Yazzie et al v. Government Employees Insurance Company, et al
ORDER DENYING MOTION TO BIFURCATE AND MOTIONS TO DISMISS by Magistrate Judge Kirtan Khalsa. Defendant GEICO's Motion to Bifurcate and Stay Plaintiffs' Extra-Contractual Claims (Doc. 23) is denied without prejudice. Defendant Michal Ellis' Motion to Dismiss (Doc. 36), Defendant Darcell Elmore's Motion to Dismiss (Doc. 42), and Defendant Michal Ellis' Second Motion to Dismiss (Doc. 60), are denied. (kmt)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
LISA YAZZIE et al.,
Civ. No. 16-1085 KK/LF
GOVERNMENT EMPLOYEES INSURANCE
COMPANY et al.,
ORDER DENYING MOTION TO BIFURCATE AND MOTIONS TO DISMISS
THIS MATTER comes before the Court on: (1) Defendant Government Employees
Insurance Company’s (“GEICO”) Motion to Bifurcate and Stay Plaintiffs’ Extra-Contractual
Claims (Doc. 23) (“Motion to Bifurcate”), filed December 2, 2016; (2) Defendant Michal Ellis’
Motion to Dismiss (Doc. 36), filed January 3, 2017; (3) Defendant Darcell Elmore’s Motion to
Dismiss (Doc. 42), filed January 12, 2017; and, (4) Defendant Michal Ellis’ Second Motion to
Dismiss (Doc. 60), filed January 31, 2017. The Court, having reviewed the parties’ submissions
and the relevant law, and being otherwise fully advised, FINDS that the Motion to Bifurcate is
not well taken at this time and should be DENIED WITHOUT PREJUDICE, and that the
motions to dismiss are not well taken and should be DENIED.
Defendant GEICO’s Motion to Bifurcate
Factual Background and Procedural History
Plaintiffs Lisa and Ernest Yazzie filed this action in the First Judicial District Court for
the State of New Mexico on August 10, 2016, and filed an amended complaint in that forum on
September 27, 2016. (Doc. 1 at 7; Doc. 10 at 3.) In their amended complaint, Plaintiffs allege
that, on or about January 17, 2015, an unidentified driver operating an uninsured vehicle owned
by Patricia Brown negligently caused an automobile accident that injured them. (Doc. 1 at 9;
Doc. 29 at 1.) According to Plaintiffs, the driver of Ms. Brown’s vehicle “crossed the centerline, struck the Yazzie[s’] vehicle[,] . . . fled the scene of the crash,” and was intoxicated. (Doc.
29 at 1.)
At the time of the accident, Plaintiffs were named insureds on an uninsured motorist
(“UM”)/underinsured motorist (“UIM”) policy issued by Defendant GEICO. (Doc. 1 at 9; Doc.
2 at 4.) Plaintiffs allege that, on January 13, 2016, they made a written claim for payment of UM
benefits under the policy as a result of the accident, but that Defendant GEICO, acting through
its employees Defendants Ellis and Elmore, rejected the claim on January 25, 2016. (Doc. 1 at
Plaintiffs contend that, in the course of handling their claim, Defendants breached
Defendant GEICO’s insurance contract with Plaintiffs as well as the implied covenant of good
faith and fair dealing, and committed fraud, misrepresentation, malicious abuse of process, and
willful violations of the “Insurance Trade Practices and Frauds Act” and the “Unfair Claims
Practices Act.” (Id. at 13-16.) In particular, Plaintiffs claim that Defendants “chose not to
investigate and process Plaintiffs[’] claim in a timely manner,” “misrepresent[ed]” the nature of
Plaintiffs’ coverage, and refused to pay Plaintiffs benefits for which Defendant GEICO’s liability
could not reasonably be disputed. (Id. at 10-11.)
Defendant GEICO removed the case to this Court on September 30, 2016, and filed its
Motion to Bifurcate on December 2, 2016. (Docs. 1, 23.) In the Motion to Bifurcate, Defendant
GEICO asks the Court to stay discovery regarding, and bifurcate the trial of, Plaintiffs’ extracontractual claims pending resolution of their breach of contract claims.
(Doc. 23 at 9.)
Plaintiffs filed a response in opposition to the motion on December 16, 2016, and Defendant
GEICO filed a reply in support of it on December 29, 2016. (Docs. 29, 32.)
A district court’s discretion in deciding whether to sever issues for trial is “broad” and
“considerable.” United States ex rel. Bahrani v. ConAgra, Inc., 624 F.3d 1275, 1283 (10th Cir.
2010) (quoting Anaeme v. Diagnostek, Inc., 164 F.3d 1275, 1285 (10th Cir. 1999)); Angelo v.
Armstrong World Indus., 11 F.3d 957, 964 (10th Cir. 1993). Federal Rule of Civil Procedure 42,
which governs bifurcation in federal civil actions, permits the Court to order a separate trial of
any claim or issue “[f]or convenience, to avoid prejudice, or to expedite and economize.” Fed.
