Holmes v. All American Check Cashing, Inc. et al
Filing
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MEMORANDUM OPINION re 67 Order on Motion to Set Aside Default. Signed by Neal B. Biggers on 3/12/2014. (llw)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
DELTA DIVISION
TAMIKA HOLMES
PLAINTIFF
V.
CIVIL ACTION NO. 2:11CV007-B-A
ALL AMERICAN CHECK CASHING, INC.
DEFENDANT
MEMORANDUM OPINION
Presently before the court is the motion of defendant All American Check Cashing, Inc.,
to set aside the default judgment entered against it by this court on March 25, 2013. Upon due
consideration of the motion, response, exhibits, and supporting and opposing authority, the court
finds that the motion is well taken and should be granted.
The plaintiff, Tamika Holmes, was the victim of theft when her purse was stolen from her
vehicle in Memphis, Tennessee, on November 25, 2009. Ms. Holmes promptly notified the
Memphis Police Department and filed a police report about the incident. She then contacted her
credit card companies and credit bureaus to report the incident and to have a fraud alert placed
on her social security number.
The plaintiff alleges that on that same date an individual presented herself at the Olive
Branch, Mississippi office of defendant All American Check Cashing, Inc., (“All American”)
and identified herself as Tamika Holmes. The individual presented a check purporting to be
from Target in the amount of $774.30, and the check was cashed by All American, despite the
fact that All American allegedly verified Holmes’ social security number and was advised of the
fraud alert. Subsequently the individual or some other individual working in concert with the
individual traveled to Sunflower County, Mississippi, and cashed other checks using the
plaintiff’s misappropriated identity.
All American later reported to the Olive Branch Police Department that Tamika Holmes
had uttered a forgery in presenting the $774.30 check. The plaintiff was arrested by the Olive
Branch Police Department on January 14, 2010. While the plaintiff was under arrest in Olive
Branch, officials discovered an outstanding arrest warrant for the plaintiff from the Indianola,
Mississippi Police Department issued by former defendant City of Indianola for the checks that
had been negotiated in Sunflower County through the misappropriation of the plaintiff’s identity.
While the plaintiff was incarcerated, the individual who had misappropriated the plaintiff’s
identity continued to negotiate checks in the name of Tamika Holmes. After spending more than
seven days in jail, Ms. Holmes was finally released. According to the plaintiff, All American,
through its administrative employee Dianne Valladares and its Olive Branch office employee
Pamela June Lyles, actively assisted in the prosecution of the plaintiff for more than nine months
after service was rendered in the present action. The local state circuit court dropped the
criminal case in an order dated November 8, 2011, stating “that the above named defendant was
a victim of identity fraud and was not involved in the criminal activities that this case is based
upon.”
The plaintiff filed the present action on January 14, 2011, and amended her complaint on
April 11, 2011, asserting claims against All American for negligence, gross negligence, and
intentional infliction of emotional distress. She also sued the City of Indianola for civil rights
violations but eventually settled with the municipal defendant. She served defendant All
American on February 17, 2011, by certified mail at the defendant’s official registered location
and the office of its President and Incorporator, Michael Gray. Stephanie Gray, the wife of
Michael Gray, signed and acknowledged receipt of the summons and complaint by providing her
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signature on the return receipt. All American never answered the complaint, and after a March
18, 2013 hearing, this court entered a default judgment in the amount of $143,000.00 against All
American on March 25, 2013. All American finally made an appearance on May 7, 2013, and
subsequently moved to set aside the default judgment, asserting that service was not proper and
that the judgment is void.
Analysis
Federal Rule of Civil Procedure 55(c) states, “The court may set aside an entry of default
for good cause, and it may set aside a default judgment under Rule 60(b).” Because a default
judgment has been entered in this action, the court looks to Rule 60(b), which limits the setting
aside of a default judgment to certain enumerated bases, including that the judgment was
procured by fraud, that the judgment is void, or that the judgment should be overturned for “any
other reason that justifies relief.” Fed. R. Civ. P. 60(b).
“An individual or entity named as a defendant is not obliged to engage in litigation unless
notified of the action, and brought under a court’s authority, by formal process.” Murphy Bros.,
Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 347 (1999). “Before a . . . court may exercise
personal jurisdiction over a defendant, the procedural requirement of service of summons must
be satisfied.” Id. (quoting Omni Capital Int’l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104
(1987)). “[W]hen service of process is improper, the default judgment is void, and the district
court must grant a Rule 60(b)(4) motion for relief from it.” Jackson v. FIE Corp., 302 F.3d 515,
528 (5th Cir. 2002) (citing Carimi v. Royal Caribbean Cruise Line, Inc., 959 F.2d 1344, 1349
(5th Cir. 1992)).
