Travelers Cas. and Sur. Co. of America v. Brenneke

• Decision Date: 09 January 2009
• Docket Number: No. 06-36077.,06-36077.
• Citation: 551 F.3d 1132
• Parties: TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, Plaintiff-Appellee, v. Anthony Paul BRENNEKE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

551 F.3d 1132

TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, Plaintiff-Appellee, v. Anthony Paul BRENNEKE, Defendant-Appellant.

No. 06-36077.

United States Court of Appeals, Ninth Circuit.

Submitted October 24, 2008.^*

Filed January 9, 2009.

Kim D. Stephens, Seattle, WA, for the defendant-appellant.

Jan D. Sokol and Tyler J. Storti, Portland, OR, for the plaintiff-appellee.

Appeal from the United States District Court for the District of Oregon; Ann

Aiken, District Judge, Presiding. D.C. No. CV 06-0303 AA.

Before: A. WALLACE TASHIMA and MILAN D. SMITH, JR., Circuit Judges, and GEORGE H. WU,^** District Judge.

WU, District Judge:

The principal issue herein is the sufficiency of service under Federal Rule of Civil Procedure ("Fed. R. Civ.P.") 4(e) by the placement of the summons and complaint within a defendant's physical proximity. Appellant Anthony Paul Brenneke ("Brenneke") appeals from a summary judgment entered against him in favor of Appellee Travelers Casualty and Surety Company of America ("Travelers") in the amount of $211,300. Brenneke contends that the district court lacked jurisdiction over him because he was never properly served, and that it erred in finding that he had waived his right to challenge personal jurisdiction. He further claims that Travelers presented insufficient evidence of damages for the court to have properly made any damage award. Rejecting those contentions, we affirm the district court's decision.

FACTUAL AND PROCEDURAL BACKGROUND

On March 6, 2006, Travelers filed a complaint against Brenneke, NSP Development, Inc. ("NSP"), and Sherwood H.D., LLC ("Sherwood") (collectively "Defendants"), seeking recovery under a Commercial Surety Bond Application ("Indemnity Agreement") which the Defendants had executed in favor of Travelers. The Indemnity Agreement was executed in connection with a supersedeas bond ("Bond") which was posted in conjunction with the Defendants' appeal of certain judgments entered in state court against them and in favor of an entity called Polygon Northwest Company ("Polygon"). The Bond was in the sum of $297,503. Under the Indemnity Agreement, the Defendants agreed to indemnify Travelers:

... from and against any and all damages, loss, costs, charges, and expenses of whatsoever kind or nature, including counsel or attorney's fees, whether incurred under retainer or salary or otherwise, which it shall or may, at any time, sustain or incur by reason or in connection with furnishing any Bond, including any investigation related thereto.

The Indemnity Agreement further provided that, upon receipt of notice that a demand had been made against the Bond, the Defendants would pay Travelers the full amount of the demand plus any necessary fees within three business days before payment of the demand was due. Failure to make such payment to Travelers would cause the Defendants/ indemnitors to be additionally liable for all reasonable costs and expenses, including attorney fees, incurred by Travelers to enforce the Indemnity Agreement. Ultimately, a demand was made and Travelers notified Brenneke that the sum of $297,503 was required. Brenneke never responded to that notice or to Traveler's subsequent demands for indemnification.

After the Defendants had failed to timely respond to the complaint, Travelers filed a "Motion for Order of Default and Judgment" against them. Brenneke filed a "Response in Opposition to Motion for Entry of Default" and his declaration, stating that he had never been served with the summons and complaint. Brenneke had previously filed a "Notice of Appearance" indicating his intent to appear and defend in the action (and purporting to preserve "any objections to the jurisdiction of the court").

In connection with its motion to enter default, Travelers submitted the affidavit of Phil Sheldon ("Sheldon"), a process server for Barrister Support Service, which Travelers had hired to effectuate service upon Brenneke. Sheldon stated that he had experienced "significant difficulty" in serving Brenneke in the past, and that he was aware of other process servers' having experienced similar difficulty. He also indicated that he had successfully served legal documents personally on Brenneke on prior occasions. As to the current matter, he stated that he had made four separate visits to Brenneke's home between March 17, 2006 and April 2, 2006, attempting to accomplish service. No one answered the door or intercom even though, on more than one occasion, there were two or three vehicles in the driveway. On both his first and third visits to that residence, Sheldon left a note for Brenneke to contact Barrister Support Service, but he did not do so. During what was apparently the fifth attempt, on the evening of April 2, 2006, an adult male answering to the name of Paul Brenneke responded to Sheldon's ringing on the intercom at Brenneke's residence. When Sheldon identified himself as a process server, that person responded "Oh great," but never opened the door. However, Sheldon observed Brenneke standing behind the window next to the front door watching him. Sheldon then held the summons and complaint out towards the window, and announced in a loud voice "You are served." Sheldon further indicated that Brenneke watched him place the documents on the doorstep. Sheldon thereafter completed a proof of service form. The district court granted Travelers' motion for entry of default as against NSP and Sherwood, but denied it as to Brenneke. As part of that order, Brenneke was required to file an answer within the next ten days. Brenneke did so. The only affirmative defense stated in that answer was a lack of personal jurisdiction based on the absence of personal service.

