IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 16, 2008
No. 08-30114 Charles R. Fulbruge III
Clerk
STANLEY A. MILLAN
Plaintiff-Appellant
v.
USAA GENERAL INDEMNITY COMPANY, also known as USAA GIC
Defendant-Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
Before JOLLY, BARKSDALE, and HAYNES, Circuit Judges.
HAYNES, Circuit Judge:
Stanley Millan appeals the district court’s order dismissing his claims for
failing to effect timely service on the proper defendant under FED. R. CIV. P.
4(m). Although the district court’s dismissal was without prejudice, both parties
agree that the running of the applicable statute of limitations likely bars Millan
from refiling his claims. Because the record does not support dismissal of
Millan’s claims under the heightened standard of review applicable to effective
dismissals with prejudice, we reverse and remand as described below.
I. FACTS
No. 08-30114
In August 2005, Millan obtained a Standard Flood Insurance Policy for his
residence issued by USAA General Indemnity Corporation (USAA GIC) under
the National Flood Insurance Program. Hurricane Katrina damaged Millan’s
residence later that month. Millan attempted to resolve his claim with USAA,1
a company division of USAA GIC but not the issuer of Millan’s flood policy, but
USAA denied Millan’s proof of flood loss. Millan appealed USAA’s denial to
FEMA, which granted Millan’s request in part, recommending that “USAA”
review Millan’s flood claim and use rates from Home Building Association of
New Orleans to calculate his loss. At some point, Millan received a check from
USAA, but he contended it was inadequate and returned it. Nothing suggests
that USAA or USAA GIC took any other action with respect to Millan.
On May 18, 2007, Millan, a practicing attorney, filed a pro se suit against
USAA alleging breach of contract and a number of other claims. On August 24,
2007, Millan attempted to serve USAA via CT Corporation, but the service was
returned unexecuted because, under Louisiana law, the Louisiana Secretary of
State serves as the agent for service of process for foreign insurers. LA. REV.
STAT. ANN. § 22:1253. Millan alleges that information on the Secretary of State’s
website led him to believe that CT Corporation served as USAA’s agent for
service of process.2
1
It appears to be disputed exactly which entity Millan dealt with in the pre-suit
negotiations. Appellee suggests it was USAA GIC, and the district court’s opinion used the
name “USAA GIC.” Millan, however, argues that he dealt with USAA and that USAA’s
involvement in the pre-suit negotiations is one of the reasons he initially sued the wrong
entity. No evidentiary hearing was conducted, and the district court did not purport to make
findings of fact on these issues. The district court’s opinion cites some facts not supported by
the evidence in the record. For example, it states that USAA GIC sent a check to Millan,
whereas Millan filed a copy of the check stub and check showing the payor as “United States
Automobile Association [USAA].” We use the version of the facts supported by uncontradicted
evidence.
2
While service under state law is one method of service under the Federal Rules of Civil
Procedure, it is not the only one. No one addressed, so we do not, whether service upon CT
Corporation was proper under Fed. R. Civ. P. 4(h)(1)(B), allowing service upon “any other agent
authorized by appointment or by law.” (emphasis added).
2
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On September 6, 2007, the district court issued an order that Millan
interpreted to extend the time for filing service until October 9, 2007. The order
reads in full:
A review of the record indicates that no service of the complaint has
been made upon the defendant(s).
Rule 4(m) of the Federal Rules of Civil Procedure provides:
If service of the summons and complaint is not made upon a
defendant within 120 days after the filing of the complaint, the
Court, upon motion or on its own initiative after notice to the
plaintiff, shall dismiss the action without prejudice as to that
defendant or direct that service be effected within a specified time;
provided that if the plaintiff shows good cause for the failure, the
Court shall extend the time for service for an appropriate period.3
Accordingly;
IT IS ORDERED that on or before October 9, 2007, plaintiff shall
file into the record the return of service of process that has been
effected on the defendant(s). Failure to do so will result, without
further notice, in the DISMISSAL of any unserved defendants.
