Welch v. All American Check Cashing, Inc.

Filing 20

ORDER denying 18 Motion for Reconsideration. Signed by Magistrate Judge David A. Sanders on 4/16/2015. (rrz)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
OXFORD DIVISION

JESSICA LYN WELCH

PLAINTIFF

V.

CIVIL ACTION NO. 3:14MC18-DAS

ALL AMERICAN CHECK
CASHING, INC., a Mississippi
Corporation

DEFENDANT

ORDER
This matter is before the court on Erin Petty’s motion (#18), which seeks relief from a
previous order (#17) that requires her to pay All American Check Cashing, Inc.’s reasonable
attorneys’ fees and expenses stemming from her actions as a non-party witness in the underlying
litigation. Having considered the motion, the court finds that it should be denied for the reasons
that follow.
Background
Previously, this court granted All American’s motion for attorneys’ fees and expenses
after finding that Erin Petty had been evading service of a subpoena. In fact, from the
documentation supporting All American’s motion, it was apparent that at least twenty-six
attempts were made at serving Petty. All twenty-six attempts failed. Notably, nine of these
attempts occurred after the court held a telephonic conference, in which Petty’s attorney
participated, and stated that it would entertain a motion for sanctions if Petty was, in fact,
avoiding service. Once Petty did finally attend the deposition, a second telephonic conference
was required to force her to answer certain questions, and this court reiterated that it would
entertain a motion to have Petty bear the costs flowing from her evasive behavior. Therefore,

before All American filed its motion for reasonable expenses, Petty received notice of possible
sanctions from this court twice.
Months later, All American filed a motion to recover the fees and expenses it incurred as
a result of its failed attempts at serving Petty. Through her attorney, Lisa Meggs, Petty
responded by arguing that All American had failed to prove any attempt to evade service, and
that All American had not been harmed in any way, as it was ultimately able to depose her.
Petty also submitted that All American’s motion was simply an attempt to punish her. In
granting the motion, the court limited All American’s recovery to only those fees and expenses
incurred after the first telephonic conference, i.e., the date on which Petty was placed on notice
that the court was considering sanctions against her.
In her motion for relief from judgment, Petty assigns two errors to this court’s previous
order. First, she argues that the court lacked jurisdiction to sanction her for actions preceding
service of process. Petty also argues that the court failed to issue a show cause order or hold a
hearing to determine whether sanctions were appropriate, thereby making the order granting
sanctions improper. Each argument will be treated separately below.
A. Jurisdiction
In her motion, Petty argues that this court lacked personal jurisdiction when it ordered her
to pay All American’s fees and expenses. Specifically, she argues that it was improper for the
court to impose sanctions because, at least for the time period used by the court in calculating All
American’s expenses, she had yet to be served with a subpoena. True enough, this court is
uncertain whether All American has ever successfully served Petty. But as will be explained
below, the court finds that Petty is barred from raising personal jurisdiction as a defense.

Like subject matter jurisdiction, which limits a court’s ability to hear certain matters,
personal jurisdiction limits the court’s authority over certain persons or property. Therefore, a
judgment rendered in the absence of personal jurisdiction is void and must be set aside.
Bludworth Bond Shipyard, Inc. v. M/V Caribbean Wind, 841 F.2d 646, 649 (5th Cir. 1988) (per
curiam). To acquire jurisdiction over the person, a court must serve on the person a document,
“such as a summons, notice, writ, or order.” McGuire v. Sigma Coatings, Inc., 48 F.3d. 902, 907
(5th Cir. 1995) (citing 2 Moore’s Federal Practice ¶ 4.02[1] at 4-85). Though technically not an
element of personal jurisdiction per se, such formal notice of contemplated action is part of the
due process limitations on federal courts’ jurisdiction. Id. Its primary function is to place parties
on notice that an action has commenced against them. § 1063 Subject Matter Jurisdiction,
Venue, Personal Jurisdiction, and Service of Process Distinguished, 4 Fed. Prac. & Proc. Civ. §
1063 (3d ed.). However, when a party raises personal jurisdiction or defective service of process
as a defense, parties must do so at their first opportunity. See Fed. R. Civ. P. 12(b). If these
defenses are not raised in a party’s first responsive pleading, they are forfeited. Fed. R. Civ. P.
12(h). Similarly, parties waive these defenses if they voluntarily submit themselves to the
court’s jurisdiction by appearing before it and allowing it to adjudicate their rights. McGuire, 48
F.3d at 907.
Although Petty was not served with a subpoena during the time period for which
sanctions were imposed, this court’s order granting fees and expenses to All American is valid.
In her response to All American’s motion for fees and expenses, Petty failed to challenge the
jurisdiction of the court. This omission proves fatal for Petty’s jurisdictional argument. In so
doing, Petty forfeited her ability to challenge personal jurisdiction under Fed. R. Civ. P. 12(h)
and availed herself to the jurisdiction of this court.

B. Show Cause Order
Petty also argues that this court erred by ordering sanctions without first issuing a show
cause order and holding a hearing to determine whether sanctions were appropriate. In making
this argument, Petty relies on McGuire v. Sigma Coatings, 48 F.3d 902 (5th Cir. 1995).
However, this case is inapplicable to the facts presently before the court.
In McGuire, the Fifth Circuit was faced with this issue: whether a district court had
jurisdiction to sanction in-house counsel for destruction of evidence when he was neither a party
nor an attorney of record in the underlying case. 48 F.3d at 906. The attorney, James Veach,
was employed as in-house counsel for a corporation that was being sued for environmental
contamination. Id. at 905. The defendant corporation allegedly instructed Veach to destroy
internal documents later held to be subject to a discovery order. Although plaintiffs never sought
sanctions from individual attorneys or corporate officers of the corporation, the court imposed
sanctions sua sponte against Veach after he testified at a hearing. Id. at 906.

However, the

district court never served Veach with an order to show cause. The Fifth Circuit vacated the
order imposing sanctions on the ground that the district court had no personal jurisdiction over
Veach because it “had not issued a show cause or similar order or process that would have put
Veach on notice that sanctions were being considered against him personally.” Id. at 907.
Unlike McGuire, sanctions were not ordered sua sponte by this court, and Petty was
given ample notice that sanctions were being considered against her. The sanctions levied
against Petty stem from All American’s motion for fees and expenses, which was served on
Petty’s attorney, and to which Petty responded. Moreover, before All American filed its motion,
this court explicitly stated in a telephonic conference that it would entertain a motion for costs if
Petty was found to be evading service. Petty’s attorney participated in his conference. This

warning was reiterated during the second telephonic conference in which Petty participated
directly. Therefore, this court’s previous order awarding All American its reasonable attorneys’
fees and expenses is compliant with the due process limitations on federal jurisdiction because
Petty received sufficient notice that sanctions were being considered against her.
Conclusion
This court’s previous order granting All American’s motion for attorneys’ fees and
expenses is proper. In calculating the reasonable attorneys’ fees and expenses attributable to her
evasive behavior, the court was careful to include only those expenses incurred after Petty’s
attorney was put on notice that the court was considering sanctions. Petty received further notice
of sanctions when All American filed its motion for fees and expenses. In responding to All
American’s motion, Petty voluntarily availed herself to the jurisdiction of the court and failed to
challenge its jurisdiction. Consequently, Petty is bound by this court’s previous order requiring
her to reimburse All American for its reasonable expenses.
IT IS THEREFORE ORDERED that Petty’s Motion for Relief from Judgment is hereby
DENIED.
SO ORDERED this, the 16th day of April, 2015.
/s/ David A. Sanders
UNITED STATES MAGISTRATE JUDGE