U.S. v. Ayer, s. 88-1066

• Citation: 857 F.2d 881
• Decision Date: 26 September 1988
• Docket Number: Nos. 88-1066,88-1067,s. 88-1066
• Parties: UNITED STATES of America, Plaintiff, Appellee, v. Rita Kips AYER, et al., Defendants, Appellees, Universal Aircraft Corporation, S.A., Defendant, Appellant. UNITED STATES of America, Plaintiff, Appellee, v. Rita Kips AYER, Defendant, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 881

857 F.2d 881

12 Fed.R.Serv.3d 612

UNITED STATES of America, Plaintiff, Appellee, v. Rita Kips AYER, et al., Defendants, Appellees, Universal Aircraft Corporation, S.A., Defendant, Appellant.

UNITED STATES of America, Plaintiff, Appellee, v. Rita Kips AYER, Defendant, Appellant.

Nos. 88-1066, 88-1067.

United States Court of Appeals, First Circuit.

Submitted July 18, 1988.

Decided Sept. 26, 1988.

Edward B. Ginn and Kline & Gordon, Boston, Mass., on brief for Universal Aircraft Corp., S.A. and Rita Kips Ayer, defendants, appellants.

William S. Rose, Jr., Asst. Atty. Gen., Gary R. Allen, David I. Pincus, and Regina S. Moriarty, Tax Div., Dept. of Justice Washington, D.C., on brief for plaintiff, appellee.

Before COFFIN, BOWNES and SELYA, Circuit Judges.

SELYA, Circuit Judge.

The stage was set for these appeals by the filing of an action to enforce certain federal tax liens in the United States District Court for the District of Massachusetts. The cast of characters, in no especial order, is as follows:

1. The taxpayers: Frederick B. Ayer and his wife, defendant-appellant Rita Kips Ayer.

2. The debt: upward of $820,000 in taxes, penalties, and interest, assessed against the taxpayers, jointly and severally.

3. The property: a parcel of real estate situated at 78 Main Street, Nantucket, Massachusetts (Property), owned by Mrs. Ayer.

4. The affiliated entity: defendant-appellant Universal Aircraft Corporation S.A. (Universal), a Panamanian firm in which Frederick B. Ayer was (or had been) a principal. Universal claimed to hold a valid second mortgage on the Property.

5. The departed defendant: First National Bank of Boston. As originally drawn, the complaint joined three defendants: the bank (qua mortgagee), Mrs. Ayer, and Universal. Upon its prompt disclaimer of any interest in the Property, the Bank was dropped as a party.

6. The villain of the piece: plaintiff-appellee United States of America, creditor and lienholder.

Before the house lights are lowered, we rehearse the travel of the proceedings below.

I

The United States filed suit in the district court on October 8, 1985. On January 17, 1986, it caused the summons and complaint to be served on Mrs. Ayer by certified mail at the Ritz Towers, 465 Park Avenue, New York City. At about the same time, the government tried to reach Universal by serving Mr. Ayer, thought to be its president, at the identical address. This attempt was unsuccessful; husband and wife had become estranged, and he had moved. There followed a further failed effort to serve the corporation at Mr. Ayer's former offices in New York. The district court, understandably, became impatient to get the show on the road. On February 18, 1986, the court acted sua sponte, ordaining that the suit would be dismissed unless proof of service was filed or good cause shown for neglect to serve. ¹

On cue, plaintiff complied with the Rule 4(j) order by filing (a) as to Rita Ayer, the marshal's return-of-process (ROP) form and the certified mail receipt; and (b) as to Universal, the process receipts explaining the failed attempts to serve. The district court, seemingly satisfied with the recital, withheld dismissal, instead entering a scheduling order on May 21, 1986. See Fed.R.Civ.P. 16. Some months later, however, the court held a status conference, in consequence of which it ordered service of process to be completed by February 19, 1987. The government thereupon managed to locate a new business address for the elusive Frederick Ayer. It served him by certified mail in Miami during January 1987, as Universal's proxy.

On March 30, the court held another status conference. Plaintiff's counsel represented that both appellants, though served, had neglected to answer. From there, the script takes a familiar turn. On July 24, the United States applied for entry of default and for a default judgment. See generally Fed.R.Civ.P. 55. It included with the moving papers a certificate signed by its counsel which delineated the service theretofore made on appellants. Judgment by default was entered on July 28, 1987.

Some six weeks later, both Mrs. Ayer and the corporation entered stage left and moved to vacate judgment under Fed.R.Civ.P. 60(b). ² The motions each asserted that due and proper service had not been effected. Specifically, Mrs. Ayer alleged by affidavit that her home was in Nantucket, not New York City, and said that she should have been served there. Universal relied on an affidavit in which Frederick Ayer emoted that, when service was made upon him in Universal's behalf, he was no longer featured as its president; and in any event, the summons was misaddressed. Apparently convinced that the best defense is a good offense, appellants also filed a motion to dismiss the complaint for noncompliance with Fed.R.Civ.P. 4(j). The government successfully opposed all of the motions. These appeals ensued.

