Kirby et al v. Resmae Mortgage Corporation et al

Filing 24

OPINION AND ORDER by Chief Judge Gregory K Frizzell Complaint dismissed without prejudice. Plaintiffs amended complaint due by 1-6-2015. ; setting/resetting deadline(s)/hearing(s): ( Miscellaneous Deadline set for 1/6/2015); vacati ng/setting aside order(s); denying 20 Motion to Accelerate/Extend/Reset Hearing(s)/Deadline(s); denying 21 Motion for Miscellaneous Relief; denying 22 Motion for Default Judgment (Re: 2 Complaint, 23 Clerk's Entry of Default, Ruling on Motion for Entry of Default by Clerk ) (Documents Terminated: 23 Clerk's Entry of Default, Ruling on Motion for Entry of Default by Clerk ) (hbo, Dpty Clk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
ELBERT KIRBY, JR., CALEB
MEADOWS, and JOHN DOE,
Plaintiffs,
v.
RESMAE MORTGAGE CORPORATION,
LASALLE BANK NATIONAL
ASSOCIATION, US BANK NATIONAL
ASSOCIATION, and OCWEN LOAN
SERVICING, LLC,
Defendants.

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Case No. 14-CV-389-GKF-FHM

OPINION AND ORDER
Before the court is the motion of plaintiffs Elbert Kirby and Caleb Meadows, appearing
pro se, for default judgment against defendant Resmae Mortgage Corporation (“Resmae”) [Dkt.
#22], their motion for additional time to serve defendant Ocwen Loan Servicing, LLC [Dkt.
#20], and their motion for alternate service by first class mail [Dkt. #21]. As discussed below, the
court finds that the attempted service of process on Resmae was insufficient, and that plaintiffs’
Complaint [Dkt. #2] fails to state a claim on which relief may be granted. The plaintiffs’ motions
are denied, and their Complaint is dismissed without prejudice.
I.

Procedural Background

The plaintiffs filed their Complaint on July 11, 2014. [Dkt. #2]. The court subsequently
granted the plaintiffs’ motion for leave to proceed in forma pauperis. [Dkt. #11]. Returns of
service were filed with respect to defendants US Bank National Association [Dkt. #13], Resmae
[Dkt. #14], and LaSalle Bank National Association [Dkt. #15] on November 4, 2014. On the
returns of service for US Bank National Association and LaSalle Bank National Association,

however, the U.S. Marshals Service certified that it was unable to locate those defendants. [Dkt.
##13, 15]. Only on the return of service for Resmae did the U.S. Marshal Service certify that it
had some evidence of attempted service, having left the summons and complaint in a bin located
on a receptionist’s desk on the third floor of the corporate offices in Wilmington, Delaware.
[Dkt. #14]. No return of service has been filed with respect to defendant Ocwen Loan Servicing,
LLC.
On December 1, 2014, the court directed the plaintiffs to show cause why the court
should not dismiss the action without prejudice as to the unserved defendants. [Dkt. #16]. On
December 10, 2014, the plaintiffs moved for additional time to serve Ocwen Loan Servicing,
LLC [Dkt. #20], for permission to serve US Bank National Association and LaSalle Bank
National Association by first class mail [Dkt. #21], and for default judgment against Resmae
[Dkt. #22]. Upon the plaintiffs’ motion [Dkt. #19], the Court Clerk entered default against
Resmae on December 12, 2014. [Dkt. #23].
II.

Discussion

Service of process under Fed. R. Civ. P. 4 “provides the mechanism by which a court
having venue and jurisdiction over the subject matter of an action asserts jurisdiction over the
person of the party served.” Hukill v. Oklahoma Native American Domestic Violence Coalition,
542 F.3d 794, 797 (10th Cir. 2008) (finding that the plaintiff failed to properly serve the
defendant when she left service with a receptionist at the defendant’s business address). “The
plaintiffs bear the burden of demonstrating that the court has personal jurisdiction over the
parties, including valid service of process.” Habyarimana v. Kagame, 821 F.Supp.2d 1244, 1251
(W.D. Okla. 2011) (citing Claus v. Mize, 317 F.3d 725, 727 (7th Cir. 2003); Carimi v. Royal

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Carribean Cruise Line, Inc., 959 F.2d 1344, 1346 (5th Cir. 1992); 5A Charles Alan Wright &
Arthur R. Miller, Federal Practice & Procedure, § 1353 (2d ed. 1990)).
Fed. R. Civ. P. 4(h) provides that a corporation or business entity may be served in one of
two ways: (i) by serving it in the same manner in which one would serve an individual person
under Rule 4(e)(1), or (ii) by delivering the process to “an officer, a managing or general agent,
or any other agent authorized by appointment or by law to receive service of process. . . .” In
pertinent part, Rule 4(e) allows for service upon an individual by delivering a copy of the
summons and complaint to the individual personally, or to an agent authorized to receive service
of process. Rule 4(e) also allows for service upon an individual by following the methods
provided by the laws of the state in which the district court is located or where service is made.
Under both Oklahoma and Delaware law, to effect service of process by personal delivery, the
process server must deliver a copy of the summons and the petition or complaint with a
designated person, such as the individual being served (Okla. Stat. tit 12 § 2004(C)(1)(c)(1); Del.
Super. Ct. Civ. R. 4(f)(1)(I)) or an agent authorized to receive service of process (Okla. Stat. tit.
12 § 2004(C)(1)(c)(3); Del. Super. Ct. Civ. R. 4(f)(1)(III)).
Each of these methods for effecting service by personal delivery has one requirement in
common: the summons and complaint must be left with a certain person, such as the individual
being served or a designated agent. In this case, however, the return of service for Resmae was
not given to any individual; instead, it was left in a bin located on the receptionists’ desk located
on the third floor of the corporate office. [Dkt. #14]. Whether under Oklahoma law, Delaware
law, or the Federal Rules of Civil Procedure, service was insufficient. The court therefore lacks
personal jurisdiction over Resmae. As such, the plaintiffs’ motion for default judgment [Dkt.
#22] must be denied, and the Clerk’s entry of default [Dkt. #23] must be set aside.

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But even if service upon Resmae had been sufficient and default had been properly
entered, the plaintiffs would not be entitled to default judgment. A “defendant’s default does not
in itself warrant the court in entering a default judgment. . . . There must be a sufficient basis in
the pleadings for the judgment entered.” Bixler v. Foster, 596 F.3d 751, 762 (10th Cir. 2010)
(quoting Nishimatsu Const. Co. v. Houston Nat. Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)).
Notwithstanding a defendant’s default, “[t]he claimant must state a legally valid claim for relief,”
and “[a] court may grant judgment by default only for relief that may lawfully be granted on the
well-pleaded facts alleged by the claimant.” 10 James Wm. Moore et al., Moore’s Federal
Practice § 55.32(1)(b) (3d ed. 2014). Therefore, “it remains for the court to consider whether the
unchallenged facts constitute a legitimate cause of action, since a party in default does not admit
mere conclusions of law.” Bixler, 596 F.3d at 762 (quoting 10A Charles Alan Wright, Arthur R.
Miller, & Mary K. Kane, Federal Practice and Procedure § 2688, at 63 (3d ed. 1998)); see also
Quirindongo Pacheco v. Rolon Morales, 953 F.2d 15, 16 (1st Cir. 1992) (“After an entry of
default, a court may examine a plaintiff’s complaint to determine whether it alleges a cause of
action.”); Cripps v. Life Ins. Co. of North America, 980 F.2d 1261, 1267 (9th Cir. 1992)
(“[N]ecessary facts not contained in the pleadings, and claims which are legally insufficient, are
not established by default.”).
To state a legitimate cause of action, a complaint must contain “enough facts to state a
claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570
(2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (holding that a claim has “facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged”). A complaint that offers mere
“labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not

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do.” Twombly, 550 U.S. at 555. Nor does a complaint suffice if it tenders “naked assertion[s]”
devoid of “further factual enhancement.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at
557). “Factual allegations must be enough to raise a right to relief above the speculative level . . .
on the assumption that all the allegations in the complaint are true (even if doubtful in fact).”
Twombly, 550 U.S. at 555 (citations omitted).
In their Complaint, the plaintiffs allege the defendants used “manufactured evidence of
indebtedness” to extort from them property interests worth in excess of $500,000. [Dkt. #2, p. 3].
In support of this allegation, they state that the defendants falsely claimed to own a security
interest in their property and mailed demands for payment to them every month for more than
four years. [Id., pp. 7–23]. The plaintiffs bring their claim under 18 U.S.C. § 1964(c), which
authorizes “[a]ny person injured in his business or property” as a result of racketeering activities
prohibited in 18 U.S.C. § 1962 to bring suit to recover treble damages. [Id., p. 1].
But the plaintiffs fail to plead sufficient factual content to allow the court to draw a
reasonable inference that the defendants caused them to suffer any injury. The plaintiffs
repeatedly insist that they have suffered “tangible losses” to their “‘property interests’ or
‘business interests’ or ‘business and property interests.’” [Id., pp. 5–6, 23]. Yet they do not say
what these interests are. Nor do they offer any allegations that plausibly show that the
defendants’ conduct deprived them of their property, or inflicted any harm upon them beyond the
nuisance of unwanted mail. In the absence of such supporting allegations, the plaintiffs’ claims
that the defendants deprived them of property interests are merely conclusory allegations, which
the court need not accept. Moffett v. Halliburton Energy Servs., Inc., 291 F.3d 1227, 1232 (10th
Cir. 2002). The plaintiffs have thus failed to offer sufficient factual allegations to “raise a right to

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relief above the speculative level” or “state a claim to relief that is plausible on its face.”
Twombly, 550 U.S. at 555, 570.
The plaintiffs’ motion for default judgment against Resmae [Dkt. #22] must therefore be
denied not only because service upon Resmae was insufficient, but also because the plaintiffs’
Complaint does not contain sufficient factual allegations to state a legally valid claim for relief.
The court further finds that the plaintiffs’ failure to state a valid claim, and the court’s
consequent inability to grant the requested relief, constitutes alternate cause to set aside the
Clerk’s entry of default [Dkt. #23] pursuant to Fed. R. Civ. P. 55(c). See Nikwei v. Ross Sch. of
Aviation, Inc., 822 F.2d 939, 941 (10th Cir. 1987) (“Setting aside a default entry . . . is addressed
to the sound discretion of the trial court, and they are given a great deal of latitude in exercising
their discretion. . . .” (internal citations omitted)); Hunt v. Ford Motor Co., 65 F.3d 178 (10th
Cir. 1995) (unpublished decision) (citing In re Dierschke, 975 F.2d 181, 183 (5th Cir. 1992))
(noting that the presentation of a “meritorious defense” is a “principal factor” to be considered in
determining whether there is good cause to set aside an entry of default, though the court may
consider other factors).
Because the court has determined that the action fails to state a claim on which relief may
be granted, moreover, the court is required to dismiss the Complaint. 28 U.S.C.
§ 1915(e)(2)(B)(ii). To remedy the deficiencies noted above, the plaintiffs may file an Amended
Complaint which specifies the underlying facts that demonstrate that they are entitled to relief.
See Nasious v. Two Unknown B.I.C.E. Agents, 492 F.3d 1158, 1163 (10th Cir. 2007) (“[T]o state
a claim in federal court, a complaint must explain what each defendant did to [the plaintiff];
when the defendant did it; how the defendant’s action harmed [the plaintiff]; and, what specific
legal right the plaintiff believes the defendant violated.”).

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Finally, because the underlying Complaint must be dismissed, the plaintiffs’ motions for
additional time to serve Ocwen Loan Servicing, LLC [Dkt. #20] and for alternate service by first
class mail [Dkt. #21] are denied.
III.

Conclusion

WHEREFORE, the plaintiffs’ motion for default judgment [Dkt. #22] is denied, the
Clerk’s entry of default [Dkt. #23] is set aside, the plaintiffs’ Complaint [Dkt. #2] is dismissed
without prejudice, and the plaintiffs’ motions for additional time to serve defendant Ocwen Loan
Servicing, LLC [Dkt. #20] and for alternate service by first class mail [Dkt. #21] are denied.
Plaintiffs may file an Amended Complaint within 21 days of this order. Failure to do so may
result in dismissal of this action without prejudice.
ENTERED this 16th day of December, 2014.

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