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Cunningham v. Enagic USA, Inc.

United States District Court, M.D. Tennessee, Nashville Division

February 15, 2019

CRAIG CUNNINGHAM, Plaintiff,
v.
ENAGIC USA, INC., et al., Defendants.

          REPORT AND RECOMMENDATION

          BARBARA D. HOLMES UNITED STATES MAGISTRATE JUDGE

         TO: Honorable David M. Lawson, District Judge

         Pending before the Court is the motion (Docket No. 284) of Defendant Lavenia Sue Brown, a/k/a Susie Tremblay-Brown, to set aside default judgment. Brown filed a memorandum of law in support of her motion (Docket No. 285). Assignee of Record James E. Shelton filed a response in opposition (Docket No. 288), and Brown filed a reply in support (Docket No. 289). By Order entered October 11, 2018, Brown's motion was referred to the Magistrate Judge for a report and recommendation. (Docket No. 291). For the reasons set forth below, the undersigned respectfully recommends that Plaintiff's motion (Docket No. 284) be granted.

         I. BACKGROUND

         Plaintiff Craig Cunningham (“Cunningham”) is a resident of Nashville, Tennessee. Cunningham filed this pro se lawsuit against seven defendants seeking damages under the Telephone Consumer Protection Act, 47 U.S.C. §§ 227 et seq. (“TCPA”) on July 31, 2015. (Docket No. 1). Plaintiff subsequently filed three amended complaints (Docket Entry Nos. 5, 8, and 41) expanding to twenty the number of defendants sued under the TCPA, including the addition of Defendant Lavenia Sue Brown a/k/a Susie Tremblay-Brown (“Brown”). The undersigned presumes that the parties are familiar with the underlying facts and procedural history of this lawsuit and, therefore, recites only the information needed for context to decide this motion.[1]

         The Clerk issued a summons as to Brown on September 22, 2015. (Docket No. 13). Brown's summons was directed to Susie Trembley-Brown, 925 Lakeville Street #233, Petaluma, CA 94952. (Id.). Cunningham returned Brown's summons as executed on October 19, 2015. (Docket No. 26). The Proof of Service attached to the returned summons stated that the summons was served via the United States Postal Service by certified mail with return receipt requested. (Id.). The return receipt was signed by a Matt Tyler on September 26 (presumably, although not indicated, of 2015). (Id.). Neither the Agent box nor the Addressee box next to the signature of Mr. Tyler was checked on the return receipt. (Id.).

         Cunningham moved for entry of default by the Clerk against Brown after she failed to file an answer. (Docket No. 66). In his motion, Cunningham represented that Brown had been served, (id. at 2), relying on the certified mail return receipt signed by Mr. Tyler. The Clerk entered default against Brown on January 4, 2016. (Docket No. 90). Cunningham then filed a motion for default judgment (Docket No. 233), which the Court granted on August 16, 2017. (Docket No. 246). By assignment dated November 13, 2017, and filed with the Court on November 17, 2017, Cunningham assigned all rights, title and interest in the judgment to James Shelton. (Docket No. 255). The Court entered its second corrected judgment against Brown on January 16, 2018. (Docket No. 274).

         Brown now moves the Court to set aside the entry of default and default judgment. In support of her motion, Brown argues that she was not properly served and, therefore, that the Court lacked personal jurisdiction. (Docket No. 285 at 3-4). Brown declares that she has never worked, lived, or received mail at the address to which the summons was delivered. (Declaration of Lavenia Sue Brown, Docket No. 286-1 at ¶¶ 10-11). Brown further states that she has never known or worked with an individual named Matt Tyler, nor has she authorized anyone with that name to receive mail on her behalf. (Brown Declaration, Docket No. 286-1 at ¶ 13). Brown argues that, without proper service, the Court did not have jurisdiction to enter default or default judgment. (Docket No. 285 at 4-5). Based on this alone, Brown states that the entry of default and default judgment should be set aside. (Id. at 5).

         In the alternative, Brown argues that she has satisfied the weight of the equities required by United Coin Meter Co. v. Seaboard Coastline R.R., 705 F.2d 839, 845 (6th Cir. 1994) to justify relief from the defaults. Brown contends that the default was not entered based on any culpable conduct by herself as she did not know of the lawsuit's existence or the judgment until her bank account was seized. (Docket No. 285 at 5). Brown asserts that she has a meritorious defense as she neither arranged for nor placed any automated calls to Cunningham. (Id.). Brown finally argues that Cunningham will suffer no prejudice as he will only be required to litigate his case if the motion is granted and because he can continue to enforce his judgment against the other defendants in the case. (Id. at 5-6).