Travelers filed a motion for summary judgment supported by the affidavit of Edward M. Connelly ("Connelly"), "a Bond Claim Manager, Salvage [for] St. Paul Travelers, which is an entity that owns 100% of Plaintiff [Travelers]." Connelly stated that he was "the individual at Travelers in charge of this Brenneke file." He described Travelers' posting of the $297,503 Bond and the eventual execution of the Indemnity Agreement by Brenneke in his capacities as President of NSP, the "Managing Member" of Sherwood, and individually. Connelly further stated that:

As of the date of this Affidavit, Travelers is still owed at least $211,300. This balance owing consists of the balance remaining on the amount paid out to Polygon on the Bond plus other amounts, including attorneys fees, costs, and expenses incurred by Travelers to date in enforcing its rights under the Indemnity Agreement, all with accrued interest at the rate of 6.825% from the respective dates paid through June 26, 2006. In addition, Travelers also continues to incur expenses, costs, and attorney fees in this action....

In an "Opinion and Order" granting Travelers' summary judgment motion, the district court rejected Brenneke's lack of personal jurisdiction affirmative defense concluding that he was "properly served with the Summons and Complaint in this action as a matter of law." In doing so, the court noted that "Brenneke's response does not address or respond to any facts contained in the Sheldon Affidavit." Further, the court found undisputed evidence of damages based on statements in and exhibits attached to the Connelly affidavit.

DISCUSSION

I. Travelers substantially complied with Fed.R.Civ.P. 4(e)(1) and (2).

A. Applicable law and standard of review

"A federal court is without personal jurisdiction over a defendant unless the defendant has been served in accordance with Fed.R.Civ.P. 4." Benny v. Pipes, 799 F.2d 489, 492 (9th Cir.1986) (citing Jackson v. Hayakawa, 682 F.2d 1344, 1347 (9th Cir.1982)). A district court's interpretation of the Federal Rules of Civil Procedure is reviewed de novo. Cal. Scents v. Surco Prods., Inc., 406 F.3d 1102, 1105 (9th Cir.2005); Atchison, Topeka & Santa Fe Ry. v. Hercules Inc., 146 F.3d 1071, 1073 (9th Cir.1998). The district court's determination whether personal jurisdiction can be exercised is a question of law reviewable de novo when the underlying facts are undisputed. FDIC v. British-American Ins. Co., 828 F.2d 1439, 1441 (9th Cir.1987).

So long as a party receives sufficient notice of the complaint, Rule 4 is to be "liberally construed" to uphold service. Chan v. Soc'y Expeditions, Inc., 39 F.3d 1398, 1404 (9th Cir.1994). However, "neither actual notice nor simply naming the defendant in the complaint will provide personal jurisdiction without substantial compliance with Rule 4." Benny, 799 F.2d at 492 (citation and quotes omitted).

B. Analysis

Brenneke's only basis for challenging the district court's jurisdiction over him is his argument that he was not properly served. There is sufficient undisputed evidence to conclude that Travelers substantially complied with Fed.R.Civ.P. 4(e)(1) and (2).¹

Here, although the process server was unable to effect in-hand service upon Brenneke, the district court reasonably concluded that Travelers' service of the summons and complaint satisfied the requirements for personal service under Rule 4(e)(2). As noted in 4A Wright & Miller, Federal Practice and Procedure § 1095 at 516-17 (3d ed.2002):

If the defendant attempts to evade service or refuses to accept delivery after being informed by the process server of the nature of the papers, it usually is sufficient for the process server to touch the party to be served with the papers and leave them in defendant's presence or, if a touching is impossible, simply to leave them in the defendant's physical proximity. It is not crucial in these circumstances that the defendant does not take the papers into his or her possession. Since this procedure satisfies the objective of giving notice to the party to be served, it seems to be entirely sufficient to satisfy the delivery requirement of Rule 4(e)(2). [Footnote omitted.]

Sufficient service may be found where there is a good faith effort to...