United States District Court, S.D. Alabama, Southern Division
REPORT AND RECOMMENDATIONS
KATHERINE P. NELSON UNITED STATES MAGISTRATE JUDGE.
This
action is before the Court on the motion for default judgment
under Federal Rule of Civil Procedure 55(b) (Doc. 15) filed
by Plaintiff GRUPO HGM Tecnologias Submarina, S.A.
(“Grupo”). The assigned District Judge has
referred the motion to the undersigned Magistrate Judge for
appropriate action under 28 U.S.C. § 636(a)-(b), Federal
Rule of Civil Procedure 72, and S.D. Ala. GenLR 72(a).
See (Doc. 19 at 2); (5/2/2019 electronic reference);
S.D. Ala. GenLR 72(b). Defendant Oddgeir Ingvartsen has
submitted pro se a document styled “Defendants
Respond to Plaintiff Application for Default Judgement and
this case overall” (Doc. 16), purportedly on behalf of
both himself and Defendant Energy Subsea, LLC (“Energy
Subsea”), that opposes Grupo's motion and also
requests that this case be dismissed or transferred to a
Florida court. Grupo subsequently submitted a reply in
further support of its motion for default judgment (Doc. 18).
To date, neither Defendant has submitted any additional
filings with the Court. Upon consideration, and pursuant to
§ 636(b)(1)(B)-(C) and Rule 72(b)(1), the undersigned
will recommend that the Court (1) deny Ingvartsen any relief
requested in his pro se response (Doc. 16), and (2)
deny Grupo's motion for default judgment without
prejudice.
I.
General Legal Standards
“When
a defendant has failed to plead or defend, a district court
may enter judgment by default. Fed.R.Civ.P. 55(b)(2).
“Because of [the Eleventh Circuit Court of
Appeals's] strong policy of determining cases on their
merits, however, default judgments are generally disfavored.
While a defaulted defendant is deemed to admit the
plaintiff's well-pleaded allegations of fact, he is not
held to admit facts that are not well-pleaded or to admit
conclusions of law. Entry of default judgment is only
warranted when there is a sufficient basis in the pleadings
for the judgment entered.” Surtain v. Hamlin
Terrace Found., 789 F.3d 1239, 1244-45 (11th Cir. 2015)
(per curiam) (quotations, footnote, and some citations
omitted). See also Eagle Hosp. Physicians, LLC
v. SRG Consulting, Inc., 561 F.3d 1298, 1307 (11th Cir.
2009) (“ ‘A default judgment is unassailable on
the merits, but only so far as it is supported by
well-pleaded allegations.' ” (quoting
Nishimatsu Const. Co. v. Houston Nat. Bank,
515 F.2d 1200, 1206 (5th Cir. 1975))).
Conceptually, … a motion for default judgment is like
a reverse motion to dismiss for failure to state a claim.
See Wooten v. McDonald Transit Assocs., Inc., 775
F.3d 689, 695 (5th Cir. 2015) (stating in the context of a
motion for default judgment, “whether a factual
allegation is well-pleaded arguably follows the familiar
analysis used to evaluate motions to dismiss under Rule
12(b)(6)”).
When evaluating a motion to dismiss, a court looks to see
whether the complaint “contain[s] sufficient factual
matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.' ” Ashcroft v.
Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173
L.Ed. 2D 868 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167
L.Ed.2d 929 (2007)). This plausibility standard is met
“when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Id.
(citing Twombly, 550 U.S. at 556, 127 S.Ct. at
1965).
Surtain, 789 F.3d at 1245.
Moreover,
in cases involving a default judgment, “there must be
strict compliance with the legal prerequisites establishing
the court's power to render the judgment.”
Varnes v. Local 91, Glass Bottle Blowers Ass'n of
U.S. & Canada, 674 F.2d 1365, 1369 (11th Cir. 1982).
II.
Procedural History
Grupo
commenced this civil action on October 4, 2018, by filing a
four-count complaint (Doc. 1) with the Court against
Ingvartsen and Energy Subsea. Grupo subsequently filed
evidence indicating that Ingvartsen was served with the
summons and complaint on October 11, 2018 (see Doc.
7), and that Energy Subsea was served on October 19, 2018
(see Doc. 11). Thus, Ingvartsen and Energy Subsea
were required to serve their responsive pleadings by November
1 and November 9, 2018, respectively. See Fed. R.
Civ. P. 12(a)(1). After those deadlines passed with no
response from either Defendant, on Grupo's applications
(see Docs. 12, 13) the Clerk of Court entered
default against both Defendants on November 14, 2018, under
Federal Rule of Civil Procedure 55(a). (See Doc.
14). Neither Defendant appeared in this action following
entry of default, and on February 11, 2019, Grupo moved the
Court for entry of default judgment against the Defendants
under Federal Rule of Civil Procedure 55(b)(2). (See
Doc. 15). The motion for default judgment was served on the
Defendants at the same addresses where they were served with
the summons and complaint. (See Doc. 15 at 3).
