Goodwin v. Hatch

          ORDER AFFIRMING AND ADOPTING THE MAY 14, 2018, ORDER AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE

         This matter is before the Court upon the May 14, 2018, Order and Recommendation by United States Magistrate Judge Kristen L. Mix (Doc. # 122), in which she addressed Defendants VLG Investments LLC, VLG Investment 2006 LLC, VLG Investments 2007 LLC, VLG Investments 2008 LLC, HEWM Investors, LLC, HEWM Investors II, LLC, and HEWM/VLG Investments, LLC's^[1] (collectively, the “Moving Defendants”) Motion to Set Aside Default Under Federal Rule of Civil Procedure 55(c) and to Dismiss Under Rules 12(b)(2) and 12(b)(5) (for purposes of this Order only, the “Motion”) (Doc. # 115). Magistrate Judge Mix granted Moving Defendants' request to set aside the Clerk's entry of default against them (Doc. # 110) and recommended that this Court grant Moving Defendants' Motion to Dismiss for lack of personal jurisdiction. (Doc. # 122 at 2.) Plaintiff Jon Goodwin timely objected to Magistrate Judge Mix's Order and Recommendation. (Doc. # 124.) Moving Defendants subsequently replied in support of the Order and Recommendation. (Doc. # 125.)

         For the reasons described herein, Plaintiff's Objection is overruled. The Court affirms and adopts the Magistrate Judge's Order and Recommendation.

         I. BACKGROUND

         The Court extensively explained the factual and procedural background of this case in its previous Order. (Doc. # 97.) Magistrate Judge Mix's Order and Recommendation also detailed this background. (Doc. # 122.) The Recommendation is incorporated herein by reference. See 28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P. 72(b). The Court therefore recounts only the facts necessary to address Moving Defendants' Motion.

         Plaintiff first named Moving Defendants in this action on July 14, 2016. (Doc. # 41.) Pursuant to Rule 4(m), Plaintiff was therefore required to serve Moving Defendants by October 12, 2016. See Fed. R. Civ. P. 4(m). Plaintiff filed a Second Amended Complaint, now the operative Complaint, on August 19, 2016. (Doc. # 83.) Plaintiff served Moving Defendants on November 2, 2016, but did not file proofs of service on or around that date.

         On November 4, 2016, Magistrate Judge Mix issued an Order to Show Cause, directing Plaintiff to show cause why his claims were not barred by claim preclusion, issue preclusion, and/or the Rooker-Feldman doctrine. (Doc. # 90 at 5-6.) The Magistrate Judge simultaneously stayed the case in its entirety, pending a ruling on her Order to Show Cause. (Id. at 6.) Some thirteen months later, on December 11, 2017, Magistrate Judge Mix discharged the Order to Show Cause and recommended that the Court dismiss the gross majority of Plaintiff's claims. (Doc. # 93 at 33-35.)

         This Court adopted the Magistrate Judge's Recommendation and lifted the stay on January 12, 2018, despite Plaintiff's Objection (Doc. # 94) to it. (Doc. # 97.) Pursuant to the Court's Order, only the following claims remain:

1. Claims 1, 3, 6, 7, and 8 against the Doe Defendants;

2. Claims 2, 4, 5, 9, 10, 11, 14, 17, and 23 against the Doe Defendants, VLG Investments LLC, VLG Investments 2006 LLC, VLG Investments 2007 LLC, VLG Investments 2008 LLC, HEWM Investors LLC, HEWM Investors II LLC, and HEWM/VLG Investments LLC;

3. Claim 26 against [all] Defendants.

(Id. at 17.)

         Three days before this Court dismissed most claims and lifted the stay however, on January 9, 2018, Magistrate Judge Mix issued a second Order to Show Cause. (Doc. # 95.) She explained that it “ha[d] come to the Court's attention that [Moving Defendants] ha[d] not been served . . . in this action, and therefore, are not proper parties to this litigation.” (Id. at 1.) She noted that the service deadline as to Moving Defendants was October 12, 2016, pursuant to Rule 4(m). (Id.) The Magistrate Judge ordered Plaintiff to “show cause why th[e] Court should not recommend that the case against [Moving] Defendants . . . be dismissed pursuant to [Rule] 4(m)” and to “file proofs of service, or respond in writing . . ., on or before February 6, 2018.” (Id. at 3.)

         In response to this second Order to Show Cause, Plaintiff filed on February 4, 2018, six proofs of service on Moving Defendants, all of which reflect service on Moving Defendants on November 2, 2016-approximately three weeks after the October 12, 2016, deadline pursuant to Rule 4(m). (Doc. ## 98-103.)

         The next day, February 5, 2018, Plaintiff filed Motions for Entry of Default as to Moving Defendants. (Doc. ## 104-09.) Plaintiff asserted in each motion that he had served Moving Defendants on November 2, 2016, and that Moving Defendants had failed to answer the Complaint by November 23, 2016. E.g., (Doc. # 104-1.) Plaintiff did not disclose that Moving Defendants were first named in the lawsuit on July 14, 2016, or that Rule 4(m) had required him to serve Moving Defendants by October 12, 2016. See (id.) The Clerk of the Court granted Plaintiff's Motion for Entry of Default and entered default against Moving Defendants on the same day, February 5, 2018. (Doc. # 110.)