R. Civ. P. 42(b). “Bifurcation is not an abuse of discretion if such interests favor separation of
issues and the issues are clearly separable.” Angelo, 11 F.3d at 964.
“Regardless of efficiency and separability, however, bifurcation is an abuse of discretion
if it is unfair or prejudicial to a party.” Id. Moreover, bifurcation is to be decided “on a case-bycase basis” and should not be regarded as “routine.” Marshall v. Overhead Door Corp., 131
F.R.D. 94, 97-98 (E.D. Pa. 1990). Bifurcation under Rule 42(b) is inappropriate when it will
“not appreciably shorten the trial or [a]ffect the evidence offered by the parties” because claims
are inextricably linked. F.D.I.C. v. Refco Group, Ltd., 184 F.R.D. 623, 629 (D. Colo. 1999).
The party seeking bifurcation bears the burden of proving that it is proper “in light of the general
principle that a single trial tends to lessen the delay, expense, and inconvenience.” Belisle v.
BNSF Ry. Co., 697 F. Supp. 2d 1233, 1250 (D. Kan. 2010).
The Court also has broad discretion to stay proceedings incident to its power to manage
its docket. Clinton v. Jones, 520 U.S. 681, 706 (1997); Abdulhaseeb v. Calbone, 600 F.3d 1301,
1310 (10th Cir. 2010). In addition, the Court may stay discovery pursuant to Federal Rule of
Civil Procedure 26(c), which for good cause shown allows the Court to limit discovery to protect
a party from “annoyance, embarrassment, oppression, or undue burden or expense.” Fed. R. Civ.
P. 26(c); Nankivil v. Lockheed Martin Corp., 216 F.R.D. 689, 692 (M.D. Fla. 2003); Johnson v.
N.Y. Univ. Sch. of Educ., 205 F.R.D. 433, 434 (S.D.N.Y. 2002). The party seeking a stay bears
the burden of establishing the need for it. Clinton, 520 U.S. at 708.
In its Motion to Bifurcate, Defendant GEICO asks the Court to stay discovery regarding,
and bifurcate the trial of, Plaintiffs’ extra-contractual claims pending resolution of their breach of
contract claims. (Docs. 23 at 9; Doc. 32 at 11.) Defendant GEICO first argues that it has a right
to litigate Plaintiffs’ contractual claims, presenting any coverage defenses as well as any
defenses the UM would have had, before Plaintiffs’ extra-contractual claims can proceed. (Doc.
23 at 3-5; Doc. 32 at 1-5.) According to Defendant GEICO, Plaintiffs must establish both the
fact and amount of its contractual liability before they can pursue their extra-contractual claims.
(Doc. 23 at 3-5.) In support of this argument, Defendant GEICO contends that it is obligated to
pay benefits under Plaintiffs’ UM/UIM policy only if Plaintiffs are “legally entitled to recover”
damages from the UM. 1 (Id. at 3; Doc. 32 at 5.) Although Defendant GEICO acknowledges that
“the dispute between the Plaintiffs and Defendant lies primarily with the value of their claims,” it
insists that “Plaintiffs must first establish they are legally entitled to recover damages from the
UM,” and the amount of those damages, “before attempting to establish liability for their bad
faith allegations.” (Doc. 32 at 5 (emphasis in original).)
As the source of this standard, Defendant GEICO cites to Ortiz v. Safeco Insurance Co. of America, which in turn
cites to Section 66-5-301(A) of the New Mexico Statutes Annotated. (Doc. 32 at 5); 207 F. Supp. 3d 1216, 1219
(D.N.M. 2016). Neither Defendant GEICO nor Plaintiffs cite to or attach the relevant portions of the UM/UIM
policy Defendant issued to Plaintiffs. (See generally Docs. 23, 29, 32.) To the extent the policy’s terms provide for
coverage broader than New Mexico law requires, those terms, rather than Section 66-5-301(A), would seem to
govern Defendant GEICO’s obligation to pay Plaintiffs’ UM claims. Essex Ins. Co. v. Vincent, 52 F.3d 894, 896
(10th Cir. 1995). However, because neither party has cited to or attached the policy, the Court will presume that its
terms follow Section 66-5-301(A) for purposes of Defendant GEICO’s Motion to Bifurcate.
In the particular circumstances of this case, the Court disagrees. As the court in Willis v.
Government Employees Insurance Co. observed,
New Mexico statutory law on UM/UIM coverage simply requires “the insured be
legally entitled to recover damages and that the negligent driver be uninsured” or
underinsured. Farmers Ins. Co. of Arizona v. Sandoval, 2011-NMCA-051, ¶ 7,
149 N.M. 654, 657, 253 P.3d 944, 947 (citing Schmick v. State Farm Mut. Auto.
Ins. Co., 1985-NMSC-073, ¶ 11, 103 N.M. 216 (1985)). Neither New Mexico
statutes nor caselaw require the establishment of the amount of damages before an
insured can be considered legally entitled to recover damages at all. An insured,
therefore, can be legally entitled to recover damages even if the exact amount of
damages is not yet determined. . . . GEICO has failed to convince the Court that a
determination of damages is a condition precedent to the bad faith claims.
