Subotich et al v. Liuyang Dun Pai Fireworks Mfg et al

Filing 90

ORDER signed by Judge J.P. Stadtmueller on 7/7/2017: GRANTING 89 Defendant Matt Palazsynski's Second Motion to Supplement and GRANTING 77 Plaintiffs' Motion for Entry of Default. Clerk of Court DIRECTED to enter default against Defendants Matt Palazsynski, Dun Pai Fireworks Group, and Dun Pai Manufacturing. (cc: all counsel) (jm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
MICHAEL SUBOTICH and
JENNIFER SUBOTICH,
Plaintiffs,

Case No. 15-CV-219-JPS-JPS

v.
TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA, MATT
PALAZSYNSKI, DUN PAI
FIREWORKS GROUP, DUN PAI
MANUFACTURING, ABC
INSURANCE COMPANY, and DEF
INSURANCE COMPANY,

ORDER

Defendants.
Plaintiffs have been attempting to serve their second amended
complaint upon Defendants Matt Palazsynski (“Palazsynski”), Dun Pai
Fireworks Group (“DPFG”), and Dun Pai Manufacturing (“DPM”) for over
a year. See (Docket #66 and #76).1 Their final deadline to dismiss those
defendants or seek their default was May 21, 2017. (Docket #76). On May
19, 2017, Plaintiffs moved for entry of default as to each defendant pursuant
to Federal Rule of Civil Procedure (“FRCP”) 55(a). (Docket #77).2

Travelers Property Casualty Company of America, the only remaining
non-fictitious defendant, was served and answered the second amended
complaint long ago. (Docket #64).
1

This is neither the first long delay in service for these defendants, nor is it
the first time Plaintiffs have sought default; both occurred previously with respect
to Plaintiffs’ first amended complaint. See (Docket #58). The Court did not reach
the propriety of service, the issue here, because the complaint named improper
defendants. Id.
2

Palazsynski opposed the motion on May 30, 2017. (Docket #84 and #85).
DPFG and DPM did not. Plaintiffs replied to Palazsynski’s opposition on
June 13, 2017. (Docket #88).
Palazsynski is in China and the Dun Pai companies are based there.
The central issue in Plaintiffs’ motion, then, is whether they were properly
served and thus subject to default (there is no question that they have not
responded to the second amended complaint). FRCP 4(f)(1) provides that
service in a foreign country may be accomplished “by any internationally
agreed means of service that is reasonably calculated to give notice, such as
those authorized by the Hague Convention on the Service Abroad of
Judicial

and

Extrajudicial

Documents

[(the

“Hague

Service

Convention”)][.]” The United States and China are signatories to the Hague
Service Convention. See The Hague Conventions, Signatories, Ratifications,
Approvals, and Accessions (June 7, 2017), https://www.hcch.net/en/
instruments/status-charts.
Article 15 of the Convention describes when default is appropriately
taken in suits involving international defendants. It states:
Where a writ of summons or an equivalent document
had to be transmitted abroad for the purpose of service, under
the provisions of the present Convention, and the defendant
has not appeared, judgment shall not be given until it is
established that (a) the document was served by a method prescribed
by the internal law of the State addressed for the
service of documents in domestic actions upon persons
who are within its territory, or
(b) the document was actually delivered to the
defendant or to his residence by another method
provided for by this Convention,
and that in either of these cases the service or the delivery was
effected in sufficient time to enable the defendant to defend.
Page 2 of 6

[(“Paragraph One”)]
Each contracting State shall be free to declare that the
judge, notwithstanding the provisions of the first paragraph
of this article, may give judgment even if no certificate of
service or delivery has been received, if all the following
conditions are fulfilled (a) the document was transmitted by one of the
methods provided for in this Convention,
(b) a period of time of not less than six months,
considered adequate by the judge in the particular
case, has elapsed since the date of the transmission of
the document,
(c) no certificate of any kind has been received, even
though every reasonable effort has been made to
obtain it through the competent authorities of the State
addressed.
Notwithstanding the provisions of the preceding
paragraphs the judge may order, in case of urgency, any
provisional or protective measures.
[(“Paragraph Two”)]
Hague Service Convention, February 10, 1969, 20 U.S.T. 361, T.I.A.S. No.
6638, 658 U.N.T.S. 163. In ratifying this treaty, the United States issued a
declaration activating Paragraph Two. Id., Designations and Declarations
Made on the Part of the United States in Connection with the Deposit of the
United States Ratification, Declaration No. 3.
Plaintiffs contend that they have complied with Paragraph Two’s
prerequisites for default judgment. They used an international process
serving company to transmit the second amended complaint to Chinese
authorities in April 2016. (Docket #78 at 2). Chinese authorities never
acknowledged receipt of the second amended complaint, nor have they
responded to requests for updates on the status of service. Id. More than six
Page 3 of 6

