DAVID TEMPLE v. SECTOR LLC (2024)

OPINION AND ORDER (1) GRANTING DEFENDANT'S MOTION TO SET ASIDE ENTRY OF DEFAULT, ECF NO. 7; (2) SETTING ASIDE CLERK'S ENTRY OF DEFAULT, ECF NO. 5; (3) DENYING PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT, ECF NO. 10; AND (4) DIRECTING PLAINTIFF TO SERVE PROCESS ON DEFENDANT

The facts of this case lay a straightforward path through a thicket of procedural undergrowth. The plaintiff believed he had properly served the defendant through certified mail and sought entry of default, which was entered. But the sufficiency of that method of service is squarely at issue here: Does service of process by only certified mail satisfy the stringent requirements needed for this Court to exercise jurisdiction over a Michigan LLC? As explained below, the answer is “No.”

I.

On June 26, 2023, Plaintiff David Temple filed a complaint against Defendant Sector 7, alleging unpaid overtime and retaliation under the Fair Labor Standards Act of 1938, 29 U.S.C. § 201 et seq. ECF No. 1. A summons was issued the next day. ECF No. 2.

On July 25, 2023, Plaintiff filed a proof of service of the complaint and summons. ECF No. 3. According to the proof of service, Plaintiff “served the summons on Brian Hernandez (Melanie LaDuke), who is designated by law to accept service of process on behalf of Sector 7, LLC, on 7/20/2023 by U. S. Certified Mail, RRR Article No. 9589 0710 5270 0863 8524 54.” Id. at PageID.12 (cleaned up). The certified-mail receipts demonstrate that the complaint and summons were mailed to Brian Hernandez and that Melanie LaDuke signed for the package on July 20, 2023. Id. at PageID.13. Thus, Defendant presumably had until August 10, 2021, to answer the complaint. See FED. R. CIV. P. 12(a)(1)(A)(i).

On August 17, 2023, Plaintiff sought entry of default from the Clerk of this Court, see ECF No. 4, which was entered the next day, ECF No. 5.

On September 14, 2023, Defendant filed a motion to set aside the Clerk's entry of default. ECF No. 7. Plaintiff responded to Defendant's motion, ECF No. 9, and then filed a motion for default judgment, ECF No. 10, which has been fully briefed, ECF Nos. 12; 13.

II.

“The court may set aside an entry of default for good cause ․” FED. R. CIV. P. 55(c). But, first, this Court “must establish whether service of process was proper” because “proper service of process is required for a court to have personal jurisdiction over a defendant” Lu v. SAP Am., Inc., No. 22-1253, 2022 WL 13983546, at *3 (6th Cir. Oct. 24, 2022) (citing Canaday v. Anthem Cos., 9 F.4th 392, 395 (6th Cir. 2021)). “Accordingly, ‘if service of process was not proper, the court must set aside an entry of default.’ ” Id. (quoting O.J. Distrib., Inc. v. Hornell Brewing Co., 340 F.3d 345, 352 (6th Cir. 2003)).

Plaintiff has not perfected service of process on Defendant. Plaintiff primarily focuses on whether he mailed service of process to the correct resident agent. But the “who” does not matter at this juncture. His problem is that he did not personally serve anyone, as he was required to do.

Plaintiff attempted to serve process on an LLC—but only by certified mail. See ECF No. 3. “Certified mail is not sufficient service of process on a corporation or an LLC under the Federal Rules of Civil Procedure or the Michigan Court Rules.” Cincinnati Ins. v. Omega Elec. & Sign Co., 652 F. Supp. 3d 879, 883 (E.D. Mich. 2023) (citations omitted). Here, Civil Rule 4(h) governs “the proper manner of service for LLCs.” Wyatt v. Safeguard Props. LLC, No. 2:16-CV-13312, 2018 WL 3547099, at *2 (E.D. Mich. July 24, 2018).

For LLCs, service of process must be either (1) sufficient under the law of the forum state or (2) personally served on an authorized agent, as well as mailed in certain circumstances. See FED. R. CIV. P. 4(h)(1). The law of the forum state, Michigan, requires in relevant part either (1) personal service on a registered agent or (2) personal service on “a member or other person in charge” and “registered mail, addressed to the registered office of the limited liability company.” Mich. Ct. R. 2.105(H)(1)-(2).

Here, nothing in the record indicates that Plaintiff personally served the complaint or summons on Defendant. So Plaintiff's service of process is insufficient under the laws of Michigan and the United States. Cincinnati Ins., 652 F. Supp. 3d at 883 (“Mailing must be accompanied by personal service of the agent․ Thus, as a matter of law, plaintiff insufficiently served [defendant] by sending process through certified mail.” (first citing Etherly v. Rehabitat Sys. of Mich., No. 2:13-CV-11360, 2013 WL 3946079, at *1, 4–5 (E.D. Mich. July 31, 2013); and then citing Bullington v. Corbell, 809 N.W.2d 657, 664 (Mich. Ct. App. 2011))).

Because the predicate entry of default will be set aside, Plaintiff's motion for a default judgment must be denied. Indeed, as Plaintiff notes, “[t]o obtain judgment by default, [he] must first request a default from the clerk pursuant to Rule 55(a).” ECF No. 10 at PagelD. 146–47 (citing Shepard Claims Servs., Inc. v. William Darrah &Assocs., 796 F.2d 190, 193 (6th Cir. 1986). No default, no default judgment.

For these reasons, Defendant's motion to set aside entry of default will be granted, and Plaintiff's motion for default judgment will be denied.

The next step is for Plaintiff to serve Defendant. Plaintiff had to perfect service of process by September 24, 2023. See FED. R. CIV. P. 4(m) (“If a defendant is not served within 90 days after the complaint is filed, the court—on motion or on its own after notice to the plaintiff—must dismiss the action without prejudice against that defendant or order that service be made within a specified time.”); ECF No. 1 (filed on June 26, 2023); see also E.D. Mich. LR 41.2. But he has still not done so some ten months since filing his complaint. Therefore, Plaintiff will be directed to serve process on Defendant on or before May 1, 2024. If Plaintiff does not do so, then the case will be dismissed under Civil Rules 4(m) and 41(b).¹

III.

Accordingly, it is ORDERED that Defendant's Motion to Set Aside Clerk's Entry of Default, ECF No. 27, is GRANTED.

Further, it is ORDERED that the Clerk's Entry of Default, ECF No. 5, is SET ASIDE.

Further, it is ORDERED that Plaintiff's Motion for Default Judgment, ECF No. 10, is DENIED.

Further, it is ORDERED that Plaintiff is DIRECTED to serve a complaint and summons upon Defendant on or before May 1, 2024, in full compliance with Civil Rule 4 and Michigan Court Rule 2.105(H). To that end, Plaintiff must timely present to the Clerk's Office three completed summonses to be issued for service upon Defendant. After Plaintiff has perfected service of the complaint and summons upon Defendant, Plaintiff must prove it by filing a completed copy of the Return of Service here. If Plaintiff fails any of these obligations, the above-captioned case will be dismissed without prejudice under Civil Rules 4(m) and 41(b).

FOOTNOTES

1.   “To avoid dismissal, Plaintiff must [demonstrate] good cause for failing to serve process ․” Koehn v. 313 Presents, LLC, 649 F. Supp. 3d 465, 467 (E.D. Mich. 2023) (citing Friedman v. Est. of Presser, 929 F.2d 1151, 1157 (6th Cir. 1991)).

SUSAN K. DeCLERCQ United States District Judge