2015 WL 11181339, at *4 (D.N.M. Jun. 17, 2015). A contrary case on which Defendant GEICO
relies, i.e., Aragon v. Allstate Insurance Co., 185 F. Supp. 3d 1281 (D.N.M. 2016), is plainly
distinguishable. In Aragon, the plaintiff’s claim was for UIM benefits; and, to recover UIM
benefits, a plaintiff must prove, inter alia, “damages that exceed the tortfeasor’s liability limits.”
Id. at 1283.
Obviously, however, when a plaintiff seeks to recover UM benefits, that
requirement makes no sense; even the most minimal damages will exceed the amount the
plaintiff could collect from the uninsured tortfeasor’s non-existent liability insurance. Ortiz, 207
F. Supp. 3d at 1220.
Defendant also relies on Hovet v. Allstate Insurance Co., 2004-NMSC-010, ¶¶ 22-23, 135
N.M. 397, 89 P.3d 69, in which the New Mexico Supreme Court held that a third-party claimant 2
has a right to sue an insurer for unfair settlement practices under Sections 59A-16-20(E) and
59A-16-30 of the New Mexico Statutes Annotated. (Doc. 32 at 8-9.) The Hovet court imposed
“certain preconditions” on such a suit, however:
As used in this Order, the term “third-party claimant” refers to the alleged victim of an accident who sues the
automobile liability insurer of the alleged tortfeasor who caused the accident. See, e.g., Hendren v. Allstate Ins. Co.,
1983-NMCA-129, ¶ 18, 100 N.M. 506, 672 P.2d 1137. The term “first-party claimant,” in contrast, refers to an
alleged accident victim who makes a claim under her own automobile liability insurance policy. See, e.g., Willis,
2015 WL 11181339, at *4.
[a] third-party claimant’s statutory cause of action against the insurer for unfair
settlement practices must await the conclusion of the underlying negligence action
between the claimant and the insured. Thus, a third-party claimant may not sue
both the insured and the insurer in the same lawsuit. Not only that, the third-party
claimant will not even have an action under Section 59A-16-20(E) unless and
until there has been a judicial determination of the insured’s fault and the amount
of damages awarded in the underlying negligence action.
2004-NMSC-010 at ¶¶ 23, 26, 135 N.M. 397, 89 P.3d 69 (internal citation omitted).
The Court finds this case distinguishable from Hovet in three significant ways. First, the
extra-contractual claims alleged in Plaintiffs’ amended complaint are not limited to claims based
on Defendant GEICO’s alleged bad faith refusal to settle. (See, e.g., Doc. 1 at 10-11.) In that
respect, this case is like Willis, in which the court denied Defendant GEICO’s motion to
bifurcate and stay discovery. 2015 WL 11181339, at *5. In Willis, Defendant GEICO argued
that a determination of the plaintiffs’ contractual damages was necessary before their bad faith
claims could proceed. Id. at *3. The Willis court rejected that argument, noting that
[a]n insurer in New Mexico can act in bad faith in its handling of a claim for
reasons other than its refusal to pay a claim in full. Here, Plaintiffs’ bad faith
claims concerning quality or quantity of services, untimeliness, and dishonesty are
for reasons other than GEICO’s refusal to pay Plaintiffs’ claim in full. Those bad
faith claims are distinct and independent from Plaintiffs’ claim that GEICO
refused to pay Plaintiffs’ claim in full, the basis for Plaintiffs’ contract claims.
Accordingly, the bad faith claims are not contingent on the contract claims.
GEICO has, therefore, failed to demonstrate that bifurcation is warranted for that
Id. (internal citations and quotation marks omitted).
As in Willis, Plaintiffs in this case have asserted extra-contractual claims regarding
“quality or quantity of services, untimeliness, and dishonesty,” i.e., “for reasons other than
[Defendant] GEICO’s refusal to pay Plaintiffs’ claims in full,” id., and these claims are not
contingent on the outcome of their contractual claims. (Doc. 1 at 10-11.) Thus, as in Willis,
bifurcation is not warranted for that reason at this time. Cf. Ortiz, 207 F. Supp. 3d at 1220-21
(disregarding insured’s conclusory allegations of misconduct other than bad faith refusal to settle
in granting insurer’s motion to bifurcate).
Second, the Court finds Hovet distinguishable because, at least at this juncture, Defendant
GEICO has failed to identify any actual dispute regarding the UM’s liability for the accident at
issue. The Ortiz case is likewise distinguishable for this reason. 207 F. Supp. 3d at 1218.
