Arthur v. Litton Loan Servicing Lp

• Decision Date: 19 November 2002
• Docket Number: No. 1:02-CV-285.,1:02-CV-285.
• Citation: 249 F.Supp.2d 924
• Parties: Dixie J. ARTHUR and Carletta Davis, Plaintiffs, v. LITTON LOAN SERVICING LP; Steve Jetter; U.S. Bank National Association, as Trustee Under the Pooling and Servicing Agreement Dated as of May 2000, Among Financial Asset Securities Corp., as Depositor, Greenwich Capital Financial Products, Inc., as Seller, Litton Loan Servicing, LP, as Servicer; and U.S. Bank National Association, as Trustee, Soundview Home Equity Loan Asset-Backed Certificates, Series 2000-1, Without Recourse, and Arnold M. Weiss, Substitute Trustee Under a Deed of Trust Executed October 29, 1999 by Dixie J. Arthur and Carletta Davis to Transcontinental Title, as Trustee, Defendants.
• Court: U.S. District Court — Eastern District of Tennessee

249 F.Supp.2d 924

Dixie J. ARTHUR and Carletta Davis, Plaintiffs, v. LITTON LOAN SERVICING LP; Steve Jetter; U.S. Bank National Association, as Trustee Under the Pooling and Servicing Agreement Dated as of May 2000, Among Financial Asset Securities Corp., as Depositor, Greenwich Capital Financial Products, Inc., as Seller, Litton Loan Servicing, LP, as Servicer; and U.S. Bank National Association, as Trustee, Soundview

Home Equity Loan Asset-Backed Certificates, Series 2000-1, Without Recourse, and Arnold M. Weiss, Substitute Trustee Under a Deed of Trust Executed October 29, 1999 by Dixie J. Arthur and Carletta Davis to Transcontinental Title, as Trustee, Defendants.

No. 1:02-CV-285.

United States District Court, E.D. Tennessee, at Chattanooga.

November 19, 2002.

Hugh J. Moore, Jr., Shumaker, Witt, Gaither & Whitaker, PC, Chattanooga, TN, Whitney Durand, Southeast Tennessee Legal Services, Chattanooga, TN, for plaintiffs.

Gregory C. Logue, Chad D. Emerson, Woolf, McClane, Bright, Allen & Carpenter, Knoxville, TN, for Litton Loan Servicing, LP, Steve Jetter, U.S. Bank National Ass'n., defendants

Valerie A. Spicer, Unknown, Richard T. Klingler, Kennedy, Fulton, Koontz & Farinash, Chattanooga, TN, for Arnold M. Weiss, defendant.

MEMORANDUM AND ORDER

EDGAR, Chief Judge.

Defendants Litton Loan Servicing LP ("Litton") and U.S. Bank National Association ("U.S.Bank") removed this case from the Chancery Court in Hamilton County, Tennessee. There are two motions before the Court. Plaintiffs move to remand pursuant to 28 U.S.C. § 1447(c) contending that Litton has been served with process and Litton failed to timely file the notice of removal within the 30-day time limit provided in 28 U.S.C. § 1446(b). [Court File No. 8]. Litton and U.S. Bank oppose the motion.

After reviewing the record, the Court concludes the plaintiffs' motion to remand is DENIED. The 30-day time limit in § 1446(b) for filing a notice of removal is not triggered and does not begin to run until the plaintiffs effect service of process upon the defendant. Murphy Brothers, Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 119 S.Ct. 1322, 143 L.Ed.2d 448 (1999). Because the plaintiffs have not effected service of process upon Litton and U.S. Bank, these defendants have timely removed this civil action pursuant to 28 U.S.C. § 1446(b).

Litton and U.S. Bank move pursuant to FED. R. CIV. P. 12(b)(5) to dismiss the plaintiffs' complaint against them on the ground of insufficient service of process. [Court File No. 3]. In the alternative, the defendants move that the insufficient service be quashed and the plaintiffs be ordered to effect proper service of process within 30 days. Plaintiffs respond that they have effected sufficient service of process upon Litton, but concede there is a lack of service of process upon U.S. Bank. [Court File No. 6].

The Court agrees with Litton and U.S. Bank that the plaintiffs' efforts to effect service of process upon them are deficient. Instead of dismissing the complaint against Litton and U.S. Bank, the Court will grant the plaintiffs an extension of time to effect service of process. The Court RESERVES ruling on the defendants' Rule 12(b)(5) motion to dismiss.

I. Background

On June 4, 2002, the plaintiffs filed their complaint in Chancery Court in Hamilton County, Tennessee. Plaintiffs attempted to effect service of process upon Litton by having a deputy sheriff in Shelby County, Tennessee, deliver the summons and complaint to Arnold M. Weiss ("Weiss") on July 15, 2002. Weiss, an attorney-at-law in Memphis, Tennessee, did not refuse delivery of the summons and complaint for Litton.

Plaintiffs likewise attempted to effect service of process upon U.S. Bank by having the same Shelby County deputy sheriff deliver a summons and complaint to Weiss on July 15, 2002. However, Weiss refused to accept these documents on behalf of U.S. Bank. Plaintiffs concede that U.S. Bank has not been served with process. [Court File No. 8, p. 2 n. 1].