         On February 6, 2018, Counsel David L. Stanton entered a limited appearance on behalf of Moving Defendants for purposes of moving to set aside the entry of default judgment against them and to dismiss the Complaint against Moving Defendants for lack of jurisdiction. (Doc. # 111.) Also on February 6, 2018, Plaintiff responded to the Magistrate Judge's second Order to Show Cause concerning Rule 4(m), arguing that he had not been able to identify an agent for service of process for Moving Defendants. (Doc. # 112.)

         Ten days later, on February 16, 2018, Moving Defendants filed the Motion at issue in this Order, their Motion to Set Aside Default Under Federal Rule of Civil Procedure 55(c) and to Dismiss Under Rules 12(b)(2) and 12(b)(5). (Doc. # 115.) Moving Defendants first asserted that because “Plaintiff's service of [Moving] Defendants was indisputably beyond the [October 12, 2016] deadline allowed under Rule 4(m), ” the Clerk's entry of default judgment against Moving Defendants (Doc. # 110) was in error and must be set aside. (Doc. # 115 at 15.) Second, Moving Defendants argued that the claims against them must be dismissed for lack of personal jurisdiction pursuant to Rule 12(b)(2). (Id.)

         Plaintiff timely filed his Response in opposition to Moving Defendants' Motion on March 2, 2018. (Doc. # 119.) Moving Defendants replied on March 16, 2018. (Doc. # 120.)

         The Magistrate Judge issued her Order and Recommendation on the Motion on May 14, 2018, ordering that the Clerk's entry of default against Moving Defendants be vacated, and recommending that the Court dismiss claims against Moving Defendants for lack of personal jurisdiction. (Doc. # 122 at 12.)

         Plaintiff timely objected to the Magistrate Judge's Order and Recommendation on May 29, 2018 (Doc. # 124), and Moving Defendants replied in support of it on June 12, 2018 (Doc. # 125).

         II. STANDARDS OF REVIEW

         A. REVIEW OF A RECOMMENDATION

         When a magistrate judge issues a recommendation on a dispositive matter, Fed.R.Civ.P. 72(b)(3) requires that the district judge “determine de novo any part of the magistrate judge's [recommended] disposition that has been properly objected to.” An objection is properly made if it is both timely and specific. United States v. One Parcel of Real Property Known As 2121 East 30th Street, 73 F.3d 1057, 1059 (10th Cir.1996). In conducting its review, “[t]he district judge may accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions.” Fed.R.Civ.P. 72(b)(3).

         B. PRO SE PLAINTIFF

         Plaintiff proceeds pro se. The Court, therefore, reviews his pleading “liberally and hold[s] [it] to a less stringent standard than those drafted by attorneys.” Trackwell v. United States, 472 F.3d 1242, 1243 (10th Cir. 2007) (citations omitted). However, a pro se litigant's “conclusory allegations without supporting factual averments are insufficient to state a claim upon which relief can be based.” Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991). A court may not assume that a plaintiff can prove facts that have not been alleged, or that a defendant has violated laws in ways that a plaintiff has not alleged. Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983); see also Whitney v. New Mexico, 113 F.3d 1170, 1173-74 (10th Cir. 1997) (a court may not “supply additional factual allegations to round out a plaintiff's complaint”); Drake v. City of Fort Collins, 927 F.2d 1156, 1159 (10th Cir. 1991) (a court may not “construct arguments or theories for the plaintiff in the absence of any discussion of those issues”). Nor does pro se status entitle a litigant to an application of different rules. See Montoya v. Chao, 296 F.3d 952, 957 (10th Cir. 2002).

         III. DISCUSSION

         A. MAGISTRATE JUDGE MIX'S ORDER TO SET ASIDE ENTRY OF DEFAULT JUDGMENT

         Moving Defendants first argued in their Motion that the entry of default against them “should be set aside for good cause because they were premised on indisputably late service by Plaintiff.” (Doc. # 115 at 4.) Magistrate Judge Mix agreed and ordered that the Clerk's entry of default be vacated. (Doc. # 122 at 4-6, 12.)

         1. Magistrate Judge Mix Had Authority to Set Aside the Entry of Default

         Plaintiff first objects that Magistrate Judge Mix did not have the authority to grant Moving Defendants' Motion as to the entry of default against Moving Defendants and that by doing so, the Magistrate Judge “subjugate[ed] . . . the authority of this Court's Article III judge.” (Doc. # 124 at 10.) Plaintiff rejects the Magistrate Judge's interpretation of Ashby v. McKenna, 331 F.3d 1148, 1152 (10th Cir. 2003), which the Magistrate Judge cited and summarized as “indicating appropriateness of a Magistrate Judge entering an order under 28 U.S.C. § 636(b)(1)(A) on a motion to set aside clerk's entry of default” (Doc. # 122 at 5-6). (Doc. # 124 at 10.) Plaintiff argues that Ashby “did not conclude that a magistrate judge has the authority to vacate or deny vacation of default”; rather, Ashby indicated “that a magistrate judge can affirm the action of a court clerk . . . denying a motion for default when a motion to dismiss by a defendant is pending before a court.” (Id.) Plaintiff also argues that Moving Defendants' request to set aside the entry of default “is dispositive and, pursuant to [28 U.S.C. § 636(b)], ” only a district court judge has authority to adjudicate dispositive motions. (Id.)

         This Court finds that the Magistrate Judge acted within her authority in setting aside the entry of default against Moving Defendants; Plaintiff's Objection fails. The Federal ...