Plaintiffs assert “[t]here is no real dispute that [they] are owed benefits” under the UM policy,
and, as noted above, even Defendant GEICO acknowledges that “the dispute between the
[parties] lies primarily with the value of their claims.” (Doc. 29 at 8; Doc. 32 at 5.) Moreover,
although Defendant GEICO contends that Plaintiffs must “establish fault on the part of the
uninsured driver,” (Doc. 32 at 1), at no time in its briefs on bifurcation has it identified any
reason to question the UM’s fault, or to otherwise challenge Plaintiffs’ description of the
accident. (See generally Docs. 23, 32.) Defendant bears the burden of demonstrating that
bifurcation is proper, and at this stage of the litigation has failed to carry that burden. Belisle,
697 F. Supp. 2d at 1250. As in Willis, the Court presently sees “no risk of simultaneous
litigation on the issue of underlying negligence,” and bifurcation is not warranted for that reason.
2015 WL 11181339, at *4.
Finally, the Court finds Hovet distinguishable because Hovet involved a third-party
claimant, whereas here, Plaintiffs are first-party claimants bringing bad faith claims against their
own insurer. 3 The holding in Hovet was explicitly limited to third-party bad faith claims. 2004-
The Court notes that “the legislative purpose in creating compulsory uninsured motorist coverage was to place the
injured policyholder in the same position, with regard to the recovery of damages, that he would have been in if the
tortfeasor had possessed liability insurance.” Boradiansky v. State Farm Mut. Auto. Ins. Co., 2007-NMSC-015, ¶ 8,
141 N.M. 387, 156 P.3d 25. Nevertheless, the special relationship between an insurer and its insured dictates that a
first-party insured seeking to recover under a UM/UIM policy is in a position analogous, but not identical, to that of
a third-party claimant seeking to recover under a tortfeasor’s liability policy. See, e.g., Grasshopper Natural Med.,
LLC v. Hartford Cas. Ins. Co., 2016 WL 4009834, at *30–*33 (D.N.M. Jul. 7, 2016) (discussing nature of
relationship between insurer and insured); see also State Farm Mut. Auto. Ins. Co. v. Barker, 2004-NMCA-105, ¶
13, 136 N.M. 211, 96 P.3d 336 (New Mexico’s public policy is to “provide protection from uninsured drivers by
NMSC-010, ¶ 26, 135 N.M. 397, 89 P.3d 69. Its concern about a third-party claimant attempting
to “sue both the insured and insurer in the same lawsuit,” and the “potential confusion” that
might arise in such a situation, is simply not an issue here. Id. at ¶¶ 25-26.
Finally, Defendant GEICO cites to Barker, 2004-NMCA-105, 136 N.M. 211, 96 P.3d
336, to support its argument that Plaintiffs must first prove the amount of the damages they are
entitled to recover from the UM, before they can pursue their extra-contractual claims. (Doc. 23
at 4; Doc. 32 at 3.) However, the Court concludes that Barker, like Aragon, Ortiz, and Hovet, is
In Barker, the parties’ UM/UIM insurance policy expressly permitted the
defendant insurer to arbitrate the amount of damages the insured was entitled to recover from a
UM in the event the insurer and insured could not agree. 2004-NMCA-105, at ¶¶ 11-12, 136
N.M. 211, 96 P.3d 336. The Barker court held that, because the insurer “did not breach its
contract by following [the contract’s] terms . . . and arbitrating the issue of damages,” the insured
was not entitled to prejudgment interest under Section 56-8-3 of the New Mexico Statutes
Annotated. Id. at ¶¶ 12, 21; see id. at ¶ 19 (“Section 56-8-3(A) requires that a contract be
breached before an award of prejudgment interest can be considered.”). Here, in contrast,
Defendant GEICO has presented no evidence that the terms of Plaintiffs’ UM/UIM policy
authorized it to handle Plaintiffs’ claims as it allegedly has; and, of course, at this time, there is
no issue regarding Defendant GEICO’s entitlement to prejudgment interest. As such, Barker is
Defendant GEICO also argues that bifurcation and stay of Plaintiffs’ extra-contractual
claims would promote convenience and judicial efficiency. (Doc. 23 at 5-8; Doc. 32 at 8-10.)
However, the Court does not share Defendant’s view that bifurcation is likely to result in a more
placing injured parties in the same or similar position they would have been in had they been dealing with a person
with liability insurance” (emphasis added)).
expeditious resolution of this case. Bifurcation is not mandated simply because determination of
the coverage issue could dispose of some part of Plaintiffs’ extra-contractual claims. As noted
above, bifurcation under Rule 42(b) is inappropriate when it will not appreciably shorten trial or
affect the evidence offered because claims are inextricably linked. Refco Group, Ltd., 184
F.R.D. at 629. At this stage of the proceedings, the facts relevant to Plaintiffs’ contractual and
extra-contractual claims appear intertwined enough to permit discovery and trial of all the claims
together. For example, evidence regarding Defendant GEICO’s reasons for refusing to pay
Plaintiffs’ UM claims as requested appears centrally relevant to both their coverage and bad faith
claims, and would have to be presented at two separate trials if the claims were bifurcated and
Plaintiffs were successful on their coverage claims.
