Opinion
No. SA-03-CV-417-RF.
November 17, 2004
ORDER GRANTING DEFENDANT'S MOTION TO VACATE DEFAULT JUDGMENT AND GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS
BEFORE THE COURT is Defendant's Motion to Vacate Default Judgment and to Dismiss, filed on November 5, 2004, as well as Plaintiff's Response and Defendant's Reply. After due consideration, the Court is of the opinion that Defendant's Motion to Vacate the Default Judgment (Docket No. 76) should be GRANTED. However, because there is a question as to Plaintiff's efforts to serve the Defendant, Defendant's Motion to Dismiss (Docket No. 76) should be DENIED IN PART. Since Plaintiff has stipulated to dismissal of two of its claims, the Court will GRANT IN PART Defendant's Motion to Dismiss (Docket No. 76) as to these claims.
FACTUAL AND PROCEDURAL BACKGROUND
This case involves the alleged unauthorized reception by Defendant Steve Chan of satellite television programming signals broadcast by Plaintiff DirecTV. DirecTV is a California-based company in the business of distributing satellite television broadcasts throughout the United States. DirecTV relays signals from within the United States to satellites in space, which send the signals back to earth, where they are received by outdoor antennae. The returning satellite signals carrying Plaintiff's television broadcasts are encrypted and are intended to be decrypted only by additional reception equipment which DirecTV provides or sells to its subscribing customers.
In its complaint, DirecTV contends that Defendant purchased devices that allowed him to receive DirecTV's signals without subscribing to DirecTV's service. DirecTV alleges that Chan wrongfully possessed and used equipment allowing him to decrypt and receive DirecTV's encrypted satellite signals for the purposes of illegally gaining free access to television programming, in violation of federal telecommunications and wiretapping laws and state statutory and common law. Plaintiff brings six claims related to this activity.
On February 25, 2004, a Default Entry by Clerk against Steve Chan was entered in this cause. Plaintiff DirecTV moved for entry of final judgment and the Court set a hearing for August 4, 2004, at which time the Court entered an Order of Final Judgment Default against Chan.
On October 19, 2004, Defendant Chan filed the instant motion, asking the Court to vacate its default judgment and dismiss the claims against him filed by Plaintiff. Chan avers that he was never served with process in the case and had no notice of the lawsuit while it was pending. He claims that he never received process at his residence located at 9349 Dover Ridge, San Antonio, Texas, ("San Antonio address") but understands that process was attempted on Mr. Anthony Williams in Newark, New Jersey ("Newark address"). Chan claims that he has never resided or worked at the Newark address or any other address in New Jersey. Chan argues that the default judgment entered in this cause is void for lack of personal jurisdiction because he was never properly served. As a result, Chan argues that the default judgment must be vacated as a matter of law.
Aff. of Steve Chan.
Id.
Defendant also argues that DirecTV's claims against him should be dismiss because DirecTV did not timely serve him and because DirecTV has failed to exercise due diligence in prosecuting its claims. Chan claims that DirecTV's state law claims are barred by limitations and should be dismissed for failure to exercise due diligence in prosecution. Chan also argues that DirecTV has failed to state a claim under 18 U.S.C. § 2512 and TEX. CIV. PRAC. REM. CODE § 123.001 and moves to dismiss these claims under FED. R. CIV. P. 12(b)(6). In addition, Chan initially argued that Plaintiff has not properly stated a claim for conversion under state law. Plaintiff has since stipulated to dismissal of the state law conversion claim as well as the federal Section 2512 claim, so the Court will not address either of these claims further and will dismiss them accordingly.
Plaintiff DirecTV responds, alleging that it tried to serve Defendant Chan at his San Antonio address six times but was unsuccessful. On the final attempt of service at the San Antonio address, process servers were told that Chan did not reside at the address and was living in California at an unknown address. Further, mail sent to the San Antonio address was returned with the hand-written notation "No Such Person — Return to Sender." Subsequently, DirecTV conducted a "skip trace search" which associated Chan's name, date of birth, and Social Security number with an address in Newark, New Jersey. DirecTV argues that its process server left the summons at the New Jersey address and that as a result, service was proper under Rule 4(e)(2). DirecTV also argues that, even if service was not proper under Rule 4(e)(2), good cause exists for an extension of time pursuant to Rule 4(m). Based upon its efforts to serve Mr. Chan, DirecTV argues that the case should not be dismissed for want of prosecution.
