Premier Capital v. DeCarolis

Premier Capital v. DeCarolis           CV-01-126-M             01/04/02
                   UNITED STATES DISTRICT COURT

                        DISTRICT OF NEW HAMPSHIRE


Premier Capital, Inc.
(Successor in Interest to the
Merchants National Bank of
Manchester),
     Appellant

      v.                                        Civil No. 01-126-M
                                                Opinion No. 

Philip V. DeCarolis,
     Appellee


                                 O R D E R


      Premier Capital, Inc.     ("Premier") appeals a decision of the

bankruptcy court   (Vaughn, C.J.) dismissing its complaint against

Philip V. DeCarolis     ("DeCarolis"), debtor in an underlying

bankruptcy proceeding.      For the reasons given below, the decision

of the bankruptcy court is affirmed.



                           Standard of Review

      A bankruptcy court's findings of fact are not set aside

unless clearly erroneous.       Palmacci v. Umpierrez, 

   (1st Cir. 1997)   (citing F e d . R. B a n k r . P. 8013; Commerce Bank &

Trust Co. v. Burgess (In re Burgess), 

 (1st Cir.

1992); F e d . R. C i v . P. 52(c), advisory committee's note to 1991
Amendment).     However, a "bankruptcy court's legal conclusions.

drawn from the facts so found, are reviewed de novo."                  Palmacci,

 (citing Martin v. Baiqar (In re Ban gar) , 

   (1st Cir. 1997)) .


     Absent either a mistake of law or an abuse of
     discretion, the bankruptcy court ruling must stand.
     See Siedle v. Putnam Invs., Inc., 

 (1st
     Cir. 1998). A bankruptcy court "may abuse its
     discretion by ignoring a material factor that deserves
     significant weight, relying on an improper factor, or,
     even if it [considered] only the proper mix of factors,
     by making a serious mistake in judgment." 

Picciotto v. Salem Suede, Inc.                 (In re Salem Suede, Inc.), 

 (1st Cir. 2001).                  "On an appeal the district court .

. . may affirm, modify, or reverse a bankruptcy judge's judgment,

order, or decree or remand with instructions for further

proceedings."     F e d . R. B a n k r . P.    8013.



                   Factual and Procedural Background

     By complaint filed August 18, 2000, Premier initiated an

adversary proceeding against DeCarolis and five other defendants.

DeCarolis is the debtor in an underlying Chapter 7 bankruptcy

proceeding in the United States Bankruptcy Court for the District

of New Hampshire      (Case No. 00-11474-MWV).            On August 23, 2000,


                                               2
the bankruptcy court issued a summons and notice of pretrial

conference.    Once the summons was issued. Premier had ten days to

serve it. F e d . R. B a n k r . P. 7004(e), but did not do so.



     Sometime later. Premier retained new counsel.           When new

counsel reviewed the file and realized that the August 23 summons

had not been served within the time allotted by Rule 7004(e),

counsel asked the bankruptcy court to issue an "alias summons,"

which it did on October 23, 2000.         Again, Premier had ten days

from the date of issuance to serve the fresh summons.             At the

time the second summons was issued. Premier's counsel did not

know the addresses of two of the six defendants named in the

complaint.    Counsel did know DeCarolis's address, however, as

well as the addresses of three other defendants.           By November 8 -

fifteen days after the alias summons was issued - Premier's

counsel had obtained addresses for all six defendants, and, on

that date, delivered all six summonses.



      Thirteen days later, on November 21, 2000, DeCarolis moved

the bankruptcy court to dismiss Premier's complaint for failure

to serve the summons within the ten-day limit specified by F e d .



                                      3
R. B a n k r . P. 7004(e).   In his motion, DeCarolis pointed out that

"[f]allure to serve Summons and Complaint within ten days under

former Bankruptcy Rule 7004(e) justifies order of dismissal with

leave to obtain new summons."          (Appellant's A pp. at 15 (emphasis

added).)     Premier objected to the motion to dismiss on grounds

that it had "good cause" for failing to meet the ten-day

deadline.     But, inexplicably. Premier did not attempt to obtain

or serve yet another summons        (i.e., a second alias summons, which

would have been the third, overall) within the ten days required

by Rule 7 0 0 4 (e).



