Sams v. Heritage Transport Inc

Filing 44

ORDER denying 21 Motion to Set Aside Default Judgment. Signed by Honorable David C Norton on 3/29/13. (juwo)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
TIMOTHY J. SAMS,

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Plaintiff,
vs.
HERITAGE TRANSPORT, INC.,
Defendant.

No. 2:12-cv-00462-DCN

ORDER

This matter is before the court on defendant Heritage Transport, Inc.’s motion
to set aside default judgment. For the reasons set forth below, the court denies the
motion.
I. BACKGROUND
This case arises out of an automobile accident that occurred in Lexington
County, South Carolina on October 25, 2010, when plaintiff was rear-ended on the
interstate by a tractor trailer operated by a driver for defendant. See Compl. ¶ 7.
Plaintiff Timothy J. Sams, a South Carolina resident, brought this diversity action
against defendant Heritage Transport, Inc. (Heritage), a California corporation with
its principal place of business in California, on February 17, 2012. Id. ¶¶ 1-2. The
summons and complaint were mailed to Heritage on February 21, 2012 by certified
mail, return receipt requested, at the following address: Mr. Baljit Singh, Registered
Agent, 3855 Skofstad Street, Apt. 29, Riverside, CA 92505.1 ECF No. 4. Ms. Irene
Singh received service on March 2, 2012 and signed the return receipt. ECF No. 5.
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Heritage’s filing with the California Secretary of State lists Baljit Singh as the agent for
service of process and the corporate address as 3855 Skofstad Street, Apt. 29, Riverside, CA
92505. See ECF No. 21-6.

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Because Heritage did not file a timely answer, on March 29, 2012, Sams moved the
clerk for an entry of default. The clerk entered default the same day.
On April 4, 2012, Sams filed a motion for default judgment, which the court
granted on April 18, 2012. The court held a damages hearing on May 29, 2012,
during which Sams testified about the accident and presented evidence regarding his
injuries. Two notices of the hearing—which was originally set for May 29, 2012 at
11:00 a.m. and then rescheduled for May 29, 2012 at 10:30 a.m.—were mailed by the
clerk’s office to Mr. Singh’s address. See ECF Nos. 11, 13. On June 11, 2012, the
court awarded Sams $279,205.42 in actual damages and $100,000 in punitive
damages, plus prejudgment interest. ECF No. 17. The same day, the clerk’s office
mailed notice of the default judgment to Mr. Singh’s address. See ECF No. 19. On
June 14, 2012, Ms. Singh again accepted delivery and signed a return receipt. See
ECF No. 20. On June 25, 2012, Heritage made its first appearance in court by
moving to quash service of the summons and complaint and to set aside the entry of
default and default judgment. The court held a hearing on this motion on September
5, 2012.2
II. DISCUSSION
In support of its motion for relief from default, Heritage claims that its
registered agent for service of process, Baljit Singh, did not receive proper service of

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At the hearing, the court stated that unless the parties decided to participate in mediation,
defendant would have fifteen days from the date of the hearing to file a supplemental brief
regarding service of process under California law, and plaintiff would have fifteen days to
respond. The court was informed that the parties would attempt to mediate the case “pronto,”
see Hr’g Tr., Sept. 5, 2012, 39:11-13, and therefore did not order supplemental briefing.
Having learned that mediation did not take place until March 22, 2013 and was unsuccessful,
the court now finds it appropriate to rule on the motion.

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the summons and complaint because delivery was not restricted to the addressee. Mr.
Singh’s wife, Irene Singh, signed the return receipt, but Heritage contends she is not
authorized to accept service on behalf of the corporation. As such, Heritage asks that
service of the summons and complaint be quashed. Alternatively, Heritage requests
that the court grant relief from default based on excusable neglect.
A. Whether Service Was Sufficient Under Rule 4
Federal Rule of Civil Procedure 4(h) governs service on a corporation. It
states,
Unless federal law provides otherwise or the defendant's waiver has
been filed, a domestic or foreign corporation, or a partnership or other
unincorporated association that is subject to suit under a common
name, 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 and--if the agent is one authorized by statute and the
statute so requires--by also mailing a copy of each to the
defendant . . . .
Fed. R. Civ. P. 4(h) (emphasis added). Under Rule 4(h), Sams had two primary
options for effecting service on Heritage: as provided under Rule 4(e)(1), or by
“delivering” a copy of the summons and complaint to an officer or agent authorized
to receive service.