Also, Plaintiffs and the individual
Defendants will likely need to be deposed, and a substantial portion of each deposition will likely
be relevant to both the contractual and the extra-contractual claims.
In short, based on the record now before the Court, bifurcation of, and a stay of discovery
regarding, Plaintiffs’ extra-contractual claims would not result in a substantial savings of the
Court’s and the parties’ resources, and, in the event a jury finds for Plaintiffs on their contractual
claims, would significantly delay the ultimate resolution of the case, require the Court to
empanel two separate juries, and require witnesses to testify at two separate trials. Moreover, to
the extent Plaintiffs’ discovery regarding their extra-contractual claims is excessively
“consuming and invasive” or seeks privileged or confidential information as Defendant GEICO
claims, (Doc. 23 at 6), Federal Rule of Civil Procedure 26 provides it with ample means to
protect its interests.
Defendant GEICO also claims that bifurcation is necessary to avoid unfair prejudice to it.
(Doc. 23 at 6-7); see Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431, 1435 (10th Cir. 1993)
(district court, citing need to avoid potential prejudice to defendant, did not abuse its discretion
in bifurcating claims). According to Defendant GEICO, it would be “unfairly prejudiced at trial
by potential jury confusion over the mixed presentation of evidence regarding claims of bad faith
and claims regarding liability and damages for the underlying UIM [sic] claim.” (Doc. 23 at 6.)
Defendant GEICO also contends that if the Court tries Plaintiffs’ contractual and extracontractual claims together, there will be a conflict between Plaintiffs’ right to present evidence
of Defendant GEICO’s settlement offers to show bad faith, and Defendant GEICO’s right to
exclude such evidence to avoid the appearance of having conceded liability. (Id. at 7); see Fed.
R. Civ. P. 408 (evidence of compromise offers and negotiations not admissible to prove or
disprove validity or amount of a disputed claim or for impeachment, but may be admitted for
At present, the Court is disinclined to bifurcate and stay Plaintiffs’ extra-contractual
claims on this basis. In general, it seems likely that appropriate jury instructions and arguments
of counsel can mitigate any danger of unfair prejudice to Defendant GEICO at trial.
The Court does not find that there is a substantial risk of juror confusion or
prejudice simply because the jury will consider admissible evidence regarding
both the bad faith and contract claims. Jurors are often asked to comprehend
issues in civil litigation that are considerably more complex than the issues in this
case. Sufficiently clear jury instructions, including limiting instructions, and clear
arguments by counsel will enable jurors to understand the different sets of issues
presented and thereby, avoid any confusion or prejudice.
Willis, 2015 WL 11181339, at *4.
The Court recognizes that not all of the circumstances relevant to bifurcation are static.
Thus, notwithstanding the foregoing discussion, it is possible that at a later stage in these
proceedings, the Court may be persuaded to bifurcate the trial of this matter, or to phase it, for
example, in a manner permitting the parties to present evidence regarding Plaintiffs’ extra-
contractual claims to the jury, but only if that same jury first finds in Plaintiffs’ favor on their
contractual claims. As such, the Court’s denial of Defendant GEICO’s Motion to Bifurcate will
be without prejudice to its ability to seek the same or similar relief in the future based on new
information or changed circumstances.
Moreover, this Order does not preclude Defendant
GEICO from asking the Court to phase discovery, nor does it preclude the Court from granting
such relief if proper. However, in light of the record now before it, the Court concludes that
bifurcation and stay of Plaintiffs’ extra-contractual claims would significantly delay the litigation
and result in the discovery and presentation of duplicative evidence, and is not necessary to
prevent unfair prejudice to Defendant GEICO.
The Court will therefore deny Defendant
GEICO’s Motion to Bifurcate without prejudice at this time.
The Individual Defendants’ Motions to Dismiss
Factual Background and Procedural History
On November 18, 2016, Defendants Elmore and Ellis jointly filed a motion to dismiss
Plaintiffs’ claims against them, alleging insufficient service of process. (Doc. 12.) The Court
denied the motion as premature on December 2, 2016, finding that Plaintiffs had until December
29, 2016, to serve the individual Defendants properly. (Doc. 24 at 2.) On December 22, 2016,
Plaintiffs filed a Return documenting proof of service of process on Defendant Ellis on
December 13, 2016. (Doc. 30 at 2.) On January 3, 2017, however, Defendant Ellis filed a
second motion to dismiss, in which she argued that the December 13 service of process was
invalid because she was served with a summons issued, not by this Court, but rather by the state
district court before removal. (See generally Doc. 36.) In their response to the motion, Plaintiffs
asserted that federal law allowed them to serve Defendant Ellis with a state court summons, but,
“[o]ut of an abundance of caution,” they also served Defendant Ellis with a federal summons on
January 11, 2017. (Doc. 47 at 2; see also Doc. 45 (Proof of Service on Defendant Ellis on Jan.