      By motion filed January 8, 2001 - while his previous motion

to dismiss was still pending before the bankruptcy court -

DeCarolis again sought dismissal of Premier's complaint, on the

additional ground of failure to serve the summons within the 120

days allowed by F e d . R. C i v . P. 4 (m) .   The bankruptcy court held a

hearing on DeCarolis's motions on February 20, 2001.            At that

hearing, counsel for Premier told the court that "we do admit

that the summons and complaint was [sic] served fifteen days

after issuance . . . ."         (Appellant's App. at 7 9.)    But Premier's




                                        4
counsel argued that service had nevertheless been made within the

120-day limit prescribed by Rule 4 (m), explaining that


    the debtor had filed a motion to dismiss for failure to
    serve within the ten days. We didn't request a new
    summons be issued because that was still pending before
    the Court, and we weren't sure if the Court would
    require a new summons to be issued or just grant the
    debtor further time to answer, since the reason for the
    motion to dismiss was allegedly that they didn't have
    enough time to respond.  They never requested an
    extension from us, which would have been aptly granted
    if that were the reason for the motion to dismiss.

          For these - for that reason. Your Honor, under
     Rule 7004(e), which is the one that applies in this
     case, which is the failure to serve within ten days, it
     requires that the Court shall issue a new summons, not
     that the case be dismissed.


(Id. at 80-81.)   When asked by Chief Judge Vaughn why she did not

simply obtain a second alias summons upon receipt of DeCarolis's

first motion to dismiss. Premier's counsel stated:


         Your Honor, I was under the assumption I had to
    wait for that to be adjudicated.  I got the summons and
    I promptly recognized that we were after the ten days
    when I got the notice [of DeCarolis's first motion to
    dismiss], and I looked at it and said, "Okay, the Rule
    says the Court has to issue a new summons, or, perhaps
    the Court's going to give further time to answer,
    because they're concerned they don't have enough time."
    So I thought I had to wait until the hearing on that
    first motion to dismiss before I could request a new
    summons because it hadn't been adjudicated.



                                 5
(Id. at 83.)    The colloquy between Chief Judge Vaughn and

Premier's counsel continued:


          THE COURT:   But even when you got the alias -

          MR.   [sic] BANKOWSKI:   - and we served it.

          THE COURT:    - summons, that was not served within
     the ten days.

          MR.   [sic] BANKOWSKI:   Right.

          THE COURT:    There's no question about it.

          MR. [sic] BANKOWSKI: That's true. There's no
     question. Your Honor. That's true. And we looked at
     the Rule and we said, "That's right, we didn't serve it
     within the ten days," so the Court is required to issue
     a new summons. We also looked at Rule 7004 [sic] and
     said, "Well, we did serve in the 120 days, so we're all
     set with Rule 120. (sic)"

          THE COURT:  The Court's only required to issue a
     new summons when somebody requests it.

          MR. [sic] BANKOWSKI: Right. And I thought as
     soon as the Court adjudicated on the first motion to
     dismiss that the Court would issue the new summons or
     else just extend the time for service, and that hearing
     was coming up on January 9th, which is what we were
     waiting for was that hearing. Your Honor.  I don't
     believe that we delayed, and I think there's - if for
     some reason the Court thinks we didn't serve in the 120
     days, we had good cause, because our reading of the
     Rules also have [sic] been recognized by the Bankruptcy
     Court in Connecticut that that 120-day rule is separate
     and distinct from Rule 7004(e).

          THE COURT: All these cases are factual and are
     discretionary on the matter of the Court.


                                   6
          MR.   [sic] BANKOWSKI:   That's right.



          THE COURT: I understand your argument.

         MR. [sic] BANKOWSKI: Okay.   If the Court for some
    reason believes that the 120-day rule applies, we still
    think there's good cause exists [sic] for extending the
    time for service.  There's a meritorious complaint
    here, which would be barred if the Court chose to
    dismiss this case, and that alone can be reason for the
    Court not exercising its discretion to dismiss the
    case, aside from the fact that we do have good cause in
    this case.  If you look at the - I believe it's the
    Third Circuit case - yes, KCV Casale from Pennsylvania,
    which cites the Third Circuit case of Pettruccelli v.
    Boerinqer and Ratsinqer (phonetic). The Court
    recognized in that case that the counsel there at all
    didn't have good cause.  They just failed to serve,
    which was wholly separate from this case; however, the
    case shouldn't be dismissed when there is a meritorious
    case, so it would be time-barred as a result of the
    dismissal.


