Robinson Engineering Co. v. George

• Decision Date: 03 August 2000
• Docket Number: No. 98-3685,98-3685
• Parties: (7th Cir. 2000) ROBINSON ENGINEERING COMPANY, LTD. PENSION PLAN AND TRUST and R. W. ROBINSON & ASSOCIATES COMPANY PROFIT SHARING PLAN, Plaintiffs-Appellees, v. MARK G. GEORGE, Defendant-Appellant
• Court: U.S. Court of Appeals — Seventh Circuit

Page 445

223 F.3d 445 (7th Cir. 2000)

ROBINSON ENGINEERING COMPANY, LTD. PENSION PLAN AND TRUST and R. W. ROBINSON & ASSOCIATES COMPANY PROFIT SHARING PLAN, Plaintiffs-Appellees, v. MARK G. GEORGE, Defendant-Appellant.

No. 98-3685

In the United States Court of Appeals For the Seventh Circuit

Argued December 2, 1999

Decided August 3, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 88 C 1071--Charles R. Norgle, Sr., Judge.

Before Ripple, Kanne, and Diane P. Wood, Circuit Judges.

Diane P. Wood, Circuit Judge.

Robinson Engineering Co. Ltd. Pension Plan and Trust (Robinson) filed suit against Mark George (George) alleging that George defrauded Robinson out of nearly $1,000,000. Robinson claims that it eventually served George at his residence in Canada. George never showed up in the district court, however, and the court in due course entered a default judgment in Robinson's favor. Ten years later, asserting that he had never been served, that he had only recently discovered the existence of the judgment, and that the district court had never properly acquired personal jurisdiction over him, George filed a motion under Fed. R. Civ. P. 55(c) and 60(b)(4) to vacate the default judgment. The court denied George's motion. For the reasons stated below, we reverse and remand for further proceedings.

I

This case began more than ten years ago. On February 5, 1988, Robinson filed a complaint alleging that George, Timothy McDonald, and Canam Financial Group, Ltd. had defrauded Robinson out of nearly $1,000,000 through violations of the Organized Crime Control Act of 1970 (RICO), 18 U.S.C. sec.sec. 1961-68, Section 12 of the Securities Act of 1933, 15 U.S.C. sec. 77l, and Section 10 of the Securities Exchange Act of 1934, 18 U.S.C. sec. 78j(b) and Rule 10b-5, 17 C.F.R. 240.10b-5. Robinson also alleged supplemental state law claims for rescission and fraud. The court issued a summons for George with a service address of 400 E. Randolph Street, Suite 1622, Chicago, Illinois.

No one served George on Randolph Street, but Robinson got wind of the fact that he could be found in Canada, and so it took steps to locate him there. On June 29, 1988, Robinson filed a return of service indicating that Canadian process server Jim Bangs had served George. (We note that this was not a timely filing under Fed. R. Civ. P. 4(g),which requires that proof of service must be made "promptly" and "in any event within the time during which the person served must respond to the process." According to Bangs's affidavit, he accomplished service on May 12, 1988. The summons states that George had to respond within 20 days, which would have been June 1, 1988, as provided by Fed. R. Civ. P. 6. Proof of service, however, was not filed with the court until June 29, 1988, and was docketed June 30. Because we have decided this case on other grounds, we need not resolve whether George may complain about this defect now.) The return of service was supported by an affidavit from Bangs indicating that service of process had been made by leaving the summons and complaint with an individual residing at George's abode in Calgary, in the Canadian province of Alberta.

The details of that alleged service reveal why George has brought the present action. Bangs reported that he first determined that George and McDonald resided in apartment 806 of a condominium development in Calgary. On May 4, 1988, he observed that George's automobile was parked in the basement of the condominium building. By speaking with the condominium development management, Bangs confirmed that George lived in apartment 806. Bangs then arranged with the inspection service coordinator of the development's property management company to serve a notice to inspect McDonald and George's apartment. On the morning of May 12, 1988, Bangs and the inspector went to the apartment and the inspector knocked on the door. When there was no answer, the inspector opened the door to the apartment and entered to conduct his inspection. Bangs remained in the hallway.

Bangs then saw a man whom the inspector identified as one of the apartment's tenants. Although it is clear that Bangs remained in the hallway and did not enter the apartment, it is unclear from the affidavit if the man emerged from the apartment, was about to enter the apartment, or merely passed Bangs in the hallway. When Bangs asked the man if he was McDonald or George, the man responded he was neither. Bangs nonetheless thought that the man fit McDonald's physical description; he consequently served the man with a copy of the summons. The inspector told Bangs that after the man was served he became engrossed in the contents of the summons, flipping from page to page. The affidavit closes with Bangs's statement that he believes that the summons and complaint were brought to George's attention.