Thereafter, Millan attempted service on USAA through the Louisiana Secretary
of State, but the service was returned unexecuted because Millan failed to pay
the proper fee. Millan corrected this error on September 21, 2007, timely serving
USAA under his interpretation of the district court’s September 6, 2007 order,
but four days after the 120-day deadline for service under Rule 4(m). It is
undisputed that Millan filed the return of service by the order’s October 9
deadline.
USAA GIC entered the case and sought dismissal of Millan’s claims on a
number of grounds, including failure to effectuate service by the Rule 4(m)
deadline of September 17, 2007. Millan opposed the motion, arguing that the
3
The language of Rule 4 was amended as part of the general restyling of the Civil Rules
effective December 1, 2007. The changes to Rule 4(m) have no bearing on the issues in this
appeal.
3
No. 08-30114
district court’s September 6, 2007 order extended the service deadline to October
9, 2007, and, alternatively, that the ambiguous nature of the order created “good
cause” for a four-day extension. On November 6, 2007, USAA GIC served a reply
brief, arguing for the first time that Millan sued and failed to timely serve the
correct USAA entity, namely USAA GIC. In an attempt to cure this defect,
Millan filed, on November 16, 2007, an amended complaint naming the proper
defendant, USAA GIC.
On November 20, 2007, the district court entered an order dismissing
Millan’s complaint without prejudice on the ground that Millan had not shown
“good cause” for failing to timely effect service. In response to Millan’s argument
that his amended complaint naming USAA GIC should relate back to his
original complaint, the district court found that Millan had not filed an amended
complaint.4
Within the requisite ten-day period, Millan filed a motion to amend or
alter the district court’s judgment under FED. R. CIV. P. 59(e), arguing that
significant confusion as to the proper identity of the defendant led him to
erroneously sue USAA instead of USAA GIC. The district court denied Millan’s
motion, holding that regardless of Millan’s recent remedial action in filing an
amended complaint naming USAA GIC, Millan’s failure to sue and serve the
proper party for six months warranted dismissal of his complaint. Millan’s
claims are before this Court.
II. DISCUSSION
USAA GIC’s motion to dismiss initially rested on one defect – the failure
to serve any defendant within the 120 days prescribed by Rule 4(m). In its reply,
it raised a separate defect – when Millan did serve someone, he served an
improper defendant, USAA. Thus, USAA GIC argues to this Court, Millan both
4
The district clerk’s delay in entering the amended complaint into the record caused
the district court’s misapprehension that Millan had not filed an amended complaint.
4
No. 08-30114
failed to effectuate timely service and failed to sue the proper defendant. We
address each issue in turn.
On the question of whether service on USAA was timely, Millan argues
that the district court’s September 6, 2007 order established “good cause” under
Rule 4(m) mandating a four-day extension for service because the order either
extended the deadline for service until October 9, 2007, or, alternatively, the
order can be read reasonably to grant such an extension.
A. Service as to USAA
Rule 4(m) permits a district court to dismiss a case without prejudice if the
plaintiff fails to serve the defendant within 120 days of filing the complaint.
Thompson v. Brown, 91 F.3d 20, 21 (5th Cir. 1996). If, however, the plaintiff can
establish good cause for failing to serve the defendant, the court must extend the
time for service. Id. Even if the plaintiff lacks good cause, the court has
discretionary power to extend the time for service. Id. A discretionary extension
may be warranted, “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.” FED. R. CIV. P. 4(m) advisory committee’s note (1993).
Assuming arguendo that Millan cannot show good cause, we find that the
district court erred in refusing to grant Millan additional time for service under
the discretionary provisions of Rule 4(m). Millan argues, and USAA GIC agrees,
that where the applicable statute of limitations likely bars future litigation, a
district court’s dismissal of claims under Rule 4(m) should be reviewed under the
same heightened standard used to review a dismissal with prejudice.5 See
Boazman v. Econ. Lab., Inc., 537 F.2d 210, 213 (5th Cir. 1976) (“where the
dismissal is without prejudice, but the applicable statute of limitations probably
bars further litigation, the standard of review of the District Court’s dismissal
5
The parties agree that the limitations period of 42 U.S.C. § 4072 would likely bar
Millan from refiling his claims.
