United States District Court, N.D. Illinois, Eastern Division
May 4, 2005.
UNITED STATES OF AMERICA, Plaintiff,
THOMAS B. McLAUGHLIN CHRISTINE B. McLAUGHLIN HARRIS BANC BARRINGTON f/d/b/a PALATINE NATIONAL BANK as trustee of Illinois Land Trust No. 4491 COASTAL BANC, and ILLINOIS DEPARTMENT OF REVENUE Defendants.
The opinion of the court was delivered by: JOAN H. LEFKOW, District Judge
MEMORANDUM OPINION AND ORDER
Before the court are defendant Thomas McLaughlin and Christine
McLaughlin's motions to dismiss the complaint for lack of
personal jurisdiction due to untimely service of process pursuant
to Rules 12(b)(2) and 12(b)(5), Fed.R.Civ.P. Defendants'
motions essentially ask the court to revisit its decisions
granting the United States' motion to reopen the Rule 4(m) period
of time within which to effectuate service of process and two
subsequent extensions of time. For the reasons stated below, the
court denies defendants' motions.
I. RULE 12(b)(2) AND RULE 12(b)(5) MOTIONS TO DISMISS
Federal Rule of Civil Procedure 4(m) requires the dismissal of
an action if the plaintiff fails to serve the complaint within
120 days after it is filed and does not show good cause for
failing to comply with the 120 day requirement.*fn1 The
plaintiff bears the burden of showing good cause. See Geiger v. Allen, 850 F.2d 330, 333 (7th Cir. 1998). Once
good cause is demonstrated, the district court is obligated to
extend the time for service. Panaras v. Liquid Carbonic Indus.
Corp., 94 F.3d 338, 340 (7th Cir. 1996). Even in the absence
of a showing of good cause, the Seventh Circuit has held that the
district court must consider whether a permissive extension of
time for service is warranted under the facts of the case. Id.
On May 2, 1994, taxes were assessed against Thomas McLaughlin
for the years 1983 through 1989.*fn2 On April 27, 2004, less
than a week before the expiration of the applicable statute of
limitations, the United States filed its complaint against Thomas
McLaughlin pursuant to 26 U.S.C. §§ 7401 and 7403.*fn3
Christine McLaughlin was joined as a defendant to this action
pursuant to 26 U.S.C. § 7403(b) because she may claim an interest
in the real property held by Thomas McLaughlin and against which
the United States seeks to foreclose a federal tax lien. On June
18, 2004, the United States sent a copy of the complaint and a
request for waiver of service by regular mail to each of the
defendants, with the exception of Christine McLaughlin. After
receiving her home address from the Internal Revenue Service, the
United States sent a copy of the complaint and a request for
waiver of service to Christine McLaughlin on July 8, 2004.
Neither Thomas McLaughlin or Christine McLaughlin accepted service by mail in response to the
requests for waivers.
According to the Second Declaration of Barbara E. Seaman, which
the United States attached to its response to defendants' motions
to dismiss, Ms. Seaman was assigned to this lawsuit following the
departure of the attorney who had filed the complaint from the
Tax Division of the U.S. Department of Justice. (Second Seaman
Dec. at ¶ 2). In July of 2004, Stephen Lewis, the attorney for
the McLaughlins, contacted Ms. Seaman to discuss the present
lawsuit and another matter. (Second Seaman Dec. at ¶ 6). Because
the McLaughlins had not yet retained Mr. Lewis to represent them
in the present lawsuit, Ms. Seaman declined discussing the case
with Mr. Lewis until he was counsel of record. (Second Seaman
Dec. at ¶ 7). Mr. Lewis indicated to Ms. Seaman that he expected
the McLaughlins to retain his services for the present matter.
(Second Seaman Dec. at ¶ 8). Because of her conversation with Mr.
Lewis, Ms. Seaman was aware that the McLaughlins had taken action
in response to the request for waiver of service and was
unalarmed when Thomas McLaughlin did not respond to the request
for waiver of service within the thirty-day period. (Second
Seaman Dec. at ¶¶ 9-10).
On or about August 8, 2004, before the expiration of the
120-day period for service of process, Ms. Seaman contacted
Revenue Officer Sandra Davis to request that she effect personal
service of the complaint on Thomas McLaughlin and Christine
McLaughlin. (Second Seaman Dec. at ¶ 12). Ms. Seaman explained
the requirements of personal service to Revenue Officer Davis in
a telephone conversation and again by letter. (Second Seaman Dec.
at ¶ 13). On or about August 19, 2004, Revenue Officer Davis
informed Ms. Seaman that she had served the McLaughlins and that
she would return the summonses by Federal Express to Ms. Seaman.
(Second Seaman Dec. at ¶ 14). The next day, August 20, 2004, Ms.
Seaman received the summonses and briefly noted that the return of service portion was completed. (Second Seaman Dec.
at ¶ 15). Ms. Seaman did not read the entries carefully or read
the accompanying history sheet from Revenue Officer Davis. Id.
Only when drafting a motion for entry of default on or about
October 1, 2004 did Ms. Seaman realize that the service of
process by Revenue Officer Davis was faulty under Rule 4,
Fed.R.Civ.P. (Second Seaman Dec. at ¶ 19). Revenue Officer Davis had
left copies of the summonses and complaint with Donna McLaughlin,
the daughter of Thomas McLaughlin and sister of Christine
McLaughlin, at the McLaughlins' chiropractor business. Id.
