Powell v. Freedom Financial Network et al

RESPONSE to Motion re: 30 MOTION for Entry of Default

D. Ariz.October 24, 2017

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 O g l e t r e e , D e a k in s , N a s h S m o a k & S t e w a r t , P .C . 2 4 1 5 E a s t C a m e l b a c k R o a d , S u it e 8 0 0 P h o e n ix , A r iz o n a 8 5 0 1 6 (6 0 2 ) 3 6 4 -7 0 0 0 UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Marcus Powell, Plaintiff, vs. Freedom Financial Network LLC, a Delaware limited liability company, dba Freedom Debt Relief (Joint Employer); Ron Rinehart, Linda Luman, Adam Collins, Kevin Gallegos, Patrick Kessel, Mira Makarem, Ron Suan, Tom Carr, Ben Whitlach, Teresa Chatwin, Mark Gorski, Dan Young, Nicole Durkin, Hank Doss, John Banston, Dan Padilla, Dakoita Cavannaugh, Andrew D. Housser, & Bradford G. Stroh, Defendants. No. CV-17-02647-PHX-GMS RESPONSE TO PLAINTIFF’S MOTION FOR ENTRY OF DEFAULT JUDGMENT AGAINST THE INDIVIDUAL DEFENDANTS BY DEFENDANTS RON RINEHART, LINDA LUMAN, PATRICK KESSEL, BEN WHITLACH, TERESA CHATWIN, MARK GORSKI, DAN YOUNG, NICOLE DURKIN, JOHN BANKSTON, DAN PADILLA, AND DAKOTA CAVANAUGH Defendants Ron Rinehart, Linda Luman, Patrick Kessel, Ben Whitlach, Teresa Chatwin, Mark Gorski, Dan Young, Nicole Durkin, John Bankston, Dan Padilla, Dakota Cavanaugh, (collectively, “Individual Defendants”) oppose Plaintiff’s Motion for Entry of Default Judgment (Doc. 30) because they were never properly served with process and, L. Eric Dowell, SBN 011458 Marissa E. Thielen, SBN 031162 Ogletree, Deakins, Nash, Smoak & Stewart, P.C. 2415 East Camelback Road, Suite 800 Phoenix, Arizona 85016 Telephone: (602) 778-3700 Fax: (602) 778-3750 Attorney for Defendant Freedom Financial Network, LLC d/b/a Freedom Debt Relief and the Individually Named Defendants Case 2:17-cv-02647-GMS Document 38 Filed 10/24/17 Page 1 of 5 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 O g l e t r e e , D e a k in s , N a s h , S m o a k & S t e w a r t , P .C . 2 4 1 5 E a s t C a m e l b a c k r o a d , S u it e 8 0 0 P h o e n ix , A r iz o n a 8 5 0 1 6 (6 0 2 ) 3 6 4 -7 0 0 0 now that they have authorized undersigned counsel to accept service of process, they have moved to dismiss (Doc. 33) and answered Plaintiff’s Second Amended Complaint (Doc 36). Defendants respectfully request the Court to deny Plaintiff’s Motion. I. BACKGROUND On July 14, 2017, Plaintiff filed a complaint in Maricopa County Superior Court. Three days later, on July 17, 2017, Plaintiff filed a First Amended Complaint. On July 19, 2017, a Maricopa County Sheriff’s officer went to the offices of Freedom Financial Network, LLC d/b/a Freedom Debt Relief (“FFN”) and, ostensibly, asked to speak with Nicole Durkin, FFN’s Human Resources Business Partner. When Ms. Durkin greeted the officer, he handed her a stack of papers and asked if she would give the papers to certain employees of FFN. The papers given to her were summons’ and complaints for the Individual Defendants and FFN1. [Exhibit 1, Declaration of Nicole Durkin.] Neither FFN nor any of the Individual Defendants ever authorized Ms. Durkin to accept service of process on their behalves. [Id.] On August 7, 2017, FFN removed the action from state court to federal court and filed a Motion for More Definite Statement (Doc. 8), on August 14, 2017. In that Motion, FFN specifically noted that the Individual Defendants had not been properly served with process (Doc 8 at p. 2, fn. 1). After Plaintiff failed to timely respond to FFN’s Motion for More Definite Statement, the Court entered an Order requiring Plaintiff to respond by September 29, 2017 (Doc. 18). On September 27, 2017, Plaintiff filed a response to FFN’s Motion for More Definite Statement (Doc. 25) in addition to filing his Second Amended Complaint (Doc. 26). On September 27, 2017, Plaintiff and a female friend appeared at FFN’s corporate offices and dropped off a stack of papers at the front reception desk. The papers were copies of Plaintiff’s Second Amended Complaint for each Individual 1 The officer also gave Ms. Durkin the complaint and summons for some of the other defendants who were originally parties to this matter, but have since been terminated from this case pursuant to the Court’s Order (Doc. 34). Case 2:17-cv-02647-GMS Document 38 Filed 10/24/17 Page 2 of 5 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 O g l e t r e e , D e a k in s , N a s h , S m o a k & S t e w a r t , P .C . 