Aff. of Due Diligence of Robert C. Hill.
Aff. of Valerie Castberg.
Plf.'s Resp. at 2; Ex. A to Ray Aff.
FED. R. CIV. P. 4(m) ("if the plaintiff shows good cause for the failure, the court shall extend the time for service for an appropriate period.")
DISCUSSION
I. Motion to Vacate Default Judgment
Valid service of process is a prerequisite to a court's assertion of personal jurisdiction over a defendant. A judgment obtained by way of defective service is void for lack of personal jurisdiction and must be set aside as a matter of law. Under Rule 60(b)(4), a district court must set such a judgment aside, regardless of whether the movant has a meritorious defense. Moreover, there is generally no timeliness requirement applicable to a motion under Rule 60(b)(4).
See Omni Capital Int'l v. Rudolf Wolff Co., Ltd., 484 U.S. 97, 103 (1987).
Miner v. Punch, 838 F.2d 1407, 1410 (5th Cir. 1988); Auster Oil Gas, Inc. v. Stream, 891 F.2d 570, 581 (5th Cir. 1990).
Bludworth Bond Shipyard, Inc. v. M/V Caribbean Wind, 841 F.2d 646, 649 (5th Cir. 1988) (citing Broadcast Music, Inc. v. M.T.S. Enterprises, 811 F.2d 278, 280 (5th Cir. 1987)).
Id. See also 11 CHARLES WRIGHT ARTHUR MILLER, FEDERAL PRACTICE PROCEDURE § 2862 at 197 (1973).
Defendant Chan claims that he was never validly served with process and that the default judgment is void for lack of personal jurisdiction. DirecTV argues that it properly served Chan with process under Rule 4(e) by leaving a copy of the summons with Mr. Anthony Williams at the Newark, New Jersey address that it had located using a skip trace search. Further, DirecTV alleges that it only did so after attempting to serve Chan personally at his San Antonio residence on six occasions. On the final attempt, DirecTV alleges that an individual identifying himself as Mr. Chan's brother informed the process server that Chan did not live at that address and that he was not sure where Chan lived.
Plf.'s Resp. at 2, para. 3; Hill Aff.
Based on these facts, DirecTV argues that its service upon Chan was proper, since Rule 4(3)(2) requires service be made only at a "dwelling house or usual place of abode," not at the Defendant's place of residence or employment. Further, DirecTV argues, service may be at a place of only transient and impermanent dwelling, and that service at the New Jersey address was sufficient. DirecTV also suggests that, absent a clear denial from Chan that he ever occupied the Newark address on even a temporary basis, DirecTV is entitled to an evidentiary presumption that service on Chan was proper under Rule 4(e)(2).
See DeFrancis v. Bush, 859 F.Supp. 1022, 1023 (E.D. Tex. 1994).
In the alternative, DirecTV argues that if service of process is deemed insufficient, good cause exists for an extension of time under Rule 4(m) and requests such an extension. In particular, DirecTV argues that if Chan actually resided at the San Antonio address as he claims, then its attached affidavits illustrate that Chan was evading service. Further, DirecTV argues, evasion of service constitutes good cause for an extension of time to perfect service as permitted by Rule 4(m).
Chan disputes DirecTV's allegations, swearing in an affidavit that he was never served at his San Antonio residence and has never been to the Newark address. Further, Chan avers that he never received the summons that DirecTV alleges was mailed to his San Antonio address and that he never refused mail sent to his address related to this matter. Further, Chan states that he did not direct his brother to tell a process server that he did not reside at the San Antonio address or to return summons addressed to him "No Such Person — Return to Sender."
Supplemental Aff. of Chan, para. 8.
Id.
Based on Chan's affidavits, uncontroverted in material part, the Court finds that Plaintiff DirecTV never properly served Chan in this matter. While there is certainly a lack of information as to the cause of this failure, the record is clear that Chan was not properly served under Rule 4. As a result, the Court never obtained the requisite personal jurisdiction over Chan for entry of judgment against him in this cause. Thus, the default judgment entered against Chan is void and must be set aside as a matter of law. Under Rule 60(b)(4), this Court must set aside the judgment against Chan, regardless of whether DirecTV has a defense, meritorious or otherwise, to the failure of process described above. Thus, the Court has no choice but to set aside and vacate the default judgment entered in this matter on August 4, 2004 for lack of jurisdiction over Defendant Chan.
