Golden et al v. Mentor Capital et al
MEMORANDUM DECISION denying 79 Motion to Dismiss Third-Party Complaint for insufficient service of process. Signed by Judge Jill N. Parrish on 8/3/17. (jlw)
IN THE UNITED STATES DISTRICT COURT
IN AND FOR THE DISTRICT OF UTAH
GENA GOLDEN, an individual and SUSAN
GOLDEN, an individual,
MENTOR CAPITAL, INC., a Delaware
corporation, LABERTEW & ASSOCIATES,
a Utah limited liability company, and
MICHAEL L. LABERTEW, an individual,
MEMORANDUM DECISION AND
ORDER DENYING THIRD-PARTY
DEFENDANT, SCOTT VAN RIXEL’S
MOTION TO DISMISS
Case No. 2:15-cv-00176-JNP-BCW
Judge Jill N. Parrish
MENTOR CAPITAL, INC., a Delaware
RICHARD GOLDEN, an individual, and
SCOTT VAN RIXEL, an individual,
Before the court is Third-Party Defendant, Scott Van Rixel’s (“Van Rixel”), Motion to
Dismiss the Third-Party Complaint (“Complaint”) of Third-Party Plaintiff, Mentor Capital, Inc.
(“Mentor”), pursuant to Fed. R. Civ. P. 12(b)(5) for insufficient service of process. Van Rixel
argues that dismissal is appropriate because service of the Complaint and summons was
accomplished after the 90-day time limit established in Rule 4(m) and good cause does not exist
for the delay. For the reasons articulated below, the court DENIES Van Rixel’s motion to
1. On March 14, 2016, Mentor took the deposition of Van Rixel in a related action
pending before the American Arbitration Association.
2. In that deposition, Van Rixel provided his business address, but initially refused to
give his home address, citing privacy and security concerns.
3. Following the deposition, on April 26, 2016, Van Rixel’s attorney provided an
address in Miami, Florida as Van Rixel’s residential address.
4. On May 4, 2016, Mentor filed its Complaint with the court.
5. On May 7, 2016, the process server whom Mentor had hired informed Mentor that the
Miami address was unoccupied and that he had been informed that Van Rixel did not
live at that address.
6. Both Mentor and Van Rixel participated in another arbitration held in San Francisco
for three days from May 9, 2016, until May 11, 2016.
7. Although Mentor had allegedly experienced difficulty in locating Van Rixel, Mentor
chose not to serve Van Rixel at the arbitration. Neither did Mentor ask Van Rixel or
his attorney for a current residential address during the three-day arbitration.
8. Between May and November 2016, Mentor alleges that it “continued to search for a
valid address” at which to serve Van Rixel. But Mentor did not attempt to serve Van
Rixel at the business address he had given at the March deposition.
9. Mentor also failed to inquire of Van Rixel’s counsel as to his current residential
address or to request that Van Rixel’s counsel waive service on his behalf.
10. On November 15, 2016, 195 days after it filed its Complaint, Mentor served Van
Rixel at a business event in Las Vegas.
A motion to dismiss under Rule 12(b)(5) for insufficient service of process may be based
on a plaintiff’s failure to comply with Federal Rule of Civil Procedure 4(m). See 5B Charles
Alan Wright & Arthur R. Miller, Fed. Practice & Procedure § 1353 (3d ed. 2016) (collecting
cases stating failure to comply with Fed. R. Civ. P. 4(m) may be basis for 12(b)(5) defense for
insufficient service of process). Rule 4(m) provides:
If a defendant is not served within 90 days after the complaint is filed, the court-on motion or on its own after notice to the plaintiff--must dismiss the action
without prejudice against that defendant or order that service be made within a
specified time. But if the plaintiff shows good cause for the failure, the court must
extend the time for service for an appropriate period.
Fed. R. Civ. P. 4(m). The burden of establishing validity of service is on the plaintiff. See
F.D.I.C. v. Oaklawn Apartments, 959 F.2d 170, 174 (10th Cir. 1992).
The Tenth Circuit has instructed district courts to evaluate Rule 12(b)(5) dismissals
relying on Rule 4(m) using a two-prong test: Espinoza v. United States, 52 F.3d 838, 841 (10th
Cir. 1995). First, the court must decide if there is good cause for the failure to effectuate service
within 90 days and if there is, then it must give an extension. Id. Second, if the plaintiff fails to
show good cause, the court must still use its discretion to determine whether permissive
extension is warranted. Id. Absent a showing of good cause and if the court declines to extend a
permissive extension, the court has discretion to “either dismiss the case without prejudice or
extend the time for service.” Id.
Van Rixel argues that Mentor exceeded the time limit established by Rule 4(m) because it
filed its Complaint on May 4, 2016, but did not serve the Complaint on him until November 15,
2016, 195 days later. (Doc. 79 at 2–3). Additionally, Van Rixel contends that Mentor has no
good cause for its delay because it could have served him as early as May 9, during a joint
deposition in a related case, or could have inquired of Van Rixel’s counsel to ascertain the best
address for service or to ask counsel to accept service on his behalf. (Id. at 3–5).
