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Long v. McAfee

United States District Court, E.D. California

October 24, 2019

WAN TING LONG, et al., Plaintiffs,
v.
ERIC MCAFEE, et al., Defendants.

         ORDER DENYING PLAINTIFFS' REQUEST FOR ENTRY OF DEFAULT WITHOUT PREJUDICE AND DIRECTING CLERK OF COURT TO ABSTAIN FROM ENTERING DEFAULT ORDER REQUIRING PLAINTIFFS TO FILE PROOFS OF SERVICE, AMENDED PROOFS OF SERVICE, OR SUPPLEMENTAL AFFIDAVITS DEMONSTRATING PROPER SERVICE ON ALL DEFENDANTS ORDER DIRECTING CLERK OF COURT TO CORRECT PARTY NAME SPELLING IN DOCKET (ECF NOS. 11, 12)

         Currently before the Court is Plaintiffs' request for entry of default against multiple defendants in this action. (ECF No. 12.) For the reasons explained in this order, the request shall be denied without prejudice, and Plaintiffs shall be required to demonstrate proper service on defendants within thirty (30) days of service of this order. Given the Plaintiffs' pro se status, the Court has extensively set forth below the applicable legal standards governing service of process under the Federal Rules and California law so that Plaintiffs may be informed on these standards when they address the facial inconsistencies in the proofs of service, and so that the pro se Plaintiffs may make an informed decision on whether they wish to proceed by filing amended affidavits or briefing explaining how service was proper, or whether they wish to attempt service in another manner on one or more of the defendants and then submit such proofs of service to the Court.

         I. BACKGROUND

         On July 1, 2019, Wang Ting Long and Xuejun Makhsous (“Plaintiffs”), proceeding pro se, filed this action alleging violations of the Federal Securities Act and California law. (ECF No. 1.) On July 2, 2019, the Court issued summonses and an order setting the mandatory scheduling conference. (ECF Nos. 3, 4, 5.) The July 2, 2019 order setting the mandatory scheduling conference informed Plaintiffs that they were to “diligently pursue service of the summons and complaint” and “promptly file proofs of the service.” (ECF No. 5 at 1.) On September 24, 2019, because Plaintiffs failed to file proofs of service showing that Defendants had been served in this action, the Court ordered Plaintiffs to file a notice of status of service within fourteen (14) days of entry of the order. (ECF No. 10.) The order informed Plaintiffs that failure to comply with the order may result in a recommendation the action be dismissed for failure to serve in compliance with Rule 4 of the Federal Rules of Civil Procedure. (Id.)

         On October 7, 2019, Plaintiffs filed, and on October 9, 2019, the Court docketed, proofs of service alleging service of the summons and complaint on the following defendants: (1) Advanced BioEnergy GP, LLC; (2) Advanced BioEnergy, LP; (3) Eric McAfee; (4) Michael Penbera; (5) Joseph Penbera; and (6) Adam McAfee. (ECF No. 11.) Plaintiffs have not filed any documents alleging service of the summons and complaint on the following defendants: (1) California Energy Investment Company, LLC; (2) Aementis, Inc.; (3) AE Advanced Fuels, Inc.; (4) U.S. Regional Center Services, LLC; and (5) Park Capital Management, LLC.[1]

         On October 7, 2019, Plaintiffs filed a request for entry of default against the following defendants who, as noted above, are alleged to have been served with the summons and complaint according to the proofs of service filed: (1) Eric McAfee; (2) Joseph Penbera; (3) Michael Penbera; (4) Adam McAfee; (5) Advanced BioEnergy, LP; and (6) Advanced BioEnergy GP, LLC. (ECF No. 12.) Plaintiffs also request entry of default against the following defendants which Plaintiffs have not filed any proofs of service alleging service of the summons and complaint upon: (1) California Energy Investment Company, LLC; (2) Aementis, Inc.; and (3) AE Advanced Fuels, Inc. (ECF No. 12.)

         II.

         LEGAL STANDARD

         A. Entry of Default under Rule 55

         Rule 55 of the Federal Rules of Civil Procedure provides that “[w]hen a party against whom a judgment or affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.” Fed.R.Civ.P. 55(b)(1). Before a default is entered, the “court clerk must be satisfied from Plaintiff'[s] request and accompanying documentation that (1) defendant has been served with the summons (or has agreed to waive service); (2) the time allowed by law for responding has expired; (3) defendant has failed to file a pleading or motion permitted by law; and (4) defendant is neither a minor nor an incompetent person.” Shapour v. California, Dep't of Transp., No. 1:13-CV-1682 AWI-BAM, 2013 WL 6797470, at *1 (E.D. Cal. Dec. 19, 2013) (citations omitted).

