[D O NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
F O R THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
FEB 22, 2007
THOMAS K. KAHN
N o . 05-16180
D . C. Docket No. 04-23127-CV-MGC
T Y C O FIRE & SECURITY, LLC,
JESUS HERNANDEZ ALCOCER,
JORGE HERNANDEZ TORRES,
RAIF SHANIN ISAAC,
GONZALO QUESADA SUAREZ, et al.,
A p p e al from the United States District Court
fo r the Southern District of Florida
(F eb ru a ry 22, 2007)
B efo re TJOFLAT, HULL and BOWMAN,* Circuit Judges.
P E R CURIAM: P lain tiffs-A p p ellan ts Tyco Fire & Security, LLC, Phillip McVey, and G eo rg e Azze ("Tyco"), appeal the district court's October 6, 2005 order granting D efen d an t Alert 24, LLC's ("Alert 24")1 motion to dismiss for forum non co n v en ien s. Because we conclude that the district court's order contains rulings th at are internally inconsistent, we vacate and remand for further proceedings with d ir e c tio n s .
I. BACKGROUND A. T y co 's Complaint and Service of Process O n December 15, 2004, Tyco filed a complaint against Defendant Alert 24 an d several codefendants, in which Tyco alleged causes of action for violation of th e Racketeer Influenced and Corrupt Organizations Act, 18U.S.C. §§ 1961-1968, c iv il conspiracy, and defamation. The record reflects that Defendant Alert 24 was serv ed on December 31, 2004, through substitute service of process upon Carolyn H ar riso n at her house in North Carolina, on behalf of Paul Eichelberger, Alert 24's reg istered agent who had been residing with Harrison for approximately four * Honorable Pasco M. Bowman II, United States Circuit Judge for the Eighth Circuit, sitting by designation.
1 Alert 24 is a Texas limited liability company with its principal place of business in Texas. m o n th s. On January 27, 2005, a return of service was executed for Alert 24.
B. C lerk's Entry of Default, Fed. R. Civ. P. 55(a) F o r more than two months after service of process, Alert 24 failed to answer T y co 's complaint. Thereafter, on March 7, 2005, Tyco moved for a clerk's entry o f default against Alert 24, pursuant to Federal Rule of Civil Procedure 55(a). In its motion, Tyco alleged that "Alert 24 was served duly with summons and c o m p la in t on December 31, 2004," but failed to answer within the time prescribed b y the rules.2 Tyco also attached an affidavit of service which indicated that the su b stitu ted service of process occurred on December 31, 2004.
R u le 55(a) provides: "When a party against whom a judgment for affirm ativ e relief is sought has failed to plead or otherwise defend as provided by th ese rules and that fact is made to appear by affidavit or otherwise, the clerk shall e n te r the party's default." Fed. R. Civ. P. 55(a).
O n March 17, 2005, the clerk entered a default against Alert 24, finding that A lert 24 was "in default for failure to appear, answer or otherwise plead to the co m p lain t filed herein within the time required by law." C. A lert 24's Motion to Dismiss O n April 8, 2005, Defendant Alert 24 subsequently moved, in a single p lead in g , to quash service of process, to vacate the clerk's entry of default, to d ism iss for lack of personal jurisdiction, to dismiss for improper venue, and to d is m is s for forum non conveniens. In its motion, Alert 24 argued, inter alia, that s er v ic e of process was invalid because (1) Eichelberger was not an agent of Alert 2 4 and had not been affiliated with Alert 24 since he sold his interest in the c o m p a n y in 2002; and (2) even if Eichelberger was the proper person to serve, su b stitu te service of process was ineffective because the house in North Carolina w h e r e the papers were served was not Eichelberger's "permanent dwelling place." Alert 24 also argued that, because service of process was invalid, the clerk's entry o f default should be set aside, pursuant to Rule 55(c).3 D. D is tr ic t Court's October 6, 2005 Order T h e district court addressed all of the issues in Alert 24's motion to dismiss in a single order. First, the district court found that service of process was proper a n d denied the motion to quash. Specifically, the district court found that, under T e x a s law, limited liability companies must continuously maintain a registered ag en t for purposes of service of process, and that Eichelberger was Alert 24's only reg istered agent with the Texas Secretary of State at the time of service. The d istrict court also noted that, even if Eichelberger was listed as Alert 24's reg istered agent due to an inadvertent error, that fact would be unavailing because A lert 24 failed to comply with the clear provisions under Texas law for changing a reg istered agent. The district court found that "it would be patently unfair and co n trary to the purpose of [Texas law] for this Court to allow Alert 24 to shield itself from service of process simply by failing to comply with the [law's] u n a m b ig u o u s mandate." Finally, the district court determined that the substituted s er v ic e of process was valid because the house in North Carolina was E ic h e lb e r g e r 's usual place of abode at the time of service, and because there was n o requirement that substituted service of process occur at Eichelberger's p e r m a n e n t dwelling house.