After the summons and complaint for Litton were delivered to Weiss on July 15, it appears that Weiss, or some other person in his law office, notified Litton. On July 16, 2002, an attorney in the Weiss law office, Valerie Ann Spicer ("Spicer"), wrote a letter to the plaintiffs' counsel stating that Spicer and Weiss had been retained to represent Litton in this case. Spicer requested an extension of time for Litton to file a responsive pleading. Based on Spicer's letter, the Court infers that Litton had actual notice of the pending suit no later than July 16, 2002.

For purposes of determining when service of process was effected on Litton and when Litton's 30-day time limit commenced to run for filing a notice of removal under 28 U.S.C. § 1446(b), it is immaterial whether Litton may have had actual notice of the pending suit. Actual notice does not constitute service of process on Litton pursuant to FED. R. CIV. P. 4(h) and TENN. R. CIV. P. 4.04(4). A defendant's actual knowledge of a lawsuit is no substitute for proper service of process. LSJ Investment Co., Inc. v. O.L.D., Inc., 167 F.3d 320, 322 (6th Cir.1999); Friedman v. Estate of Presser, 929 F.2d 1151, 1155-56 (6th Cir. 1991). Assuming arguendo that Litton had actual notice of the plaintiffs' suit on July 16, 2002, this did not trigger the 30-day time limit for Litton to file its notice of removal under § 1446(b) in the absence of formal service of process. Murphy Brothers, 526 U.S. 344, 119 S.Ct. 1322, 143 L.Ed.2d 448. On September 19, 2002, Litton and U.S. Bank filed a notice of removal in this federal district court pursuant to 28 U.S.C. § 1446. In the notice, Litton and U.S. Bank state the case is being removed prior to the plaintiffs effecting service of process.

II. Plaintiffs' Motion to Remand [Court File No. 8]

To lay the groundwork for analyzing the motion to remand, we review 28 U.S.C. § 1446(b) and Murphy Brothers, 526 U.S. 344, 119 S.Ct. 1322. 28 U.S.C. § 1446(b) provides in part that the notice of removal "shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based ...." Prior to Murphy Brothers, some federal courts recognized that the phrase "or otherwise" in § 1446(b) hinted it was possible for a defendant to receive the plaintiffs initial pleading or complaint, prior to the plaintiff effecting service of process, and this could trigger the 30-day time limit for the defendant to file a notice of removal. In 1993, the Sixth Circuit reviewed § 1446(b) and adopted what is commonly referred to as the "receipt rule." Tech Hills II v. Phoenix Home Life Mut. Ins. Co., 5 F.3d 963, 966-68 (6th Cir.1993). Under the receipt rule, the time for filing a notice of removal pursuant to § 1446(b) commenced to run when the defendant actually received a copy of the initial pleading which on its face set forth a removable claim, even though the plaintiff had not effected service of process.

The receipt rule adopted by the Sixth Circuit in Tech Hills II has been abrogated by the United States Supreme Court and is no longer good law. In Murphy Brothers, the Supreme Court rejected the receipt rule. It reasoned that service of process is fundamental to any procedural imposition on a defendant. In the absence of service of process or a waiver of service of process by the defendant, a federal court ordinarily cannot exercise personal jurisdiction over the defendant. Murphy Brothers, 526 U.S. at 350, 119 S.Ct. 1322; Omni Capital Int'l Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104, 108 S.Ct. 404, 98 L.Ed.2d 415 (1987); Friedman, 929 F.2d at 1156; Amen v. City of Dearborn, 532 F.2d 554, 557 (6th Cir.1976). The Supreme Court in Murphy Brothers interprets 28 U.S.C. § 1446(b) in light of the bedrock principle that a defendant is not obliged to engage in civil litigation unless the defendant is properly notified of the action and brought under the court's authority, i.e., personal jurisdiction, by formal service of process. A defendant's 30-day time limit to file a notice of removal under § 1446(b) is triggered by simultaneous service of the summons and complaint, or the defendant's receipt of the complaint "through service or otherwise" after and apart from the service of summons, but not by the defendant's mere receipt of the complaint unattended by formal service of process. Murphy Brothers, 526 U.S. at 347-48, 119 S.Ct. 1322; see also 14C CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE: JURISDICTION 3D § 3732, Pocket Part (2002).

In the wake of Murphy Brothers, this Court focuses its attention on the key issue whether the plaintiffs in the instant case have effected service of process. Plaintiffs contend that remand is necessary because Litton did not timely file the notice of removal within the 30-day limit required by § 1446(b). The plaintiffs' position is predicated on the erroneous premise that they effected service of process upon Litton on July 15, 2002, when the summons and complaint for Litton were delivered to Weiss. The plaintiffs' motion to remand is without merit because the record shows that the plaintiffs have not effected service of process upon Litton.

FED. R. CIV. P. 4(h) provides in part that service of process upon a corporation, which has not waived service, shall be effected in a judicial district of the United States in the manner prescribed for service on individuals in Fed. R. CIV. P. 4(e)(1), or by delivering a copy of the summons and complaint "to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process" on behalf of the corporation. Fed. R. CIV. P. 4(e)(1) provides that service of process may be effected in any judicial district of the United States pursuant to the law of the state in which the federal district court is located or the...