         B. Jurisdiction and Service of the Complaint

         “A federal court does not have jurisdiction over a defendant unless the defendant has been served properly under” Federal Rule of Civil Procedure 4. Direct Mail Specialists, Inc. v. Eclat Computerized Techs., Inc., 840 F.2d 685, 688 (9th Cir. 1988) (citing Jackson v. Hayakawa, 682 F.2d 1344, 1347 (9th Cir.1982)); see also Chambers v. Knight, No. 18-CV-02906-BAS-BGS, 2019 WL 1923936, at *2 (S.D. Cal. Apr. 30, 2019) (“A default may not enter against a defendant unless the plaintiff has properly served the defendant.”). “Rule 4 is a flexible rule that should be liberally construed so long as a party receives sufficient notice of the complaint.” Direct Mail, 840 F.2d at 688 (quoting United Food & Commercial Workers Union v. Alpha Beta Co., 736 F.2d 1371, 1382 (9th Cir. 1984)). However, “without substantial compliance with Rule 4, ‘neither actual notice nor simply naming the defendant in the complaint will provide personal jurisdiction.' ” Direct Mail, 840 F.2d at 688 (quoting Benny v. Pipes, 799 F.2d 489, 492 (9th Cir.1986)). “Once service is challenged, plaintiffs bear the burden of establishing that service was valid under Rule 4.” Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004) (citations omitted). “[A] signed return of service constitutes prima facie evidence of valid service which can be overcome only by strong and convincing evidence.” SEC v. Internet Solutions for Bus., Inc., 509 F.3d 1161, 1163 (9th Cir. 2007).

         1. Service on an Individual Natural Person

         Federal Rule of Civil Procedure 4(e) governs service on individuals within a judicial district of the United States and provides that a plaintiff may serve an individual by:

(1) following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made; or
(2) doing any of the following:
(A) delivering a copy of the summons and of the complaint to the individual personally;
(B) leaving a copy of each at the individual's dwelling or usual place of abode with someone of suitable age and discretion who resides there; or
(C) delivering a copy of each to an agent authorized by appointment or by law to receive service of process.

Fed. R. Civ. P. 4(e). Thus, even if service does not comply with one of the three methods described in subsection 2, service is still proper if it complies with the law of the state where the district court is located, or the state where service is completed. Id.

         California law allows for service upon an individual by personal delivery to the person to be served. Cal. Civ. Proc. Code § 415.10. California also allows for substitute service upon an individual:

If a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served . . . a summons may be served by leaving a copy of the summons and complaint at the person's dwelling house, usual place of abode, usual place of business, or usual mailing address other than a United States Postal Service post office box, in the presence of a competent member of the household or a person apparently in charge of his or her office, place of business, or usual mailing address other than a United States Postal Service post office box, at least 18 years of age, who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and of the complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left.

Cal. Civ. Proc. Code § 415.20(b).

         As stated in the statute and emphasized in the Judicial Council comments, substitute service on an individual is only allowed if personal service cannot be effectuated after the exercise of reasonable diligence to personally serve the individual party. See Judicial Council Comment to Cal. Civ. Proc. Code § 415.20(b); Burchett v. City of Newport Beach, 33 Cal.App.4th 1472, 1477 (1995) (“As noted in the Legislative comment to the section, ‘Personal delivery must be attempted in all cases where this alternative method of service is used.' ”); Jes Solar Co. Ltd. v. Tong Soo Chung, 725 Fed.Appx. 467, 470 (9th Cir. 2018) (noting same). Further, “[t]he process server, or other persons with personal knowledge of the facts, must set forth in the proof of service facts showing that the various requirements were complied with [Sections 417.10(a), 417.20(a)].” Judicial Council Comment to Cal. Civ. Proc. Code § 415.20(b). Specifically, Section 417.10(a) states:

         Proof that a summons was served on a person within this state shall be made:

(a) If served under Section . . . 415.20 . . . by the affidavit of the person making the service showing the time, place, and manner of service and facts showing that the service was made in accordance with this chapter. The affidavit shall recite or in other manner show the name of the person to whom a copy of the summons and of the complaint were delivered, and, if appropriate, his or her title or the capacity in which he or she is served, and that the notice required by Section 412.30 appeared on the copy of the summons served, if in fact it did appear.