N ex t, the district court addressed Alert 24's motion to vacate the clerk's e n tr y of default. The district court stated that a clerk's entry of default could be set asid e for "good cause," pursuant to Rule 55(c), but noted that Alert 24 had failed to p r e se n t any argument to justify setting aside the default other than its argument that serv ice of process was invalid. The district court reiterated that service of process w as valid and found that "the default was the result of Alert 24's culpable co n d u ct." Accordingly, the district court denied the motion to vacate the clerk's en try of default. The district court also denied Alert 24's motion to dismiss for la ck of personal jurisdiction and its motion to dismiss for improper venue.
A lth o u g h the district court had already denied Alert 24's motion to vacate th e entry of default, and even though Alert 24 remained in default due to its failure to timely defend, the district court granted Alert 24's motion to dismiss for forum n o n conveniens, finding that Mexico was an adequate alternative forum. Tyco now ap p eals the district court's order dismissing the case for forum non conveniens.
There is no cross-appeal from the district court's order.
II. DISCUSSION A. E ffect of Clerk's Entry of Default T h e entry of a default against a defendant, unless set aside pursuant to Rule 5 5 (c), severely limits the defendant's ability to defend the action. While "a default is not treated as an absolute confession by the defendant of his liability and of the p lain tiff's right to recover," a defaulted defendant is deemed to "admit the p lain tiff's well-pleaded allegations of fact." Nishimatsu Constr. Co. v. Houston N at'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).4 The defendant, however, "is not h eld to admit facts that are not well-pleaded or to admit conclusions of law." Id.
Thus, before entering a default judgment for damages, the district court must en su re that the well-pleaded allegations in the complaint, which are taken as true d u e to the default, actually state a substantive cause of action and that there is a s u b s ta n tiv e , sufficient basis in the pleadings for the particular relief sought. At that p o in t, the defendant, even though in default, is still entitled to contest the su fficien cy of the complaint and its allegations to support the judgment being s o u g h t. See Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1278 (11th Cir. 2 0 0 5 ) (citing Nishimatsu, 515 F.2d at 1206).5 A defaulted defendant also can defend by challenging the jurisdiction of the co u rt to enter judgment against him. Thus, for example, a defendant in default still can challenge the validity of service of process or contest the court's exercise of p erso n al jurisdiction over him.6 O th e r than the narrow exceptions discussed above, a defendant, once a d efau lt has been entered against him, is not entitled to raise any other defenses.
Accordingly, procedural defenses, such as a motion to dismiss for forum non co n v en ien s, which the Supreme Court has described as a "supervening venue p ro v isio n ," are lost. See Am. Dredging Co. v. Miller, 510 U.S. 443, 453, 114 S.
C t. 981, 988 (1994).
In this case, the district court upheld the clerk's entry of default against Alert 2 4 , concluded that service of process was valid, and determined that it could p r o p e rly exercise personal jurisdiction over Alert 24. At that point, the district co u rt should have refused to consider Alert 24's motion to dismiss for forum non co n v en ien s. However, because the district court did consider, and ultimately g ran ted , Alert 24's motion to dismiss based on forum non conveniens without first v a c atin g the clerk's default order, we find these rulings in the district court's order to be internally inconsistent. Thus, we vacate the district court's October 6, 2005 o rd er and remand for further proceedings.
O n remand, if the district court determines, as it did in its October 6, 2005 o rd er, that the default should not be set aside, then the district court must deny A le rt 24's motion to dismiss for forum non conveniens. At that point, Tyco can ap p ly to the district court for entry of a judgment by default in accordance with R u le 55(b)(2), and Alert 24 would be entitled to challenge only the sufficiency of th e complaint or the amount of the recovery.