(Id. at 84-87.)   The bankruptcy court granted DeCarolis's motion

to dismiss, ruling from the bench, as follows:


         Well, Ms. Bankowski, you haven't convinced me.
    I'm going to grant the motion to dismiss.  I don't
    believe there was a valid service of the summons.   I
    believe under the Rule 7004 that it's - the requirement
    is on you or your client to show good cause under
    7004(m) [sic] for failure to make the service within
    the 120 days.  I disagree with the - your argument
    that, in fact, even though you didn't get an alias
    summons after the ten days had expired on your first
    alias summons, that since it was served, that would
    comply with the 120-day rule.  I don't believe it does


                                   7
    comply with the 120-day rule, and from what I've heard
    here today I'm not convinced there was good cause for
    the failure to serve it.

         As I think I've indicated, for the life of me, I
    don't understand when Mr. Askenaizer [DeCarolis's
    counsel] filed the first motion to dismiss on November
    21st, when it was clear that there were still 28, 29
    days left to get an alias summons and make (End of Tape
    #1. Tape # 2 continues without interruption as
    follows): service with [sic] 120 days, at least upon a
    defendant that you knew where he was located. And
    there's no question that if you had made proper service
    on this defendant and not the others, the complaint
    would have gone forward against this defendant, while
    service may not have been completed with respect to the
    other defendants.  You don't necessarily have to serve
    them all to get proper service on one. And under 704 -
    7004(m) [sic], the burden is to show just cause.

         I know that prejudice is sometimes taken into
    consideration, but in this particular fact situation
    where service could have been made within the 120-day
    period, proper service with a new alias summons after
    the first one had expired, and that wasn't done. I'm
    not convinced there was good cause for me to extend the
    time at this point in time for new service on this
    defendant.  We've been here a number of times. This
    matter has to go forward.  The debtor is entitled to a
    speedy resolution of both objections to discharge and
    exceptions to discharge.

         For all of those reasons I am going to grant the
    motion to dismiss.


(Id. at 92-93.)




                               8
                                  Discussion

     Premier says the bankruptcy court's decision should be

reversed because:    (1) service of the summons and complaint was in

fact made within the 120 days required by the Federal Rules of

Civil Procedure, as incorporated into the Federal Rules of

Bankruptcy Procedure; and (2) in the alternative, the bankruptcy

court abused its discretion when it:              (a) declined to find good

cause for Premier's failure to meet the 120-day deadline; and (b)

failed to extend the 120-day deadline, even in the absence of

good cause.



I.   The Relevant Law

     The service requirements for complaints in adversary

proceedings in bankruptcy court are set out in the Federal Rules

of Bankruptcy Procedure        ("Bankruptcy Rules") and the Federal

Rules of Civil Procedure        ("Rules of Civil Procedure"), which must

be read in combination.        See Ovama v. Sheehan (In re Sheehan) ,

    (9th Cir. 2001).           Under the Bankruptcy Rules,

"Rule 4(a),   (b) , (c) (1),   (d) (1),       (e)-(j),   (1), and (m) FR Civ P

[sic] applies in adversary proceedings."                 F e d . R. B a n k r . P.

7004(a).   The Bankruptcy Rules also provide, in relevant part:



                                          9
             Summons: Time Limit for Service Within the United
        States.  Service made under Rule 4(e), (g), (h)(1),
        (i), or (j)(2) F.R.Civ.P. [sic] shall be by delivery of
        the summons and complaint within 10 days after the
        summons is issued.   If service is by any authorized
        form of mail, the summons and complaint shall be
        deposited in the mail within 10 days after the summons
        is issued.   If a summons is not timely delivered or
        mailed, another summons shall be issued and served. . .



F e d . R. B a n k r . P.   7004(e).    In addition, the Bankruptcy Rules

provide:


        . . . Except as provided in paragraphs (2) and (3) of
        this subdivision, when an act is required or allowed to
        be done at or within a specified period by these rules
        or by a notice given thereunder or by order of court,
        the court for cause shown may at any time in its
        discretion (1) with or without motion or notice order
        the period enlarged if the request therefor is made
        before the expiration of the period originally
        prescribed or as extended by a previous order or (2) on
        motion made after the expiration of the specified
        period permit the act to be done where the failure to
        act was the result of excusable neglect.


F e d . R. B a n k r . P.   9006(b) (1) .   Finally, the Federal Rules of Civil

Procedure provide, in relevant part:


             Time Limit for Service.  If service of the summons
        and complaint is not made upon a defendant within 120
        days after the filing of the complaint, the court, upon
        motion or on its own initiative after notice to the
        plaintiff, shall dismiss the action without prejudice


                                              10
        as to that defendant or direct that service be effected
        within a specified time; provided that if the plaintiff
        shows good cause for the failure, the court shall
        extend the time for service for an appropriate period.



