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Raja v. Federal Deposit Insurance Corp.

United States District Court, District of Columbia

February 12, 2018

M. NAWAZ RAJA, et al., Plaintiffs,


          KETANJI BROWN JACKSON United States District Judge.

         Pro se Plaintiffs, a married couple, maintain that their 2006 home loan refinancing was unlawfully procured, and that subsequent attempts to foreclose on their home were therefore illegal. (See Compl., ECF No. 1, ¶¶ 39, 193, 204; Pls.' Resp. to Order to Show Cause, ECF No. 5, at 1.) On March 17, 2016, Plaintiffs filed the instant lawsuit against 18 defendants (primarily banks, along with a government regulator and an individual), asserting nine counts, including Truth in Lending Act violations, breach of contract, fraud, and unjust enrichment. (See generally Compl.) Since the filing of the complaint, Plaintiffs have attempted to effect service of process on the defendants in various ways, and Magistrate Judge Deborah Robinson-to whom this Court randomly referred the matter for full case management-has considered the parties' service-related arguments on at least two separate occasions.

         Before this Court at present is Magistrate Judge Robinson's Report and Recommendation (“R & R”) dated August 16, 2017, which finds that Plaintiffs have failed to demonstrate proper service of process upon any of the defendants, and recommends that 16 of the 18 Defendants be dismissed from the action on that basis. (See R & R, ECF No. 44, at 2-3.)[1] Plaintiffs have filed a timely objection, in which they contest the R & R's finding that Defendants “were not served as of the June 16, 2017 deadline” (id. at 1) and ask this Court to “find that [D]efendants have been timely and properly served” (Pls.' Objs. to R & R (“Pls.' Objs.”), ECF No. 46, at 20), so that this case can continue.

         This Court need not go that far. For the reasons explained below, the Court agrees with the Magistrate Judge that there is no factual basis for a finding that Plaintiffs effected service properly by the court-ordered deadline, but this Court also finds that Plaintiffs (who are proceeding pro se) were never given a clear explanation of why their prior attempts at service were deemed deficient, and they were not provided the customary notice of the consequences of their failure to effect proper service upon Defendants. Therefore, the Court will ADOPT the R & R's findings about service, but will DECLINE to dismiss the case as the Magistrate Judge recommends, and will grant Plaintiffs one more opportunity to effect proper service.

         I. BACKGROUND

         Plaintiffs filed their complaint in this matter on March 17, 2016 (see Compl.), and filed service affidavits three months later, on June 17, 2016 (see Affs. of Service, ECF No. 3). Plaintiffs filed a Motion for Entry of Default on November 29, 2016, after it appeared that all of the defendants had failed to respond to the complaint timely. (See Pls.' Mot. for Entry of Default, ECF No. 7; see also Min. Order of Nov. 8, 2016). On May 24, 2017, Magistrate Judge Robinson convened a status conference to address the Motion for Entry of Default, during which she heard arguments from both Plaintiff M. Nawaz Raja and counsel for 11 of the defendant-entities, who had entered a limited appearance for the sole purpose of contesting service. (See Min. Order of May 25, 2017.)[2] The Magistrate Judge did not rule from the bench regarding the service dispute during the status conference, nor did she provide any oral statement regarding whether or not Plaintiffs' process servers had effectively served Defendants. Rather, the dispute was resolved via a Minute Order that stated simply that “the undersigned finds that Defendants have not been served.” (Id.) The Minute Order further denied Plaintiffs' Motion for Entry of Default, and set a new deadline of June 16, 2017, by which Plaintiffs “shall effect service of process upon all Defendants.” (Id.)

         On July 19, 2017, the 11 Defendants that had appeared at the status conference filed a notice that informed the Court that they had not been properly served with process as of the June 16, 2017 deadline. (See Defs.' Notice of Failure to Serve (“Eleven Defs.' Notice”), ECF No. 35.) Two other Defendants also filed a notice of failure to serve. (See Defs. IndyMac Venture and IMB Holdco's Notice of Failure to Serve, ECF No. 37.) Plaintiffs responded by filing rebuttals to both notices, detailing their methods of service and arguing that Defendants had, in fact, been properly served. (See Pls.' Rebuttals to Notices of Failure to Serve, ECF Nos. 39 & 40). Defendants IndyMac ABS, Inc. and IndyMac MBS, Inc. filed a response to Plaintiffs' rebuttal (see Resp. to Rebuttal to Alleged Notice of Failure to Serve, ECF No. 42), as did the Federal Deposit Insurance Corporation (“FDIC”), as receiver for both IndyMac Bank, F.S.B. and IndyMac Federal Bank (see FDIC Defs.' Resp. to Pls.' Rebuttal to Alleged Failure to Serve, ECF No. 43).