If, on the other hand, the district court determines that the clerk's entry of d efau lt should be set aside, then the district court should explain in detail why, v acate the clerk's default order, and only then reconsider Alert 24's motion to d ism iss for forum non conveniens.
B. F o ru m Non Conveniens Analysis W h ile we express no opinion as to the entry of default or as to the ultimate m erits of Alert 24's motion to dismiss for forum non conveniens, we note that the d istrict court's analysis of the forum non conveniens issues was lacking. Thus, we p o in t out certain legal principles that should guide the district court's analysis in th e event that the district court decides to vacate the clerk's default order and to reco n sid er the motion.
In order to prevail on its motion to dismiss based on forum non conveniens, D efen d an t Alert 24 has the burden of demonstrating that (1) an adequate altern ativ e forum is available, (2) the public and private factors weigh in favor of d ism issal, and (3) Tyco can reinstate its suit in the alternative forum without undue in co n v en ien ce or prejudice. Leon v. Million Air, Inc., 251 F.3d 1305, 1311 (11th C ir. 2001).
The first step in this forum non conveniens analysis is to determine "whether an adequate alternative forum exists which possesses jurisdiction over the whole case." C.A. La Seguridad v. Transytur Line, 707 F.2d 1304, 1307 (11th Cir. 1983). T h is inquiry has two parts the defendant must demonstrate both the availability a n d the adequacy of the proposed alternative forum. Leon, 251 F.3d at 1311. In th is case, Mexico would be an "available" forum if the Mexican court can assert ju r is d ic tio n over the entire case. Id. Generally, a defendant can demonstrate an av ailab le forum by showing that it is amenable to service of process in that forum, o r alternatively, by consenting to the jurisdiction of the alternative forum. See, e .g ., Piper Aircraft Co. v. Reyno, 454 U.S. 235, 242, 102 S. Ct. 252, 259 (1981); L a Seguridad, 707 F.2d at 1305 n.1. In its brief on appeal, Tyco emphasizes that D efen d an t Alert 24 failed to establish before the district court that it was amenable to service of process in Mexico. Moreover, Alert 24 conceded at oral argument b efo re this Court that it had not consented to the jurisdiction of the Mexican courts.
Thus, it is unclear whether Mexico is an available alternative forum for this case.
However, the district court's order did not address this threshold issue of "av ailab ility," but instead focused only on the adequacy of the Mexican forum.
Any future analysis of Alert 24's motion to dismiss for forum non conveniens must a d d r e ss both whether the alleged alternative forum is "available" and whether that f o r u m is adequate.
A s to the second part of the inquiry, an alternative forum will be considered ad eq u ate so long as it could provide some relief for the plaintiffs' claims, even if "th e substantive law that would be applied in the alternative forum is less favorable to the plaintiffs than that of the present forum." Piper Aircraft, 454 U.S. at 247, 1 0 2 S. Ct. at 261. In its brief on appeal, Tyco argues that Alert 24 failed to present a n y evidence showing that adequate remedies exist in Mexico for the claims raised in Tyco's complaint, and that the district court improperly shifted the burden of p ro o f on this issue to Tyco. If the district court decides to address Alert 24's m o tio n to dismiss for forum non conveniens, it must also address these concerns w h en determining whether Mexico is an adequate alternative forum.
O n ce an adequate alternative forum has been established, th e trial judge must consider all relevant factors of private interest, w eig h in g in the balance a strong presumption against disturbing p lain tiffs' initial forum choice. If the trial judge finds this balance of p r iv a te interests to be in equipoise or near equipoise, he must then d eterm in e whether or not factors of public interest tip the balance in fav o r of a trial in a foreign forum.
L a Seguridad, 707 F.2d at 1307 (citation omitted); see also Gulf Oil Corp. v. G ilb ert, 330 U.S. 501, 508-09, 67 S. Ct. 839, 843 (1947) (discussing private and p u b lic interest factors to be considered).
