Summary
holding that the defendant's claim of insufficient process under 12(b) failed because the summons and complaint were in their proper form and satisfied the requirements of Rule 4
Summary of this case from MORALES v. NYS DEPT. OF LABOR DIV. OF EMPLOYEE SERVOpinion
03 Civ. 2906 (SAS).
July 16, 2003.
Louis Modugno, Esq., McElroy, Deutsch Mulvaney, LLP, Morristown, NJ, Attorney for Plaintiff.
John E. Shavers, Attorney for Defendant (Pro Se).
OPINION AND ORDER
United States Fire Insurance Company ("U.S. Fire") brought this action against John E. Shavers, Jesco Construction Corporation ("Jesco"), Jesco Construction Corporation of Mississippi ("Jesco of Mississippi"), Emerald Corporation ("Emerald"), James M. Stockstill and Phyllis M. Stockstill seeking exoneration, indemnification, subrogation and quia timet. Shavers now moves, pro se, to dismiss the suit for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(2), insufficient process pursuant to Rule 12(b)(4), insufficient service of process pursuant to Rule 12(b)(5), and prematurity under Rule 62(a). Shavers also moves to quash service and for sanctions pursuant to Rule 11. For the reasons stated below, all of Shavers' motions are denied.
Shavers filed two motions raising nearly identical issues. He filed the first motion on May 23, 2003, on his own behalf.See Shavers' 5/23/03 Motion to Dismiss ("5/23/03 Motion to Dismiss"). His second motion, filed on June 3, 2003, was brought on behalf of himself, Jesco Construction Corporation of Mississippi and Emerald Corporation. See Shavers' 6/3/03 Motion to Dismiss ("6/3/03 Motion to Dismiss"). However, corporations require representation of counsel and cannot appear pro se. See Rowland v. California Men's Colony, Unit II Men's Advisory Council, 506 U.S. 194, 202-03 (1993). This Court has repeatedly advised Shavers of this requirement. See 6/3/03 Preliminary Injunction Order ("PI Order") at 3-4. Therefore, I will only consider Shavers' motions to dismiss on his own behalf.
I. BACKGROUND
A. Facts
Jesco, Jesco of Mississippi and Emerald are construction contractors, all of which are owned or controlled by Shavers. Complaint ("Compl.") ¶ 13. James and Phyllis Stockstill, respectively, are President and Secretary of Jesco of Mississippi. See 8/8/00 General Agreement of Indemnity ("Agreement"), Ex. A to Compl., at 12.
On August 8, 2000, Shavers, Jesco, Jesco of Mississippi, James M. Stockstill, Phyllis M. Stockstill and Shavers-Whittle Construction (collectively "indemnitors") signed a General Agreement of Indemnity with U.S. Fire. See Agreement. On September 26, 2001, Emerald Corporation was added as a party to the Agreement. See 9/26/01 Indemnity Rider, Ex. B to Compl. Under the Agreement, the indemnitors are to indemnify U.S. Fire against any liability incurred from having executed any bonds on their behalf. See Agreement 1 2.
Shavers-Whittle Construction is not a defendant in this action.
Over the course of 2001 and 2002, U.S. Fire issued a number of bonds for construction projects on behalf of Jesco. Compl. ¶ 35. Jesco subsequently failed to pay its subcontractors and labor and material suppliers on various projects for which U.S. Fire had issued bonds. See id. ¶¶ 20, 27, 29, 31. As a result, U.S. Fire was required to pay claims under those bonds. See id. To date, U.S. Fire has paid over one million dollars in claims resulting from Jesco's failure to pay its subcontractors and suppliers. See id. ¶ 35. Claims against U.S. Fire in an amount exceeding three million dollars are still pending. See id. ¶ 37.
