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Linwood Trading Ltd. v. American M Recycling Services

United States District Court, D. New Jersey

June 18, 2015

LINWOOD TRADING LTD. d/b/a TMG METAL, Plaintiff,
v.
AMERICAN M RECYCLING SERVICES, et al., Defendants.

MEMORANDUM OPINION

JAMES B. CLARK, III, Magistrate Judge.

This matter having been opened to the Court by Defendant American M Recycling Services' ("AMRS") motion to set aside the entry of default, dismiss the complaint or, in the alternative, transfer venue to the Central District of California [Docket Entry No. 7]; and Plaintiff Linwood Trading LTD d/b/a TMG M ("TMG") having opposed AMRS's motion [Docket Entry No. 10]; and the Court having considered the arguments submitted in support of, and in opposition to, AMRS's motion; and for the reasons that follow, AMRS' request to set aside the entry of default is GRANTED and AMRS's motions to dismiss the complaint and transfer venue are DENIED without prejudice as premature.

I. BACKGROUND

Plaintiff TMG filed this breach of contract action on September 17, 2014 against Defendants AMRS, Howard and Tamara Misle, and Chad Mueller in connection with contracts for the shipment of scrap metal. See generally Compl.; Docket Entry No. 1. On December 18, 2014, TMG requested default against AMRS based on service of the summons and complaint dated October 6, 2014, and default was entered by the Clerk's Office on February 20, 2015. On March 11, 2015, TMG filed a letter addressed to the Clerk of Court which requested that the original entry of default be vacated, and that a second request for default, based on a second service to AMRS dated February 9, 2015, be entered. See Docket Entry No. 6.[1] AMRS filed the instant motion the next day, March 12, 2015, requesting that the Court set aside the entry of default, dismiss the complaint, and/or transfer venue to the Central District of California.

II. LEGAL STANDARD

A. Setting Aside Default under Fed.R.Civ.P. 55

Fed.R.Civ.P. 55(c) provides that for good cause shown, the Court may set aside an entry of default. The entry of default is disfavored in the Third Circuit, and all doubt should be resolved in favor of setting aside the default. See Lorenzo v. Griffith, 12 F.3d 23, 27 n.4 (3d Cir. 1993); U.S. v. $55, 518.05 in U.S. Currency, 728 F.2d 192, 194 (3d Cir. 1984). The Court should weigh the following factors in considering a motion to set aside default: "(1) whether the plaintiff will be prejudiced; (2) whether the defendant has a meritorious defense; and (3) whether the default was the result of the defendant's culpable conduct, " Miles v. Aramark Correctional Serv. at Curran Fromhold Correctional Facility, 236 F.Appx. 746, 751 (3d Cir. 2007) (quoting Gold Kist, Inc. v. Laurinburg Oil Co., 756 F.2d 14, 19 (3d Cir. 1985)). However the Gold Kist factors need not be analyzed and, the "entry of default... can be set aside if it was not properly entered at the outset, including circumstances where proper service of the complaint is lacking." Taylor v. Gilliam, 2013 U.S. Dist. LEXIS 170798 *20-21 (D.N.J. Dec. 4, 2014).

B. Dismissal under Fed.R.Civ.P. 12(b)(5)

Federal Rule of Civil Procedure 12(b)(5) permits a court to dismiss a case for "insufficiency of service of process." Fed.R.Civ.P. 12(b)(5). "The party asserting the validity of service bears the burden of proof on that issue." Grand Entm't Group v. Star Media Sales, 988 F.2d 476, 488 (3d Cir. 1993). District courts possess "broad discretion" when evaluating a motion to dismiss for insufficient service of process. See Umbenhauer v. Woog, 969 F.2d 25, 30 (3d Cir. 1992). "Where a plaintiff acts in good faith, but fails to effect proper service of process, courts are reluctant to dismiss an action." Ramada Worldwide Inc. v. Shriji Krupa, LLC, Civ. No. 07-2726, 2013 U.S. Dist. LEXIS 65655, at *17 (D.N.J. Apr. 17, 2013). "Rather, courts will elect to quash service and grant plaintiff additional time to properly serve the defendant." Id.

III. DISCUSSION

A. Setting Aside Default

AMRS argues that the entry of default is void because of improper service on October 6, 2014 and that the complaint must therefore be dismissed pursuant to Fed.R.Civ.P. 12(b)(5). Specifically, AMRS claims that service was improper because TMG merely alleged that it "served an authorized agent' referred to as Jane Doe' and offering some sort of physical description of the alleged agent." AMRS Brief in Support at 4; Docket Entry No. 7-1. In this regard, AMRS submits that TMG failed to make a showing that service was proper on October 6, 2014. In addition, AMRS argues that it satisfies the applicable factors to show good cause for setting aside the entry of default.

TMG has opposed AMRS's request to set aside default, arguing that service of process was properly effected on October 6, 2014, and in the alternative, even if the October 6, 2014 service was improper, that AMRS was properly served again on February 9, 2015. TMG Brief in Opposition at 1; Docket Entry No. 10-2. TMG argues that the Affidavit of Service which states that service was made upon an authorized Jane Doe[2] agent, and including a physical description of the agent, was proper under the rules. Id. at 3. Moreover, TMG submits that even if the October 6th service is deemed to be improper, proper service was nonetheless effectuated on February 9th, when TMG served process upon Meghan Konecne, a sales manager at AMRS.[3] Id. at 4. In addition, TMG claims that communications between it and counsel for AMRS in January and February 2015 show that AMRS was aware of the litigation. Therefore, TMG claims that AMRS has failed to satisfy the good cause standard to vacate default since TMG will be prejudiced, AMRS is culpable for the entry of default, and AMRS has not shown that it has a meritorious defense by failing to submit a proposed answer to the Court. Id. at 11. As such, TMG maintains that AMRS should remain in default and that the complaint should not be dismissed.

In AMRS' reply it argues the October 6th service of process was improper because it was not served upon a recognized agent of AMRS and that the February 9th service of process was likewise improper, as Meghan Konecne is not an agent authorized to accept service on AMRS' behalf. AMRS Brief in Reply at 3; Docket Entry No. 12-1. AMRS states that she is a sales manager, and as such, does not fall ...


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