U.S. v. Elmes

• Decision Date: 02 July 2008
• Docket Number: No. 07-11424.,07-11424.
• Citation: 532 F.3d 1138
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Timothy J. ELMES, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

532 F.3d 1138

UNITED STATES of America, Plaintiff-Appellee, v. Timothy J. ELMES, Defendant-Appellant.

No. 07-11424.

United States Court of Appeals, Eleventh Circuit.

July 2, 2008.

Charles E. McFarland, New Castle, KY, for Elmes.

Robert J. Branman, Robert W. Metzler, U.S. Dept. of Justice, Tax Div., App. Sec., Washington, DC, for U.S.

Appeal from the United States District Court for the Southern District of Florida.

Before ANDERSON, HULL and SILER,^* Circuit Judges.

SILER, Circuit Judge:

Timothy Elmes failed to appear in response to an IRS summons, and the government filed a petition in the United States District Court to enforce the summons. The district court issued an order to show cause why the petition should not be granted. Elmes responded by filing a motion to dismiss under Rule 12(b) of the Federal Rules of Civil Procedure for lack of personal jurisdiction and improper service of process. He claims the district court lacked personal jurisdiction because he was not served with a court-issued summons pursuant to Rule 4. The district court denied Elmes's motion to dismiss and granted the government's petition to enforce. On appeal, Elmes argues the district court (1) lacked personal jurisdiction over him and (2) violated his right to due process by failing to grant him additional time to respond to the government's petition after denying his Rule 12(b) motion.

Because Rule 81(a)(3) permits a district court to modify the application of the civil rules in a subpoena-enforcement proceeding, we affirm the district court's exercise of personal jurisdiction in this case. We likewise affirm the district court's denial of Elmes's request for additional time to respond after the denial of his motion to dismiss.

BACKGROUND

IRS Revenue Agent James Keelan conducted an investigation of Elmes's tax liability for taxable years 2002, 2003, and 2004. On March 20, 2006, Keelan issued an IRS summons ordering Timothy Elmes to appear on April 13, 2006 at an address in the U.S. Virgin Islands, based on Elmes's claim of residency there, to produce books and records relating to those taxable years. Keelan effected service by personally handing a copy of the summons to Elmes. Elmes failed to appear pursuant to the summons.

On October 25, 2006, the government filed a petition to enforce the IRS summons. On December 6, 2006, the district court issued an order to show cause why the petition should not be granted. The district court scheduled a hearing for February 6, 2007 before a magistrate judge to address any issues raised by Elmes. The order gave Elmes twenty days to file a written response supported by affidavits and to file any motions. The order stated:

All motions and issues raised by [Elmes] in response to the Petition will be considered on the date set forth above for the hearing. Only those issues raised by motion or brought into controversy by the response and supported by affidavit will be considered at the time of the hearing, and any uncontested allegations of the Petition will be deemed admitted.

The order gave the following direction regarding how it should be served: "[W]ithin five (5) days from the date of this Order[,] the United States Marshal, his deputy, or an employee of the Internal Revenue Service shall serve a copy of this Order, together with the Petition and exhibits attached thereto, upon [Elmes]." Within the five-day period, Keelan personally served Elmes with the show cause order, the petition, and the attached exhibits.

In response to the order, Elmes filed a motion to dismiss under Rule 12(b), alleging a lack of personal jurisdiction and improper service of process. Elmes claimed the district court lacked jurisdiction because he was not served with a court-issued summons as required by Rule 4. The government then filed a motion to strike Elmes's motion. Elmes responded with a motion to strike the government's motion, adding the allegation that Keelan was an interested party and therefore could not properly serve the order.¹ Elmes then sought relief from this court by filing a petition for a writ of prohibition and requesting a stay of the district court proceedings. This court denied both the stay and the writ, noting that "[a] writ of prohibition is not available in this case because an adequate alternative remedy exists in that Elmes can appear before the magistrate judge on February 6, 2007, and argue his [Rule] 12(b) motion to dismiss based on lack of personal jurisdiction." See In re Timothy J. Elmes, No. 07-10398-E, slip op. at 2 (11th Cir. Feb. 5, 2007).