F e d . R . Civ . P . 4 (m) .




II.      Service Within 120 Days

         Premier argues that even though the delivery it made on

November 8 did not constitute effective service under F e d . R.

B a n k r . P.   7004(e), it was effective service for purposes F e d . R.

C i v . P.   4 (m).   In other words. Premier claims that it properly

served its summons and complaint upon DeCarolis well in advance

of the 120-day deadline specified by Rule 4 (m)              (which fell on

December 18, 2000), albeit not within ten days of issuance of the

summons.          On that basis. Premier contends that the bankruptcy

court committed legal error when it dismissed the complaint for

failure to meet the 120-day deadline.              DeCarolis, obviously,

contends that Premier's delivery of the summons and complaint was

a nullity under:         (1) F e d . R. B a n k r . P. 7004(e), because it was not

served within ten days of issuance; and (2) F e d . R. C i v . P. 4 (m) ,

because no service that met the requirements of F e d . R. B a n k r . P.

7004(e) was made within 120 days after the complaint was filed.


                                          11
         Plainly, the summons and complaint were "delivered" to

DeCarolis by November 8, the date on which Premier placed these

documents in the mail (Appellant's App. at 52).             See F e d . R.

B a n k r . P.   7004(b)(1)     (allowing service by first-class mail, in

addition to the forms of service authorized by F e d . R. C i v . P.

4(e)-(j)).          The question before this court, however, is whether

that delivery, which did not constitute effective service under

F e d . R. B a n k r . P.   7004(e), nevertheless constituted service within

120 days for purposes of F e d . R. C i v . P. 4 (m) .



         Premier relies upon Union Trust Co. v. Anderson (In re

Anderson), 

 (Bankr. D. Conn. 1995), for the

proposition that F e d . R. C i v . P. 4 (m) "reserves its harsh result

for those instances where there is a complete lack of 'service .

. . upon' a defendant, not merely a circumstance where, although

actually served, a defendant is afforded insufficient time to

plead."          However, the "rule" Premier seeks to invoke was labeled,

in several different ways, as dictum.             

.1    Thus,


     1 Specifically, the court wrote: "Though not critical to its
ruling given the foregoing findings of 'good cause' and 'waiver'
under Rule 4(j), this Court's decision may be supportable also by
a legal conclusion that Rule 4(j) [current Rule 4 (m)] is simply
not applicable to the facts of this case." In re Anderson. 

 (emphasis added). The court continued in the same

                                           12
Premier's authority for the proposition that ineffective service

under F e d . R. B a n k r . P. 7004(e) can, nevertheless, be effective

service under F e d . R. C i v . P. 4 (m) is less than a "holding" and,

as nonbinding precedent, is helpful only to the extent the

analysis is persuasive.



     DeCarolis, on the other hand, relies upon Dreier v. Love (In

re Love), 

     (Bankr. E.D. Tenn. 1999), aff'd 

 (E.D. Tenn 1999) and 

        (6th Cir. 2001) .    In

that case, plaintiffs in an adversary proceeding served an alias

summons and a copy of the complaint on the debtor/defendant

within the ten days prescribed by F e d . R. B a n k r . P. 7004(e), but

failed to serve those documents on the debtor/defendant's



vein: (1) "Arguably, by its terms. Rule 4(j) reserves its harsh
result . . .," 

 (emphasis added); and (2) "Arguably, the Court
could conclude that the concept of ''service' in Rule 4(j)
encompasses an instance of 'service' completed in an appropriate
manner, albeit tardily under the standard of Fed.R .Bank.P .
7004(f)," 

 (emphasis on "arguably" added). Finally, the In re
Anderson court concluded its discussion in the following way:

          However, as noted supra, given the Court's
     findings of "good cause" and waiver, a formal ruling on
     this legal guestion is unnecessary to this Court's
     decision on the instant motions.  Therefore, the Court
     declines to so rule at this time.

Id. at 408   (emphasis added).

                                    13
attorney, as required by F e d . R. B a n k r . P. 7004(b)(9).   Ruling on

the debtor/defendant's motion to dismiss, the bankruptcy court

held:


           Because the Plaintiffs did not serve the Debtor's
      attorney with the October 20, 1998 Alias Summons and a
      copy of the "complaint" as required by Rule 7004(b) (9),
      their attempted service upon the debtor was
      ineffective.  Thus, the Plaintiffs failed to timely
      serve the Debtor under Rule 4 (m) .


