Sho Services, LLC v. China Film Group Corp.

          ORDER GRANTING MOTION TO SET ASIDE DEFAULT JUDGMENT

          CHRISTINE M. ARGUELLO JUDGE

         This matter is before the Court on Defendant China Film Group Corporation's Motion to Set Aside Default Judgment. (Doc. # 44.) Plaintiff SHO Services, LLC filed a Response (Doc. # 49) on June 3, 2019, and Defendant filed a Reply (Doc. # 51) on June 17, 2019. For the following reasons, the Court grants Defendant's Motion.

         I. BACKGROUND

         Plaintiff is a Colorado-based security, crowd safety, and management company that provides safety consulting and management designed for live entertainment environments, including evacuation plans, emergency procedure plans, public safety coordination, and budgeting compliance. (Doc. # 1 at 2.) Defendant is a film enterprise in the People's Republic of China. (Id. at 1.) This case arises from a contract dispute regarding services that Plaintiff alleges to have performed for Defendant without receiving compensation.

         On September 8, 2017, Magistrate Judge Mix issued an order which directed Plaintiff to file a status report regarding its efforts to serve Defendant. (Doc. # 11 at 1.) Accordingly, on September 18, 2017, Plaintiff filed a Status Report which indicated that it had “engaged a company that specializes in serving foreign companies with service of process . . . in U.S. lawsuits in accordance with the Hague Convention, ” although it was “unknown exactly how long it will take for the Chinese Central Authority to accept the papers and effectuate service, but Plaintiff [was] informed that it is likely to take several months if not longer.” (Doc. # 13 at 1.) Plaintiff also reported that “Defendant has several agents that work in the U.S. and appear at events, and Plaintiff has attempted to serve those agents and will continue to do so this Fall [sic].” (Id. at 2.)

         Subsequently, on November 13, 2017, Plaintiff filed an Affidavit of Service, which indicated that Plaintiff had served an individual named Maio Xiaotian in Los Angeles, CA. (Doc. # 14 at 1.) Mr. Ziaotian is the president of an entity called China Film Co-Production Corporation (“CFCC”), which is a subsidiary of Defendant. (Doc. # 16 at 2- 3.) Plaintiff asserted that service was proper because Mr. Xiaotian is a “managing or general agent” of Defendant. (Id. at 3.) Defendant did not file an answer or otherwise respond.

         Accordingly, on February 13, 2018, Plaintiff filed a Motion for Entry of Default and Default Judgment. (Id.) Thereafter, the Clerk of the Court issued an Entry of Default, and this Court issued a Default Judgment Order against Defendant on May 11, 2018. (Doc. ## 18, 26.) However, on February 11, 2019, Defendant filed a document titled, “The Responses to the Lawsuit Filed by SHO Services, LLC Against China Film Group Corporation.” (Doc. # 40.) The document appears to be an Answer, and it indicates that Defendant received notice of this case on January 4, 2019. (Id.)

         Additionally, Defendant filed the instant Motion to Set Aside Default Judgment on May 13, 2019. (Doc. # 44.) Defendant included the affidavits of Shang Zhe, Defendant's “Head of Legal, ” and Mr. Xiaotian in support of its Motion. Mr. Xiaotian states that he was never served with process while he was in Los Angeles during the fall of 2017, and Shang Zhe indicates that Defendant and CFCC are, in fact, separate entities.

         II. STANDARD OF REVIEW

         Federal Rule of Civil Procedure 60(b)(4) provides that a court “may relieve a party or its legal representative from a final judgment . . . [if] the judgment is void.” Further, the Tenth Circuit has held that “[w]here Rule 60(b)(4) is properly invoked, ‘relief is not a discretionary matter; it is mandatory . . . .'” Hukill v. Oklahoma Native Am. Domestic Violence Coal., 542 F.3d 794, 797 (10th Cir. 2008) (quoting Orner v. Shalala, 30 F.3d 1307, 1310 (10th Cir. 1994)); see also Glob. Gold Mining, LLC v. Ayvazian, 983 F.Supp.2d 378, 384 (S.D.N.Y. 2013) (“Rule 60(b)(4) is ‘unique' because ‘relief is not discretionary and a meritorious defense is not necessary.'” (quoting Covington Indus. v. Resintex A.G., 629 F.2d 730, 733 n.3 (2d Cir. 1980))).

         Relevant here, “a default judgment in a civil case is void if there is no personal jurisdiction over the defendant.” Hukill, 542 F.3d at 797 (citation omitted). Importantly, “service of process [under Fed.R.Civ.P. 4] provides the mechanism by which a court . . . asserts jurisdiction over the person of the party served.” Id. (citation omitted). Therefore, “a judgment obtained by way of defective service is void for lack of personal jurisdiction and must be set aside as a matter of law.” Chettri v. Nepal Bangladesh Bank, Ltd., No. 10 CIV. 8470 PGG, 2014 WL 4354668, at *5 (S.D.N.Y. Sept. 2, 2014) (citation omitted), aff'd sub nom. Chettri v. Nepal Rastra Bank, 834 F.3d 50 (2d Cir. 2016).

         III. DISCUSSION

         Defendant argues that the default judgment in this case (Doc. # 27) should be set aside based on defective service.^[1] Specifically, Defendant argues that effecting service on Defendant's subsidiary did not constitute service on Defendant. The Court agrees.

         A. ...