On February 6, 2007, the magistrate judge held a hearing in accordance with the show cause order. Elmes appeared at the hearing without counsel and presented the arguments raised in his pre-hearing motions. When the magistrate judge asked Elmes if he had any other objections, Elmes responded that he did not. The magistrate judge denied Elmes's motion to dismiss and issued a report and recommendation (R&R), concluding that the court had personal jurisdiction and the summons should be enforced. The magistrate judge reasoned that the show cause order "was essentially a court-issued summons in that it was signed by the District Judge presiding over this case and it notified Mr. Elmes of this action against him." United States v. Elmes, No. 06-61617-Civ., 2007 WL 521878, at *2 (S.D.Fla. Feb. 14, 2007). Elmes objected to the R&R, reiterating his previous arguments and claiming that after the denial of his motion to dismiss, he should be given additional time to respond.² Thereafter, the district court adopted the R&R and ordered Elmes to comply with the IRS summons within twenty days.

DISCUSSION

We review de novo the district court's denial of a Rule 12(b) motion to dismiss for lack of personal jurisdiction or insufficient service of process. McGow v. McCurry, 412 F.3d 1207, 1214 (11th Cir. 2005) (personal jurisdiction); Prewitt Enters., Inc. v. Org. of Petroleum Exporting Countries, 353 F.3d 916, 920 (11th Cir. 2003) (insufficient service). We review for clear error any factual findings regarding sufficiency of service. Prewitt, 353 F.3d at 920. We also review de novo the district court's interpretation of federal procedural rules. Vencor Hosps., Inc. v. Standard Life & Accident Ins. Co., 279 F.3d 1306, 1308 (11th Cir.2002).

A. Personal Jurisdiction

Elmes argues that the district court lacked personal jurisdiction over him due to insufficient service of process. Elmes contends the government was required to serve him with a court-issued summons pursuant to Rule 4 of the Federal Rules of Civil Procedure. Rule 4 requires, among other things, that a summons be signed by the clerk of the court and bear the court's seal. Fed.R.Civ.P. 4(a)(1)(F), (G). Elmes also points to 28 U.S.C. § 1691 "to give a statutory conformation [sic] to the requirements of a summons in Rule 4."³ Section 1691 states: "All writs and process issuing from a court of the United States shall be under the seal of the court and signed by the clerk thereof."

It is undisputed in this case that Elmes was not served with a standard, court-issued summons. Elmes focuses particularly on the government's failure to serve him with a document containing the signature of the clerk and seal of the court. The government argues that it was sufficient to serve Elmes with the order to show cause, which was signed by the district judge presiding over the case. The district court agreed with the government's interpretation and held the show cause order "was essentially a court-issued summons in that it was signed by the District Judge presiding over this case and it notified Mr. Elmes of this action against him."

On appeal, the government's initial brief argues that service of the show cause order was sufficient pursuant to Rule 81(a)(3),⁴ which permits district courts to alter the application of the rules of civil procedure in subpoena-enforcement proceedings. Rule 81(a)(3) provides in relevant part:

[The Federal Rules of Civil Procedure] apply to proceedings to compel the giving of testimony or production of documents in accordance with a subpoena issued by an officer or agency of the United States under any statute of the United States except as otherwise provided by statute or by rules of the district court or by order of the court in the proceedings.

(emphasis added). This court has described the scope of Rule 81(a)(3) in broad terms, saying that its effect is to "make application of the rules of civil procedure in subpoena enforcement proceedings discretionary with the district court." United States v. Se. First Nat'l Bank of Miami Springs, 655 F.2d 661, 663 (5th Cir. Unit B Sept.1981).⁵ Although the government did not present this argument before the district court, we are free to affirm the district court's decision on any ground that is supported by the record. Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1059 (11th Cir.2007).

In Donaldson v. United States, the Supreme Court explained that the civil rules apply to an IRS summons proceeding, but they do not apply inflexibly. 400 U.S. 517, 528, 91 S.Ct. 534, 541, 27 L.Ed.2d 580 (1971). Rather, "a district court, by local rule or by order, may limit the application of the rules in a summons proceeding ... so long as the rights of the party summoned are protected and an adversary hearing, if requested, is made available." Id. at 528-29, 91 S.Ct. at 541. The Court in Donaldson approved limiting the application of Rule 24(a)(2), governing intervention as of right, in a tax summons case. Id. Subsequent cases have approved other limitations of the civil rules in IRS summons-enforcement cases. See, e.g., United States v. McCoy, 954 F.2d 1000, 1003-04 (5th Cir.1992) (holding district court had discretion to modify the three-day notice requirement for default judgment by giving notice in a show cause order); United States v. Vetco, Inc., 691 F.2d 1281, 1285 (9th Cir.1981) (holding district court need not make findings...