BMO Harris Bank NA v. DVS Freight LLC et al

Filing 27

ORDER signed by Chief Judge Pamela Pepper on 3/30/2020. 20 Plaintiff's motion for default judgment DENIED without prejudice. 25 Plaintiff's motion for alternative service GRANTED; plaintiff may serve defendant OMG Express through mail a nd publication as described in Wis. Stats. §§801.11(1)(c) and (5)(b). Case STAYED as to defendant Violeta Veleva only; plaintiff to notify the court when Veleva's bankruptcy case has been dismissed or she has received discharge. (cc: all counsel, via mail to Violeta Veleva)(cb)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN

BMO HARRIS BANK NA,
Plaintiff,
Case No. 18-cv-595-pp
v.
DVS FREIGHT LLC, OMG EXPRESS CORP.,
VIOLETA VELEVA, and OMG ENTERPRISE INC.,
Defendants.
ORDER DENYING AS MOOT PLAINTIFF’S MOTION FOR DEFAULT
JUDGMENT AGAINST DVS FREIGHT LLC AND OMG EXPRES CORP. (DKT.
NO. 20), GRANTING PLAINTIFF’S MOTION FOR EXTENSION OF TIME TO
SERVE AND FOR ALTERNATIVE SERVICE (DKT. NO. 25) AND STAYING
PROCEEDINGS AS TO DEFENDANT VIOLETA VELEVA

I.

Procedural History
On April 16, 2018, the plaintiff sued DVS Freight LLC, OMG Express

Corp. and Violeta Veleva, alleging that all three defendants had breached a
contract with the plaintiff. Dkt. No. 1. On June 6, 2018, defendant Veleva
answered on behalf of all three defendants. Dkt. No. 7. The plaintiff filed a
motion to strike the answer and Judge Duffin (to whom this case originally was
assigned) granted the motion on the ground that the two corporate entities
could appear in federal court only via licensed counsel. Dkt. No. 11. Judge
Duffin gave defendants DVS Freight and OMG Express fourteen days to answer
or otherwise respond to the complaint through counsel. Id. at 3. To date, the

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two corporate defendants have not answered or responded, and no counsel has
filed a notice of appearance for either of them.
In September of 2018, the plaintiff moved for entry of default, dkt. no.
12, and default judgment, dkt. no. 13, against the corporate defendants. The
clerk entered default on August 23, 2018. This court considered the plaintiff’s
motion for default judgment in January of 2019 and concluded that on the
record before it, the plaintiff had not shown that it had effected proper service
on DVS Freight, LLC. Dkt. No. 14 at 4-5. It ordered the plaintiff to provide the
court with proof that DVS was aware of the suit and that its failure to answer
was not the result of ignorance of the suit’s existence. Id. at 6.
The plaintiff responded by filing a return of service indicating that on
May 15, 2018, the process server had served the summons and complaint on
“Violeta Velva” as managing member for DVS Freight LLC, 9931 70th Street in
Kenosha. Dkt. No. 15. The plaintiff also filed a declaration of counsel attesting
that Violeta Veleva was vice president of DVS and a member of that
corporation. Dkt. No. 18. Counsel supported this assertion by referencing the
signature page of the loan agreement. Id. (citing Dkt. No. 1-7 at 6, showing
Veleva signing a loan and security agreement as Vice President of DVS Freight
LLC as of October 2014 and Dkt. No. 1-9 at 6, showing Veleva signing another
loan and security agreement as a member of DVS Freight LLC as of November
2014).
The plaintiff filed a second return of service indicating that on May 15,
2018, it personally had served OMG Express Corp. by serving “Violeta Velva2

Registered Agent” at 9931 70th St, Kenosha, WI 53124. Dkt. No. 16. Finally, it
filed a return of service indicating that on May 15, 2018, it had served “Violeta
Velva” at 9931 70th Street, Kenosha, WI 53124. Dkt. No. 17.
On February 26, 2019, the plaintiff filed a second motion for default
judgment. Dkt. No. 20. The motion asked the court to enter default judgment
as to both DVS Freight LLC and OMG Express Corp. Id. The brief in support of
the motion indicated that Violeta “Velva” was listed as the registered agent for
DVS Freight, LLC, OMG Express Corp. and OMG Enterprise Inc., but that the
plaintiff had been unable to serve OMG Enterprise at the address it had used
to serve the other defendants (9931 70th Street, Kenosha, Wisconsin). Dkt. No.
25-2.
On June 5, 2019 the plaintiff asked for leave to file an amended
complaint and an amended motion for default judgment. Dkt. No. 21. The
motion indicated that the original complaint did not name the proper
defendant. Id. at 2. While the original complaint alleged that the plaintiff had
entered into an agreement with “OMG Express Corp.,” the motion for leave to
amend says that the plaintiff actually entered into an agreement with “OMG
Enterprise Inc.” Id. The motion also asked for leave to file an amended motion
for default judgment. Id. The court granted the motion to file an amended
complaint but denied as premature the motion to file an amended motion for
default judgment. Dkt. No. 22. The plaintiff subsequently filed its amended
complaint. Dkt. No. 23.

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On October 11, 2019—about three months after the plaintiff filed the
amended complaint—the plaintiff filed this motion for extension of time to serve
OMG Enterprise Inc. and for alternative service. Dkt. No. 25. The plaintiff
alleged that it unsuccessfully tried to serve Violeta Veleva—the registered
agent—nine times on six different days in July and August 2019. Dkt. No. 25-2
at 2; see also Dkt. No. 25-1 (affidavits of non-service). The plaintiff asks to
serve through “alternative” service—namely, by certified mail and other service
under Rule 4(e)(1) of the Federal Rules of Civil Procedure and Wisconsin
Statute 801.11(1)(c) and (5)(b). Id.
II.