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1. Rule 4(h)(1)(B)
Sams did not comply with Rule 4(h)(1)(B). Courts have held that Rule
4(h)(1)(B) “clearly requires personal delivery,” i.e., attempted service by mail is not
enough. Mettle v. First Union Nat’l Bank, 279 F. Supp. 2d 598, 602 (D.N.J. 2003);
see Technologists, Inc. v. MIR’s Ltd., 725 F. Supp. 2d 120, 127 (D.D.C. 2010). Sams
did not personally serve the summons and complaint on an officer or agent of
Heritage. Therefore, service was not made under Rule 4(h)(1)(B).
2. Rule 4(h)(1)(A)
In the alternative, Sams argues that he satisfied Rule 4(h)(1)(A). Rule
4(h)(1)(A) requires service in compliance with Rule 4(e)(1). Rule 4(e)(1), which
governs service on an individual, states that service may be accomplished “by
following state law for serving a summons in a civil 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) (emphasis added). Under Rule 4(e)(1), service could
have been effected by following the law of either South Carolina (where the district
court is located) or California (where service was made).
South Carolina Rule of Civil Procedure 4(d)(8) authorizes service by certified
mail as follows:
Service by Certified Mail. Service of a summons and complaint
upon an . . . [individual, corporation, or partnership] . . . may be made
by the plaintiff or by any person authorized to serve process pursuant
to Rule 4(c), including a sheriff or his deputy, by registered or
certified mail, return receipt requested and delivery restricted to the
addressee. Service is effective upon the date of delivery as shown on
the return receipt.
S.C. R. Civ. P. 4(d)(8) (emphasis added).
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Courts have not required stringent compliance with the requirements of South
Carolina Rule 4(d)(8). In Colleton Preparatory Academy, Inc. v. Hoover Universal,
Inc., 616 F.3d 413 (4th Cir. 2010), the Fourth Circuit wrote,
Hoover Universal claims that the service of process was flawed
because the delivery was not restricted to the addressee, but this
argument is unpersuasive. The South Carolina Supreme Court has
noted that it will not require “exacting compliance” with the rules
related to service of process. Roche v. Young Bros., Inc. of Florence,
318 S.C. 207, 209-10, 456 S.E.2d 897 (1995). Instead, the court
inquires into “whether the plaintiff has sufficiently complied with the
rules such that the court has personal jurisdiction of the defendant and
the defendant has notice of the proceedings.” Id. at 210, 456 S.E.2d
897.
Colleton, 616 F.3d at 421 n.9. In Roche, the case cited by Colleton, the South
Carolina Supreme Court specifically stated that South Carolina Rule 4(d)(8) “simply
does not require the specific addressee to sign the return receipt.” 456 S.E.2d at 900.
Here, the question is whether Sams sufficiently complied with South Carolina
Rule 4(d)(8) such that this court has personal jurisdiction over Heritage and Heritage
had notice of the proceedings. The court has personal jurisdiction over Heritage
because it “‘purposefully directed’ [its] activities at residents of the forum” by
transacting business in South Carolina and operating a vehicle for business purposes
in South Carolina. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)
(quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984)). In addition,
Sams’s cause of action “‘arise[s] out of or relate[s] to’ those activities.” Id. (quoting
Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 (1984)).
Moreover, under Colleton and Roche, Sams sufficiently complied with South
Carolina Rule 4(d)(8) by mailing a copy of the summons and complaint, by certified