         On August 16, 2017, Magistrate Judge Robinson issued the instant Report and Recommendation. (See R & R.) As mentioned above, the R & R finds that Plaintiffs failed to meet the court-ordered deadline to demonstrate effective service of process, and as a result, recommends that the case be dismissed as to the 11 Defendants “who appeared at the status conference and subsequently filed a notice”[3] and also the five Defendants who “have not appeared, but as to whom Plaintiffs have failed to effect service.”[4] (Id. at 2, 3.) As cause for the dismissal recommendation, the Magistrate Judge states that Plaintiffs had filed “no return of service affidavit relating to any Defendant” as of the date of the R & R, and that “[t]he efforts described by Plaintiffs [in their rebuttal filings] cannot be said to comply with the requirements for service enumerated in the Federal Rules.” (Id. at 2, 2 n.2.)[5]

         Plaintiffs filed a timely objection to the R & R on August 29, 2017 (see Pls.' Objs.), to which 11 Defendants have responded (see Opp'n to Pls.' Objs. to R & R, ECF No. 48; see also Pls.' Rebuttal to IndyMac ABS and IndyMac MBS's Alleged Joinder Opp'n to Pls.' Obj. to R & R (“Pls.' Reply”), ECF No. 50). Although Plaintiffs' arguments are at times difficult to follow, their filing specifically recounts the steps they took to serve Defendants prior to the Magistrate Judge's service deadline, and maintains that they did effect proper service, primarily by directing the summonses to the counsel of record for the defendants. (See Pls.' Objs. at 1-9, 12-20.) Consequently, Plaintiffs ask this Court to overrule the R & R by “find[ing] that defendants have been timely and properly served[]” or “in the alternative[, ] giv[ing] additional time of 60 days for Plaintiffs to effect service, with cost assessed on defendants.” (Id. at 20.)


         The Federal Rules of Civil Procedure (“FRCP”) provide that “[u]nless service is waived, proof of service must be made to the court.” Fed.R.Civ.P. 4(1)(1). “Except for service by a marshal or deputy marshal, ” a plaintiff must provide proof of service through an affidavit that the process server provides. Id. Service must be made within 90 days after the complaint is filed, and if a plaintiff fails to effect proper service within this time, “the court-on motion or on its own after notice to the plaintiff-must dismiss the action without prejudice against that defendant or order that service be made within a specified time.” Fed.R.Civ.P. 4(m). However, “if the plaintiff shows good cause for the failure, the court must extend the time for service for an appropriate period.” Id.

         The Magistrate Judge in this case determined that Plaintiffs had failed to provide proof of service as Rule 4(1) requires by the court-ordered deadline of June 16, 2017, and recommended dismissal of Plaintiffs' legal action against most of the defendants as a result. (See R & R at 2-3.) When a timely objection is made to a magistrate judge's findings and recommendations, this Court reviews the portions of the R & R to which an objection is made de novo, see M.G. v. District of Columbia, 246 F.Supp.3d 1, 4 (D.D.C. 2017) (citing Fed.R.Civ.P. 72(b)), but the Court need not entertain new evidence, and may make its determination “based solely on the record developed before the magistrate judge, ” LCvR 72.3(c).

         This Court has conducted its own de novo review of the record before Magistrate Judge Robinson, and it concurs with her findings, but will give Plaintiffs another chance to effect proper service, as explained below.

         A. Plaintiffs Have Failed To Comply With The FRCP's Service Requirements

         It is crystal clear that Plaintiffs have not, in fact, filed the required proof of service with respect to their second attempt at serving the defendants, either by the deadline of June 16, 2017, or thereafter. (See Min. Order of May 25, 2017.) The Federal Rules require the filing of an “affidavit” as proof that a defendant has been properly served unless service has been waived, Fed.R.Civ.P. 4(1)(1), and in the instant case, the docket does not indicate that Plaintiffs filed any such affidavit since the Magistrate Judge set the deadline by which Plaintiffs needed to make that showing. Nor have Plaintiffs argued that they have “good cause for [this] failure[.]” Fed.R.Civ.P. 4(m).

         Instead, throughout their various rebuttal statements and notices, Plaintiffs have repeatedly insisted that their various efforts to effect proper service of process on the defendants should be deemed to suffice. (See generally Pls.' Rebuttals to Notices of Failure to Serve; Pls.' Objs.; Pls.' Reply.) Specifically, Plaintiffs have raised several fact-bound objections to the R & R's failure-to-serve finding, none of which provides any basis for concluding that Defendants were actually properly served.