Cal. Civ. Proc. Code § 417.10(a). The Judicial Council Comments provide additional guidance for effectuating substitute service on an individual:

In the case of substituted service pursuant to Section 415.20(b) on a natural person . . . the additional matters that must be stated or shown are: (1) the efforts that had been made by the affiant in an attempt to deliver the papers by hand to the defendant personally, (2) that the place of delivery was the dwelling house, usual place of abode, or usual place of business of a person who may be served under those sections, and the name and title or representative capacity, if any, of such person, (3) that the person in whose presence the papers had been left was determined after careful inquiry by the process server to be a competent member of the household or a competent person apparently in charge of such business, as the case may be, who was at least 18 years of age, (4) that such person had been informed of the general nature of the papers, and (5) the date a copy of the papers was thereafter mailed (by first-class mail, postage prepaid) to the person to be served at the place of delivery. Several affidavits or certificates may be used to show that these requirements had been met.

Judicial Council Comment to Cal. Civ. Proc. Code § 417.10. Therefore, if substituted service is attempted under Code of Civil Procedure § 415.20(b), the facts establishing reasonable diligence must be set forth in an affidavit, pursuant to Code of Civil Procedure § 417.10.

         “The terms ‘dwelling house' and ‘usual place of abode' take their meaning from the Federal Rules.” Judicial Council Comment to Cal. Civ. Proc. Code § 415.20(b); see also Zirbes v. Stratton, 187 Cal.App.3d 1407, 1417 (1986). “The term ‘usual place of business' includes a defendant's customary place of employment as well as his own business enterprise.” Judicial Council Comment to Cal. Civ. Proc. Code § 415.20(b); Schumacher v. Airbnb, Inc., No. C 15-5734 CW, 2016 WL 7826667, at *5 (N.D. Cal. Nov. 9, 2016).

         To effectuate service by mailing only, a copy of the summons and complaint must be mailed by first-class mail or airmail to the person to be served, together with two copies of a specific notice and acknowledgement, and a return envelope, postage prepaid and addressed to the sender. Cal. Civ. Proc. Code § 415.30(a). Service is only deemed complete on the date a written acknowledgment of a receipt of summons is executed by the party to be served, and the acknowledgment is returned to the sender. Cal. Civ. Proc. Code § 415.30(c).

         2. Service on Entities

         Federal Rule of Civil Procedure 4(h) governs the specific requirements for service of process on a corporation, partnership, or association within a judicial district. Fed.R.Civ.P. 4(h). Under Rule 4(h)(1), a corporation, partnership, or association can be served: “(A) in the manner prescribed by Rule 4(e)(1) for serving an individual; or (B) by delivering a copy of the summons and 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)(1)(A)-(B).

         Under subsection (A), the manner for serving an individual pursuant to 4(e)(1) is determined in accordance with the law of the state where the district court is located, or where service of process is made. Fed.R.Civ.P. 4(e)(1). Although the term “delivery” under Subsection (B) is not expressly defined by the Federal Rules of Civil Procedure, courts generally hold that Rule 4 requires personal service. TMX Logistics, Inc. v. FF Trucking, Inc., No. CV1400873PSGASX, 2014 WL 12691618, at *1-2 (C.D. Cal. Sept. 5, 2014) (citations omitted). “Courts permitting service by mail under Rule 4(h)(1)(B) have specified that the rule is only met when a certificate of receipt is signed by an agent authorized to sign on behalf of the corporation.” Id. (citing Gulley v. Mayo Found., 886 F.2d 161, 164-65 (8th Cir. 1989)).

         California state law allows for service upon a corporation by delivering a copy of the summons and complaint “[t]o the person designated as agent for service of process;” or “[t]o the president or other head of the corporation, a vice president, a secretary or assistant secretary, a treasurer or assistant treasurer, a general manager, or a person authorized by the corporation to receive service of process.” Cal. Code Civ. Proc. § 416.10.

         Under California law, an unincorporated association, including a partnership, may be served by delivering a copy of ...


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