In re Love, 

.          In re Love deems proper service

under F e d . R. B a n k r . P. 7004(e) to be a prerequisite for timely

service under F e d . R. C i v . P. 4 (m) .   Like In re Anderson, In re

Love is not binding, but that case does carry somewhat more

persuasive value, given its decisional quality.



      Premier distinguishes In re Love on the basis that that

case, unlike this one, involved a complete failure to serve a

required "party"      (i.e., counsel for the debtor/defendant), rather

than just a failure to serve in a timely manner.            Leaving aside

whether counsel qualifies as "a party" who must be served, to the

extent Premier distinguishes In re Love based upon the fact that

DeCarolis, unlike the debtor's attorney in In re Love, had actual

notice of the complaint. Premier's argument is unpersuasive.               See


                                        14
Meqanck v. Couts (In re Couts), 

 (Bankr. E.D.

Mich. 1995)              ("actual knowledge of a suit is not a substitute for

proper service of process and does not cure a technically

defective service of process")                                  (citing Friedman v. Estate of

Presser, 

 (6th Cir. 1991)); see also 1 J a m e s

W m . M o o r e , M o o r e 's F e d e r a l P r a c t i c e   § 4.03 [3] [a]   (3rd ed. 2000)

("Generally, independent knowledge by defendant that an action

has been commenced is insufficient, in the absence of proper

service of process, to confer jurisdiction over defendant."); cf.

Javurek v. Wadsworth (In re Wadsworth) 

 (D. Kan.

1996)        (explaining that defendant's actual notice of suit "is not

equivalent to a showing of 'good cause'" for failure to timely

serve).



          Indeed, untimely delivery, even when made to all persons who

must be served, is insufficient to constitute valid service.                                      See

Ruthe v. Dohrinq (In re Dohrinq), 

 (Bankr. N.D.

Tex. 2000)             ("The summons, as served, was expired and therefore

service of it was a nullity and should be quashed.").                                      While the

bankruptcy court in In re Dohrinq ultimately granted plaintiff an

additional thirty days to effect service, it did so only after



                                                                15
ruling that plaintiff's attempted service, which was untimely

under F e d . R. B a n k r . P. 7004(e), was also ineffective under F e d . R.

C i v . P.   4 (m) .   The court merely found good cause for plaintiff's

failure to serve within 120 days and granted discretionary

relief.



        The practical goal to be achieved by the clumsy linkage of

F e d . R. B a n k r . P.   7004(e) and F e d . R. C i v . P. 4 (m) is probably

deducible, but swift processing of adversary proceedings is not a

necessary result.2              The court's obligation, however, is to read

the Bankruptcy Rules and the Rules of Civil Procedure in

combination.           See In re Sheehan, 

.           As between the



     2 Apparently, service within ten days of the summons'
issuance is intended to afford a defendant in a bankruptcy
adversary proceeding the familiar twenty days in which to respond
(i.e., defendant must respond within thirty days of issuance of
the summons, which must be served within ten days of issuance,
resulting in at least twenty days to respond). See In re
Anderson, 

 n.4.   It might be easier, and far less
complex, to simply afford twenty days to respond, calculated from
the date of service, and to require service within 120 days of
filing the complaint. Of course, under the current combination
of rules, 120 days is allowed for service of the summons in a
bankruptcy adversary proceeding, so long as the summons is also
served within ten days of issuance.   Thus, while plaintiff must
serve the complaint and summons within ten days of issuance of
the summons, he or she can apparently wait until the 119th day
after filing the complaint to obtain and properly serve an alias
summons.

                                              16
rule urged b y Premier (late service under F e d . R. B a n k r . P.

7004(e) constitutes timely service under F e d . R. C i v . P. 4 (m)) and

the rule urged by DeCarolis      (effective service under F e d . R. C i v .

P. 4 (m) requires proper service under F e d . R. B a n k r . P. 7004(e)),

the better rule is that service within 120 days under F e d . R. C i v .

P. 4 (m), in a bankruptcy adversary proceeding, means proper

service under F e d . R. B a n k r . P. 7004(e) within 120 days of filing

the complaint.       That is, a defendant must be served within ten

days of the issuance of the summons, and within 120 days of the

filing of the complaint.       Here the summons and complaint were

served within 120 days of the filing of the complaint, but more

than ten days after the alias summons was issued.           Accordingly,

service was ineffective under both F e d . R. B a n k r . P. 7004(e) and

F ed . R . Civ. P . 4 (m) .