11, 2017).) In reply, Defendant Ellis contended that the January 11 service of process was also
invalid, because it was untimely. (Doc. 51 at 3-4.) Defendant Ellis later filed a third motion to
dismiss (entitled her second), reasserting the arguments presented in her second motion, in case
the January 11 service of process had mooted the second motion. (Doc. 60.)
On January 3, 2017, Plaintiffs filed a Proof of Service of process on Defendant Elmore,
in which Plaintiffs’ process server attested that she personally served Defendant Elmore on
December 22, 2016. (Doc. 38 at 2.) On January 12, 2017, Defendant Elmore filed his second
motion to dismiss, asserting that the December 22 service of process was invalid. (Doc. 42.) In
his affidavit attached to the motion, Defendant Elmore attested that the process server did not
serve him personally as she claimed, but rather “threw papers at [his] wife” at his residence.
(Doc. 42-1 at 3.) Plaintiffs filed a response in opposition to Defendant Elmore’s motion on
January 26, 2017, attaching the process server’s affidavit. (Doc. 54.) In her affidavit, the
process server attested that she “made an error” when she previously swore that she had
personally served Defendant Elmore. (Doc. 54 at 3.) In fact, she attested, she served Defendant
Elmore by handing copies of the summons and complaint to Defendant Elmore’s wife at his
residence. (Id.) Also on January 26, 2017, Plaintiffs filed an Amended Proof of Service
consistent with the process server’s affidavit. (Doc. 53.) In reply, Defendant Elmore argued that
the Court should disregard the Amended Proof of Service because it contradicts the original
Proof of Service, and because Plaintiffs did not seek the Court’s leave to file it. (Doc. 61.)
According to 28 U.S.C. § 1448, in cases that have been removed from state to federal
in which any one or more of the defendants has not been served with process or in
which the service has not been perfected prior to removal, or in which process
served proves to be defective, such process or service may be completed or new
process issued in the same manner as in cases originally filed [in federal court].
28 U.S.C. § 1448. Although Defendant Ellis represents as settled law that “post-removal service
must be accomplished pursuant to a subpoena issued by the federal district court,” (Doc. 36 at 5
(citation and internal punctuation marks omitted)), the actual state of the law is not so clear. In a
case conspicuously absent from Defendant Ellis’ briefs on the pending motions to dismiss, the
Tenth Circuit stated:
[t]he Ninth Circuit has held that where the plaintiff has not served the defendant
with process prior to removal, the district court has no power to complete the
service. Rather, the court must issue new process pursuant to Fed. R. Civ. P. 4.
Beecher v. Wallace, 381 F.2d 372, 373 (9th Cir. 1967). This court has yet to rule
on that precise question, and there is no need to do so here.
Wallace v. Microsoft Corp., 596 F.3d 703, 707 (10th Cir. 2010) (emphasis added). In other
words, the Tenth Circuit has not yet decided whether a plaintiff may serve a defendant with a
state court summons after removal to federal court. Id. Moreover,
there is a conflict of authority on the issue whether state process issued but not
served prior to removal retains any efficiency for further service after removal,
and as many or more courts have rejected Beecher’s interpretation of § 1448 and
held that the statute allows service of process to be completed under state law
where process was issued but not served prior to removal.
Minter v. Showcase Sys., Inc., 641 F. Supp. 2d 597, 600 (S.D. Miss. 2009); see also Spiritbank v.
McCarty, 2009 WL 1158747, at *1-*2 (N.D. Okla. Apr. 22, 2009) (citing cases). As one such
court reasoned, “Section 1448 allows for the completion of state service of process if the process
was commenced prior to the date of removal,” and “service of process commence[s]” when the
state court summons is issued. Schmude v. Sheahan, 214 F.R.D. 487, 490 (N.D. Ill. 2003).
When a summons and complaint have not been timely served, courts “employ a twostep analysis for determining whether an extension of time should be granted.” Salazar v. City of
Albuquerque, 278 F.R.D. 623, 627 (D.N.M. 2011). “First, the plaintiff is entitled to a mandatory
extension of time if the plaintiff can demonstrate good cause for failing to timely effect service.”