Mentor responds that Van Rixel purposely evaded service by giving a “bogus” home
address in Miami, Florida. (Doc. 84 at 4). It contends that when it tried to serve Van Rixel at that
address, it found it unoccupied. (Id. at 2). Further, Mentor argues that it chose not to serve Van
Rixel during the deposition on May 9 because it felt that doing so would be unprofessional. (Id.)
Finally, due to the difficulty in finding Van Rixel in public after that deposition, Mentor argues
that November 15 was the earliest time it reasonably could have effectuated service. (Id. at 5–6).
Thus, Mentor asks that the court either excuse its failure to effect service within 90 days or
extend the time for service pursuant to Rule 4(m). (Id.)
I. No Good Cause Shown.
Rule 4 does not define “good cause.” In re Kirkland, 86 F.3d 172, 174 (10th Cir. 1996).
The Tenth Circuit has “interpreted the phrase narrowly, rejecting inadvertence or neglect as
‘good cause’ for untimely service.” Id. (citations omitted). However, good cause may exist
where the defendant has avoided or evaded service of process. Hendry v. Schneider, 116 F.3d
446, 449 (10th Cir. 1997). The Tenth Circuit has provided further guidance as to the “good
cause” inquiry, stating that the good cause exception should be “read narrowly to protect only
those plaintiffs who have been meticulous in their efforts to comply with the Rule.” Despain v.
Salt Lake Area Metro Gang Unit, 13 F.3d 1436, 1438 (10th Cir. 1994).
It is undisputed that Mentor exceeded Rule 4(m)’s deadline for service. Mentor contends
that good cause exists because Van Rixel purposely and nefariously avoided service.
Specifically, Mentor argues that it failed to locate Van Rixel because the residential address he
gave to Mentor’s counsel was “bogus” and he generally evaded service by not appearing at more
of his company’s events. (Doc. 84 at 4–5). While it may be true that the residential address
became outdated and that Van Rixel attended fewer public events in an effort to avoid service,
that is insufficient to show good cause.
Mentor’s proffered justification for failure to effect timely service on Van Rixel is
insufficient to constitute good cause where Mentor failed to follow through on reasonable
options for serving Van Rixel in the allotted time. Mentor failed to serve Van Rixel when they
were together for three days during an arbitration, despite the fact that Mentor already knew that
the residential address it had for Van Rixel was no longer valid. Indeed, the process server made
Mentor aware that Van Rixel’s residential address was not valid three days before the arbitration.
(Id. at Ex. C). Even with this knowledge, Mentor did not ask either Van Rixel or his attorney for
an updated address. And Mentor never attempted to serve Van Rixel at his business address,
never contacted Van Rixel’s attorney to request an updated residential address, and never
inquired of Van Rixel’s counsel as to whether he would accept service on his behalf. Finally, at
no time did Mentor file a motion with the court seeking to extend the time for service. Mentor’s
occasional and pedestrian attempts to serve Van Rixel do not qualify as a meticulous effort to
comply with Rule 4(m).
Mentor also argues that Van Rixel had notice regarding the third-party claims against
him. But “[t]he relevant standard . . . is not whether defendants do or do not have ‘actual
knowledge’ of a suit in which they are named. The standard is whether plaintiffs have shown
‘good cause’ for their failure” to effectuate service and “actual notice is not equivalent to a
showing of good cause.” Despain, 13 F.3d at 1439. Thus, Van Rixel’s knowledge of the thirdparty claims against him does not excuse Mentor’s failure to effectuate timely service.
II. The Court Grants a Permissive Extension
The court now turns to the second prong of the test outlined in Espinoza, under which it
must exercise its discretion in deciding whether to grant a permissive extension to Mentor.
Espinoza, 52 F.3d at 841. The factors to be considered in determining whether to grant a
permissive extension include: 1) potential barring of claims under a statute of limitations, 2)
prejudice to the defendant, 3) whether the defendant had notice, 4) the likelihood of eventual
service, 5) whether the plaintiff is represented by counsel, and 6) the length of the delay. Id. at
The court concludes that a permissive extension is warranted in this case. Although the
statute of limitations would not bar the refiling of the Complaint, other considerations warrant an
extension of time. First, Van Rixel suffered little or no prejudice as a result of the delay in
service and will suffer little or no prejudice from the court granting Mentor an extension. Even
though service was not effectuated for 195 days, there is no indication that Van Rixel has been
prejudiced by the delay. Indeed, neither trial nor discovery cut-off dates have been set in this
matter and the parties are just beginning the fact discovery process. Further, it is apparent that
Van Rixel has had notice of these proceedings for quite some time. More importantly, because
any dismissal would be without prejudice, granting Van Rixel’s motion to dismiss would only
further delay these proceedings because Mentor would then need to refile its claims and again
serve Van Rixel. Accordingly, the court exercises its discretion to grant a permissive extension
of time for service through the date Van Rixel was served on November 15, 2016.
IT IS ORDERED that the time for service of process for Mentor’s Third-Party Complaint
is extended to November 15, 2016. IT IS FURTHER ORDERED that Van Rixel’s Motion to
Dismiss (Dkt. No. 79) is DENIED.
DATED August 3, 2017.
Judge Jill N. Parrish
United States District Judge
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