United States District Court, E.D. Kentucky, Southern Division, Pikeville
PAUL F. SOARES, Plaintiff,
CLYDE BOYD, ROBERT SKEANS, NATURAL RESOURCES & ENERGY, a Kentucky Limited Liability Company, and JOHN DOES Defendants.
ORDER AND OPINION
K. CALDWELL, CHIEF JUDGE.
matter is before the Court on the Defendants' Motion to
Set Aside Default Judgments and Motion to Dismiss. (DE 78).
For the reasons stated below, the Defendants' Motion is
GRANTED in part and DENIED
core, the dispute in this case stems from a contract between
Kentucky Minerals Limited (“KML”), the Lessor,
and Natural Resources & Energy Limited Liability Company
(“Natural Resources”), the Lessee. (DE 1-1 at 1.)
The contract provides that KML seeks to sell its working
interest in 900 acres known as “Vinson
Properties” to Natural Resources in exchange for $700,
000 to be paid in accordance with the agreement. At the time
of contract, Paul Soares was the president of KML, and Clyde
Boyd was the president of Natural Resources. (DE 1-1 at 7.)
filed a Complaint on September 27, 2017 alleging claims for
actual fraud, lost profits, breach of contract, conversion,
and personal injury against Clyde Boyd, Robert Skeans,
Natural Resources, and Does 1-50. (DE 1-1.) Soares also filed
a Motion for Leave to Proceed in forma pauperis, which this
Court granted. (DE 8-9). Accordingly, the Court ordered the
Deputy Clerk in the Pikeville Clerk's Office to prepare a
Service Packet for each of the named Defendants and send it
to the United States Marshall Service (“USMS”) in
Lexington Kentucky. (DE 10.) The USMS was then ordered,
within 40 days of the order, to send a Service Report to the
Pikeville Clerk's Office, to be filed in the record,
stating whether service had been accomplished for each
Defendant. The order went on to state that if the Defendant
is “served by certified mail, the Service Report shall
include (i) a copy of the green card showing proof of service
or (ii) a statement that the green card was not returned from
the U.S. Postmaster, along with a
“Track-and-Confirm” report from the U.S. Postal
Service showing that a proof of delivery does not
exist.” (DE 10 at 2.)
Pikeville Clerk's Office prepared the Service Packets for
each Defendant and delivered them to the USMS to effectuate
service. (DE 11-12). The USMS attempted to effectuate service
by FedEx Express Saver, which did not require any signature
from the recipient. The Summons for Natural Resources and
Boyd were returned executed via FedEx on December 13, 2017.
(DE 13 and 14). The Summons for Skeans was returned
unexecuted by the USMS. (DE 15). Following this attempt at
service, Soares hired the Sheriff's Office of Floyd
County, who personally served Skeans. (DE 34 at 4.)
Additionally, Soares, himself, personally mailed a copy of
the Complaint and Summons by certified mail. (DE 34 at 1-3.)
Soares's Complaint went unanswered, and he moved for
entry of default against each Defendant. (DE 19, 20, and 36).
The Clerk entered default against all three Defendants. (DE
21, 22 and 37). Soares then moved for default judgement
against Boyd and Natural Resources, and this Court, in
accordance with the Federal Rules of Civil Procedure, granted
his motion. (DE 28). Soares also filed a motion for default
judgement against Skeans, which remains pending before the
Court. (DE 62).
thereafter, this Court received its first communication from
the Defendants styled as a Motion to Set Aside Default
Judgments and Motion to Dismiss, in which they collectively
assert improper service of process and lack of subject matter
jurisdiction. (DE 78). Based on the current pleadings, this
Court finds it has subject matter jurisdiction under 28
U.S.C. § 1332 simply because Soares is a citizen of
California, the Defendants are citizens of Kentucky, and the
amount in controversy exceeds $75, 000. However, pursuant to
Fed.R.Civ.P. 12(h)(3), the Court may reconsider this issue at
any time. Regarding the improper service argument, after
examining the effectuated service of the Defendants, this
jurisdiction's service of process rules, and requirements
for in forma pauperis (“IFP”) plaintiffs, the
Court finds that each Defendant was improperly served.
Natural Resources, and Skeans did not receive proper service
of process under the Federal Rules of Civil Procedure.
Fed.R.Civ.P. 4(e) provides that an individual is served by
(1) delivering a copy of the summons and complaint to the
individual personally; (2) leaving a copy of each at the
individual's dwelling or usual place of abode with
someone of suitable age and discretion who resides there; (3)
delivering a copy of each to an agent authorized by
appointment or by law to receive service of process; or (4)
any method permitted by state law in the state where the
action is pending. Fed.R.Civ.P. 4(h) provides that a
corporation must be served by (1) delivering a copy of the
summons and complaint to an officer, managing, general agent,
or any other agent authorized by appointment or law to
receive service of process and by also mailing a copy of each
to the defendant; or (2) any method permitted by the
law provides that a defendant can be served (1) through
personal delivery, to the defendant or his agent, by a person
authorized to deliver service; or (2) by registered or
certified mail, return receipt requested. Ky. R. Civ. P.
4.01(1)(b), 4.04(2). “Service by registered mail or
certified mail is complete only upon delivery of the
envelope. The return receipt shall be proof of the time,
place, and manner of service.” Ky. R. Civ. P.
4.01(1)(a). Service shall be made upon a corporation by
serving an officer, managing agent, or any other agent
authorized by appointment or by law to receive service on its
behalf. Ky. R. Civ. P. 4.04(5). In Kentucky, service may be
made on a corporation via certified mail only if it is served
to an officer, managing agent, or any other agent authorized
by appointment in accordance with Ky. R. Civ. P. 4.04(5).