Omni Capital, 484 U.S. at 103.
Auster Oil Gas, 891 F.2d at 581.
Bludworth Bond Shipyard, 841 F.2d at 649; Broadcast Music, 811 F.2d at 280.
II. Motion to Dismiss
A. Dismissal for Failure of Service of Process
Rule 4(m) provides that:
If a service of summons and complaint is not made upon defendant within 120 days after the filing of the complaint, the court upon motion or on its own initiative after notice to the plaintiff, shall dismiss the action without prejudice as to that defendant or direct that service be effected within a specific time; provided that if the plaintiff shows good cause for the failure, the court shall extend the time for service for an appropriate period.
FED. R. CIV. P. 4(m)(1993) (emphasis added).
Courts have the inherent power to exercise sound discretion and dismiss for want of prosecution. However, courts must extend the time for service of process under Rule 4(m) if plaintiff shows good cause for its failure. Thus, the district court must first determine whether good cause exists for failure of service of process.
See Link v. Wabash R.R., 370 U.S. 626 (1962) (inherent power vested in courts to manage their own affairs so as to achieve orderly and efficient disposition of cases).
Thompson v. Brown, 91 F.3d 20, 21 (5th Cir. 1996).
Id. See also Petrucelli v. Bohringer Ratzinger, 46 F.3d 1298, 1305-06 (3d Cir. 1995).
1. Good Cause for Failure of Service
Case law decisions construing Rule 4(m)'s good cause exception are many and do not afford precise guidance about a situation like the one before this Court. However, the cases generally provide that where the plaintiff makes several diligent attempts to serve defendants, its ultimate failure to do so effectively does not preclude a finding of good cause.
See generally Gordon v. Hunt, 116 F.R.D. 313, 320 (S.D.N.Y.), aff'd 835 F.2d 452 (2d Cir. 1987), cert. denied 486 U.S. 1008 (1988); 4B CHARLES ALAN WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE PROCEDURE § 1137, at 342 et seq (2002).
116 F.R.D. at 320; Resolution Trust Corp. v. Starkey, 41 F.3d 1018, 1022 (5th Cir. 1995) ("In short, one is required to be diligent in serving process, as well as pure of heart, before good cause will be found.").
As Defendant argues, nearly eighteen months have passed since the lawsuit was filed. However, there is a real question about why Plaintiff's efforts to effect appropriate process in this matter failed. The Hill Affidavit clearly shows five visits to Chan's residence during June 2003 at which Plaintiff's process server attempted to effect process. On the sixth visit, in July 2003, the server was informed by an individual identifying himself as the Defendant's brother that the Defendant did not reside at the San Antonio address and was living in California. At that point, Plaintiff conducted the skip trace search which provided it with the Newark address that Plaintiff subsequently used for service. Having done so, Plaintiff believed that it had affected proper service on Chan and made no further attempts to serve Chan with process.
DirectTV argues that if Chan's affidavit testimony is taken as true and he did in fact reside at the San Antonio address in June and July 2003, then he must have been evading service. Whether these allegations of evasion are accurate or not, the Court finds that good cause existed for DirecTV's failure to serve Chan properly within the 120-day window provided in Rule 4(m).
2. Extension of Time for Service
DirecTV still has not properly served Chan and requests that it be given additional time in which to do so. Under Rule 4(m), "[i]f good cause is present, the district court must extend time for service." Since the Court has determined that, given DirecTV's repeated attempts at service and confusion regarding Chan's residence, good cause for an extension has been shown. As a result, the Court will order that DirecTV be given additional time in which to perfect service upon Chan.
Plf.'s Resp. at paras. 6-10.
Thompson, 91 F.3d at 21.
B. Dismissal For Want of Prosecution
Defendant Chan moves to dismiss arguing that DirecTV's state law claims, included in its complaint as Counts Five and Six, are barred by the applicable statute of limitations. The Court has noted that DirecTV has stipulated to dismissal of Count Five, so it will focus only on Count Six. Count Six is DirecTV's cause of action under the Texas wiretap statute, which is subject to the two-year Texas statute of limitations set forth under TEX. CIV. PRACE. REM. CODE § 16.003. This statute of limitations applies even though the case was brought in federal court. In order to "bring suit" on a state law claim within the two-year period, the plaintiff must file within the period and exercise due diligence in serving the defendant with process. Chan claims without support that DirecTV failed to exercise due diligence when it attempted to serve him at the Newark address.