Id. (citing Espinoza v. United States, 52 F.3d 838, 841 (10th Cir. 1995)). In this context, “good
cause” is construed “narrowly to protect only those plaintiffs who have been meticulous in their
efforts to comply with the Rule.” Id. (quoting Despain v. Salt Lake Area Metro Gang Unit, 13
F.3d 1436, 1438 (10th Cir. 1994)). “Second, if the plaintiff fails to show good cause, the court
still must exercise its discretion, and either dismiss the case without prejudice or extend the time
for service.” Id. (quoting Espinoza, 52 F.3d at 842). Courts consider a number of factors in
determining whether to grant a discretionary extension of time for service, including whether
(1) the plaintiff intentionally delayed serving process; (2) the plaintiff was
dilatory in his effort to serve process; (3) the defendant revealed the defect in
service to the plaintiff; (4) dismissal of the case would be a severe sanction
against the plaintiff; (5) judicial economy would be served by dismissing claims;
(6) the defendant would be prejudiced from delayed service of process; (7) the
defendant had actual notice of the lawsuit; and (8) the plaintiff’s mistake . . . is
Willis v. Gov’t Employees Ins. Co., 2016 WL 3951730, at *3 (D.N.M. Feb. 8, 2016). “In
analyzing the above factors, the Court considers the strong policy which prefers that courts reach
the merits of a case instead of dismissing [it] on a technicality.” Id. (citing Baumeister v. N.M.
Comm’n for the Blind, 409 F. Supp. 2d 1351, 1353-54 (D.N.M. 2006)). Finally, Federal Rule of
Civil Procedure 4 provides that “[f]ailure to prove service does not affect the validity of service.
The court may permit proof of service to be amended.” Fed. R. Civ. P. 4(l)(3).
To resolve Defendant Ellis’ two pending motions to dismiss, the Court need not decide
whether Plaintiffs’ service of a state court summons on Defendant Ellis was proper. Also, the
Court need not decide whether Plaintiffs’ counsel’s interpretation of Section 1448 to permit such
service constitutes “good cause for failing to timely effect service.” Salazar, 278 F.R.D. at 627.
This is so because, even if such service was improper, and even if counsel’s interpretation does
not constitute good cause, the Court will exercise its discretion to extend the time for Plaintiffs to
serve Defendant Ellis to January 11, 2017, the date on which she was undisputedly personally
served with a federal summons. (Docs. 45, 47, 51.) In so holding, the Court has considered
First, there is no evidence that Plaintiffs intentionally delayed in serving
Defendant Ellis with process, and the record indicates that they have not been dilatory in their
efforts to do so. Willis, 2016 WL 3951730, at *3. On the contrary, Plaintiffs have been
persistently, if at times imperfectly, attempting to serve the individual Defendants with process
since at least October 24, 2016, less than a month after Defendant GEICO removed the case to
federal court. (Doc. 11 at 10-11.)
Second, each time Defendant Ellis filed a motion to dismiss alleging a defect in
Plaintiffs’ attempts to serve her, Plaintiffs acted with reasonable promptness to correct the defect.
Willis, 2016 WL 3951730, at *3. Third, although dismissal would not be a “severe sanction,”
because the statutes of limitation on Plaintiffs’ claims against Defendant Ellis will not expire for
some time, 4 the Court finds that allowing the claims to proceed would far more effectively
promote judicial economy and conserve the parties’ resources. Id. If the Court were to dismiss
4 See, e.g., N.M. Stat. Ann. § 37-1-3 (six-year statute of limitation applies to claims founded on written contract);
N.M. Stat. Ann. § 37-1-4 (four-year statute of limitation applies to claims of fraud); Nance v. L.J. Dolloff Assocs.,
Inc., 2006-NMCA-012, ¶ 22, 138 N.M. 851, 126 P.3d 1215 (four-year statute of limitation applies to claims under
New Mexico Unfair Insurance Practices Act and New Mexico Unfair Practices Act).
Plaintiffs’ claims against Defendant Ellis without prejudice, Plaintiffs would most likely refile
them. Even if they were to do so in state court, as before, Defendant Ellis would likely once
again remove them to this Court. If so, consolidation, on a party’s motion or sua sponte, seems
another likely possibility. The foregoing scenario involves considerable effort, expense, and
delay only to return the case to its current procedural posture. See Freeze-Dry Prods., Inc. v.
Metro Park Warehouse, Inc., 159 F.R.D. 45, 46 (D. Kan. 1994) (Courts “may consider
practicalities in exercising [their] discretion to determine whether to dismiss. Dismissal would
be relatively pointless in the instant case. It will not bar plaintiff’s claim, but will simply require
plaintiff to re-file and re-serve defendant.”).