B. Procedural History
U.S. Fire filed this action on April 25, 2003, for indemnification and breach of contract. See id. ¶¶ 68, 72. U.S. Fire also claimed that Shavers misrepresented his financial condition and transferred assets in an attempt to avoid his indemnity obligations to U.S. Fire. See id. ¶ 61. In order to prevent the defendants from transferring any more assets, U.S. Fire sought a temporary restraining order ("TRO") and preliminary injunctive relief, enjoining defendants from transferring assets. See id. ¶ 64. The TRO was issued against Shavers, Jesco, Jesco of Mississippi and Emerald on April 25, 2003. See Order to Show Cause for Preliminary Injunction and TRO. The TRO was amended on May 2, 2003, to enjoin only Shavers and Jesco, pending a preliminary injunction hearing. See 5/2/03 Transcript of TRO Conference at 24. On May 13, 2003, Shavers filed an appeal of the May 2 Amended TRO.See PI Order at 3. On May 23, 2003, the TRO was amended a second time to allow Shavers to access funds to support his minor daughter and retain an attorney for the defendant corporations. See id. On June 2, 2003, Shavers filed an appeal of the May 23 Amended TRO. See id. Both Shavers and Jesco failed to appear for the preliminary injunction hearing that had been scheduled that day. See id. at 4-5. On June 3, 2003, this Court rendered a default judgment, withdrawing the May 23 Amended TRO and preliminarily enjoining Shavers and Jesco in accordance with the terms set forth in the May 23 Amended TRO. See id. at 5. Shavers filed an appeal of the PI Order on July 2, 2003. Shavers now brings motions to dismiss.
The appeals of the PI Order and Amended TROs are pending. Because Shavers' interlocutory appeals involve only the TROs and PI Order and are unrelated to the merits of U.S. Fire's claims, this Court retains jurisdiction over this proceeding and may decide Shavers' motions to dismiss. See Webb v. GAF Corp., 78 F.3d 53, 55 (2d Cir. 1996) (citing New York State Nat'l Org. For Women v. Terry, 886 F.2d 1339, 1350 (2d Cir. 1989)).
II. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
A. Legal Standard
To survive a motion to dismiss for lack of personal jurisdiction, the plaintiff need only make a prima facie showing of jurisdiction. See A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79 (2d Cir. 1993). Where the issue is addressed by affidavits prior to the completion of discovery, a plaintiff may defeat a motion to dismiss based on legally sufficient allegations of jurisdiction. See Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir. 1998). All allegations are construed in the light most favorable to the plaintiff and all doubts are resolved in his favor, "notwithstanding a controverting presentation by the moving party." A.I. Trade Fin., 989 F.2d at 79-80.
It is well established under federal law that parties may contract to consent to a particular court's jurisdiction. See National Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 316 (1964); Falconwood Fin. Corp. v. Griffin, 838 F. Supp. 836, 838-39 (S.D.N.Y. 1993). Thus, when parties agree to submit to the jurisdiction of a particular forum through a contractual forum selection clause, their selection will be enforced without the need to engage in the traditional personal jurisdiction analysis. See Days Inn of America, Inc. v. L.A., Inc., No. 97 Civ. 5476, 1998 WL 765182, at *2 (S.D.N.Y. Nov. 3, 1998) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n. 14 (1985)); National Sch. Reporting Servs., 924 F. Supp. at 23. New York law also recognizes that contractual forum selection clauses are presumptively valid and enforceable absent compelling reason. See Brooke Group Ltd. v. JCH Syndicate 488, 87 N.Y.2d 530, 534 (1996) (citing Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972)). Therefore, if this Court finds that the forum selection clause is enforceable, it may exercise personal jurisdiction over Shavers.
Personal jurisdiction is governed by the laws of the forum state. See National Sch. Reporting Servs., Inc. v. National Schs. of Cal., Ltd., 924 F. Supp. 21, 23 (S.D.N.Y. 1996). In a traditional jurisdictional analysis, this Court would look to New York Civil Practice Law and Rules §§ 301 and 302 for the bases of jurisdiction and determine whether the exercise of that jurisdiction satisfies the requirements of due process. See Bank Brussels Lambert v. Fiddler Gonzalez Rodriquez, 171 F.3d 779, 784 (2d Cir. 1999).
A court may find a forum selection clause enforceable unless it finds that enforcement "'would be unreasonable and unjust, or that the clause [i]s invalid for such reasons as fraud or overreaching.'" Jones v. Weibrecht, 901 F.2d 17, 18 (2d Cir. 1990). Similarly, under New York law, a court may hold a forum selection clause unenforceable if the clause is shown by the challenging party to be "in contravention of public policy, or [that] a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court." Premium Risk Group, Inc. v. Legion Ins. Co., 741 N.Y.S.2d 563, 564 (2d Dep't 2002) (citing Brooke Group, 87 N.Y.2d at 534.)