As the curtain rises, we address Rule 4(j). Then, because we find service to have been timely (if not swift), the scene shifts to the district court's refusal to vacate the judgments. ³

II

Rule 4(j) was added to the Civil Rules as part of the wholesale rewriting of Rule 4 which took effect on February 26, 1983. Although the legislative history of these amendments is sparse--it comprises, in the main, a section-by-section analysis submitted in the House by Congressman Edwards--the evident purpose of Rule 4(j) was to compel parties and their counsel to be diligent in prosecuting causes of action. See 128 Cong.Rec. H9848 (daily ed. Dec. 15, 1982), reprinted in 1982 U.S.Code Cong. & Admin.News 4434, 4442; Wei v. State of Hawaii, 763 F.2d 370, 372 (9th Cir.1985). There is, of course, a glaring need for such sedulity. When suit is filed, the limitations period is ordinarily tolled. Yet, until the defendants receive some formal notice of the institution of the action, they are not assured a meaningful opportunity to discover, marshall, and preserve evidence, that is, to prepare a defense. Then, too, the court has a systemic interest in the progress of its own docket and in management of a burgeoning flow of litigation. To meet this amalgam of needs, the rule provides a stern sanction--dismissal--unless service is perfected within the 120-day limit or there is "good cause" for the time overrun.

A

In this case, service was effected on at least one defendant (Universal) well beyond the expiration of the 120-day period. ⁴ In such circumstances, the burden of demonstrating the requisite good cause rested upon plaintiff. See Winters v. Teledyne Movible Offshore, Inc., 776 F.2d 1304, 1305 (5th Cir.1985); Wei, 763 F.2d at 372; cf. Saez Rivera v. Nissan Mfg. Co., 788 F.2d 819, 821 n. 2 (1st Cir.1986) (per curiam) (plaintiff has burden of proving proper service of process). Such a showing is, by its very nature, fact-specific. Ruiz Varela v. Sanchez Velez, 814 F.2d 821, 824 (1st Cir.1987) (per curiam); Woods v. Partenreederei M.S. Yankee Clipper, 112 F.R.D. 115, 116 (D.Mass.1986). The district judge pulls the laboring oar in scrutinizing plaintiff's efforts: we review the lower court's evaluation of the presence or absence of good cause in the Rule 4(j) milieu only for abuse of discretion. Lovelace v. Acme Markets, Inc., 820 F.2d 81, 83 (3d Cir.), cert. denied, 108 S.Ct. 455 (1987); Ruiz Varela, 814 F.2d at 823; Fournier v. Textron, Inc., 776 F.2d 532, 534 (5th Cir.1985); see also United States for u/b DeLoss v. Kenner General Contractors, Inc., 764 F.2d 707, 710-11 (9th Cir.1985) (applying abuse-of-discretion standard); Edwards v. Edwards, 754 F.2d 298, 299 (8th Cir.1985) (per curiam) (similar).

B

We have examined the record in this case with care, and find no misuse of the district judge's substantial discretion. There is nothing to suggest that the delay in service was intentional or that the government stood to benefit from it. On the opposite hand, there has been no meaningful demonstration of any cognizable prejudice resulting to defendants from the passage of additional time. ⁵ Nor are we aware of any "aggravating factors," see Fournier, 776 F.2d at 534, or of any affront to the district court's control over its own docket.

To be sure, appellants argue that the government should have known, as early as July 8, 1986, that Mr. Ayer was at best a bit player (not the proper party to be served on Universal's behalf), yet plunged ahead singlemindedly, heedless of that knowledge. The most that can be said, however, is that the cited testimony might well have supported a determination that no good cause existed to justify the failure of prompt service. But the nisi prius court made no such finding, and the evidence certainly did not require one. Likewise, appellants' asseveration that the complaint should have been thrown out because proof of service was not filed within twenty days of the entry of the February 18, 1986 order borders on the fatuous. Plaintiff responded within the twenty days. The district court accepted both plaintiff's proof of service on Mrs. Ayer and its excuse for not serving the corporate defendant as comprising due compliance with its order. That acceptance suffices. After all, the writing judge plays a "special role ... in elucidating the meaning and intendment of an order which he authored." Martha's Vineyard Scuba Headquarters, Inc. v. Unidentified, Wrecked and Abandoned Steam Vessel, 833 F.2d 1059, 1066-67 (1st Cir.1987); see also United States v. Levasseur, 846 F.2d 786, 795 (1st Cir.1988) (same; citing Martha's Vineyard ); Lefkowitz v. Fair, 816 F.2d 17, 22 (1st Cir.1987) (similar). ⁶

If Fed.R.Civ.P. 4(j) were enforced harshly and inflexibly, as appellants urge, the good cause exception would be written out of the rule by judicial fiat. We see no point in such a draconian construction. Congress, we believe, intended Rule 4(j) to be a useful tool for docket management, not an instrument of oppression. Here, where (1) Universal was largely defunct and entirely shrouded...