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No. 08-30114
should be the same as is used when reviewing a dismissal with prejudice.”). We
have recognized that dismissal with prejudice “is an extreme sanction that
deprives a litigant of the opportunity to pursue his claim.” Gonzalez v. Firestone
Tire & Rubber Co., 610 F.2d 241, 247 (5th Cir. 1980). Consequently, this Court
has limited district courts’ discretion to dismiss claims with prejudice. See Price
v. McGlathery, 792 F.2d 472, 474 (5th Cir. 1986). A district court’s “dismissal
with prejudice is warranted only where ‘a clear record of delay or contumacious
conduct by the plaintiff’ exists and a ‘lesser sanction would not better serve the
interests of justice.’” Gray v. Fid. Acceptance Corp., 634 F.2d 226, 227 (5th Cir.
1981) (quoting Durham v. Fla. East Coast Railway Co., 385 F.2d 366, 368 (5th
Cir. 1967), and Brown v. Thompson, 430 F.2d 1214, 1216 (5th Cir. 1970)).
Additionally, where this Court has affirmed dismissals with prejudice, it has
generally found at least one of three aggravating factors: “(1) delay caused by
[the] plaintiff himself and not his attorney; (2) actual prejudice to the defendant;
or (3) delay caused by intentional conduct.” McGlathery, 792 F.2d at 474.
Millan and USAA GIC agree that dismissal of Millan’s claims will likely
have the effect of dismissal with prejudice and thus should be reviewed under
this heightened standard. Although the heightened standard of review is
generally applied to dismissals for failure to prosecute after the defendant has
been served, we have also used it to review dismissals for failure to prosecute
where the underlying basis was untimely or insufficient service. Sealed
Appellant v. Sealed Appellee, 452 F.3d 415, 416-18 (5th Cir. 2006); Porter v.
Beaumont Enters. & Journal, 743 F.2d 269, 271-72 (5th Cir. 1984); Veazey v.
Young’s Yacht Sale & Serv., Inc., 644 F.2d 475, 476-77 (5th Cir. 1981).6 We fail
6
Our Court recently issued an unpublished (and, therefore, not binding) opinion
seeming to apply a more stringent analysis of the plaintiff’s conduct than this standard of
review suggests to a Rule 4(m) dismissal. Newby v. Enron Corp., No. 06-20658, 2008 U.S. App.
LEXIS 14041, at *12-*13 (5th Cir. July 2, 2008) (unpublished). However, that case involved
particularly egregious facts where the plaintiff, unlike this one, never attempted service within
6
No. 08-30114
to see any principled reason why a district court’s dismissal of claims due to a
delay between filing and service should be subjected to a lower standard of
review merely because the district court characterizes the delay as a failure to
timely or properly serve the defendant, as opposed to a failure to prosecute.
Indeed, the heightened standard of review is to be applied to the “equivalent” of
a Rule 41(b) dismissal. Berry v.CIGNA/RSI-CIGNA, 975 F.2d 1188, 1190 (5th
Cir. 1992). Accordingly, we apply that standard to review the district court’s
dismissal of Millan’s claims under Rule 4(m).
1. Clear record of delay or contumacious conduct
This Court has recognized that “delay which warrants dismissal with
prejudice must be longer than just a few months; instead, the delay must be
characterized by ‘significant periods of total inactivity.’” McNeal v. Papasan, 842
F.2d 787, 791 (5th Cir. 1988) (quoting John v. Louisiana, 828 F.2d 1129, 1131
(5th Cir. 1987)). Our precedents have generally reserved dismissals with
prejudice for “egregious and sometimes outrageous delays.” Rogers v. Kroger
Co., 669 F.2d 317, 321 (5th Cir. 1982). “In short, these are cases where the
plaintiff’s conduct has threatened the integrity of the judicial process, often to
the prejudice of the defense, leaving the court no choice but to deny that plaintiff
its benefits.” Id.
We do not perceive a clear record of delay in this case. Millan served
USAA four days after the Rule 4(m) deadline for service, after making two
attempts at service within the 120 days.