B. Shavers Consented to Jurisdiction in New York
Shavers' objections to this Court's exercise of personal jurisdiction are unavailing. His primary argument is that he has only appeared in court by telephone, and such appearances do not permit a court to exercise personal jurisdiction over a defendant. See 5/23/03 Motion to Dismiss at 1-2. However, Shavers does not address U.S. Fire's argument that he had consented to jurisdiction in New York by virtue of a forum selection clause in the parties' Agreement, executed by Shavers on August 8, 2000. See Plaintiff's Memorandum in Opposition to Motion to Dismiss at 4-6. The Agreement provides, in pertinent part:
This Instrument shall be governed by, construed and enforced in accordance with the laws of the State of New York . . . The Indemnitors hereby agree and consent to the jurisdiction of the courts of the State of New York and agree that any disputes arising between the Indemnitors and the Surety shall be litigated in the Supreme Court of the State of New York or in the Southern District Of [sic] New York of the United States District Court, unless the Surety elects or consents in writing to litigate elsewhere.
Agreement ¶ 31. Shavers does not dispute the validity of the Agreement or the forum selection clause. Absent any showing that the Agreement or the forum selection clause was a result of fraud or overreaching, and that enforcement of the clause would be unreasonable, unjust, against public policy, or make trial so difficult for Shavers as to deprive him of his day in court, the forum selection clause is enforceable. Because Shavers has failed to make the required showing, the forum selection clause is enforceable and permits the exercise of this Court's jurisdiction.
III. MOTION TO DISMISS FOR INSUFFICIENT PROCESS AND INSUFFICIENT SERVICE OF PROCESS AND MOTION TO QUASH SERVICE
A. Legal Standard
Rule 4(e)(2) governs service upon individuals within the United States and provides, in pertinent part, that "[s]ervice upon an individual . . . may be effected . . . by delivering a copy of the summons and of the complaint to the individual personally." Fed.R.Civ.P. 4(e)(2). The service of the summons and complaint must be made upon a defendant within 120 days of filing the complaint. See Fed.R.Civ.P. 4(m). The primary purpose of service of process is to give a defendant legal notice of the claims asserted against him so that he may prepare his defense. See Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 350 (1999). Only upon the service of a summons is a party required to appear and defend in an action. See id. If service of process is insufficient, the general rule in this Circuit is that such service is quashed and the action is preserved provided there is a reasonable prospect that plaintiff ultimately will be able to serve the defendant properly. See Montalbano v. Easco Hand Tools, Inc., 766 F.2d 737, 740 (2d Cir. 1985); Three Crown Ltd. P'ship v. Caxton Corp., 817 F. Supp. 1033, 1050 (S.D.N.Y. 1993).
At the time Shavers filed his first motion to dismiss he had not yet been formally served with the summons and complaint. Shavers was personally served on June 2, 2003, by Wayne Centanni, a private investigator and process server.See 6/13/03 Letter Brief to the Court from Louis Modugno ("Modugno Ltr.") at 1. The summons and verified complaint were served well within the 120 day period following the filing of the complaint on April 25, 2003. See id. Shavers does not dispute that the summons and complaint themselves were in their proper form and satisfy the requirements of Rule 4. Therefore, the claim of insufficient process under Rule 12(b)(4) fails.
U.S. Fire mailed a letter with a copy of the complaint to Shavers via overnight delivery on April 24, 2003. See 4/24/03 Letter of Notice to Defendants from Louis Modugno, attorney for plaintiff, Ex. A to 6/9/03 Affidavit of Louis Modugno ("6/9/03 Modugno Aff."). Shavers appears to have received the letter and thus been on actual notice. See 4/25/03 Letter from Shavers to Modugno, Ex. C to 6/9/03 Modugno Aff. However, such service of process is defective under Rule 4(e)(2). See Fed.R.Civ.P. 4(e) (2) ("[S]ervice upon an individual . . . may be effected . . . by delivering a copy of the summons and of the complaint to the individual personally.").