         First, Plaintiffs argue that they properly served various Defendants by effecting service of process on the named Defendants' attorneys of record. (See Pls.' Objs. at 1- 9, 12-20; see also Id. at 5-6, 16 (maintaining that Plaintiffs received response letters from some of the defense attorneys, which Plaintiffs say confirms that the summonses were properly served); Pls.' Reply at 2, 7 (same).) But under FRCP 4-which is the applicable legal standard for effecting proper service-serving an attorney of record who is not a designated agent of the defendant for the purpose of service does not satisfy the service of process requirement. See Fed. R. Civ. P. 4(h)(1)(B) (stating that service on a corporation can be made through delivering the summons “to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process”); see also Fed. R. Civ. P. 4(i)(2) (stating that service on a federal agency must be made by serving the United States and also the agency); Fed.R.Civ.P. 4(e)(2) (stating that service on an individual can be accomplished by, inter alia, “delivering a copy of [the summons and complaint] to an agent authorized by appointment or law to receive service of process”).[6]

         To be sure, Federal Rule of Civil Procedure 5(b)(1) references service on an attorney (see Pls.' Objs. at 3, 7-9), but that rule pertains to the filing of papers “after the original complaint, ” Fed.R.Civ.P. 5(a)(1)(B) (emphasis added), and does not apply to the complaint and summons that initiate a case, see Fed. R. Civ. P. 5(a)(1); see also Rule 5(b)(1) (providing that “[i]f a party is represented by an attorney, service under this rule must be made on the attorney unless the court orders service on the party”). In other words, the serving and filing of pleadings and other papers in the context of the litigation-which is governed by Rule 5-is distinct from Rule 4's requirements regarding the service of a summons and complaint upon a party, and cannot be a basis on which to find that Defendants have been properly served under Rule 4.

         In this same vein, Plaintiffs are incorrect to insist that defendant counsel “should be estopped from denying service on behalf of their clients” because the parties “have exchanged documents and correspondences” in this matter. (Pls.' Objs. at 17.) In this jurisdiction, actual notice is not a substitute for proper service on a party as Rule 4 directs. See Whitehead v. CBS/Viacom, Inc., 221 F.R.D. 1, 3 (D.D.C. 2004) (“[P]laintiff cannot fulfill his burden under Rule 4(h) by showing that defendant had notice of the suit.”).

         The fact that Defendants' counsel allegedly acted in bad faith by “[leading] Plaintiffs to believe that [counsel] would accept service on behalf of their clients” (Pls.' Objs. at 17), and/or that Plaintiffs proceeded in good faith by relying on the alleged representations of certain defendant counsel “with whom[] they have been in active litigation for several years” (id. (emphasis omitted) (quoting Opp'n to Pls.' Mot. for Default J. and Cross Mot. for a Stay on Behalf of Defs. IndyMac ABS, Inc. and IndyMac MBS, Inc., ECF No. 8, at 2)), is entirely beside the point. Regardless, it is undisputed that the defense counsel in question “is not authorized to accept service on behalf of” his clients (id. at 5-6), and the Federal Rules make clear that such authorization is what matters when it comes to effecting proper service.

         Plaintiffs are also mistaken when they argue that they complied with the Federal Rules with respect to service on Defendant FDIC, because they “served [the] complaint and summons to the U.S. Attorney General, U.S. Attorney, Civil Process Clerk” under “Rule 4(i)(A)[.]” (Id. at 1, 2; see also Id. at 15 (arguing that “Rule 4(i)(A) allows service to be proper [by] (i) deliver[ing] a copy of the summons and of the complaint to the United States attorney for the district where the action is brought” (second alteration in original)).)[7] To begin with, Plaintiffs have not filed any affidavits that prove this purported service, as Rule 4(1) requires. Moreover, and in any event, the rule that Plaintiffs rely upon-Rule 4(i)(1)(A)-governs the process for service on the United States, not service upon an agency such as the FDIC. Compare Fed. R. Civ. P. 4(i)(1)(A) with 4(i)(2).

         Plaintiffs' contention that at least the 11 Defendants whose attorneys entered a limited appearance in this matter should have been deemed timely and properly served (see Pls.' Objs. at 19) fares no better. The record clearly indicates that the various attorneys for those Defendants “entered their appearances for the limited purpose of contesting service of process” at the status conference of May 24, 2017. (Min. Order of May 25, 2017; see also FTR Gold Recording of May 24, 2017 Status Conf.) Moreover, it is well established in this jurisdiction that a defendant's “appearance in court, without more, is ...

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