         Assignee of Record James E. Shelton (“Shelton”) filed a response in opposition to Brown's motion. (Docket No. 288). Shelton argues Brown was properly served as her co-defendant and alleged romantic partner, Jeffrey Howard, received mail at the same address to which Brown's summons was mailed. (Id. at 2, 3-4). Shelton contends that Brown had knowledge of the lawsuit and that service was proper based on Brown's statement to a credit card company in response to a chargeback related to the facts underlying the lawsuit. (Id. at 2, 5-6). Shelton further contends that Brown had knowledge of the suit as a signature purporting to be Brown's appears on the certificate of service for Jeffrey Howard's answer. (Id. at 2, 4-5). Shelton finally argues that Brown failed to timely move the Court to set aside default and that her alleged evasive, dishonest, and culpable conduct warrants denial of relief. (Id. at 2-3, 7-11). Shelton's arguments rely largely on an affidavit submitted by Cunningham, in which he states under penalty of perjury various details of business transactions between he and an individual named Susie Tremblay-Brown and that he “knew that [another defendant, James Howard, and Brown] were dating and living together at the time” on which Brown was ostensibly served. (Docket No. 288 at 14-59).

         Brown replied to Shelton's opposition, arguing that the burden of proof of proper service rests with Shelton and that Shelton has failed to meet this burden. (Docket No. 289 at 2). Brown first argues that the exhibits attached to Shelton's response were unauthenticated and inadmissible. (Id. at 1). Brown then points out that the address served by Cunningham is the address of a strip mall, not a personal residence. (Id. at 1-2). Brown adds that Shelton has failed to provide an affidavit of Matt Tyler demonstrating that he was authorized to accept mail for her. (Id. at 2). Brown contends there is no authenticated document purporting to be a statement from Brown in relation to Shelton's argument that she had knowledge of the lawsuit via a chargeback dispute. (Id. at 2). Brown further contends that Shelton's argument related to her signature on Jeffrey Howard's answer is not plausible and that Shelton failed to provide an affidavit from Howard to affirm his allegation. (Id. at 3). Brown argues that her motion was timely given, that she did not learn of the lawsuit until her bank account was frozen and that without assets it took her time to raise money to retain counsel. (Id. at 2). Finally, Brown maintains that the affidavit of Cunningham attached to Shelton's response shows that she has a meritorious defense to the TCPA claims as the affidavit indicates that Cunningham initiated the phone conversations with her. (Id. at 3).

         II. APPLICABLE AUTHORITY

         The “requirement of proper service of process is not some mindless technicality.” Friedman v. Estate of Presser, 929 F.2d 1151, 1156 (6th Cir.1991) (citation and internal quotation marks omitted). Indeed, “[d]ue process requires proper service of process for a court to have jurisdiction to adjudicate the rights of the parties.” O.J. Distrib., Inc. v. Hornell Brewing Co., 340 F.3d 345, 353 (6th Cir. 2003) (citation omitted). “[W]ithout proper service of process, consent, waiver, or forfeiture, a court may not exercise personal jurisdiction over a named defendant.” King v. Taylor, 694 F.3d 650, 655 (6th Cir. 2012) (citing Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 350 (1999)). It is a “bedrock principle that a defendant is not obliged to engage in civil litigation unless the defendant is properly notified of the action and brought under the court's authority, i.e., personal jurisdiction, by formal service of process.” Arthur v. Litton Loan Servicing LP, 249 F.Supp.2d 924, 928 (E.D. Tenn. 2002). Actual notice of the lawsuit by the defendant is immaterial to the question of whether that defendant was properly served. LSJ Inv. Co. v. O.L.D., Inc., 167 F.3d 320, 322 (6th Cir. 1999) (citing Friedman, 929 F.2d at 1155-56); Genesis Diamonds, LLC v. John Hardy, Inc., No. 3:15-cv-01093, 2016 WL 3478915, at *6 (M.D. Tenn. June 27, 2016). “And in the absence of personal jurisdiction, a federal court is ‘powerless to proceed to an adjudication.'” King, 694 F.3d at 655 (quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999)).

         A. Relief from a ...


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