Revenue Officer Davis had attempted unsuccessfully to serve
process at the residences of Thomas McLaughlin and Christine
McLaughlin. (Second Seaman Dec. at ¶ 20). Upon learning of the
error in service, the United States moved ex-parte for leave to
reopen the Rule 4(m) period, which the court granted.
After the court granted the United States' motion, the United
States attempted to effectuate service of process on six
occasions through a different process server but was
unsuccessful. The United States moved ex-parte for a thirty-day
extension of time in which to effectuate service, which the court
granted on November 11, 2004. Again, the United States, through
its process server, made additional but unsuccessful attempts to
serve process on Thomas McLaughlin and Christine McLaughlin at
their homes and office. The United States subsequently moved
ex-parte for an additional ninety-day extension, which the court
granted on December 6, 2004. Christine McLaughlin received
service of process on January 2, 2005, 250 days after the filing
of the complaint, and Thomas McLaughlin received service of
process on January 23, 2005, 271 days after the filing of the
In granting the United States' ex-parte motion for leave to
reopen the Rule 4(m) period, the court relied on the reasons stated in Ms. Seaman's first
declaration for the failure of the United States to serve process
timely on Thomas McLaughlin and Christine McLaughlin. The court
also relied on the representations of the United States in its
subsequent motions for extensions of time in granting the motions
for the thirty-day and ninety-day extensions. In her Second
Declaration, Ms. Seaman restated these reasons, which the court
had considered and accepted previously in granting the United
States' motions. Defendants do not contest the substance of the
allegations but argue instead that the allegations establish the
negligence and lack of diligence of the United States in failing
to serve process timely rather than the existence of good cause
for this failure.
A. Good Cause
A district court may find good cause where there is evidence
that a third party's conduct prevented plaintiff from effecting
timely service. Bell v. City of Chicago, No. 03 C. 2117,
2004 U.S. Dist. LEXIS 25888, at *3-4 (N.D. Ill. Dec. 20, 2004).
"Evidence of defendant's intentional evasion of service, faulty
effort by the process server, and lack of prejudice to defendant
by the delay are all factors that a court can consider in making
a good cause determination." 2004 U.S. Dist. LEXIS 25888, at *4.
A showing of good cause also must be include evidence that the
plaintiff used "reasonable diligence" in attempting to serve
defendant within the Rule 4(m) period. Id., citing Bachenski
v. Malnati, 11 F.3d 1371, 1377 (7th Cir. 1993).
In the present matter, the untimely service of process was due
in large part to the failure of Revenue Officer Davis to follow
the directions of Ms. Seaman when attempting service of process
on Thomas McLaughlin and Christine McLaughlin within the 120-day
period. Ms. Seaman's cursory review of the summonses failed to
detect Revenue Officer Davis' error, which went undiscovered
until after the 120-day period had expired. Ms. Seaman's failure
to detect the error prior to the expiration of the Rule 4(m) period is more properly
characterized as excusable neglect than good cause.
The United States also points to the unwillingness of Donna
McLaughlin to inform Revenue Officer Davis of the whereabouts of
Thomas McLaughlin and Christine McLaughlin and the number of
unsuccessful attempts by the process servers to effectuate
personal service on the McLaughlins as evidence of the
McLaughlins' attempts to evade personal service. As of the
expiration of the Rule 4(m) period, however, the United States
had attempted personal service only once. This single attempt at
service does not sufficiently demonstrate that defendants were
evading service. As such, the United States did not establish
good cause for purposes of Rule 4(m).
B. Discretionary Extensions of Time
Although the United States failed to demonstrate good cause for
failing to serve process timely, the facts as presented warranted
a permissive extension of time for service for a number of
reasons. First, the statute of limitations would bar the United
States from refiling this action if the court granted the
defendants' motion to dismiss for untimely service. See
Panaras, 94 F.3d at 341, citing Fed.R.Civ.P. 4(m), Advisory
Committee Note, 1993 Amendments ("Relief may be justified, for
example, if the applicable statute of limitations would bar the
refiled action, or if the defendant is evading service or
conceals a defect in attempted service."). While the ten-year
statute of limitations applicable to the present matter is a less
persuasive factor than the ninety-day statute of limitations at
issue in Panaras, it is nonetheless a relevant and permissible
consideration. Second, defendants have offered no reasons for the
court to believe that they have been prejudiced by the delay in
receiving service of process. See Coleman v. Milwaukee Bd. of
Sch. Dirs., 290 F.3d 932 at 934 (7th Cir. 2002). Third,
defendants had received actual notice of the lawsuit before the
120-day period had elapsed as evidenced by their consultation with Mr.
Lewis and Mr. Lewis' telephone conversations with Ms. Seaman.
Fourth, the United States had sought waiver of personal service
and had attempted personal service within the 120-day period.
Fifth, defendants received service of process within the extended
time period granted by the court. Taken together, the court
concludes that the interest of justice was better served by
granting rather than denying a permissive extension of time for
service. Thus, defendants' motions to dismiss for failure to
serve process timely are denied.
For the reasons stated above, Thomas McLaughlin's Motion to
Dismiss [#20] and Christine McLaughlin's Motion to Dismiss [#21]
are denied. Defendants have until May 27, 2005 to answer the