Fourth, the Court finds that the delayed service of a federal summons has not prejudiced
Defendant Ellis. Willis, 2016 WL 3951730, at *3. Defendant Ellis has had actual notice of this
lawsuit since at least November 18, 2016, when she and Defendant Elmore filed their first
motion to dismiss, (Doc. 12); and, she was personally served with copies of the state court
summons, the complaint, and Defendant GEICO’s Notice of Removal on December 13, 2016,
before the deadline for service of process expired. (Doc. 24 at 2; Doc. 30 at 2.) Finally, to the
extent Plaintiffs’ counsel were mistaken in their belief that service of a state court summons after
removal was proper—again, a question the Court does not reach—such mistake was at least
“understandable.” Willis, 2016 WL 3951730, at *3; see, e.g., Bruley v. Lincoln Prop. Co., N.C.,
Inc., 140 F.R.D. 452, 454 (D. Colo. 1991) (it was “plausible” for plaintiff to interpret Section
1448 to permit service of state court summons after removal). For all of these reasons, the Court
in its discretion holds that Plaintiffs’ service of process on Defendant Ellis was timely if
accomplished on or before January 11, 2017, and, as such, Plaintiffs have timely and properly
served Defendant Ellis in accordance with Rule 4. The Court will therefore deny Defendant
Ellis’ two pending motions to dismiss.
Defendant Elmore’s pending motion to dismiss also alleges insufficient service of
process, but for different reasons. As a preliminary matter, Defendant Elmore contends that the
Court should disregard Plaintiffs’ process server’s Amended Proof of Service in deciding his
motion, because Rule 4 permits amendment of proof of service only with the Court’s leave,
which Plaintiffs have failed to seek. (Doc. 61 at 2-3.) Defendant Elmore is correct that Rule 4
requires the Court’s leave for amendment of proof of service, and that Plaintiffs filed their
Amended Proof of Service without seeking such leave. Fed. R. Civ. P. 4(l)(3). The Court
cautions Plaintiffs to more carefully review and comply with the Federal Rules of Civil
Procedure in their prosecution of this action in future. However, the Court is cognizant of both
“the strong policy which prefers that courts reach the merits of a case instead of dismissing [it]
on a technicality,” Willis, 2016 WL 3951730, at *3, and the fact that “[f]ailure to prove service
does not affect the validity of service.” Fed. R. Civ. P. 4(l)(3). As such, the Court will, sua
sponte and nunc pro tunc, permit Plaintiffs to amend their Proof of Service to reflect the manner
in which Defendant Elmore was actually served.
Further, the Court is convinced that Plaintiffs’ Amended Proof of Service does in fact
reflect the manner which Plaintiffs’ process server actually served Defendant Elmore, i.e., by
leaving a copy of the summons and complaint with Defendant Elmore’s wife at his residence.
(Doc. 53; Doc. 54 at 3-4.) The Amended Proof of Service is consistent with the process server’s
affidavit, in which she explains she made a mistake when she attested that she served Defendant
Elmore personally, and that she in fact served him by handing an envelope containing copies of
the summons and complaint to his wife at his residence. (Doc. 54 at 3.) The Amended Proof of
Service, and the process server’s affidavit, are also consistent with that portion of Defendant
Elmore’s affidavit about which he has personal knowledge, i.e., that he was not served
personally. 5 (Doc. 42-1 at 3.) Moreover, in his reply in support of his motion to dismiss,
Defendant Elmore had the opportunity to present his wife’s affidavit to contradict the process
server’s affidavit, but neither did so nor explained why he did not. For these reasons, the Court
finds that Plaintiffs’ process server properly and timely served Defendant Elmore with process
on December 22, 2016, by handing copies of the summons and complaint to Defendant Elmore’s
wife at his residence in compliance with Rule 4. See Fed. R. Civ. P. 4(e)(2)(B) (individual in the
United States may be served “by leaving a copy of [the summons and complaint] at the
individual’s dwelling or usual place of abode with someone of suitable age and discretion 6 who
resides there”). The Court will therefore deny Defendant Elmore’s pending motion to dismiss.
IT IS THEREFORE ORDERED as follows:
Defendant GEICO’s Motion to Bifurcate and Stay Plaintiffs’ Extra-Contractual
Claims (Doc. 23) is DENIED WITHOUT PREJUDICE; and,
Defendant Michal Ellis’ Motion to Dismiss (Doc. 36), Defendant Darcell
Elmore’s Motion to Dismiss (Doc. 42), and Defendant Michal Ellis’ Second Motion to Dismiss
(Doc. 60), are DENIED.
It seems quite unlikely that Defendant Elmore has personal knowledge that the process server “threw papers at
[his] wife” and left them on his doorstep, notwithstanding his sworn testimony to that effect. (Doc. 42-1 at 2-3.)
According to counsel, Defendant Elmore was “in bed” at the time his wife and the process server interacted. (Doc.
42 at 3.) Before the Court could credit his testimony that he has personal knowledge of the process server’s actions,
it would at least need further explanation regarding how Defendant Elmore, while in his bed, could perceive what
the process server was doing on the doorstep outside his house.
Defendant Elmore has not disputed that his wife is a person “of suitable age and discretion who resides” at his
home. (See generally Docs. 42, 61.)
IT IS SO ORDERED.
UNITED STATES MAGISTRATE JUDGE
Presiding by Consent
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