See Ky. R. Civ. P. 4.01, 4.04. See also Oyekunle
v. Morgan & Pottinger, P.S.C., No.
3:14-CV-00401-TBR, 2014 WL 6977819, at *2 (W.D. Ky. Dec. 9,
2014). Process is effectively delivered to a person only when
it is placed within his reach and he accepts it.
Fleishman v. Goodman, 252 S.W.2d 691 (1934).
courts have further elaborated on what constitutes effective
service by certified mail in Kentucky. Under Kentucky law,
delivery by certified mail is accomplished only if the
defendant, or his agent, personally signs for the letter when
it arrives. Treat v. Shedlofsky, No.
3:10-CV-00745-R, 2012 WL 122561, at *5 (W.D. Ky. Jan. 17,
2012); See also, e.g., Fleet v. Commonwealth of Kentucky
Cabinet for Health & Family Servs., No.
3:15-CV-00476-JHM, 2016 WL 1241540, at *7 (W.D. Ky. Mar. 28,
2016) (There is a lack of valid service where a return
receipt is signed by someone other than intended recipient or
agent.); King v. Taylor, 803 F.Supp.2d 659, 668
(E.D. Ky. 2011) rev'd on other grounds 694 F.3d 650 (6th
Cir. 2012) (Service of process was unquestionably defective
where the Plaintiff attempted to serve an individual by mail
and it was signed for by a person that was neither the
intended recipient nor agent thereof.); Mitchell v.
Money, 602 S.W.2d 687 (Ky. Ct. App. 1980) (Court held
that service of process through certified mail was not
sufficient to bind a decedent's estate when it was sent
to the decedent's address and was signed for by his
wife.); Douglas v. Univ. of Kentucky Hosp.,
No. 2006-CA-002149-MR, 2008 WL 2152209, at *3 (Ky. Ct. App.
May 23, 2008) (Court ruled there was no service where the
signatory was not the intended recipient.).
present case, Soares did not comply with Fed.R.Civ.P. 4(e)(2)
in serving Boyd or Fed.R.Civ.P. 4(h)(1)(B) in serving Natural
Resources. Soares did not attempt personal service on either
Defendant in accordance with the federal rules. It appears as
if Soares attempted to serve each according to Kentucky law
pursuant to Fed.R.Civ.P. 4(e)(1). But Soares also failed to
comply with Kentucky law. Soares's only attempt to serve
Boyd and Natural Resources was by FedEx Express Saver, which
provided a return receipt but required no signature on behalf
of the recipient. (DE 13-14). The receipts indicate that the
Service Packets were “delivered, ” but they
explicitly state “NO SIGNATURE REQUIRED.” (DE 13
at 4 and DE 14 at 4.) Service by FedEx without a signature is
not sufficient under Kentucky law. See Treat, 2012
WL 122561 at *5. Moreover, without a signature, it is
impossible to know whether the proper person or entity even
received the Service Packet. Accordingly, the Court finds
that neither Boyd nor Natural Resources were effectively
also did not effectively serve Skeans. Soares first attempted
to serve Skeans by Federal Express Saver with a return
receipt, but no signature required. The Summons was returned
unexecuted due to an incorrect address. (DE 15). Soares then,
himself, mailed a copy of the Summons and Complaint via
certified mail to Skeans. (DE 34). Simultaneously, he hired
the Sheriff's Office of Floyd County to personally serve
Skeans. (DE 34 at 4.) Both attempts are insufficient.
Civ. P. 4(c) governs who is permitted to effectuate service.
It states that service is made by “any person who is at
least 18 years old and not a party (emphasis
added).” Soares is a “party” to this
action, and therefore he cannot effectively serve any of the
Defendants. Accordingly, Soares's attempt to serve Skeans
himself by certified mail is insufficient.
the USMS was required to serve all Defendants on behalf of
Soares because he is an IFP plaintiff. 28 U.S.C. §
1915(d) states that where a plaintiff is proceeding in forma
pauperis, “the officers of the court shall issue and
serve all process, and perform all duties in such
cases.” Here, the USMS did not effectively serve
the plaintiff bears the burden for appointing an appropriate
person to serve a copy of his complaint and the summons upon
a defendant. Byrd v. Stone, 94 F.3d 217, 219 (6th
Cir. 1996). However, for IFP plaintiffs, once reasonable
steps have been taken to identify for the court the
defendants named in the complaint, the burden shifts to the
USMS to obtain his or her current address and to properly
effectuate service. Id.; Treat, 2012 WL
122561 at *6. Here, Soares took the proper steps to
effectuate service on all the Defendants. The USMS attempted
to serve the Defendants, but its efforts were deficient under
he is an IFP plaintiff-will not be penalized for this failure
to properly effectuate service, and his action will not be
dismissed at this time. See Byrd, 94 F.3d at 219-20.
Instead, the Court will redirect the Pikeville Clerk's
Office to issue a Summons for each of the named Defendants,
and the USMS for the Eastern District of Kentucky will be
directed to serve, in compliance with Federal and Kentucky
law, the named Defendants with the Summons and Complaint on
Soares's behalf. Fed.R.Civ.P. 4(c)(3); 28 U.S.C. §
Setting aside the entries of default and default
Civ. P. 55(d) states that “the court may set aside an
entry of default for good cause, and it may set aside a final
default judgement under Fed.R.Civ.P. 60.” Lack of
notice and sufficient service of process intrinsically
results in a lack of due process and effectively renders a
judgment void. In re Allen, 417 B.R. 850, 854 (E.D.
Ky. 2009); Insituform Technologies, Inc. v. AMerik
Supplies, Inc., 588 F.Supp.2d 1349, 1352 (N. D. Ga.
2008) (“Where service of process is insufficient, the
entry of default is void and must be set aside.”). Good
cause to set aside an ...