Zhang v. Smugglers' Notch Management Company, Ltd.

Filing 12

MEMORANDUM OPINION & ORDER denying 3 Motion to Dismiss; granting 4 Motion for Extension of Time to Complete Service of Process by 43 days. Signed by Judge William K. Sessions III on 7/12/2012. (law)

UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT

PEI ZHANG,
Plaintiff,
v.

SMUGGLERS’ NOTCH MANAGEMENT
COMPANY LTD.,
Defendant.

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Case No. 2:11-cv-302

Memorandum Opinion & Order:
Plaintiff’s Motion for Enlargement of Time to Complete Service
of Process; Defendant’s Motion to Dismiss

Defendant Smugglers’ Notch Management Company Ltd.
(“Smugglers’”) moved to dismiss for failure to complete service
of process within the applicable statute of limitations.
Plaintiff Pei Zhang moved for an enlargement of time to complete
service of process to extend the period by 43 days.

For the

reasons that follow, Plaintiff’s motion, ECF No. 4, is GRANTED.
Defendant’s Motion to Dismiss, ECF No. 3, is DENIED.
Background
On December 25, 2010, Plaintiff, a resident of Andover,
Massachusetts, sustained a serious fracture to her right leg
while skiing at Smugglers’ Notch Resort in Jeffersonville,
Vermont.

On December 22, 2011, Plaintiff filed suit in this Court
invoking its diversity jurisdiction pursuant to 28 U.S.C. §
1332(a).

Plaintiff completed service on Defendant on April 3,

2012, 103 days after the initial filing.

Defendant seeks

dismissal of the claim as barred by Vermont’s one-year statute
of limitations for ski injuries, arguing that Plaintiff failed
to comply with Rule 3 of the Vermont Rules of Civil Procedure,
which allows 60 days to complete service when an action is
commenced by filing.

V.R.C.P. 3.

Plaintiff seeks an

enlargement of time in which to complete service.
Discussion
I.

Vermont’s Rule Governing Service of Process is an
Integral Part of its Statutes of Limitations, which a
Federal Court Sitting in Diversity Must Apply
This motion arises out of confusion over whether the

federal or the state rule of procedure applies to service of
process in a diversity action for purposes of calculating
whether a claim is time-barred.

Vermont requires that actions

to recover for ski accidents be commenced within one year after
the cause of action accrues.

Vt. Stat. Ann. tit. 12, § 513.

Vermont’s Rules of Civil Procedure provide that a civil action
may be commenced by filing a complaint with the court, and
service must be completed within 60 days, during which the
running of the statute of limitations is tolled.
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V.R.C.P. 3.

The time limit under the federal rules is 120 days after the
initial filing.

Fed. R. Civ. P. 4(m).

The Erie Doctrine requires a federal court in a diversity
action to apply state law for all substantive matters and
federal law for all procedural issues.
Tompkins, 304 U.S. 64, 92 (1939).

See Erie R.R. Co. v.

Generally, the federal rule

rather than the state rule of procedure governs the manner of
service of process in federal court.
U.S. 460, 463-64 (1965).

See Hanna v. Plumer, 380

The United States Supreme Court,

recognizing that statutes of limitations may have substantive as
well as procedural aspects, has held that when “the right to
recover” derives from state law and application of the statute
of limitations would bar recovery in state court, a federal
court ought not to afford recovery.
v. York, 326 U.S. 99, 110 (1945).

Guaranty Trust Co. of N.Y.

Moreover, when a state

considers the service of process to be an integral part of the
statute of limitations, the service rule becomes part of the
substantive law and the state procedural rule governs.

Walker

v. Armco Steel Corp., 446 U.S. 740, 752-753 (1980).
The Vermont Supreme Court has stated that “if the filing of
a complaint is to be effective in tolling the statute of
limitations as of that filing date, timely service under the
Rules of Civil Procedure must be accomplished.”
3

Weisburgh v.

McClure Newspapers, Inc., 396 A.2d 1388, 1389 (Vt. 1979).
Subsequently, this Court has consistently ruled that service of
process is an integral part of Vermont’s statutes of
limitations, and service must be achieved within Vermont’s 60day limit when failure to do so would exceed the statute of
limitations.

