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Busher v. Berthiaume

United States District Court, D. Oregon, Portland Division

November 21, 2017

MICHAEL BUSHER, an Individual Citizen of Oregon, Plaintiff,
v.
REGINALD BERTHIAUME, an Individual Citizen of Florida, Defendant.

          Richard W. Todd, TODD & SHANNON, LLP Attorneys for Plaintiff.

          David P. Morrison Timothy J. Fransen COSGRAVE VERGEER KESTER LLP Attorneys for Defendant.

          OPINION & ORDER

          MARCO A. HERNÁNDEZ, UNITED STATES DISTRICT JUDGE

         Defendant Reginald Berthiaume moves to set aside the order of default entered against him on January 20, 2017, pursuant to Federal Rule of Civil Procedure 55(c), alleging lack of proper service as required by Federal Rule of Civil Procedure 4(e). Def.'s Mot. Set Aside Order Default (“Def.'s Mot.”) 1-2, ECF 22. I grant the motion.

         BACKGROUND

         In 2016, Plaintiff Michael Busher brought an action against Defendant for Breach of Judgment, Defamation (Slander Per Se), and Interference with Business Relationship. Compl. 1, ECF 1. Plaintiff alleges he initially attempted to serve Defendant personally at his residence in Florida. Pl.'s Memo. Opp. Def.'s Mot. (“Pl.'s Opp.”) 5, ECF 33. The process server was unable to speak with Defendant and allegedly left a card with the “maid.” Id. Subsequently, the process server made a few attempts to meet with Defendant, all of which were unsuccessful. Id.

         The process server then attempted to serve Defendant at Tropical Auto Sales & Rent to Own LLC, dba Tropical Auto Outlet (“Tropical Auto”), his wife's business. Def.'s Mot. 2; Pl.'s Resp. Def.'s Mot. Dismiss Ex. 1, ECF 36. While Defendant had some limited contacts with and briefly served on the board of Tropical Auto's predecessor corporation, he alleges (and plaintiff does not refute) that he has never worked for Tropical Auto. Def.'s Mot. 2; see also Pl.'s Opp. 2-3; Def.'s Reply 2-3, ECF 38. According to Defendant, the server approached the manager on duty at the time, the financial manager of Tropical Auto, and asked her to accept service for Defendant. Decl. of Linda Leon ¶ 3, ECF 25. Defendant alleges that the manager explained that Defendant did not work at Tropical Auto and refused to accept service for him. Def.'s Mot. 2. Despite this, the process server left the service papers with the manager, allegedly informing her that “this was only one of the ways they were purporting to serve [D]efendant.” Id. The process server later provided Plaintiff with an affidavit of service, alleging that Defendant had been served “c/o Tropical Auto” by delivering the summons and complaint to “Jane Doe as Accountant.” Pl.'s Resp. Def.'s Mot. Dismiss Ex. 1.

         Subsequently, Plaintiff mailed copies of the summons and complaint both to Defendant's address and the address of Defendant's Florida lawyer. Def.'s Mot. 3; see also Decl. of David Shannon (“Shannon Decl.”) Ex. A-E, ECF 7. While there is some dispute over whether Defendant's Florida lawyer solicited a waiver of service at this point or Plaintiff sent one unsolicited, it is undisputed that neither Defendant nor his Florida lawyer signed a waiver. Compare Def.'s Mot. 3 with Pl.'s Opp. 5-6.

         On January 17, 2017, Plaintiff filed a motion for entry of default, alleging that Defendant had been served at Tropical Auto. Def.'s Mot. 3; see also Shannon Decl. Ex. A, B. The clerk entered the order of default three days later, Order Granting Mot. Default Jan. 20, 2017, ECF 8, and on May 15, 2017, Plaintiff moved for entry of a default judgment, Pl.'s Mot. Default J., ECF 9. That motion is currently pending before this Court.

         Around this time Defendant learned that Plaintiff was seeking a default judgment against him, and on June 12, 2017, Defendant retained counsel to set over the default judgment hearing and challenge the order of default against him. Decl. of Timothy J. Fransen ¶ 2, ECF 26; Decl. of Reginald Berthiaume ¶ 4, ECF 23. Defendant's counsel contacted Plaintiff on June 13 and 19, 2017, in regards to lack of service and was told that Plaintiff would provide proof of proper service. Id. at ¶ 3. On July 31, 2017, having never received such proof, Defendant moved to set aside the order of default, arguing that he was never served and thus the order of default was void. Id. at ¶ 4-6.

         STANDARDS

         Federal Rule of Civil Procedure 55(c) provides that a court may set aside an entry of default for “good cause.” Fed.R.Civ.P. 55(c). The decision to set aside an entry of default is left to the discretion of the district court. See O'Connor v. Nevada, 27 F.3d 357, 364 (9th Cir. 1994). “The court's discretion is especially broad where . . . it is entry of default that is being set aside, rather than a default judgment.” Mendoza v. Wight Vineyard Mgmt., 783 F.2d 941, 945 (9th Cir. 1986).

         When considering whether to set aside an order of default, the Ninth Circuit has directed courts to look to the grounds established for vacating a default judgment. Haw. Carpenters' Trust Funds v. Stone, 794 F.2d 508, 513 (9th Cir. 1986). The Ninth Circuit also cautions that such “grounds [for vacating a default judgment] are liberally interpreted when used on a motion for relief from an entry of default.” Id. “Where timely relief is sought from a default . . . and the movant has a meritorious defense, doubt, if any, should be resolved in favor of the motion to set aside the [default] so that cases may be decided on their merits.” Schwab v. Bullock's Inc., 508 F.2d 353, 355 (9th Cir.1974) (quoting 7 J. Moore, Moore's Federal Practice ¶ 60.19, at 232-33) (internal quotations omitted).

         A judgment does not bind a person who has not been made a party by service of process to that litigation. Yniguez v. Arizona, 939 F.2d 727, 735 (9th Cir.1991) (citing Hansberry v. Lee, 311 U.S. 32, 40 (1940)). A default judgment is, therefore, void where a defendant is not properly served. Mason v. Genisco Tech. Corp., 960 F.2d 849, 851 (9th Cir. 1992). Further, if a default judgment would be rendered void for a lack of service, then a lack of service surely meets the lower standard of ‘good cause' required to set aside an order of default. See I & U Inc. v. Publishers Sols. Int'l, No. CV130018GAFAJWX, 2014 WL 12665733, at *4 (C.D. Cal. Apr. 21, 2014) (“[I]f a default judgment would be rendered void, a mere entry of default must surely be ...


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