On
February 22, 2019, Ingvartsen filed pro se a
document styled “Defendants Respond to Plaintiff
Application for Default Judgement and this case overall,
” purportedly on behalf of both Defendants. (Doc. 16).
On February 27, 2019, the District Judge assigned to this
case entered an order informing Ingvartsen that, as a
non-attorney, he could not file a response or otherwise
defend this case on behalf of artificial entity Energy
Subsea. (See Doc. 17). The District Judge also
stated that the Court would hold the motion for default
judgment in abeyance until April 1, 2019, in order to allow
both Defendants the opportunity to obtain counsel. (See
id.). Finally, the District Judge directed Ingvartsen
“to provide appropriate contact information to the
Clerk of Court for the purposes of addressing the current
issues before the Court.” (Id.).
The
Court has heard nothing further from either Defendant since
Ingvartsen filed his pro se response on February 22,
2019. On April 8, 2019, Grupo filed a reply (Doc. 18) to
Ingvartsen's response, noting that as of that morning it
had “not received any notification that Defendants
complied with the Court's directives.” On May 2,
2019, the District Judge entered another order noting the
lack of additional filings from either Defendant and warning
the Defendants “that the Court intends to proceed with
this case including the Motion for Default Judgment with or
without counsel for the Defendants.” (Doc. 19). The
District Judge further noted: “At present, the Court
will only consider the letter previously received on behalf
of Defendant Ingvartsen. There is no appropriate response on
file for Energy Subsea LLC.” (Id.). Finally,
the District Judge referred this action to the undersigned
“pursuant to 28 U.S.C. § 636(b)(1) … for
consideration and disposition or recommendation on all
pretrial matters as may be appropriate.”
(Id.).
III.
Analysis
A.
Subject Matter Jurisdiction
“It
is . . . axiomatic that the inferior federal courts are
courts of limited jurisdiction. They are ‘empowered to
hear only those cases within the judicial power of the United
States as defined by Article III of the Constitution,'
and which have been entrusted to them by a jurisdictional
grant authorized by Congress.” Univ. of S. Ala. v.
Am. Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999)
(quoting Taylor v. Appleton, 30 F.3d 1365, 1367
(11th Cir. 1994)). Accordingly, “it is well settled
that a federal court is obligated to inquire into subject
matter jurisdiction sua sponte whenever it may be
lacking.” Id. See also Arbaugh v. Y&H
Corp., 546 U.S. 500, 514, (2006) (“[C]ourts,
including this Court, have an independent obligation to
determine whether subject-matter jurisdiction exists, even in
the absence of a challenge from any party.”).
“When a plaintiff files suit in federal court, [the
plaintiff] must allege facts that, if true, show federal
subject matter jurisdiction over [the] case exists.”
Travaglio v. Am. Exp. Co., 735 F.3d 1266, 1268 (11th
Cir. 2013).
The
complaint alleges diversity of citizenship under 28 U.S.C.
§ 1332 as the sole basis for subject matter
jurisdiction. Subject to inapplicable exceptions, §
1332(a)(2) grants district courts “original
jurisdiction of all civil actions where the matter in
controversy exceeds the sum or value of $75, 000, exclusive
of interest and costs, and is between… citizens of a
State and citizens or subjects of a foreign
state…” Plaintiff Grupo is alleged to be a
Panamanian corporation with its principal place of business
in Panama (see Doc. 1 at 1), thus making it a
citizen of the foreign state of Panama. See 28 U.SC.
§ 1332(c)(1). Defendant Ingvartsen, a natural person, is
alleged to be domiciled in, and therefore a citizen of, the
state of Alabama.[1] (Doc. 1 at 1). Ingvartsen is also alleged
to be the only member of Defendant Energy Subsea, a limited
liability company, thus also making Energy Subsea a citizen
of Alabama.[2] (Doc. 1 at 1 - 2). Because neither
Defendant shares Grupo's citizenship, there is complete
diversity among the parties. See Triggs v. John Crump
Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998)
(“Diversity jurisdiction requires complete diversity;
every plaintiff must be diverse from every
defendant.”). Section 1332(a)'s requisite minimum
amount in controversy is also satisfied because Grupo
expressly seeks damages exceeding $75, 000, exclusive of
interest and costs. Thus, the undersigned is satisfied that
subject matter jurisdiction exists in this action.
B.
Ingvartsen's Response
Ingvartsen's
pro se response (Doc. 16) was purportedly filed on
behalf of both himself and Energy Subsea. However, as the
Court's prior orders (Docs. 17, 19) informed him,
Ingvartsen, who is not an attorney licensed to practice in
this Court, can defend this action on his own behalf but
cannot do so on behalf of Energy Subsea, an artificial
entity. “The rule is well established that...an
artificial entity that can act only through agents, cannot
appear pro se, and must be represented by
counsel.” Palazzo v. Gulf Oil Corp., 764 F.2d
1381, 1385 (11th Cir. 1985). See also Nat'l Indep.