See Hitzig v. Hubbard, No. 1:08–CV–102, 2009 WL

1810850, at *2 (D. Vt. June 25, 2009); Lucas v. Wengert, No.
2:06-CV-169, 2007 WL 2792496, at *3-4 (D. Vt. Sept. 25,
2007)(adopting magistrate judge’s recommendation); Cuocci v.
Goetting, 812 F. Supp. 451, 452 (D. Vt. 1993); Poulos v. Wilson,
116 F.R.D. 326, 329-30 (D. Vt. 1987); see also Fish v. Bread
Loaf Constr. Co., Inc., No. 96-9607, 1998 WL 29640, at *1 (2d
Cir. Jan. 27, 1998) (summary order) (holding that Rule 3 is an
integral part of Vermont’s statute of limitations and affirming
dismissal of action).
Plaintiff contends that Walker, and our cases following
Walker, should not control the outcome here.

When Walker was

decided, the Federal Rules did not provide a time limit for
service of process.

Today, Rule 4(m) provides that if a

defendant is not served within 120 days after the complaint is
filed, the court must dismiss the action without prejudice or

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order service within a specified time.

Fed. R. Civ. P. 4(m).1

According to Plaintiff, Rule 4(m) presents a “direct collision”
with the state rule and Hanna demands that the state rule yield.
380 U.S. at 472-74.
Despite the changes in the federal rule since the case was
decided, the United States Supreme Court still regards Walker as
good law.

See Henderson v. United States, 517 U.S. 654, 657 n.2

(1996)(“In a federal-court suit on a state-created right,
however, a plaintiff must serve process before the statute of
limitations has run, if state law so requires for a similar
state-court suit.”)(citing Walker, 446 U.S. at 752-53).
Plaintiff also contends that a recent Vermont Supreme Court
decision, Bessette v. Department of Corrections, 2007 VT 42, 928
A.2d 514 (2007), calls into question the conclusion that timely
service is integral to Vermont’s statute of limitations.

In

Bessette, the defendant challenged an extension of time to
complete the service of process.
518.

2007 VT 42, ¶ 11, 928 A.2d at

In upholding the propriety of granting an extension of

time to complete service, the Court stated:

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Rule 4’s time limit was contained in subsection (j) of the 1983
amendments. It was later moved to subsection (m) by the 1993
amendments. See Advisory Committee notes, 1993 amend.
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[T]he argument that extensions for service circumvent
the statute of limitations is belied by the fact that,
under Weisburgh, the date the complaint is filed
controls the tolling of a statute of limitations.
Plainly, Rule 6 would not apply to the initial filing
of a complaint when no other act to commence the
action had been taken because the rule is limited to
acts controlled by the procedural rules or by the
court. The date by which one must initiate an action
is controlled by statute. The time permitted for
service once a complaint has been filed, on the other
hand, is a procedural matter controlled by the rules.
Bessette, 2007 VT 42, ¶ 13, 928 A.2d at 518 (internal citations
omitted).

Plaintiff argues that this description of the

deadline for service as a procedural matter undercuts the
authority holding that Rule 3 is an integral component of
Vermont’s statutes of limitations.
Plaintiff takes the Bessette comment out of context.

In

that paragraph, the Court was rejecting the contention that a
judicially created rule permitting an extension of time for
service conflicted with a legislatively mandated statute of
limitations and thus violated the doctrine of separation of
powers.

Id.

As the United States Supreme Court has held:

Erie-type problems were not to be solved by reference
to any traditional or common-sense substance-procedure
distinction: ‘And so the question is not whether a
statute of limitations is deemed a matter of
‘procedure’ in some sense. The question is does it
significantly affect the result of a litigation for a
federal court to disregard a law of a State that would
be controlling in an action upon the same claim by the
same parties in a State court?’
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Hanna, 380 U.S. at 466 (quoting Guaranty Trust, 326 U.S. at
109).

In other parts of the decision, the Bessette Court

explicitly relied on Weisburgh to hold that “where an action is
commenced by the timely filing of a complaint, Weisburgh permits
the statute of limitations to be tolled such that service may be
completed after the limitation period has run, so long as it is
completed in a timely manner under the rules.”
VT 42, ¶ 12, 928 A.2d at 518.

Bessette, 2007

Since the Bessette court did not

overrule Weisburgh, Vermont’s service of process remains an
integral part of the statute of limitations.

In order to toll

the Vermont statute of limitations in a federal court applying
Vermont law, service of process must be completed within 60 days
of filing the complaint.
II.

Plaintiff has Demonstrated Excusable Neglect

Plaintiff has requested an enlargement of time to complete
service of the complaint to the actual service date.

