
not occur until prompted by a show cause order), they failed to do so properly. Their attempt to
serve the City and Secretary Johnson via certified mail did not comply with the procedural
requirements that Plaintiffs should have been aware of. See Fed. R. Civ. P. 4(e); Fed. R. Civ. P.
(j)(2); M.C.R. 2.115(G)(2). Thus, the Court finds that Plaintiffs did not make a “reasonable and
diligent effort to effect service” and therefore declines to find good cause. See Habib v. Gen.
Motors Corp., 15 F.3d 72, 74 (6th Cir. 1994).
Absent good cause, the Court has discretion to either dismiss the action without prejudice
or to order that service be made within a specified time. Fed. R. Civ. P. 4(m). In determining
whether to exercise this discretion, the Court considers whether: (1) a significant extension of
time is required; (2) an extension would prejudice Defendants in some way other than the

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inherent prejudice in having to defend the suit; (3) Defendants had actual notice of the suit; (4) a
dismissal without prejudice would substantially prejudice Plaintiffs; and (5) Plaintiffs made any
good faith efforts at effecting proper service of process. Slenzka v. Landstar Ranger, Inc., 204
F.R.D. 322, 325 (E.D. Mich. 2001).
Of these factors, the first three weigh in Plaintiffs’ favor. There is no reason why
Plaintiffs should not be able to promptly serve the City and Secretary Johnson if they receive an
extension. And Defendants have not identified any additional prejudice that they would incur
from an extension; indeed, they have actual notice of the suit and have been actively involved in
the case, as evidenced by their motions to dismiss.
The fourth and fifth factors do, however, weigh against Plaintiffs. Plaintiffs have not
identified any prejudice that they would suffer if their claims against these Defendants were
dismissed without prejudice (such as by arguing that their claims would be time-barred). Nor
have they shown that they made good-faith efforts to effect proper service. Indeed, Plaintiffs
failed to even attempt to timely serve Defendants and, when they finally attempted service, their
attempt was plainly deficient under the federal rules.
All in all, weighing these factors, the scales tip (however slightly) in Plaintiffs’ favor, and
the Court finds that an extension of time for proper service of the summons and complaint is
appropriate under Rule 4(m). See also Stern v. Beer, 200 F.2d 794, 795 (6th Cir. 1952) (“[I]f the
first service of process is ineffective, a motion to dismiss should not be granted, but the case
should be retained for proper service later.”). As such, the Court shall reserve consideration of
the other arguments raised in Defendants’ motions to dismiss until Defendants are properly
served and personal jurisdiction is established.

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CONCLUSION
For the reasons above, the Court shall GRANT IN PART AND DENY IN PART
Defendants’ Rule 12(b)(5) motions. The Court GRANTS the motions insofar as Defendants
assert that they have not been properly served. But the Court DENIES Defendants’ request to
dismiss Plaintiffs’ claims. Instead, the Court shall, in its discretion, afford Plaintiffs additional
time to effect proper service on the City of Detroit and Secretary Johnson.
Accordingly, IT IS ORDERED that Plaintiffs are granted until Friday, June 8, 2018, to
properly effect service on the City of Detroit and Ruth Johnson. Failure to do so by that date
will result in Plaintiffs’ claims against these Defendants being dismissed for failure to timely
effect service. Fed. R. Civ. P. 4(m).
Additionally, the Court ORDERS that, by Friday, June 8, 2018, Plaintiffs must submit
a responsive pleading addressing the other arguments raised in Defendants’ motions to
dismiss under Rule 12(b)(1) and 12(b)(6). Failure to do so will result in Plaintiffs’ claims
against these Defendants being dismissed. See Scott v. Tennessee, 878 F.2d 382 (6th Cir. 1989)
(“[I]f a plaintiff fails to respond or to otherwise oppose a defendant’s motion, then the district
court may deem the plaintiff to have waived opposition to the motion.”).
IT IS SO ORDERED.
s/Sean F. Cox
Sean F. Cox
United States District Judge
Dated: May 31, 2018
I hereby certify that a copy of the foregoing document was served upon counsel of record on
May 31, 2018, by electronic and/or ordinary mail.
s/Jennifer McCoy
Case Manager

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