Theatre Exhibitors, Inc. v. Buena Vista Distribution
Co., 748 F.2d 602, 609 (11th Cir. 1984)
(“[C]orporations must always be represented by legal
counsel.”). “The general rule applies even where
the person seeking to represent [a] corporation is its
president and major stockholder[, ]” Palazzo,
764 F.2d at 1385 - or, as here, in the case of an LLC, its
sole, managing member. Thus, as the Court previously informed
Ingvartsen, his “Response filed shall only be on behalf
of Defendant Oddgeir Ingvartsen as an individual
person.” (Doc. 17 at 2. See also Doc. 19 at 2
(“At present, the Court will only consider the letter
previously received on behalf of Defendant Ingvartsen. There
is no appropriate response on file for Energy Subsea
LLC.”)). Accordingly, the undersigned will hereinafter
treat Ingvartsen's response (Doc. 16) as only being filed
on his own behalf and will deem Energy Subsea as having filed
no response at all. Nevertheless, given that “there
must be strict compliance with the legal prerequisites
establishing the court's power to render [a default]
judgment[, ]” Varnes, 674 F.2d at 1369, the
undersigned will consider Ingvartsen's representations as
to Energy Subsea in addressing the issues of service of
process and personal jurisdiction.[3]
To the
extent Ingvartsen's response can be construed as a motion
to set aside default, [4] it is due to be denied. Under Federal Rule
of Civil Procedure 55(c), the “court may set aside an
entry of default for good cause…” The Eleventh
Circuit has described Rule 55(c)'s “good
cause” standard as follows:
We have … noted that “ ‘[g]ood cause'
is a mutable standard, varying from situation to
situation.” Compania Interamericana Export-Import,
S.A. v. Compania Dominicana de Aviacion, 88 F.3d 948,
951 (11th Cir. 1996) (citation omitted). While the standard
must be construed to have substance, we have nonetheless
described it as a “liberal one.” Id.
(citation omitted). As we have explained, “ ‘good
cause' is not susceptible to a precise formula....”
Id. Rather, we evaluate various factors that may be
applicable in a given case. See Id. For example,
courts generally consider whether the default was culpable or
willful, whether setting it aside would prejudice the
non-moving party, and whether the defaulting party may have a
meritorious defense. Id. Depending on the
circumstances, courts have also considered factors such as
“whether the public interest was implicated, whether
there was significant financial loss to the defaulting party,
and whether the defaulting party acted promptly to correct
the default.” Id. (citation omitted). On the
other hand, where a party demonstrates an intentional or
willful disregard of the judicial proceedings, good cause to
set aside the default does not exist. Id. at 951-52.
Perez v. Wells Fargo N.A., 774 F.3d 1329, 1338 n.7
(11th Cir. 2014).
As will
be explained herein, Ingvartsen's response does not
indicate that he has a meritorious defense to Grupo's
claims. Moreover, while he claims that he only received
notice of this case on February 16, 2019 (Doc. 16 at 1) -
five days after the present motion for default judgment was
filed - Grupo has presented evidence indicating that
Ingvartsen personally signed for the summons and complaint on
October 11, 2018, see infra. Ingvartsen has also
failed to comply with the District Judge's prior
directive “to provide appropriate contact information
to the Clerk of Court for the purposes of addressing the
current issues before the Court” (Doc. 17 at 2), and he
has failed to defend this case or otherwise respond to the
Court's orders issued since he filed his
response.[5] Accordingly, the undersigned finds that
Ingvartsen has failed to show good cause to set aside the
default entered against him.
C.
Service of Process
“Service
of process is a jurisdictional requirement: a court lacks
jurisdiction over the person of a defendant when that
defendant has not been served.” Pardazi v. Cullman
Med. Ctr., 896 F.2d 1313, 1317 (11th Cir. 1990). In his
response, Ingvartsen claims that neither he nor Energy Subsea
were served with process in this action, and that they
“received notification about this case for the first
time on 2.16.2019 emailed from Energy Subsea LLC agent in
Florida.” (Doc. 16 at 1). The undersigned liberally
construes Ingvartsen's response (Doc. 16) as asserting a
motion to dismiss under Federal Rule of Civil Procedure
12(b)(5) based on insufficient service of process. In
deciding a Rule 12(b)(5) motion, a district court may
consider matters outside of the pleadings and make findings
of fact based on affidavits and other evidence relevant to
the issue. Bryant v. Rich, 530 F.3d 1368, 1376 (11th
Cir. 2008). “A defendant's actual notice is not
sufficient to cure defectively executed service.”
Albra v. Advan, Inc., 490 F.3d 826, 829 (11th Cir.
2007) (per curiam).
Federal
Rule of Civil Procedure 4(e) states that, with certain
inapplicable exceptions,
an individual … may be served in a judicial district
for the United States by:
(1) following state law for serving a summons in an action
brought in courts of general jurisdiction in the state where
the district court is located or where service is made; or
(2) doing any of the following:
(A) delivering a copy of the summons and of the complaint to
the individual personally;
(B) leaving a copy of each at the individual's dwelling
or usual place of abode with someone of suitable age and
...