A court

may extend the period of time for service after the expiration
of the 60 days if the failure to effect service was the result
of excusable neglect.

V.R.C.P. 6(b)(2); see also Bessette, 2007

VT 42, ¶ 5, 928 A.2d at 516.
“Excusable neglect” is “at a minimum, some reasonable basis
for non-compliance within the allotted time period.”
Ladd, 437 A.2d 1105, 1107 (Vt. 1981).
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Miller v.

Using the United States

Supreme Court as a guide, the Vermont Supreme Court established
four factors when considering “excusable neglect”: (1) the
danger of prejudice to the [non-movant], (2) the length of the
delay and its potential impact on judicial proceedings, (3) the
reason for the delay, including whether it was within the
reasonable control of the movant, and (4) whether the movant
acted in good faith.

In re Town of Killington, 2003 VT 87A, ¶

16, 838 A.2d 98, 104 (2003) (citing Pioneer Inv. Servs. Co. v.
Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 392 (1993).2
The Court finds that all factors favor enlargement in this
case.

The parties agree that Plaintiff acted in good faith,

believing that the federal service of process limit applied to
this action.

Furthermore, the length of the delay should not

seriously hinder judicial proceedings.

Defendant was aware of

the possibility of a suit weeks after the accident.

It should

not have lost any ability to interview witnesses or gather
necessary information.

Although Defendant may consider that it

has suffered prejudice because it has been deprived of a statute
of limitations defense, no other circumstances demonstrate
prejudice in this case.

2

The Vermont Supreme Court was considering excusable neglect
under V.R.A.P. 4. Killington, 2003 VT 87A, ¶ 1, 838 A.2d at 99.
Enlargement in this case is requested pursuant to V.R.C.P. 6.
Nonetheless, the Court finds these factors to be an appropriate
guide in determining excusable neglect. 
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The Court also finds that, in this specific case,
Plaintiff’s belief that federal procedure rules applied is an
acceptable reason for the delay.

As a general rule, ignorance

of the law rarely constitutes excusable neglect.

See In re

Lund, 2004 VT 55, ¶ 5, 857 A.2d 279, 280-81 (2004). However, the
law in this case was not entirely clear, given the arguably
ambiguous language in Bessette.
The Court finds that failure to meet the Vermont 60 day
service of process limit was excusable neglect in this case.
The Motion for Enlargement of Time to Complete Service, ECF No.
4, is GRANTED.
III. Granting the Motion for Enlargement Renders the Motion to
Dismiss Moot
Defendant argues that the Court does not dispose of its
Motion to Dismiss simply by granting an enlargement of time to
complete service.

Defendant claims it has a vested right in a

statute of limitations defense that the Court is precluded from
abridging, enlarging or modifying under Vermont’s Rules Enabling
Act, Vt. Stat. Ann. tit. 12, § 1.

If such a vested right

existed, enlargement of the time period for service of process
would be virtually eliminated.
The Court does not find that a statute of limitations
defense is a vested right.

Defendant offers no authority to
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support the notion that a viable defense to a cause of action
acquires the status of substantive property right.

Indeed, the

United States Supreme Court has said that a statute of
limitations defense cannot become a substantive vested right.
See Campbell v. Holt, 115 U.S. 620, 628 (1885)(“We certainly do
not understand that a right to defeat a just debt by the statute
of limitations is a vested right.”) ; Chase Securities Corp. v.
Donaldson, 325 U.S. 304, 314 (1945)( “[Statutes of limitations’]
shelter has never been regarded as what now is called a
‘fundamental’ right or what used to be called a ‘natural’ right
of the individual.”) Since the enlargement does not deprive
Defendant of any vested right, the order for enlargement renders
the motion to dismiss moot.
Defendant’s Motion to Dismiss, ECF No. 3, is DENIED.
Conclusion
Plaintiff failed to serve her complaint within the time
required by Rule 3 of the Vermont Rules of Civil Procedure;
however, the failure to do so was the result of excusable
neglect.

Plaintiff’s Motion for Enlargement, ECF No. 4, is

GRANTED and the period for service of process is enlarged by 43
days.

Defendant’s Motion to Dismiss, ECF No. 3, is DENIED.

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Dated at Burlington, in the District of Vermont, this 12th
day of July, 2012.
/s/William K. Sessions III
William K. Sessions III
U.S. District Court Judge

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