Collins v. Collins, 904 S.W.2d 792 (Tex.App.-Houston [1st Dist.] 1995 writ denied) (holding that the Texas wiretap statute is subject to two-year statute of limitations).
See Gonzales v. Wyatt, 157 F.3d 1016, 1021 n. 1 (5th Cir. 1988).
See Gant v. DeLeon, 786 S.W.2d 259, 260 (Tex. 1990) ( per curiam).
The Court cannot agree with Defendant Chan. DirecTV was diligent in attempting to serve Chan. Indeed, the evidence already described illustrates that DirecTV was attempting to vigorously prosecute its case, but that its attempts were being frustrated by confusion regarding Chan's place of residence. Whether this confusion was brought about by affirmative acts of Defendant Chan or not, DirecTV's failure at serving him does not reflect a lack of due diligence in its prosecution of the case. Under Texas law, if the plaintiff files suit timely but fails, despite the exercise of due diligence, to perfect service within the applicable limitations period, then the date of service will relate back to the filing date. As a result, the Court will deny Chan's motion to dismiss DirecTV's Count Six as barred by the Texas statute of limitations.
Id.; Eichel v. Ullah, 831 S.W.2d 42, 43 (Tex.App. — El Paso 1992, no writ).
C. Dismissal of Count Six for Failure to State a Claim
For purposes of a motion to dismiss under Rule 12(b)(6), the complaint must be liberally construed in favor of the plaintiff, and all the facts pleaded in the complaint must be taken as true. Dismissal on this basis is a disfavored means of disposing of a case, and district courts should avoid such dismissals "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." "The question therefore is whether, in the light most favorable to the plaintiff and with every doubt resolved in his behalf, the complaint states any valid claim for relief."
Campbell v. Wells Fargo Bank, N.A., 781 F.2d 440, 442 (5th Cir. 1986).
Kennedy v. Tangipahoa Parish Library Bd. of Control, 224 F.3d 359, 365 (5th Cir. 2000).
Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
Brown v. Nationsbank Corp., 188 F.3d 579, 586 (5th Cir. 1999) (citing 5 CHARLES ALAN WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE PROCEDURE § 1357, at 601 (1969)).
Defendant Chan also argues that Count Six should be dismissed pursuant to Rule 12(b)(6) because it fails to state a claim under the Texas wiretap statute. Chan argues that the statute only applies to communications that are intercepted aurally, not those that require the use of satellite dishes or other similar equipment. Essentially, Chan argues that since satellite signals cannot be heard with the unaided human ear, there can be no liability under Section 123.001 because the signals cannot be "intercepted" for purposes of liability.
See id. at § 123.001(2).
As DirecTV points out, Defendant Chan fails to cite any legal authority for the novel proposition he asserts. Further, this construction is inconsistent with the plain language of the statute, which provides that "'Interception' means the aural acquisition of the contents of a communication through the use of an electronic, mechanical, or other device. . . . The statute explicitly states that the "aural acquisition" of communications proscribed includes that which is done through the use of mechanical or electronic devices. Absent authority to the contrary, this interception could certainly include interception through the use of satellite receiver equipment like that at the heart of this case.
Id.
Similarly, Defendant's argument that, because DirecTV's satellite broadcasts include video as well as audio components, they are not protected by the provisions in Section 123.001 is completely without support and any apparent merit. The statute does not appear to differentiate between video and audio aspects of intercepted communications and the Court is aware of no case law adopting a construction of the law that would preclude recovery when the intercepted communications included video components.
Thus, in the light most favorable to the plaintiff, Count Six certainly states a claim for relief under the Texas wiretap statute. As a result, the Court will deny its motion to dismiss for failure to state a claim under this statute.
CONCLUSION
For the foregoing reasons, it is hereby ORDERED that Defendant's Motion to Vacate Default Judgment (Docket No. 76) is hereby GRANTED.
It is further ORDERED that Defendant's Motion to Dismiss is GRANTED, as to Counts Three and Five, to which Plaintiff has stipulated dismissal.
It is further ORDERED that Defendant's Motion to Dismiss as to the remaining claims is DENIED.
It is further ORDERED that Plaintiff be given thirty days in which to perfect service of process upon Defendant.