Likewise, the record does not establish that Millan’s delays in effecting
service resulted from contumacious conduct. We have recognized that “it is not
a party’s negligence–regardless of how careless, inconsiderate, or
understandably exasperating–that makes conduct contumacious; instead it is
the 120 days and failed to attempt service for more than 1,000 days. Id. at *11. Even if Newby
were binding, it is inapposite here.
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No. 08-30114
the ‘stubborn resistance to authority’ which justifies a dismissal with prejudice.”
McNeal, 842 F.2d at 792 (quoting John, 828 F.2d at 1131-32); see also Gray, 634
F.2d at 227-28 (finding delay caused by plaintiff’s negligent, but not
contumacious conduct, insufficient to warrant dismissal with prejudice).
Millan’s conduct, while certainly negligent, cannot be characterized as
contumacious. Indeed, Millan complied with the district court’s order by filing
the return of service upon USAA into the record by October 9, 2007. The court
then issued an order in the case to “pass for 30 days; obtain answer or default,”
suggesting that the court believed Millan had complied with its order. This
conduct is far short of “contumacious.”
2. Aggravating Factors
Further, the record in this case does not contain any of the three
aggravating factors listed above. First, arguably the delay in this case resulted
from Millan’s actions in his capacity as a lawyer, rather than in his capacity as
a litigant. Second, the only potential prejudice identified by USAA GIC is that
of having to defend the case on its merits and the possibility of someone having
to pay damages to Millan. That is not the sort of prejudice that requires
dismissal. Finally, as mentioned, the delay in this case resulted from Millan’s
negligence; no evidence shows intentional misconduct.
B. Service as to USAA GIC
USAA GIC, of course, was not “served” in the sense of receiving a
summons with its name on it until more than a month after even the October 9
date in the district court’s order and approximately two months after the Rule
4(m) deadline. USAA GIC’s original motion to dismiss made no mention of the
alleged misnomer; instead, it treated the service as if it were service on USAA
GIC and attacked only the delay in initial service. It also made a number of
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No. 08-30114
substantive arguments about the merits of the case, not pertinent here. It was
only in USAA GIC’s reply brief, served November 6, 2007, that USAA GIC stated
that the wrong entity had been served. Shortly after that document was filed,
on November 16, 2007, Millan filed an amended complaint naming the proper
defendant, USAA GIC. While we have recognized that delays occurring between
filing and service are more serious than those occurring following service, Porter,
743 F.2d at 272, here, USAA GIC received notice of Millan’s claims just days
after the Rule 4(m) deadline when Millan served USAA. This fact is evidenced
by USAA GIC’s appearance on behalf of USAA shortly after Millan served
USAA. These facts do not establish a clear record of delay and, indeed, suggest
the opposite. See Callip v. Harris County Child Welfare Dep’t, 757 F.2d 1513,
1519-21 (5th Cir. 1985) (clear record of delay where plaintiff missed nine
deadlines over two and one-half years); Morris v. Ocean Sys., Inc., 730 F.2d 248,
252 (5th Cir. 1984) (holding that court “exceeded its well-defined discretion” in
dismissing for failure to prosecute when only eight months elapsed from date of
the first status conference to the date of its dismissal).
The district court’s original order reflected an incorrect belief that no
amended complaint naming the proper defendant had been filed. Upon motion
for reconsideration, the court noted the filing of the amended complaint but
concluded that Millan did not show “good cause.” The district court did not
consider the factors outlined above. Nor did it analyze any of the issues raised
by USAA GIC’s failure to raise this issue sooner. It did not analyze the
substantial evidence filed by Millan suggesting that USAA GIC caused the
confusion as to the proper party by repeatedly sending materials under the
USAA name. Indeed, USAA GIC’s original motion to dismiss actually stated
that it was served and then focused on the four-day delay discussed above.
Because the district court had already determined that the original service of
process was untimely served, it did not fully consider the issues presented by the
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No. 08-30114
amended complaint. We decline to address these issues for the first time on
appeal. Instead, we remand for consideration of all factors under FED. R. CIV.
P 15(c) in view of our holding that the original service delay on USAA did not
justify dismissal and in view of the authorities cited above.
III. CONCLUSION
Accordingly, we REVERSE and REMAND for further proceedings
consistent with this opinion.
10