2 4 1 5 E a s t C a m e l b a c k r o a d , S u it e 8 0 0 P h o e n ix , A r iz o n a 8 5 0 1 6 (6 0 2 ) 3 6 4 -7 0 0 0 Defendant. At no time has Plaintiff filed any proof of service on the Individual Defendants as required under Fed. R. Civ. P. 4(l)(1). On October 6, 2017, in the interest of judicial economy, the Individual Defendants authorized counsel for FFN to accept service on their behalves. On October 11, 2017, FFN and the Individual Defendants filed a Motion to Dismiss Plaintiff’s Second Amended Complaint (Doc. 33). On October 16, 2017, FFN and the Individual Defendants filed an Answer to Plaintiff’s Second Amended Complaint (Doc. 36). While this case has been pending before the Court, a nearly identical case has been pending in Case No. CV-17-02445-PHX-BSB (“Related Case”). Unbeknownst to Defendants, Plaintiff filed the Related Case on July 21, 2017 in federal court. On September 18, 2017, FFN filed a Motion to Consolidate the two cases and Plaintiff’s Response to the Motion to Consolidate did not oppose consolidation and admitted that the two cases involved “similar time frames and illegal activities” (Doc. 27). On October 16, 2017, the Court entered an Order (Doc. 35) regarding FFN’s Motion to Consolidate indicating that consolidation with the Related Case would be forthcoming, assuming all parties agreed to consent to a Magistrate Judge. II. LEGAL ARGUMENT Plaintiff’s Motion for Entry of Default Judgment against the Individual Defendants should be denied because Plaintiff failed to properly serve any of the Individual Defendants and, regardless, the Individual Defendants have subsequently accepted service and filed a Motion to Dismiss (Doc. 33) and Answer (Doc. 36) respecting Plaintiff’s Second Amended Complaint. Plaintiff never properly served the Individual Defendants. In his Motion for Entry of Default Judgment and accompanying Affidavit, Plaintiff claims that all of the Individual Defendants were served on July 14, 2017. However, it was July 19, 2017 when the Maricopa County Officer dumped a stack of papers on Ms. Durkin at FFN’s offices and asked her to give them to the employees named therein. Case 2:17-cv-02647-GMS Document 38 Filed 10/24/17 Page 3 of 5 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 O g l e t r e e , D e a k in s , N a s h , S m o a k & S t e w a r t , P .C . 2 4 1 5 E a s t C a m e l b a c k r o a d , S u it e 8 0 0 P h o e n ix , A r iz o n a 8 5 0 1 6 (6 0 2 ) 3 6 4 -7 0 0 0 Fed. R. Civ. P. 4 does not permit service of process on an individual by serving a human resources director at the individual’s place of employment. Thus, unloading a stack of summons’ and complaints on Ms. Durkin did not effectuate proper service on the Individual Defendants. The Individual Defendants did not authorize Ms. Durkin to accept service of process on their behalves. [Exhibit 1.] This Court ostensibly recognized this method of service was improper when it issued an Order dismissing several of the individuals originally listed as defendants who did not subsequently authorize counsel to accept service (Doc. 34). Under Fed. R. Civ. P. 12(a)(1)(i), a defendant must serve an answer within twenty- one days after being served with the summons and complaint. The Individual Defendants accepted service by authorizing counsel to accept service on October 6, 2017, making their Answer due on October 27, 2017. The Individual Defendants filed an Answer on October 16, 2017. There is simply no basis to enter a default judgment against the Individual Defendants and Plaintiff’s Motion for Entry of Default Judgment should be denied. DATED this 24th day of October 2017. OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C. By: s/Marissa E. Thielen L. Eric Dowell Marissa E. Thielen 2415 East Camelback Road, Suite 800 Phoenix, Arizona 85016 Attorneys for Freedom Financial Network, LLC d/b/a Freedom Debt Relief Case 2:17-cv-02647-GMS Document 38 Filed 10/24/17 Page 4 of 5 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 O g l e t r e e , D e a k in s , N a s h , S m o a k & S t e w a r t , P .C . 2 4 1 5 E a s t C a m e l b a c k r o a d , S u it e 8 0 0 P h o e n ix , A r iz o n a 8 5 0 1 6 (6 0 2 ) 3 6 4 -7 0 0 0 CERTIFICATE OF SERVICE I hereby certify that on the 24th day of October 2017, I electronically filed the attached document, and COPY of the foregoing document was served by first-class mail, postage prepaid, this same day on: Marcus Powell 14404 N. 60th Place Scottsdale, AZ 85254 Marcus Powell 5402 E. Washington Street, #1022 Phoenix, AZ 85034 Pro Se Plaintiff By: s/ Jessica Oliverson 31635674.2 Case 2:17-cv-02647-GMS Document 38 Filed 10/24/17 Page 5 of 5