months (in fact, more than a year) has elapsed since the service documents
were delivered. Id.
Palazsynski does not genuinely contest these facts. Instead, he
maintains that Paragraph One does not allow default in this instance. As
quoted above, Paragraph Two states that it applies “notwithstanding the
provisions of the first paragraph of this article[.]” As applied to our case,
Paragraph One provides that default judgment is improper unless Plaintiffs
show 1) Palazsynski was served in accordance with Chinese law, or 2) the
service documents were actually delivered to him, his residence, or as
otherwise provided in the Hague Service Convention. Palazsynski has
produced a notice from the People’s Court of Liuyang, the judicial body
overseeing the jurisdiction where Palazsynski and the Dun Pai companies
were to be served, stating that it never received a summons for this case and
was never ordered to serve anything related to this case. (Docket #86-2) (a
translated copy of the document).3 The Liuyang court further states that it
would be responsible for such service. Id. Palazsynski argues that this
affirmative evidence of non-service activates Paragraph One’s prohibition
on judgment, which cannot be overridden by Paragraph Two.

Plaintiffs attack the Liuyang court notice, claiming that it is untranslated
and unauthenticated. The first contention is curious, given that the Court accepted
Palazsynski’s translated copy five days before Plaintiffs filed their reply. See Text
Order of June 8, 2017. As to authentication, Palazsynski apparently noticed that
problem after reading Plaintiffs’ reply. Later that same day, he submitted a motion
to supplement the record with an affidavit of the clerk of the People’s Court of
Liuyang. (Docket #89). Though difficult to read in its entirety, the legible portion
of the affidavit seems to confirm that service was never accomplished. (Docket
#89-1). The Court will grant Palazsynski’s motion and accept the affidavit. It does
not change the result here.
3

Page 4 of 6

The Court must disagree with Palazsynski’s reading of Article 15.
Paragraph Two applies when “no certificate of service or delivery has been
received.” The “certificate” in question is one prepared and delivered by
the “central authority” for process service each signatory is required to
establish. Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 698
(1988). The central authority receives requests for service, facilitates service
in accordance with the state’s internal law, and is then required to provide
a certificate of service to the requester, providing information on how
service was, or was not, accomplished. Id. at 699; 20 U.S.T. 361, Arts. 5 and
6. It is uncontested that Plaintiffs received no such certificate and otherwise
complied with Paragraph Two’s requirements. Palazsynski’s own evidence
of non-service is, therefore, a nullity.
In other words, Paragraph One prohibits judgment unless a person
has been served. Signatories, including the United States, can elect to
weaken this requirement by adopting the procedure of Paragraph Two.
Only a certificate issued by China’s central authority can affect whether that
procedure is properly invoked. Affirmative evidence of non-service from
the defendant fits nowhere within Article 15’s default judgment protocol.
In this case, the existence of such evidence is unsurprising, given that the
Chinese authorities have never responded to Plaintiffs’ transmission of the
service documents or requests for updates.
Palazsynski’s position is further undermined by a complete absence
of citation to relevant case law. While opinions on this narrow question are
admittedly scarce, it is difficult for the Court to agree with him when he
provides nothing more than his own, unsupported interpretation of Article
15. Though Plaintiffs provide some citations, they are largely inapposite,
because they deal with lacking evidence of service, not affirmative evidence
Page 5 of 6

of non-service. See Marschauser v. Travelers Indem. Co., 145 F.R.D. 605 (S.D.
Fla. 1992); Fox v. Regie Nationale des Usines Renault, 103 F.R.D. 453 (W.D.
Tenn. 1984). Most of the opinions are also at least fifteen years old. In the
absence of recent guiding precedent, the Court finds it most prudent to
reject Palazsynski’s strained reading of Article 15.
The Court will grant Plaintiffs’ motion and enter default against
Palazsynski. Of course, if Palazsynski moves to set aside this entry of
default pursuant to FRCP 55(c) and chooses to defend this case on its merits,
the Court would consider that request. As of today, however, he has
decided to avoid the merits and suffers the attendant consequences. Finally,
because the DPFG and DPM have not opposed Plaintiffs’ motion, and
because it is appropriate to enter default against them for the same reasons
as Palazsynski, the Court will enter default as to those entities as well.
Accordingly,
IT IS ORDERED that Defendant Matt Palazsynski’s second motion
to supplement (Docket #89) be and the same is hereby GRANTED; and
IT IS FURTHER ORDERED that Plaintiffs’ motion for entry of
default (Docket #77) be and the same is hereby GRANTED.
The Clerk of the Court is directed to enter default against Defendants
Matt Palazsynski, Dun Pai Fireworks Group, and Dun Pai Manufacturing.
Dated at Milwaukee, Wisconsin, this 7th day of July, 2017.
BY THE COURT:

____________________________________
J. P. Stadtmueller
U.S. District Judge

Page 6 of 6