United States Court of Appeals
For the First Circuit
No. 04-1027
M & K WELDING, INC.,
Plaintiff, Appellant,
v.
LEASING PARTNERS, LLC,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Joseph A. DiClerico, U.S. District Judge]
Before
Selya, Circuit Judge,
Coffin, Senior District Judge,
and Lipez, Circuit Judge.
Lisa A. Wellman-Ally with whom Law Offices of Wm. Howard Dunn,
P.C. was on brief for appellant.
Frank P. Spinella, Jr. with whom Hall, Morse, Anderson, Miller
& Spinella, P.C. was on brief for appellee.
October 22, 2004
COFFIN, Senior Circuit Judge. This appeal requires us to
monitor what Judge John Brown, writing for us, termed "the heart of
a federal court's ability to practice its trade, namely personal
jurisdiction." Hugel v. McNell, 886 F.2d 1, 2 (1st Cir. 1989). It
is also the heart of a state court's legitimization, and in this
case it is New Hampshire law that governs. In this case, the
district court vacated a default judgment for appellant for lack of
personal jurisdiction because of defective service of process.
Having carefully examined the law and the facts, we conclude that
the jurisdictional requirements were not met and consequently
affirm judgment for defendant-appellee.
The litigation arises out of plaintiff-appellant M & K
Welding, Inc.'s (M & K) unhappiness with a welding robot and
related equipment it acquired under a lease and purchase agreement
with appellee Leasing Partners, LLC (a middle man facilitator of
leasing opportunities) and Robot Man, Inc. (the seller). M & K
brought suit in New Hampshire state court against these and other
defendants for breach of warranty and other state claims.1 Service
of process was made under the authority of the New Hampshire long-
arm statute, N.H. Rev. Stat. Ann. § 510:4. There being diversity
jurisdiction, defendants other than Leasing Partners removed the
1
This appeal concerns jurisdiction over Leasing Partners, and
it consequently is the only appellee.
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case to the federal district court for the District of New
Hampshire.
This appeal was triggered by Leasing Partners' failure to
respond to the complaint. A default was declared on November 20,
2002, and on May 9, 2003 judgment was entered for the total of the
monthly payments and transportation expenditures made by M & K,
$15,265.31. Leasing Partners claimed to have no knowledge of the
default judgment until it received a letter sent on July 2, 2003 by
its assignee, M & T, notifying it of the judgment and its indemnity
liability to M & T. Leasing Partners moved to vacate the default
judgment as void because of defects in the service of process.2
I. Background
The applicable jurisdictional provision, N.H. Rev. Stat. Ann.
§ 510:4 states, in relevant part:
II. SERVICE OF PROCESS ON SECRETARY OF STATE. Service
of process upon any person who is subject to the
jurisdiction of this state, as provided in this section,
may be made by leaving a copy thereof, with a fee of $10,
in the hands or office of the secretary of state. Such
service shall be of the same legal force and effect as if
served on the defendant at his abode or place of business
in the state or country where he resides and according to
the law of that state or country, provided that notice
thereof and a copy of the process is forthwith sent by
registered mail, postage prepaid, by the plaintiff or his
attorney to the defendant at his last known abode or
2
Although Leasing Partners did not explicitly invoke Fed. R.
Civ. P. 60(b)(4), we treat that provision, which allows relief from
a final judgment that is "void," as applicable. Leasing Partners
did alternatively invoke subsection (1) of Rule 60(b), which
provides relief based on "mistake, inadvertence, surprise, or
excusable neglect."
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place of business in the state or country in which the
defendant resides. The defendant's return receipt and an
affidavit of the plaintiff or his attorney of compliance
with the section shall be appended to the process and
entered therewith. In the event that the notice and a
copy of the process are not delivered to or accepted by
the defendant, the court may order such additional
notice, if any, as justice may require.
To comply with the service of process requirements, M & K took
two steps on September 5, 2002. It sent copies of the summons and
complaint to the Merrimack County Sheriff for service on the
Secretary of State. And it sent another copy of the documents by
registered mail to the address used by Leasing Partners in the
lease-purchase agreement: 10000 Sagemore Drive, Suite 10103,
Marlton, New Jersey 08053. In the letter to Leasing Partners, M &
K's representative wrote: "I have this day forwarded copies of the
Writ of Summons and Complaint to the Merrimack County Sheriff for
service upon the New Hampshire Secretary of State, as required by
statute."3
The deputy sheriff's return indicated that service on the
Secretary was made on September 12, 2002. At Leasing Partners'
office, the return receipt for the registered mail had been signed
on September 5 by a Mary Devlin, without a check mark in either a
box for "agent" or one for "addressee." It has subsequently been
3
Appellant presents this information in its brief, noting
that this letter was not part of the record below because M & K had
not known service on the Secretary of State would be an issue. We
see no reason not to take note of it, which gives a precise
explanation of what happened.
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revealed that Mary Devlin was an employee of another company,
Horizon-Keystone Financial, the managing partner of Leasing
Partners; that she was not authorized to accept registered mail or
process on behalf of M & K; that several other enterprises shared
occupancy in the suite; that Leasing Partners at the time was in
the process of winding up operations, with its effects packed in
boxes; and that, although numerous letters had been sent to it at
this address by appellant and others, no responses were
forthcoming.
Finally, on September 9, 2002, the attorney for M & K
submitted her affidavit of compliance, averring that she had
"followed every requirement set forth in R.S.A. 510:4."
The district court noted that, although service was made on
the Secretary of State on September 12, 2002, no subsequent notice
of such service was given to Leasing Partners. It also commented
on the employment status of Mary Devlin, her lack of authority to
act for Leasing Partners, and the absence of any request by M & K
for an additional means of notice. It therefore found that service
had been defective in two ways: M & K did not provide proper notice
of service on the Secretary of State and it likewise failed to
properly serve the summons and complaint on the defendant itself.
The court did not reach a third issue raised in Leasing Partners'
motion to vacate – the possibility of relief under Fed. R. Civ. P.
60(b)(1).
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On appeal, M & K asserts that notice was properly given in
both respects. It points out that Leasing Partners was served at
its last known address, as required by the statute, and that notice
of the filing with the Secretary was adequate even though it
occurred before the actual delivery of the documents to the
Secretary.
II. Analysis
Before approaching the question of jurisdiction over the
person, we refer briefly to the question of our own appellate
jurisdiction, which we have put to the parties. What had concerned
us was whether, since the action appealed from was the setting
aside of a judgment, this was really a "final" decision as required
by 28 U.S.C. § 1291. Precedents applicable to the denial of a Rule
60(b) motion might not be pertinent to the granting of such a
motion. See Stubblefield v. Windsor Capital Group, 74 F.3d 990,
994-95 (10th Cir. 1996). On further reflection, we are satisfied
that the actions taken by the district court and the parties do
constitute sufficient finality. The court, noting that M & K had
(along with others) filed a stipulation of dismissal with
prejudice, ruled, "Therefore, the case is closed based on the
parties' stipulations." At oral argument, counsel for M & K
confirmed this fact. We therefore have no hesitation in treating
this as a final judgment. See United States v. Hoyts Cinemas
Corp., 380 F.3d 558, 564 (1st Cir. 2004).
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Coming to our main question, the governing principles are that
a default judgment issued without jurisdiction over a defendant is
void, that it remains vulnerable to being vacated at any time, and
that such jurisdiction depends on the proper service of process or
the waiver of any defect. Precision Etchings & Findings v. LGP Gem
Ltd., 953 F.2d 21, 23 (1st Cir. 1992). We and the parties agree
that New Hampshire law sets the standard for determining the
adequacy of the service of process and, therefore, jurisdiction.
And we are also mindful that we are not determining whether what
was done meets the requirements of the federal Constitution; we are
measuring what was done against the requirements of a specific
state statute.
In view of our ultimate conclusion that the essential notice
of service on the Secretary of State was defective, there is no
necessity to address the sufficiency of notice to defendant sent by
registered mail. We do not intimate that the district court was in
error in its ruling on this issue. But we are reluctant to fault
appellant for using the address chosen by Leasing Partners in
executing the lease-purchase agreement. We do not feel confident
that, on the facts of this case, New Hampshire courts would hold
such service unavailing.
Our standard of review is clear. Although orders on some Rule
60(b) motions, such as those asserting mistake or excusable neglect
under subsection(b)(1), ordinarily are reviewable only for abuse of
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discretion, a decision whether or not a judgment is void under
60(b)(4) allows no room for discretion. The review is de novo.
Honneus v. Donovan, 691 F.2d 1, 2 (1st Cir. 1982); 11 Charles Alan
Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and
Procedure § 2862, at 322-23 (2d ed. 1995).
Our interpretive guideline is equally clear. The most
prominent recent authority, South Down Recreation Ass'n v. Moran,
141 N.H. 484, 686 A.2d 314 (1996), is particularly pertinent in
that it underscores the importance of service on the Secretary of
State, where the long-arm statute requires it. In that case, out-
of-state defendants were served in their home community by a
sheriff of that state. They did not appear and were defaulted. In
the course of the New Hampshire proceeding, the trial court sua
sponte brought up the issue of personal jurisdiction and ruled that
"'nonresident defendants must be served by service on the Secretary
of State. . . . If that is unsuccessful, application may be made
to the court for alternative service.'" 141 N.H. at 485, 686 A.2d
at 315.
The New Hampshire Supreme Court, after stating that it
required "strict compliance with statutory requirements for service
of process," 141 N.H. at 487, 686 A.2d at 316, observed that
section 510:4, II specified that service by registered mail and on
the Secretary of State had the same effect as if a defendant had
been served at his abode, but noted that the statute did not
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authorize out-of-state personal service. See 141 N.H. at 488-89,
686 A.2d at 317. The only alternative method that the court
recognized was a request to the superior court to order additional
notice. See 141 N.H. at 489, 686 A.2d at 317. It therefore
affirmed the dismissal of the action even though defendant had been
served a copy of the writ by a sheriff in another state.
More recently, the court, citing only South Down, reversed a
trial court ruling that had vacated a deed conveying timber land to
an out-of-state enterprise and had awarded a New Hampshire
plaintiff over $2 million in damages. See Lunt v. Gaylor, 150 N.H.
96, 834 A.2d 367 (2003). It did so, notwithstanding that service
on the Secretary of State had been made and that registered mail,
according to counsel, had been sent to defendants, because there
was no record of the registered mail service and return receipts of
such service on file with the court. 150 N.H. at 96, 834 A.2d at
368.
Perhaps a case shedding light through an analogous problem is
helpful. In Adams v. Sullivan, 110 N.H. 101, 261 A.2d 273 (1970),
the brother-in-law of a defendant accommodated a deputy sheriff by
leaving a copy of the summons and complaint at defendant's home.
Even though the statute did not specify the manner in which
"leaving at his abode" should be interpreted, the court deemed
that, considered with other provisions, the writ is in reality
addressed to the sheriff. See 101 N.H. at 103-04, 261 A.2d at 275.
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The court affirmed dismissal of the suit on the ground that, though
actual notice was received, service was not executed by a deputy
sheriff. To us, this rather modest distinction on the question of
who can execute service renders it likely that a New Hampshire
court would take literally the requirement in section 510:4, II
that notice be given of the actual service on the Secretary of
State rather than the commencement of, or some preliminary stage
of, the process of serving.
Appellant, accepting the indispensability of service on the
Secretary of State and the standard of strict compliance, stoutly
maintains that all statutory requirements were fully met. It
contends that nothing in the statutory language requires service on
the Secretary before notice is given a defendant. It argues that,
had the legislature intended service to precede notice, it would
have required the notice to contain "proof" of service.
We are unable to accept this line of argument, both because
the wording of the statute does not permit it, and because of the
mischief that an open-ended interpretation would produce. To
consider the statutory language first, the statute proclaims the
effect of "service," defined as leaving a copy plus fee of $10 in
the office of the Secretary, as having the same effect as if
"served on the defendant at his abode . . . ." This is immediately
followed by the proviso, "provided that notice thereof . . . is
forthwith sent . . . to the defendant . . . ." This can mean only
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notice of the referent of "thereof," which is "service" – not
intention to make service, expectation that service will take
place, or commencement of action hopefully leading to service.
Here, notice was given of a preliminary step to service on the
Secretary, i.e., sending the documents to a county sheriff for
eventual service. No mention was made of payment of the $10 fee,
a necessary prerequisite to successful service.
Moreover, "forthwith," without any definite starting point,
loses all significance. In the case at bar, the time referenced
could have varied widely. As it happened, appellant maintains that
it meant that a copy of the process was properly sent immediately
after its letter requesting service was sent to a sheriff on
September 5. But if actual service had been the triggering event,
"forthwith" would mean that a copy of the process would have been
sent at least a week later.
In considering the impact of an interpretation of section
510:4, II that would stretch the meaning of "notice thereof" to
include notice of actions and stages short of completed service, we
observe that we are entering a mine field, that of court procedures
where certainty, uniformity, and clarity are prime prerequisites
for fair, stable, and orderly management of cases. There are
specific land mines that could be activated by the permissive
interpretation urged by appellant.
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Appellant has included in its Appendix the summons of an
amended complaint in this case, correcting the name of one of the
defendants. This contains a standard warning that failure to
answer the complaint being served within twenty days will result in
judgment of default "for the relief demanded in the complaint."
Appellant's interpretation would give rise to many questions. From
what time do the twenty or so days run? If only from the time of
service on the Secretary, how will a defendant know? If a
defendant fears that the starting date is that of his receipt of
the summons, and it happens that the Secretary is never served, is
this a tolerable procedure? Any actions taken by defendant to
respond would have proven needless.
If papers are lost, if fee advances are not promptly made, if,
for any reason, there are extreme delays or difficulties in
completing service on the Secretary, the available course for a
plaintiff is to request the superior court for "such additional
notice as the case requires." South Down, 141 N.H. at 489, 686
A.2d at 317. The question arises, if "service" includes "being
served," at what point should a delayed service on the Secretary
require resort to an effort to obtain additional notice? How would
a valid service be distinguished from a defective one? Would there
be mini-trials on such issues?
Finally, for cases such as this, which are removed to federal
court, will there be confusion and disputes about the running of
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time within which notices of removal can be filed? These and
possibly other questions underscore the time honored insistence on
precision in adhering to prescribed statutory methods of initiating
legal actions.
We therefore conclude that the failure to have effected
service on the Secretary of State prior to sending notice to
defendant-appellee constitutes a defect fatal to both service and
personal jurisdiction.
Affirmed.
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