Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 04 C 930-James F. Holderman, Chief Judge.
The opinion of the court was delivered by: Sykes, Circuit Judge
Before BAUER, EVANS, and SYKES, Circuit Judges.
Lawrence Ligas appeals the district court's grant of summary judgment to the government for $319,883.60 in unpaid taxes, interest, and penalties. Although Ligas raises multiple arguments in support of reversal, we need only consider one: lack of personal jurisdiction. The government never properly served Ligas.
It sought multiple extensions of time to effectuate service, asserting that if the case was dismissed for lack of personal jurisdiction, it could not be refiled because the statute of limitations had expired. After giving the government nearly a year to serve Ligas, the district court dismissed the govern-ment's complaint for failure to serve process as required under Rule 4 of the Federal Rules of Civil Procedure.
Because the government had imposed two liens on Ligas's property, Ligas subsequently asked the court to extinguish the liens. The district court treated Ligas's motion as a request for affirmative relief that waived his prior objection to personal jurisdiction and on that basis reinstated the government's complaint. That was an error. Although jurisdictional defenses may be waived, Ligas's motion to quash the tax liens was not inconsistent with his jurisdictional objection, which he continuously maintained and on which he prevailed when the district court dismissed the case under Rule 4(m). The government's tax liens were only valid if the government obtained a judgment against Ligas; removing them was a consequence of and consistent with the dismissal, since the government had maintained that the suit could not be refiled. Ligas's motion to quash was not a voluntary submission to the court's jurisdiction, so there was no basis to reinstate the government's complaint. Accordingly, we reverse and remand with instructions to dismiss.
This case stems from Lawrence Ligas's failure to pay more than $300,000 in taxes, interest, and penalties. Between 1988 and 1990, Ligas reported that he owed $26,134 in individual federal income tax, but he did not submit payment when he filed his tax returns. In addition, Ligas was the president, sole stockholder, and director of L.J. Ligas, Inc., an electrical contracting company, and it, too, owed back taxes. More specifically, the company failed to pay $88,314 in income and FICA taxes it claimed it withheld from employee paychecks in the final three quarters of 1987 and the first quarter of 1988. In 1991 the Internal Revenue Service determined that Ligas was a responsible person of a corporation that willfully failed to pay taxes under I.R.C. § 6672 and assessed a penalty against him. When Ligas failed to pay these assessments, federal tax liens automatically attached to his property under I.R.C. § 6321. Although the IRS accidently released the liens in 2001, they were reinstated in 2003. As of 2005, the government calculated that Ligas owed $319,883.60.
On February 6, 2004, just before the 10-year statute of limitations expired, the government filed a complaint seeking to reduce to judgment the unpaid assessments of federal income taxes and the § 6672 penalty. Although Ligas received a copy of the complaint and summons in the mail, he refused to waive personal service of process. The government thus embarked on an unsuccessful 15-month effort to serve Ligas. When the government initially encountered difficulty serving Ligas within the normal 120-day period, it asked the district court for additional time. The district court granted two extensions of time to serve Ligas and on September 9, 2004, authorized service by publication as permitted by Rule 4(e)(1) and 735 Ill. Comp. Stat. 5/2-206.
In late 2004 the government missed two obvious chances to accomplish service. Following the district court's September 9 order authorizing service by publication, IRS agents left a copy of the summons and complaint at Ligas's residence, claimed service by publication was perfected, and moved for default judgment when Ligas did not answer the complaint. Appearing for the limited purpose of challenging the sufficiency of process, Ligas asked the court to vacate the September 9 order and quash the service by publication. At a hearing on December 7, 2004, the district court concluded that the government had not complied with the requirements of 735 Ill. Comp. Stat. 5/2-206 and quashed the service by publication. The court then invited the government to personally serve Ligas right then and there; he was present in court, having appeared pro se for the hearing. The government's attorney did not have a copy of the summons and complaint, however, and the opportunity was lost. The court gave the government a third extension-until January 19, 2005-to serve Ligas.
On January 31, 2005-after the third extension of time had expired-the government asked for a fourth extension. On March 1, 2005, the court granted the government's request and authorized service under Rule 4(e)(1) and 735 Ill. Comp. Stat. 5/2-203.1, which allows a court to order service "in any manner consistent with due process." The district court permitted the government to serve Ligas under section 5/2-203.1 by posting a copy of the complaint and summons on the door to Ligas's home, mailing copies of the complaint and summons to Ligas's home by first-class and certified mail, and by faxing the complaint and summons to the number listed on Ligas's pro se appearance form.
Ligas asked the court to reconsider the March 1 order (this time he was acting through an attorney), and the district court agreed. Two intervening developments persuaded the court to vacate its order. First, Labe Bank, which held a mortgage on Ligas's property and was added as a co-defendant, had filed and successfully served a third-party complaint by using the sheriff's department to personally serve Ligas at his home. Second, one of the private process*fn1 servers the government used could not provide evidence of its pre-2005 attempts to serve Ligas. The district court was troubled by the fact that the government had not used federal or state agencies to try to serve process and instead relied on "seemingly inept process servers." Taken together, these developments convinced the court that the government had not diligently attempted to serve Ligas, had not shown good cause for its failure to serve Ligas, and was not entitled to a fourth extension of time. On May 17, 2005, the district court dismissed the complaint for failure to serve Ligas within the period of time prescribed by Rule 4(m). The dismissal was without prejudice, but the government had represented in its motions for extension of time that it could not refile the complaint because the statute of limitations had run.
Ligas immediately (that very same day) moved the court to quash the federal tax liens against his property. (This was not the first time Ligas had requested such relief; he had asked the court to remove the liens in his brief opposing the government's fourth request for an extension of time.) The government responded with a cross-motion asking the court to reconsider its May 17 order dismissing the complaint. In the government's view, when Ligas asked the court to extinguish the liens, he waived any objection to service of process and consented to personal jurisdiction.
In another about-face, the district court agreed. Construing Ligas's motion to quash the liens as a waiver of his previous objections to personal jurisdiction, the court vacated the dismissal order, reinstated the government's complaint, and denied the motion to quash. The case proceeded to discovery, and the district court eventually granted the government's motion for summary judgment ...