Shavers concedes that he was personally served by Centanni on June 2, 2003. See 6/3/03 Motion to Dismiss at 2-3. Shavers argues, however, that process was served by various acts of misdemeanor criminal conduct, and as such, the service of process is insufficient under Rule 12(b)(5). See id. Shavers claims that Centanni pursued him in a high speed chase in an unmarked car, flashing headlights, waving what appeared to be a badge and a gun, after which Shavers called the police who set up a roadblock at a nearby shopping center where the pursuit ended. See id. When Shavers rolled down his window at the police officer's request, Centanni, who was standing by Shavers' vehicle, threw a set of file folders into the open window, hitting Shavers on his left side. See id. Shavers claims that Centanni's conduct constitutes criminal battery, reckless endangerment, reckless driving and impersonation of an officer, all misdemeanors in violation of Mississippi law that warrant the quashing of service or a finding of insufficient service of process. See id. at 4.
Although Centanni's service of process upon Shavers may have constituted an act of battery or another misdemeanor, this does not affect the sufficiency of service of process. When service is made by personal delivery, "only fraud in enticing the defendant into the jurisdiction, immunity from suit on some policy ground, or some prejudicial error in the papers" are grounds for invalidating the service of process. See 4A Charles Alan Wright Arthur R. Miller, Federal Practice Procedure § 1095 (3d ed. 2002). None of these exceptions apply. In any event, whether Centanni's service of process constituted an act of battery is not before this Court. The service of process itself was sufficient: Shavers was personally served within 120 days of the filing of the complaint. Proof of service has been provided via Centanni's videotape recording of the pursuit and by the return of service. See Video Footage of Personal Service on Shavers, Ex. E to 6/12/03 Affidavit of Louis Modugno ("6/12/03 Modugno Aff."); 6/4/03 Return of Service, Ex. A to 6/12/03 Modugno Aff. Because the service of process was sufficient, there is no need to consider the motion to quash service. Shavers' motions to dismiss for insufficient process and insufficient service of process, and his motion to quash service are denied.
Shavers appears to have filed a criminal action, docket number 303-2237, against Centanni in Mississippi. See 6/3/03 Motion to Dismiss at 4.
IV. MOTION TO DISMISS FOR PREMATURITY IN LIGHT OF RULE 62(A)
Rule 62(a) provides that "no execution shall issue upon a judgment nor shall proceedings be taken for its enforcement until the expiration of ten days after its entry." Fed.R.Civ.P. 62(a). Thus, Rule 62(a) automatically postpones the enforcement of a court's judgment for ten days from the date of entry.
Shavers argues that U.S. Fire prematurely filed this action on April 25, 2003, by not observing the Rule 62(a) automatic ten day stay after the Honorable Jerry Brown of the United States Bankruptcy Court of the Eastern District of Louisiana rendered a judgment against Shavers on April 22, 2003. See 5/23/03 Motion to Dismiss at 5-6. The judgment was an order of dismissal with prejudice of Shavers' voluntary bankruptcy petition. See Modugno Ltr. at 3. In response, U.S. Fire asserts that Rule 62(a) is irrelevant because it only applies to parties that seek execution or enforcement of a past judgment. See id.
The language of Rule 62(a) is clear: the automatic ten day stay applies only to the execution or enforcement of a judgment. U.S. Fire is not seeking execution or enforcement of Judge Brown's judgment on Shavers' bankruptcy petition and instead is pursuing a wholly separate action. Therefore, Shavers' Rule 62(a) claim fails.
V. RULE 11 SANCTIONS
Rule 11(b) requires that, to one's best knowledge, information and belief, formed after an inquiry reasonable under the circumstances, all oral and written representations to the court must be warranted by existing law or by nonfrivolous argument for a change in existing law, be likely to have evidentiary support, and not be presented for improper purpose such as harassment. See Fed.R.Civ.P. 11(b). Rule 11(c) permits a court to impose sanctions upon attorneys, law firms or parties that violate subdivision (b) or are responsible for a violation of subdivision (b). See Fed.R.Civ.P. 11(c).
Shavers requests this Court to consider imposing sanctions upon Centanni, the private investigator and process server hired by U.S. Fire, for his conduct during the service of process.See 6/3/03 Motion to Dismiss at 4. However, this Court cannot impose sanctions upon a person who never appeared as an attorney or party to this case. Any redress that Shavers seeks against Centanni may be had in the criminal action already filed in Mississippi. The motion for Rule 11 sanctions is denied.
III. CONCLUSION
For the reasons discussed above, Shavers' motions to dismiss are denied. The Clerk is ordered to close this motion.
SO ORDERED: