NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued September 16, 2013
Decided December 18, 2013
Before
MICHAEL S. KANNE, Circuit Judge
ILANA DIAMOND ROVNER, Circuit Judge
ANN CLAIRE WILLIAMS, Circuit Judge
No. 13‐1567
In re:
LAMBROS J. KUTRUBIS, Appeal from the United States District
Debtor. Court for the Northern District of Illinois,
Eastern Division.
LAMBROS J. KUTRUBIS, No. 1:12‐cv‐04042
Defendant‐Appellant,
Sharon Johnson Coleman,
v. Judge.
GLORIA BOWMAN,
Plaintiff‐Appellee.
O R D E R
In this appeal from an adversary proceeding in bankruptcy, Defendant‐Appellant
Lambros J. Kutrubis asks us to overturn a default judgment against him because the
No. 13‐1567 Page 2
bankruptcy court lacked personal jurisdiction over him. But Kutrubis did not raise this
defense when he filed his motion to vacate the default judgment with the bankruptcy court.
Instead, he waited until appealing the bankruptcy court’s order to the district court to point
out the deficiency. The district court concluded that Kutrubis was too late. Lack of personal
jurisdiction falls within the “use it or lose it” category of defenses—a party who fails to
argue it at the first opportunity loses the right to raise it in the future. By filing a motion to
vacate the default judgment in the bankruptcy court on other, non‐jurisdictional grounds,
the district court determined that Kutrubis waived his right to contest the issue on appeal.
We agree with the district court. Kutrubis waived his personal jurisdiction challenge
by failing to bring it to the attention of the bankruptcy court in its motion to vacate default.
Because we see no reason to excuse his waiver, we affirm the district court’s judgment.
I. BACKGROUND
In January 2010, retired Cook County Circuit Court Judge Lambros J. Kutrubis filed
a bankruptcy petition in the United States Bankruptcy Court for the Northern District of
Illinois. Although Kutrubis initially filed a petition for reorganization under Chapter 11 of
the Bankruptcy Code, the case was ultimately converted into a Chapter 7 liquidation
proceeding.
One of Kutrubis’s creditors was Gloria Bowman, the daughter of Kutrubis’s ex‐wife.
In June 2010, Bowman (proceeding pro se) filed a proof of claim against Kutrubis’s
bankruptcy estate. Bowman asserted two claims: an unsecured claim of $11,500 arising out
of the resolution of Kutrubis’s divorce case and a secured claim of $1,000,000 for unpaid
rents from one of Kutrubis’s real estate properties. Kutrubis objected to both claims as
overstated and unsubstantiated. On January 25, 2011, the bankruptcy court disallowed
Bowman’s secured claim entirely but allowed her an unsecured claim of $2,500. In May
2011, Bowman filed a motion to compel Kutrubis to produce certain documents. On June
29, 2011, the court granted her motion in part and ordered Kutrubis to turn over certain
categories of documents to Bowman.
On September 12, 2011, Bowman filed a pro se adversary complaint objecting to the
discharge of Kutrubis’s debts under various provisions of the Bankruptcy Code. That same
day, Bowman issued a copy of the complaint and a summons to Kutrubis informing him
of the need to file a response within 30 days and to appear at an initial status hearing on
October 19, 2011. Bowman demonstrated her proper service of Kutrubis in the “Proof of
Service Summons Executed” which she filed with the court on September 20, 2011. Two
weeks later, Bowman filed an Amended Adversary Complaint. Kutrubis claims that he did
not receive the Amended Adversary Complaint. On December 27, 2011, the bankruptcy
court held a status hearing on Bowman’s amended pleading. At the hearing, Bowman
advised the court that she wished to file a second amended complaint.
No. 13‐1567 Page 3
On January 11, 2012, Bowman filed her Second Amended Complaint in which she pled
a new basis for the court to bar discharge of Kutrubis’s debts. The new count sought to
prevent discharge pursuant to 11 U.S.C. § 727(a)(6)(A) because of Kutrubis’s failure to
comply with the bankruptcy court’s June 2011 order requiring him to turn over documents
to Bowman. Bowman did not issue a summons in connection with her Second Amended
Complaint. Although she filed a document styled “Summons Service Executed on Lambros
J. Kutrubis,” the document had no summons attached. Kutrubis never filed an answer to
the Second Amended Complaint and never filed an appearance in Bowman’s adversary
action.
On February 28, 2012, Bowman filed a motion for default judgment on the claims
alleged in her Second Amended Complaint. The bankruptcy court granted the motion and
denied Kutrubis’s discharge “on account of his disobedience of court orders that were
entered in this case.”
Kutrubis filed a motion to vacate the default judgment pursuant to Federal Rules of
Civil Procedure 59(e) and 60(b)(1). In his motion, Kutrubis asserted two arguments: (1) the
court made a manifest error of law in discharging his debts; and (2) Kutrubis’s failure to
answer was due to excusable neglect. On April 3, 2012, the bankruptcy court denied the
motion. In its oral ruling, the court noted that Kutrubis had been served with Bowman’s
original adversary complaint a year before the entry of default and that during that time
he had made no effort to file an appearance or otherwise comply with court procedures.
After losing his bid to vacate the judgment, Kutrubis appealed the bankruptcy court’s
decision to the district court. On appeal, Kutrubis argued for the first time that the
bankruptcy court erred in entering default judgment against him because Bowman did not
properly serve him with the Second Amended Complaint. Without proper service,
Kutrubis argued, the bankruptcy court lacked personal jurisdiction over him in the
adversary proceeding.
The district court affirmed. While acknowledging that Bowman had not properly
served the Second Amended Complaint, the court held that Kutrubis had waived any
challenge to the bankruptcy court’s personal jurisdiction over him by failing to raise it in
his motion to vacate the default judgment. Kutrubis now appeals.
II. ANALYSIS
Kutrubis maintains that the district court erred in concluding that he waived his
personal jurisdiction claim by failing to raise it before the bankruptcy court. We review the
district court’s waiver determination for an abuse of discretion. See Singleton v. Wulff, 428
U.S. 106, 121 (1976) (“The matter of what questions may be taken up and resolved for the
first time on appeal is one left primarily to the discretion of the courts of appeals, to be
No. 13‐1567 Page 4
exercised on the facts of individual cases”); Interface Group‐Nevada, Inc. v. Trans World
Airlines, Inc. (In re Trans World Airlines, Inc.), 145 F.3d 124, 132 (3d Cir. 1998) (reviewing
district court’s waiver determination in bankruptcy appeal for abuse of discretion).
As an initial matter, Kutrubis argues that he was not properly served with Bowman’s
Second Amended Complaint. Federal Rule of Civil Procedure 5 applies in adversary
proceedings in bankruptcy courts. Bankr. R. 7005. Under Rule 5(a)(2), a pleading asserting
a new claim for relief against a party who is in default for failing to appear must be served
on that party pursuant to Rule 4. Fed. R. Civ. P. 5(a)(2). Rule 4 requires a party to serve a
summons with a copy of the complaint upon the defendant in order to effectuate service.
Fed. R. Civ. P. 4(c)(1). In other words, a party seeking to amend its complaint to add a new
claim against a party in default must serve the amended pleading along with summons on
the defaulted party. Fed. R. Civ. P. 4(c)(1), 5(a)(2).
Bowman did not serve her Second Amended Complaint in accordance with the Federal
Rules. At the outset, Bowman properly served her original adversary complaint on
Kutrubis, which required him to file an answer or otherwise respond within 30 days. But
Kutrubis did not file an answer or an appearance in the case, so he was a party in default.
See Peterson v. Islamic Rep. of Iran, 627 F.3d 1117, 1130 n.5 (9th Cir. 2010). In order for
Bowman to amend her adversary complaint to assert a new cause of action against
Kutrubis, she had to serve him with a summons and a copy of the amended pleading. Fed.
R. Civ. P. 4(c)(1), 5(a)(2). This she did not do. Generally speaking, her failure to effectuate
proper service would preclude the bankruptcy court’s exercise of personal jurisdiction over
Kutrubis and invalidate any resulting judgment by the court. See Lessee of Walden v. Craig’s
Heirs, 39 U.S. 147, 154 (1840) (“[S]ervice of process, or notice, is necessary to enable a Court
to exercise jurisdiction in a case … if jurisdiction be taken where there has been no service
of process, or notice, the proceeding is a nullity.”).
Despite the absence of personal jurisdiction, the district court did not err in declining
to invalidate the bankruptcy court’s judgment based on Kutrubis’s failure to raise this
procedural defect in a timely manner. “Because the requirement of personal jurisdiction
represents first of all an individual right, it can, like other such rights, be waived.” Ins. Corp.
of Ir., Ltd. v. Compagnie Des Bauxites De Guinee, 456 U.S. 694, 703 (1982). One way in which
a party may waive its personal jurisdiction objection is by failing to raise it at the earliest
opportunity. For example, the Federal Rules provide that a defendant waives a lack of
personal jurisdiction defense by failing to include it in its motion to dismiss, responsive
pleading, or amendment. See generally Fed. R. Civ. P. 12(h)(1). Similarly, if a party’s first
opportunity to raise personal jurisdiction comes about in a motion to vacate a default, and
the party does not make the argument, courts generally consider the issue waived. See e360
Insight v. Spamhaus Project, 500 F.3d 594, 601 (7th Cir. 2007) (“[A]lthough a party is not
No. 13‐1567 Page 5
required to file a Rule 60(b) motion in the district court to raise challenges to the entry of
a default judgment, this court has recognized that when a party does so, the failure to raise
certain defenses specifically may waive those defenses for purposes of appeal of the
underlying judgment”); Swaim v. Moltan Co., 73 F.3d 711, 718 (7th Cir. 1996) (“[I]n
personam jurisdictional challenges to default judgments are forfeited if not asserted in a
Rule 60(b) motion”); O’Brien v. R.J. O’Brien & Associates, Inc., 998 F.2d 1394, 1400‐01 (7th Cir.
1993) (holding that defendant waived insufficiency of process objection by failing to raise
it in motion to vacate default). Kutrubis did not raise the personal jurisdiction issue in his
motion to vacate before the bankruptcy court, instead invoking the “excusable neglect”
provision of Rule 60(b)(1). Because Kutrubis neglected to raise this issue at the first
available opportunity, the district court made no error in determining that he could not
raise it on appeal.
While conceding that he did not raise the personal jurisdiction issue at the appropriate
time, Kutrubis still contends that he should be excused from application of waiver
principles in this case. He argues that the district court should have overlooked his failure
to raise the service issue because Bowman never established a prima facie case that service
of process was correct. Kutrubis correctly identifies Bowman’s burden if Kutrubis had
challenged the court’s jurisdiction. See, e.g., Homer v. Jones‐Bey, 415 F.3d 748, 754 (7th Cir.
2005) (describing plaintiff’s burden to establish showing of service in response to personal
jurisdiction challenge raised in initial Rule 60(b)(4) motion to vacate). But Kutrubis did not
raise this issue with the bankruptcy court, so Bowman’s failure to make the required
jurisdictional showing is irrelevant. If Bowman’s service was so obviously deficient, then
Kutrubis should have raised it with the bankruptcy court in his motion to vacate. Instead,
he elected to pursue other avenues to avoid default before the bankruptcy court. Nor
should the bankruptcy court be expected to raise this deficiency on its own and do
Kutrubis’s homework for him. See e360 Insight, 500 F.3d at 599 (“We see no reason to
require the district court to raise sua sponte affirmative defenses, which may, of course, be
waived or forfeited, on behalf of an appearing party who elects not to pursue those
defenses for itself.”).
Finally, Kutrubis argues that we should exercise our discretion to consider his personal
jurisdiction challenge even though he raised it for the first time on appeal to the district
court. “It is the general rule, of course, that a federal appellate court does not consider an
issue not passed upon below.” Singleton, 428 U.S. at 120. However, a federal appeals court
has discretion to consider these issues in certain circumstances. See id. at 121 (“Certainly
there are circumstances in which a federal appellate court is justified in resolving an issue
not passed on below, as where the proper resolution is beyond any doubt … or where
‘injustice might otherwise result’”); Cnty. of McHenry v. Ins. Co. of the West, 438 F.3d 813, 820
(7th Cir. 2006) (“In the rare case in which failure to present a ground to the district court
No. 13‐1567 Page 6
has caused no one—not the district judge, not us, not the appellee—any harm of which the
law ought to take note, we have the power and the right to permit it to be raised for the
first time to us.”). We do not think that Kutrubis’s case warrants this extraordinary exercise
of discretion. To grant Kutrubis the relief he seeks would encourage strategic assertion of
the personal jurisdiction defense by parties, a practice sought to be curtailed by Rule 12(h)
and similar rules related to motions to vacate. See generally Rice v. Nova Biomedical Corp., 38
F.3d 909, 914 (7th Cir. 1994) (“It would defeat the purpose of requiring prompt assertion
of the defense of lack of personal jurisdiction if the defendant, having raised an objection
to personal jurisdiction at the outset as required, could without any penalty fail or refuse
to press it … and not seek to correct that impression until he appealed from an adverse
final judgment on the merits.”).
III. CONCLUSION
The judgment of the district court is AFFIRMED.