On July 25, 1988, the district court entered a minute order of default judgment in favor of Robinson and scheduled a prove-up hearing for August 4, 1988. After the prove-up hearing, the court entered a default judgment in favor of Robinson for $959,198 plus costs. The three defendants were held jointly and severally liable.

Ten years later, on March 18, 1998, George alone moved to vacate the default judgment pursuant to Fed. R. Civ. P. 55(c) and 60(b)(4). George alleged that the default judgment was void for lack of proper service under Fed. R. Civ. P. 4. The motion was supported by two documents: an affidavit from George and a purported affidavit from McDonald. The document from McDonald is so irregular, however, that we refrain here from calling it an affidavit. The county and state are not indicated; there is no notary seal; the "notary" did not print or type his or her name or give a commission number; and the "notary" alleged that the commission was good for life. Florida, at least (the state where George's affidavit was signed), would regard this as a nonconforming affidavit. See Fla. Stat. sec.sec. 117.01(1), 117.05. George's affidavit, which does not suffer from these flaws, indicates that he was never served with the summons and did not become aware of the default judgment until late 1997. The supposed statement from McDonald states that he was never served and that at the time service was purportedly made, he did not fit the description attributed to him by Bangs. George also filed a supplemental affidavit indicating that he and McDonald were the only residents of the apartment, including during the period when Bangs attempted service. On August 10, 1998, the court entered an order denying the motion to vacate the default judgment and George subsequently filed this appeal.

II

The abuse of discretion standard of review governs both our consideration of the district court's entry of default and default judgment, Merrill Lynch Mortgage Corp. v. Narayan, 908 F.2d 246, 250 (7th Cir. 1990), and our review of its disposition of George's motion to vacate or set aside those rulings, id. "A judgment is void for the purposes of Rule 60(b)(4) if the court that rendered it lacked jurisdiction of the subject matter, or of the parties, or if it acted in a manner inconsistent with due process of law." United States v. Indoor Cultivation Equipment From High Tech Indoor Garden Supply, 55 F.3d 1311, 1316 (7th Cir. 1995) (internal quotations and citations omitted). And "[i]f the underlying judgment is void, it is a per se abuse of discretion for a district court to deny a movant's motion to vacate the judgment under Rule 60(b)(4)." Id. at 1317. See also Gulf Coast Fans, Inc. v. Midwest Electronics Importers, Inc., 740 F.2d 1499, 1511 (11th Cir. 1984) (holding trial court abused its discretion in refusing to set aside default judgment where questions as to personal jurisdiction remained).

George raises two alternative arguments for why service of process was defective first, service was not proper, because abode service was not allowed under the then-applicable version of Rule 4; second, even if abode service was proper, Robinson failed to meet the requirements of that rule. Rule 4 was amended effective December 1, 1993. Service of process, however, is governed by the version of Rule 4 in effect at the time service was attempted. See Manufacturers Hanover Trust Co. v. Ponsoldt, 51 F.3d 938, 938 n.1 (11th Cir. 1995). We must therefore apply the 1988 version of the rule to this case, to which we refer as Rule 4 (1988).

Under Rule 4 (1988), the ordinary territorial limits of effective service were defined to be "anywhere within the territorial limits of the state in which the district court is held, and, when authorized by a statute of the United States or by these rules, beyond the territorial limits of that state." Rule 4(f) (1988) (emphasis added). The rule identified two situations in which service might occur upon a party who was not an inhabitant of or found within the state. The first appeared in Rule 4(e) (1988), which authorized such service whenever either a statute of the United States or a statute or rule of court of the state where the court was sitting did so. The manner of service was to follow either the relevant United States statute or state statute, or for those relying on federal statutes, "if there is no provision therein prescribing the manner of service, in a manner stated in this rule." Id. Rule 4(b) and (c) (1988) set forth the manner of service and the persons who could be served for ordinary cases. Recognizing, however, that service in foreign countries presented additional complications, the rule also included special "Alternative Provisions for Service in a Foreign Country." Rule 4(i) (1988).

Rule 4(e) is primarily concerned with the individual's amenability to the court's power, rather than the particular method of service that may be used. See David D. Siegel, Practice Commentaries, C4-25 (contained in 28 U.S.C.A. Federal Rules of Civil Procedure Rules 1-11 (1992))...