United States District Court, D. Massachusetts
MEMORANDUM AND ORDER
Forward Financing, LLC alleges that it had a contract with
defendants by which plaintiff paid $135, 000 to Moss
Supermarket, LLC ("Moss") in exchange for ten
percent of its daily receipts until a total of $194, 400 was
collected by plaintiff. Plaintiff alleges that about two
weeks after entering the agreement, Moss stopped making the
required payments, and defendant Anna Hakobyan, the principal
of Moss, did not indemnify plaintiff for the breach, as
agreed. Plaintiff claimed to have served defendants, who
reside in California, on September 8, 2016. However,
defendants did not respond to the complaint within 21 days as
required under Federal Rule of Civil Procedure 12 (a) (1) (A)
(i) . On May 12, 2017, the clerk entered default. Plaintiff
has moved for default judgement.
Forward Financing v. Arthur Schuster, Inc., et al.,
16-10981-MLW, plaintiff's motion was not accompanied by a
memorandum of law, as required under Rule 7.1(b)(1) of the
Local Rules for the United States District Court for the
District of Massachusetts ("Local Rule 7.1"). In
addition, "before a default can be entered, the court
must have subject-matter jurisdiction and jurisdiction over
the party against whom the judgment is sought, which also
means that the party must have been effectively served with
process." 10A Charles Alan Wright & Arthur R.
Miller, Fed. Prac. & Proc. §2682 (4th ed. 2008); see
also In re The Home Restaurants, Inc., 285 F.3d 111, 114 (1st
Cir. 2002); Precision Etchings & Findings, Inc. v.
LGP Gem, Ltd., 953 F.2d 21, 23 (1st Cir. 1992) ("A
default judgment entered by a court which lacks jurisdiction
over the person of the defendant is void.").
there are no allegations or evidence demonstrating that the
Due Process Clause and the Massachusetts long-arm statute,
Mass. Gen. Laws Chapter 223A, §3, permit the exercise of
personal jurisdiction over the defendants, both of whom
reside in California. See Compl. at ¶¶2-3.
Plaintiff alleges that its principle place of business is in
Boston, Massachusetts and that its members reside in the
state. However, there is no allegation that defendants
negotiated or executed the contract in Massachusetts, sent
payments to defendants' Massachusetts headquarters, or
otherwise transacted any business in the state. See
Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc.,
825 F.3d 28, 34-41 (1st Cir. 2016). Even if the contract did
require payments to Massachusetts, this would not necessarily
"represent a purposeful availment of the privilege of
conducting activities in [Massachusetts], thereby invoking
the benefits and protections of [its] laws and making the
defendant[s' ] involuntary presence before the
state's courts foreseeable." Phillips Exeter
Academy v. Howard Phillips Fund, 196 F.3d 284, 291-92
(1st Cir. 1999); compare Baskin-Robbins, 825 F.3d at 38-39.
It also may be insufficient to satisfy the requirements of
the Massachusetts long-arm statute. See Moelis v.
Berkshire Life Ins. Co., 451 Mass. 483, 488-89 (2008);
see also Clean Harbors Environmental Servs., Inc. v.
Klondez Gold & Silver Mining Co., 2017 WL 2979115
(Mass. Super. Ct. 2017).
addition, plaintiff has not served Moss Supermarket, LLC in
the manner prescribed by Federal Rule of Civil Procedure 4.
Unless a defendant waives any defect in service of process,
process "must be served in accordance with Fed.R.Civ.P.
4, in order for the court to secure personal jurisdiction
over him." Echevarria-Gonzalez v.
Gonzalez-Chapel, 849 F.2d 24, 28 (1st Cir. 1988).
"If a defendant is not served within 90 days after the
Complaint is filed, the court-on motion or on its own after
notice to the plaintiff-must dismiss the action without
prejudice against that defendant or order that service be
made within a specified time." Fed.R.Civ.P. 4'(m)
(emphasis added). "The dismissal of a complaint is an
inappropriate exercise of...discretion when there exists a
reasonable prospect that service may yet be obtained."
Cutler Assocs., Inc. v. Palace Constr., LLC, 132
F.Supp.3d 191, 194 (D. Mass. 2015)(Hillman, D.J.); see
also Umbenhauer v. Woog, 969 F.2d 25, 30 (3rd Cir.
1992); Rivera Otero v. Amgen Manufacturing Limited,
317 F. R. D. 326, 328 (D. P. R. 2016).
notice and simply naming the person in the caption of the
complaint is insufficient to subject a defendant to the
jurisdiction of the district court."
Echevarria-Gonzalez, 849 F.2d at 28. Rather, Federal Rules of
Civil Procedure 4(h) and 4(e)(1) require a plaintiff to serve
a corporation in a judicial district of the United States in
one of two ways. First, the plaintiff may "follow
state law for serving a summons in an action brought in
courts of general jurisdiction in the state where the
district court is located or where service is made."
Fed. R. Civ. 4(e)(1). The plaintiff has sued in the District
of Massachusetts and purported to serve Moss in California.
Therefore, he must serve process according to: Rules 4(d)(2)
and (e) of the Massachusetts Rules of Civil Procedure;
§416.10 of the California Code of civil Procedure; or
Rule 4(h)(1)(B) of the Federal Rules of Civil Procedure.
Massachusetts and federal rules require service on "an
officer, " a "managing or general agent, " or
any other agent authorized to accept service on behalf of a
corporation. Mass. R. Civ. P. 4(d)(2) & (e); Fed.R.Civ.P.
4(h)(1)(B). California law requires service on "the
person designated as the agent for service of process or the
'president, chief executive officer, or other head of the
corporation, a vice president, a secretary or assistant
secretary, a treasurer or assistant treasurer, a controller
or chief financial officer, a general manager, or a person
authorized by the corporation to receive service of
process.'" Bovier v. Bridgepoint Educ./Ashford
Univ., 2017 WL 4922978, at *2 (S.D. Cal. Oct. 30,
2017)(citing Cal. Civ. Proc. Code §416.10).
Return of Service (Docket No. 5) as to Moss does not
establish that it was served on any of the individuals
authorized to accept service on its behalf. Instead, it
states that the server, "J. Figueroa, " served the
summons on an anonymous individual, "John 'Doe,
1" whom Figueroa asserts without explanation was
"authorized to accept" service on behalf of Moss.
This does not establish that Moss was properly served.
the entry of default against Moss is being removed, the
motion for default judgment against both defendants is being
denied without prejudice, plaintiff is being ordered to serve
Moss within 30 days, and a hearing is being scheduled to
address the issues raised in this case and others, see
Forward Financing v. Arthur Schuster, Inc., et al., C.A.
16-10981 (March 29, 2018 Order).
of the foregoing, it is hereby ORDERED that:
Motion for Default Judgment (Docket No. 10) is DENIED without
Plaintiff shall, by April 30, 2018, serve defendant Moss
Supermarket, LLC the summons and complaint in a manner
consistent with Rule 4(h) of the Federal Rules of Civil
Procedure. Any future motion for default judgment or motion
for reconsideration shall comply with Rule 7.1 of the Local
Rules of the United States District Court for the District of
Massachusetts, and be accompanied by: (a) a memorandum of law
addressing the issues raised in this Memorandum and Order;
and (b) one or more affidavits and any evidence that the
court has personal jurisdiction over the
necessary, a hearing shall be held on May 14, ...