W h e n balancing the private interest factors, the district court must consider th e strong presumption in favor of a plaintiff's choice of forum. See Gulf Oil, 330 U .S . at 508, 67 S. Ct. at 843 (noting that "unless the balance is strongly in favor of th e defendant, the plaintiff's choice of forum should rarely be disturbed"); Piper A ircraft, 454 U.S. at 255, 102 S. Ct. at 265-66 (noting that "there is ordinarily a stro n g presumption in favor of the plaintiff's choice of forum, which may be o v erco m e only when the private and public interest factors clearly point towards tr ia l in the alternative forum"). This is especially true when a United States citizen h as chosen a home forum in which to litigate. See La Seguridad, 707 F.2d at 1308 n .7 (recognizing that "courts should require positive evidence of unusually extreme circu m stan ces, and should be thoroughly convinced that material injustice is m a n if es t before exercising any such discretion as may exist to deny a United States citizen access to the courts of this country") (quotation marks, brackets, and citatio n omitted). Although "dismissal should not be automatically barred when a p lain tiff has filed suit in his home forum," Piper Aircraft, 454 U.S. at 255 n.23, 102 S . Ct. at 266 n.23, the failure to account for this presumption when balancing the p riv ate interests is an abuse of discretion, SME Racks, Inc. v. Sistemas Mecanicos P ara Electronica, S.A., 382 F.3d 1097, 1102-03 (11th Cir. 2004).
Finally, if the district court determines that the balance of interests favors the altern ativ e forum, then it must "ensure that plaintiffs can reinstate their suit in the altern ativ e forum without undue inconvenience or prejudice." La Seguridad, 707 F .2 d at 1307. In its previous order, it is not clear whether the district court co n sid ered this final analytical step before dismissing Tyco's complaint based on f o r u m non conveniens. On remand, the district court should make sure to consider th is issue in deciding whether to grant Alert 24's motion to dismiss.
III. CONCLUSION I n sum, because we find that the district court's October 6, 2005 order co n tain s rulings that are internally inconsistent, we vacate that order and remand w ith directions for further proceedings consistent with this opinion.
V A C A T E D AND REMANDED.
2 Federal Rule of Civil Procedure 12(a) provides, in relevant part, that a defendant shall serve its answer "within 20 days after being served with the summons and complaint." Fed. R. Civ. P. 12(a)(1)(A).
3 Rule 55(c) provides, in relevant part, that "[f]or good cause shown the court may set aside an entry of default . . . ." Fed. R. Civ. P. 55(c).
4 This Court adopted as binding precedent all Fifth Circuit decisions prior to October 1, 1981. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).
5 A clerk's entry of default, pursuant to Rule 55(a), is distinct from a judgment by default entered by the clerk, pursuant to Rule 55(b)(1), or by the court, pursuant to Rule 55(b)(2). Here, Tyco did not request, and would not have been entitled to, a judgment by default entered by the clerk because its claim against Alert 24 was not "for a sum certain or for a sum which can by computation be made certain." See Fed. R. Civ. P. 55(b)(1). Rather, Tyco seeks an award of compensatory damages in an unspecified sum. Thus, although in default, Alert 24 also is entitled to contest the amount of damages before the court enters a judgment by default.
6 We note, therefore, that it was proper for the district court to consider Alert 24's motions to quash service of process, to vacate the clerk's entry of default, and to dismiss for lack of personal jurisdiction.
This document cites
- U.S. Supreme Court - Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981)
- U.S. Supreme Court - Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947)
- U.S. Court of Appeals for the Eleventh Circuit - Julio Ignacio Lourido Leon, Gina Mercedes Valdivieso Santos, Et Al., Plaintiffs-Appellants, v. Millon Air Inc., a Florida Corporation, Millon Air Cargo, Inc., a Florida Corporation Et Al., Defendants-Appellees., 251 F.3d 1305 (11th Cir. 2001)
- U.S. Court of Appeals for the Eleventh Circuit - Sme Racks, Inc., a Florida Corporation, Valtec Information Systems, Inc., a Florida Corporation, Plaintiffs-Appellants, Rafael A. Castro, Mr., Individually, Plaintiff, v. Sistemas Mecanicos Para Electronica, S.A., a Spanish Company, Carmelo Garcia Aparicio., S.A., Et Al., Defendants-Appellees., 382 F.3d 1097 (11th Cir. 2004)
- U.S. Court of Appeals for the Eleventh Circuit - James P. Cotton, Jr., Gerald Eickhoff, Plaintiffs-Appellees Cross-Appellants, v. Massachusetts Mutual Life Insurance Company, a Massachusetts Corporation, Defendant-Appellant Cross-Appellee., 402 F.3d 1267 (11th Cir. 2005)
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