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mail with return receipt requested, to the registered agent for Heritage at the address
listed in its filing with the California Secretary of State. See ECF No. 21-6 (filing
with the California Secretary of State listing Baljit Singh as Heritage’s agent for
service of process and the corporate address as 3855 Skofstad Street, Apt. 29,
Riverside, CA 92505). Finally, Sams has offered plentiful evidence showing that
Heritage had notice of the proceedings. See ECF No. 35-1 (October 2010 notice to
the driver of the tractor trailer involved in the accident that Sams was being
represented by counsel, with carbon copy sent to Mr. Singh’s address); ECF No. 35-2
(November 2010 letter to Heritage’s insurance claims adjuster regarding request for
official police report); ECF No. 5 (affidavit of service of summons and complaint on
February 24, 2012 at Mr. Singh’s address); ECF Nos. 11, 13, 19 (notices mailed to
defendant between April and June 2012 by clerk’s office to Mr. Singh’s address);
ECF No. 20 (return receipt signed on June 14, 2012 by Ms. Singh demonstrating
delivery of default judgment notice). Because South Carolina Rule 4(d)(8), as
interpreted by the South Carolina Supreme Court, “does not require the specific
addressee to sign the return receipt,” Roche, 456 S.E.2d at 900, the court finds that
service was sufficient.
South Carolina Rule 4(d)(8) additionally states, “Service pursuant to this
paragraph shall not be the basis for the entry of a default or a judgment by default
unless the record contains a return receipt showing the acceptance by the defendant.”
The South Carolina Supreme Court has interpreted this sentence as requiring a
defendant to demonstrate that the return receipt was signed by an unauthorized person

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in order to set aside a default judgment. Roche, 456 S.E.2d at 900. Heritage argues
that service should be quashed because Ms. Singh was not authorized to accept
service.
Defendant makes no argument why this portion of the South Carolina Rule
should trump the Federal Rules governing entries of default and default judgment and
setting aside such entries. See Fed. R. Civ. P. 55 (stating that a court may set aside an
entry of default for good cause, and may set aside a default judgment under Rule
60(b)). The Federal Rules, specifically Rules 4(h)(1)(A) and (e)(1), only look to state
law for “serving a summons.” As stated above, Sams sufficiently complied with
South Carolina Rule 4(d)(8) for service of the summons and complaint; therefore,
under the Federal Rules, service was proper and so was the entry of default and
default judgment. See Md. State Fireman’s Ass’n v. Chaves, 166 F.R.D. 353, 354 (D.
Md. 1996) (“It is axiomatic that service of process must be effective under the
Federal Rules of Civil Procedure before a default or a default judgment may be
entered against a defendant.”).
For these reasons, the court finds that Heritage was properly served, and
denies Heritage’s request that the court quash service of the summons and complaint.3
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Sams had the option of complying with “state law for serving a summons . . . where service
is made,” i.e., California law. Fed. R. Civ. P. 4(e)(1). California Code of Civil Procedure §
415.30(a) provides,
A summons may be served by mail as provided in this section. A copy of the
summons and of the complaint shall be mailed (by first-class mail or airmail,
postage prepaid) to the person to be served, together with two copies of the
notice and acknowledgment provided for in subdivision (b) and a return
envelope, postage prepaid, addressed to the sender.
Cal. Civ. Proc. Code § 415.30(a). The court agrees with defendant that Sams did not
sufficiently comply with the California Rule governing service by mail. It does not appear

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B. Whether Heritage Has Shown Excusable Neglect Under Rule 60
Heritage alternatively seeks relief from judgment under Rule 60(b).
In support of its motion for relief, Heritage cites the standard governing relief
from entry of default under Rule 55(c). “Although [the Fourth Circuit] ha[s] analyzed
Rule 55(c) and Rule 60(b) motions using the same factors, the burden on a movant
seeking relief under the two rules is not the same.” Colleton, 616 F.3d at 420
(citation omitted). “[T]he standard to obtain relief from a default judgment under
Rule 60(b) is higher than that required for relief from entry of default under Rule
55(c).” Adams v. Object Innovation, Inc., No. 11-272, 2011 WL 7042224, at *1 n.2
(E.D. Va. Dec. 5, 2011). “Rule 60(b) motions request relief from judgment, which
implicates an interest in finality and repose, a situation that is not present when
default has been entered under Rule 55(a) and no judgment has been rendered.”
Colleton, 616 F.3d at 420 (citation and internal quotation marks omitted) (calling the
“more onerous” Rule 60(b) standard one of “excusable neglect” rather than simply
“good cause”). In deciding a motion for relief from default,
[A] district court should consider whether the moving party has a
meritorious defense, whether it acts with reasonable promptness, the
personal responsibility of the defaulting party, the prejudice to the
party, whether there is a history of dilatory action, and the availability
of sanctions less drastic.
Payne ex rel. Estate of Calzada v. Brake, 439 F.3d 198, 204-05 (4th Cir. 2006).

