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Cunningham v. Enagic USA, Inc.

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

September 10, 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 to set aside default judgment (Docket No. 294) filed by Defendant Oscar Christian Kinney. Kinney filed a sworn declaration (Docket No. 296) and a memorandum of law (Docket No. 295) in support of his motion. Plaintiff Craig Cunningham filed a response in opposition (Docket No. 299), and Kinney filed a reply (Docket No. 300). By Order, Kinney's motion was referred to the Magistrate Judge for a report and recommendation. (Docket No. 297.) For the reasons discussed below, the Court respectfully recommends that Kinney's motion (Docket No. 294) be granted.

         I. BACKGROUND

         Plaintiff Craig Cunningham (“Plaintiff” or “Cunningham”) is a resident of Nashville, Tennessee. Cunningham filed this pro se lawsuit against seven original defendants, including Kinney, seeking damages under the Telephone Consumer Protection Act, 47 U.S.C. §§ 227 et seq. (“TCPA”) on July 31, 2015. (Docket No. 1). Cunningham subsequently filed three amended complaints (Docket Entry Nos. 5, 8, and 41) expanding to twenty the number of defendants sued under the TCPA. The Court 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 explain this report and recommendation.[1]

         The Clerk issued a summons for Kinney on August 26, 2015. (Docket No. 4.) Kinney's summons was directed to Oscar Christian Kinney, 29326 Turnbury Village Drive, Spring, TX, 77386. (Id.) On October 30, 2015, Cunningham filed a “Notice Regarding Service on Oscar Christian Kinney and The 7 Figure Wealth Corporation, ” which states, as Cunningham's return of service, that (i) Cunningham attempted to serve The 7 Figure Wealth Corporation and its owner and registered agent, Kinney, by certified mail; (ii) Kinney refused to sign for the certified mail that was sent to him and which was returned unclaimed; (iii) the letter sent to Kinney at 29326 Turnbury Village Drive, Spring, TX 77386 was returned unclaimed; (iv) the Turnbury Village address is the address listed on the secretary of state website for the registered agent.[2]; and (v) Cunningham confirmed in a conversation with Kinney that the Turnbury Village address is his home address as well. (Docket No. 35 at 1.) The Notice further requested that the service date be “notated” as August 29, 2015, which, according to the Notice was the date at which the certified mail notice was left at the Turnbury Village Drive address by the United States Postal Service. (Id. at 2.) On November 13, 2015, Cunningham filed a Third Amended Complaint (Docket No 41). There is no indication whether Cunningham served or attempted to serve the Third Amended Complaint on Kinney.

         On December 11, 2015, Cunningham moved for entry of default by the Clerk against Kinney. (Docket No. 66.) In his motion, Cunningham represented that Kinney refused service of process attempted by certified mail, as described in Cunningham's October 30 Notice. (Id. at 2.) The Clerk entered default against Kinney 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.) The Court entered its second corrected judgment against Kinney on January 16, 2018. (Docket No. 274.)

         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 against Kinney (and others) to James Shelton. (Docket No. 255.) By Acknowledgment of Assignment of Judgment dated March 26, 2019, and filed on April 1, 2019, Shelton reassigned all rights, title and interest in the judgment back to Cunningham. (Docket No. 298.)[3]

         Kinney now moves the Court to set aside the entry of default and default judgment. In support of his motion, Kinney argues that he was neither properly served nor did he affirmatively refuse service and, therefore, that the Court lacks personal jurisdiction. (Docket No. 295.) Kinney declares that at the time of attempted service, he was not physically in the State of Texas, nor had he authorized anyone to accept service there, or anywhere on his behalf. (Declaration of Oscar Christian Kinney, Docket No. 296 at ¶¶ 9-11). Kinney further states that The 7 Figure Wealth Corporation business entity was defunct by February 28, 2014, more than a year and half before Cunningham attempted service by certified mail to the address listed on the Franchise Tax Account Status. (Kinney Declaration, Docket No. 296 at ¶ 12 and Ex. A). Kinney further notes that the certified mail sent by Cunningham was not refused, it was returned as “unclaimed. Kinney argues that, without proper service, the Court did not have jurisdiction to enter default or default judgment. (Docket No. 295 at 5-9.) Based on this alone, Kinney states that the entry of default and default judgment should be set aside as void under Rule 60(b)(4). (Id. at 9.)

         In the alternative, Kinney argues that he 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. Kinney contends that the default was not entered based on any culpable conduct on his part as he did not know of the lawsuit's existence or the judgment until his bank account was seized. (Id. at 9-10.) Kinney asserts that he has a meritorious defense as he neither arranged for nor placed any automated calls to Cunningham. (Id.) Kinney 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 10-11).

         In response to Kinney's motion, Cunningham argues Kinney was properly served under applicable rules of procedure. (Docket No. 299 at 2-3.) Specifically, he contends that governing rules allow unclaimed certified mail to be treated as evidence of a defendant's refusal to accept delivery. (Id. at 3.) Cunningham also disputes Kinney's sworn declaration that Kinney was not in Texas at the time of the attempted service and that The 7 Figure Wealth Corporation was defunct in August of 2015. (Id. at 4-5.) Cunningham argues that Kinney failed to timely move the Court to set aside default and that equitable considerations warrant denial of relief. (Id. at 7-10). Cunningham's arguments are made in the context of a responsive filing without any supporting evidence. One assertion by Cunningham, namely that Kinney was culpable in any defects in service by his “regular practice of evading service” (Id. at 5), relies on Exhibit C, an affidavit for substituted service. The referenced Exhibit C is an affidavit of the attempts of a private process server to serve a notice of garnishment on an Oscar Leroy Kinney II at 20707 Sundance Springs, Spring, Texas, 77379. (Docket No. 299-3.)

         Kinney replied to Cunningham's opposition, arguing that the burden of proof of proper service rests with Cunningham, a burden that Cunningham failed to meet. (Docket No. 300.) Kinney maintains that Cunningham has failed to offer any evidence of proper service, relying only on wholly unsupported arguments. (Id.)

         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, ...


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