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This weeks case update:


 

Foster v. C4B, LLC, (Myers), Service, Summons
Case no. 17-00050

Civil Rule 4(m), incorporated by Rule 7004(a)(1), provides: 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. But if the plaintiff shows good cause for the failure, the court must extend the time for service for an appropriate period. The application of Rule 4(m) requires a two-step analysis. “First, upon a showing of good cause for the defective service, the court must extend the time period. Second, if there is no good cause, the court has the discretion to dismiss without prejudice or to extend the time period.”

Trustee argues that good cause exists for his failure to properly serve C4B in this adversary proceeding because the complaint and summons were mailed to C4B’s address as listed with the Nevada Secretary of State. However, Trustee’s showing of good cause did not identify and address Trustee’s apparent error in mailing the summons and complaint to a wrongly named entity, CB4, LLC, which makes C4B’s actual knowledge of these proceedings suspect. Trustee concedes he failed to comply with Rule 7004(b)(3) and, as apparent in his own submissions, Trustee had access to the names and addresses of two individuals and one commercial agent who would likely have sufficed for the purpose of complying with Rule 7004(b)(3). But Trustee does not address why service on those individuals failed to occur. While the complaint and summons were mailed to the correct address (though identifying the wrong entity), such mailing does not equate to adequate service or require an inference of actual knowledge or notice. Thus, Trustee’s explanation is inadequate to show actual notice or excusable neglect. Service to the correct address does not excuse Trustee’s deficiencies nor amount here to good cause.

In this case, the applicable statute of limitations has run as more than two years have passed since Debtor filed its petition, and Trustee conceded as much. Doc. No. 16 at 3.4 However, a bar to refiling is not the only factor for the Court to consider. Over four years have expired from the date of the petition, and two years have expired since the time of the filing of this adversary. This delay is excessive. As discussed, there is no evidence that C4B had actual knowledge of the pending adversary. There is also no evidence that the failure to properly serve C4B was the result of C4B’s actions. The record demonstrates Trustee waited nearly two years to bring an adversary proceeding, failed to properly identify the defendant in addressing service of the summons and complaint, and failed to serve the summons to a readily determinable agent or officer of C4B. Given the delay and the lack of justification for these failures, and in the exercise of its discretion, the Court concludes that the deadline for service should not be extended under Civil Rule 4(m).

Foster v. C4B, LLC, November 8, 2019, David B. Cotner for Foster

2019 Mont. B.R. 358 (November 8, 2019)

Foster v. Lex Group Funding LLC, (Myers) Service, Summons
Case no. 17-00041

Civil Rule 4(m), incorporated by Rule 7004(a)(1), provides: 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. But if the plaintiff shows good cause for the failure, the court must extend the time for service for an appropriate period. The application of Rule 4(m) requires a two-step analysis. “First, upon a showing of good cause for the defective service, the court must extend the time period. Second, if there is no good cause, the court has the discretion to dismiss without prejudice or to extend the time period.”

Trustee argues that good cause exists for his failure to properly serve Lex in this adversary proceeding because the complaint and summons were delivered to the “correct” address as listed on the New York Secretary of State’s website as well as on the “contracts between Lex and . . . Shoot the Moon.”However, this Court’s October 11 Order raised concerns over the Court’s own mail being returned as undeliverable at the address of record for Lex, which Trustee identifies as the “correct” address. And in light of the Court’s returned mail, and the complete lack of participation by the defendant, the Court cannot conclude, without more, that Lex had actual knowledge of this proceeding.

Trustee argues in the alternative that the Court has discretion to extend time to properly serve Lex. In this case, the applicable statute of limitations has run as more than two years have passed since Debtor filed its petition, and Trustee conceded as much. However, a bar to refiling is not the only factor for the Court to consider. Over four years have expired from the date of the petition, and two years have expired since the time of the filing of this adversary. This delay is excessive. As discussed, there is no evidence that Lex had actual knowledge of the pending adversary. There is also no evidence that the failure to properly serve Lex was the result of Lex’s actions. The record demonstrates that Trustee waited nearly two years from the bankruptcy filing to bring an adversary proceeding, failed to properly address service to an officer or agent of Lex, failed to demonstrate that Lex received service after it became apparent that the address was undeliverable, and failed to adequately justify the delay in addressing the issue. Therefore, in the exercise of its discretion, the Court concludes the deadline for service should not be extended under Civil Rule 4(m).

Foster v. Lex Group Funding LLC, November 8. 2019, David B Cotner for Foster

2019 Mont. B.R. 352 (November 8, 2019)



 

 

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