that Sams mailed a copy of the summons and complaint along with two copies of a notice and
acknowledgment form and pre-paid return envelope. Therefore, Sams did not comply with §
415.30(a). See Berry v. Evans, No. 06-3795, 2007 WL 1342544, at *1 (N.D. Cal. May 8,
2007) (holding that although defendants were mailed the summons and complaint, there was
no indication that defendants were mailed the notice and acknowledgement of receipt forms
and prepaid return envelopes, thus the service by mail did not comport with California law or
Federal Rule 4(e)(1)).

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Here, Heritage has not established that existence of a meritorious defense. In
granting default judgment, this court found as follows:
The evidence shows that the driver for Heritage was driving an
overloaded tractor trailer at an excessive speed while riding on a wet,
busy, and crowded interstate highway. Sams testified that he had
slowed down because of traffic congestion just prior to being rearended by defendant’s truck. A police report filed after the accident
states, “the driver of Unit #2, driving too fast for conditions, struck
Unit #1 in the rear.” Sams stated that after the accident, the driver for
Heritage approached Sams and said, “I’m the driver of the semi that
hit you, and I’m sorry for hitting you, but I had no other choice
because my load is full and I was going downhill and the road was
slightly wet, so it was either hit you or hit my brakes and take
everybody out. So I chose to hit you.”
Order, June 11, 2012, ECF No. 17. Faced with these findings, Heritage argues that
Rico Garcia, a claims administrator, investigated Sams’s claim following the accident
and “found that liability was contested and disputed by the driver for Defendant
Heritage.” Def.’s Reply 5. This statement does not provide a defense for Heritage,
especially given that the testimony at the damages hearing established that the driver
of the tractor trailer admitted liability at the scene of the accident. In addition,
defendant has not produced an affidavit from the tractor trailer driver stating that he
was not responsible for the accident, so Mr. Garcia’s “statement” is obviously hearsay
and must be disregarded.
Moreover, Heritage has not acted with reasonable promptness; instead, it is
responsible for the default. Heritage offers the affidavit of Mr. Singh, who states he
was in India from February 14 through March 14, 2012 and could not have received
the summons or complaint. ECF No. 38-2 ¶ 6. This argument ignores the fact that
when Mr. Singh returned to California on March 14, 2012, he had one week

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remaining to meet the deadline for filing an answer or responsive pleading. In
addition, after Mr. Singh returned to California, the clerk’s office mailed three
separate notices to his address. See ECF Nos. 11, 13, 19. None of these notices were
returned to the clerk’s office.
Mr. Singh also states that although Ms. Singh signed for delivery of the
certified mail containing the summons and complaint, she never told Mr. Singh about
the mailing and was unauthorized to sign for it. Id. ¶¶ 7-10. However, this is not the
only mailing signed for by Ms. Singh at the 3855 Skofstad Street address, which is
listed in filings with the California Secretary of State as the address of both Heritage’s
“principal executive office” and “principal business office.” ECF No. 38-1 at 7. In
June 2012, when the clerk’s office sent by certified mail a notice of the default
judgment entered against Heritage to the 3855 Skofstad Street address, none other
than Ms. Singh accepted delivery and signed the return receipt. ECF No. 20. This
was done even though Mr. Singh had returned from his trip to India in March. This
evidence contradicts Heritage’s position that Ms. Singh was unauthorized to sign for
certified mail sent to Heritage at the 3855 Skofstad Street address. Instead, the
evidence shows she does so regularly.
Finally, Sams would be prejudiced if the court were to grant relief from the
default judgment, as he has been diligent in pursuing this action and has an interest in
finality and repose. See Colleton, 616 F.3d at 420.

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Heritage cannot play ostrich and hide its head in the sand until an adverse
judgment has been entered. Because Heritage has not shown excusable neglect or a
meritorious defense, the court finds that relief from default is not warranted.
III. CONCLUSION
Based on the foregoing, the court DENIES defendant’s motion to quash
service and to set aside entry of default and default judgment.
AND IT IS SO ORDERED.

_________________________________
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
March 29, 2013
Charleston, South Carolina

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