Discussion
A.

Motion for Default Judgment (Dkt. No. 20)

The court will deny the motion for default judgment without prejudice.
The court’s concern last time round was that it had no way to know whether
DVS Freight was aware it had been sued. The court pointed out in its January
14, 2019 order that the Wisconsin Department of Financial Institutions web
site showed that the registered agent for DVS Freight LLC is Sevdalin Zhekov.
Dkt. No. 14 at 2 (citing https://www.wdfi.org/apps/CorpSearch). Despite this,
the plaintiff’s counsel insists that Violeta Veleva (whose name the plaintiff
variously spells “Velva” and “Veleva”) is the registered agent for DVS Freight,
LLC. The plaintiff asserts that Veleva is vice president and an member of DVS
Freight because some six or seven years ago, she signed the loan agreements
using those titles. It’s not clear to the court why the plaintiff doesn’t just serve

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the registered agent for DVS Freight, the person whose name is listed on the
DFI web site.
The plaintiff says it has served OMG Express Corp. Violeta Veleva was
the registered agent of that corporation before it was administratively dissolved.
But it hasn’t been able to serve OMG Enterprise, whose registered agent also
was Violeta Veleva before it was administratively dissolved. Until the plaintiff is
able to effectuate service on OMG Enterprise, and show that it has properly
served DVS Freight, the court will not grant default judgment.
B.

Motion for Alternative Service or, In the Alternative, Extending
Time to Serve Defednant OMG Enterprise Inc. (Dkt. No. 25)
1.

Legal Standard

Under Rule 4(h), a plaintiff may serve a corporate defendant “in the
manner prescribed by Rule 4(e)(1).” Fed. R. Civ. P. 4(h)(1)(A). Rule 4(e)(1) allows
the plaintiff to serve an individual using the methods allowed by state law in
the state where the federal district is located. Fed. R. Civ. P. 4(e)(1). In this
case, that’s Wisconsin.
Usually, Wisconsin requires plaintiffs to personally service an officer,
director, or managing agent of a corporate defendant. Wis. Stat. §801.11(5)(a).
But if personal service isn’t possible through reasonable diligence, Wisconsin
allows plaintiffs to serve a corporate defendant “by publication of the summons
as a class 3 notice, under ch. 985, and by mailing [to an officer, director, or
managing agent’s last known address].” Wis. Stat. §801.11(1)(c), (5)(b).

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2.

Analysis

The Wisconsin Department of Financial Institutions website shows that
Veleva was the registered agent of OMG Enterprise, with an address of 4128
46th Street, Kenosha, Wisconsin. https://www.wdfi.org/apps/CorpSearch/
Details.aspx?entityID=O028992&hash=847828057&searchFunctionID=a79b80
f3-027f-4f59-a0b0-918dba7e7bd3&type=Simple&q=omg+enterprise. The site
also shows that OMG Enterprise was administratively dissolved on October 19,
2019, about a week after the plaintiff filed this motion. The plaintiff has
believed for some time that Veleva lived at 9931 70th Street, Kenosha,
Wisconsin. Dkt. No. 25-1 at 3–6. The plaintiff says that it successfully served
her there on a previous occasion. Id. The plaintiff attests that it unsuccessfully
tried to serve OMG Enterprise, through Veleva, at the 70th Street address nine
times in July and August of 2019. Id. at 7–9.
The court notes that on February 18, 2020, the plaintiff filed a
suggestion of bankruptcy as to Veleva. Dkt. No. 26. PACER shows that on
February 17, 2020, Veleva filed a Chapter 7 petition in the Eastern District of
Wisconsin. In re Violeta Veleva, Case No. 19-21197-gmh (Bankr. E.D. Wis.).
The address listed on the petition is 9931 70h Street, Kenosha, Wisconsin
53142—the address at which the plaintiff has been trying to serve OMG
Enterprise. The court is satisfied that the plaintiff has made diligent efforts to
serve OMG Enterprise.

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The court will grant the plaintiff’s motion for alternative service. The
court will allow the plaintiff to serve OMG Enterprise through mail and
publication as described in Wisconsin Statute §801.11(1)(c) and (5)(b).
C.

Violeta Veleva

Because Violeta Veleva has filed for Chapter 7 protection, the court will
stay all proceedings against her until the plaintiff notifies the court either that
she has received a discharge or that her Chapter 7 petition has been
dismissed.
III.

Conclusion
The court DENIES WITHOUT PREJUDICE the plaintiff’s motion for

default judgment as to DVS Freight LLC and OMG Express Corp. Dkt. No. 20.
The court GRANTS the plaintiff’s motion for alternative service. Dkt. No.
25.
The court ORDERS that the plaintiff may serve defendant OMG Express
through mail and publication as described in Wisconsin Statute §§801.11(1)(c)
and (5)(b).
The court ORDERS that this case is STAYED as to defendant Violeta
Veleva only. The court ORDERS that the plaintiff shall notify the court when
Veleva’s bankruptcy case has been dismissed or she has received a discharge.
Dated in Milwaukee, Wisconsin this 30th day of March, 2020.
BY THE COURT:
_____________________________________
HON. PAMELA PEPPER
Chief United States District Judge
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