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Long v. McAfee

United States District Court, E.D. California

December 16, 2019

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

         ORDER DIRECTING THE CLERK OF THE COURT TO CORRECT PARTY NAME ORDER DIRECTING THE CLERK OF THE COURT TO TERMINATE PARK CAPITAL MANAGEMENT, LLC, AND U.S. REGIONAL CENTER SERVICES, LLC, AS DEFENDANTS IN THIS ACTION ORDER DENYING PLAINTIFFS' UPDATED REQUEST FOR ENTRY OF DEFAULT AND MOTION FOR RECONSIDERATION AND DIRECTING CLERK OF COURT TO ABSTAIN FROM ENTERING DEFAULT ORDER REQUIRING PLAINTIFFS TO SUBMIT AFFIDAVIT OF PROCESS SERVER (ECF NOS. 16, 17, 18)

         Currently before the Court are Plaintiffs' updated request for entry of default, and Plaintiffs' motion for reconsideration of the Court's October 25, 2019 order denying entry of default. Having considered the moving papers and exhibits attached thereto, the Court issues the following order denying Plaintiffs' motion for reconsideration and denying Plaintiffs' request for entry of default. Additionally, the Court shall require Plaintiffs to submit an affidavit from the process server Queenie Orteza explaining the modifications made to the proofs of service, or the Court shall recommend dismissal of this action as no defendant has been shown to have been properly served. The Court also advises the Plaintiffs that the Court may call a live evidentiary hearing and require the process server to appear in person to testify to the Court concerning how the process server made the modifications to the proofs of service and how service was effectuated.

         I. INTRODUCTION AND 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 summonses 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.) As of that date, Plaintiffs had not filed any documents alleging service of the summons and complaint on the following defendants: (1) California Energy Investment Company, LLC; (2) Aemetis, Inc.;[1] (3) AE Advanced Fuels, Inc.; (4) U.S. Regional Center Services, LLC; and (5) Park Capital Management, LLC. On October 7, 2019, Plaintiffs filed a request for entry of default against all of the previously referenced defendants except for U.S. Regional Center Services, LLC, and Park Capital Management, LLC. (ECF No. 12.)

         On October 25, 2019, the Court denied Plaintiffs' request for entry of default. (ECF No. 13.) In the Court's order, the Court advised Plaintiffs they were required to file proofs of service demonstrating service on the defendants that Plaintiffs had submitted no proofs of service pertaining to, and file amended proofs of service or supplemental affidavits demonstrating proper service had been completed on the defendants that Plaintiffs sought entry of default against. (Id.) On November 21, Plaintiffs filed three separate documents in response to the Court's order. The first filing is entitled a “motion to reconsider, ” and refers to the court's order dated October 24 denying Plaintiffs' request for default judgment. (Mot. Recons. (“Mot.”), ECF No. 16.) Although the filing refers to a denial of default judgment, the Court construes this filing as a motion to reconsider the Court's order signed on October 24, 2019, and entered on October 25, 2019, denying Plaintiffs' request for entry of default. (ECF No. 13.)[2] The Plaintiffs also filed a document entitled “updated request for entry of default, ” with an attached proposed order that is entitled “proposed default judgment order.” (ECF No. 17.) Additionally, Plaintiffs filed a supplemental affidavit by Plaintiff Xuejun Makhsous (“Makhsous”), describing certain efforts to contact and serve the defendants in this action. (Suppl. Aff. Xuejun Makhsous (“Makhsous Aff.”), ECF No. 18.)

         For the reasons explained in this order, Plaintiffs' motion for reconsideration and updated request for entry of default shall be denied, and Plaintiffs shall be required to provide an affidavit from the process server explaining the modifications made to the proofs of service within thirty (30) days of service of this order or the Court will recommend dismissal of this action. The Court may also require a live evidentiary hearing whereby the process server will be required to appear in person to testify as to the modifications made to the originally submitted proofs of service.

         III. LEGAL STANDARD

         As Plaintiffs are appearing pro se, below the Court has reproduced the extensive discussion of the standards applicable to service of process that the Court provided in the previous order entered on October 25, 2019. (ECF No. 13.)

         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 where service is completed. Id.

         In addition to service upon an individual by personal delivery, 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 ...

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