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Federal Rule of Civil Procedure 4(h)(1) provides, “Unless federal law provides otherwise
or the defendant’s waiver has been filed, a domestic or foreign corporation . . . 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 . . . .” Fed. R. Civ. P. 4(h)(1). Rule 4(e)(1) requires that one
attempting to serve an individual within a judicial district of the United States may do so 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).
If the plaintiff had attempted service pursuant to Rule 4(h)(1)(A), which directs her to
Rule 4(e)(1), she would be required to follow the Mississippi rule for serving an individual
defendant. Mississippi law does not allow service by certified mail on an in-state defendant. See
Triple C Transport, Inc. v. Dickens, 870 So. 2d 1195, 1198 (Miss. 2004) (citing Miss. R. Civ. P.
4) (“Service of process may not be had by certified mail upon an in-state defendant.”). The
plaintiff, however, states that she chose to proceed under Fed. R. Civ. P. 4(h)(1)(B). As quoted
above, subpart (B) provides for service “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 . . . .” Fed. R. Civ. P. 4(h)(1)(B).
In the present case it is uncontested that the summons and complaint were physically
delivered on February 17, 2011, by certified mail to Stephanie Gray at the official registered
address of Michael Gray, the President and registered agent of All American Check Cashing,
Inc., and that Stephanie Gray, the wife of Michael Gray, signed and acknowledged her receipt of
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the package by affixing her signature to the return receipt. Unfortunately, “cases interpreting
this latter half of 4(h)(1) have interpreted the term ‘delivering’ to mean hand delivery, not mail.”
Osorio v. Emily Morgan Enterprises, LLC, No. Civ.A.SA04CA0179-XR, 2005 WL 589620, at
*2 (W.D. Texas Mar. 14, 2005). “The latter part of Rule 4(h)(1) does not provide for service of
process upon corporations by mail as a matter of federal procedure.” Id. While the plaintiff
makes a compelling argument that certified mail, as distinguished from first class mail, requires
actual hand delivery and the recipient’s signature acknowledging receipt of the package, the
Fifth Circuit has indicated that even certified mail is an unacceptable form of “delivering.” The
court has stated that “the use of certified mail is not sufficient to constitute ‘delivering’ under
Rule 4.” Gilliam v. County of Tarrant, 94 Fed. Appx. 230 (5th Cir. 2004). While Gilliam was
an unpublished opinion not intended as precedent, it nevertheless serves the purpose of revealing
the Fifth Circuit’s view on this matter, and this court is compelled to rule accordingly.
For the foregoing reasons, the court must find that the defendant’s motion to set aside
default judgment is well taken and should be granted. However, the court also finds that the
plaintiff has shown good cause warranting an opportunity to remedy her failure to perfect service
of process upon the defendant. The court finds that the plaintiff had a good faith belief that
service of process had in fact been made upon the defendant. “[I]f the plaintiff shows good
cause for the failure [to perfect service], the court must extend the time for service for an
appropriate period.” Fed. R. Civ. P. 4(m) (emphasis added); see also Thompson v. Brown, 91
F.3d 20, 21 (5th Cir. 1996) (noting that court may also extend time for service even in the
absence of good cause). Further, “[a] discretionary extension may be warranted . . . if the
applicable statute of limitations would bar the refiled action, or if the defendant is evading
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service or conceals a defect in attempted service.” Millan v. USAA Gen. Indem. Co., 546 F.3d
321, 325 (5th Cir. 2008). The statute of limitations would indeed bar the refiled action in this
case. For this and the other reasons set forth, the court will extend the period for perfecting
service of process for an additional forty-five days from the date of this order.
Conclusion
The court finds that the defendant’s motion to set aside default judgment is well taken
and should be granted but also that the plaintiff should be allowed an additional period of fortyfive days from the date of this order to perfect service of process. A separate order in accord
with this opinion shall issue this day.
This, the 12th day of March, 2014.
/s/ Neal Biggers
NEAL B. BIGGERS, JR.
UNITED STATES DISTRICT JUDGE
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