III. Failure to Grant an Extension

      Premier next argues that even        if it failed to serve

DeCarolis within the time limit prescribed by F e d . R. C i v . P.

4 (m), the bankruptcy court abused its        discretion by: (1)failing

to find good cause for its failure         to serve; and (2) failing to




                                     17
exercise its prerogative to grant a permissive extension of the

120-day limit even in the absence of good cause.



        There are three means by which a plaintiff might be granted

relief from failure to meet the 120-day service deadline.                 First,

"if the plaintiff shows good cause for the failure [to serve

within 120 days], the court shall extend the time for service for

an appropriate period."     F e d . R. C i v . P.   4 (m)   (emphasis added);

see also In re Sheehan, 

              ("upon a showing of good

cause for the defective service, the court must extend the time

period [for service]")    (citing F e d . R. C i v . P. 4 (m); Petrucelli v.

Bohrinqer & Ratzinqer, GmbH, 

 (3rd Cir. 1995)).

"The determination of whether good cause exists to justify such a

failure is entirely within the Court's discretion."                 Kadlecek v.

Ferguson (In re Ferguson), 

 (Bankr. N.D. 111.

1997)    (citing Flovd v. United States, 

 (10th

Cir. 1990); Attorney Reg. & Disco. Comm'n of the Superior. C t . of

111, v. Betts    (In re Betts) , 

 (Bankr. N.D. 111.

1992)); Artificial Intel. Corp. v. Casev, (In re Casev), 

 (Bankr. S.D. Cal. 1996)           (citing Cartage Pac. Co. v.

Waldner (In re Waldner), 

 (B.A.P. 9th Cir.



                                      18
1995)).       "Second, if there is no good cause [for defective

service], the court has the discretion to dismiss without

prejudice or to extend the time period."                       In re Sheehan, 

       (citing Petrucelli, 

) .                     Third, an extension

of the 120-day deadline may also be granted, when plaintiff moves

for such relief after the deadline has passed, under the

excusable neglect standard of               F e d . R. B a n k r . P.   9006(b). See,

e.g.. In re Sheehan, 

; In re Love, 

 0; In re Ferguson, 

; In re Casev, 

.     That decision, as well,            is within the discretion             of the

court.       See F e d . R. B a n k r . P. 9006(b) (1) .



        A.     Good Cause Under F e d . R. C i v . P. 4 (m)

        In this case, the bankruptcy court explicitly determined

that:    (1) Premier failed to effectively serve DeCarolis within

120 days of filing its complaint; and (2) Premier did not

demonstrate good cause for that failure.                       On appeal. Premier says

good cause was established by:               (1) its diligent attempts to serve

DeCarolis;       (2) its beliefs that:            (a) it had made effective

service for purposes of F e d . R. C i v . P. 4 (m); and (b) it should

not - or could not - re-serve DeCarolis while his first motion to



                                             19
dismiss was pending; and (3) the lack of prejudice to DeCarolis

should the period be extended.



     In granting the motion to dismiss, the bankruptcy court

placed considerable emphasis on Premier's failure to re-serve

DeCarolis, even after he alerted Premier to the defect in its

attempted service.3    Because Premier's failure to make service

was based upon its misunderstanding of the Bankruptcy Rules, and

concomitant inaction, the bankruptcy court cannot be said to have

abused its discretion in declining to find good cause for

Premier's failure to serve DeCarolis.4       See in re Ferguson, 204


     3 While evasion of service. In re Casev, 

(citation omitted), or some other conduct that thwarted attempted
service might bolster a claim of good cause for failure to serve,
the record in this case discloses exactly the opposite: DeCarolis
took at least one step - specifically pointing out Premier's
defective service, with time left in the service period - that
should have facilitated timely service, had Premier chosen to act
on the information it was provided.
     As in In re Love, Premier, "with ample time to do so [as a
result of DeCarolis's promptly filed motion to dismiss], took no
action to have another alias summons issued in order that [it]
might timely effectuate service in the proper manner [and] showed
no diligence in [its] efforts to serve [DeCarolis] within the
120-day time period." 

.

     4 Premier's decision not to attempt re-service was based
upon at least four legal errors.           First, it mistakenly believed
that its attempted service, while ineffective under F e d . R. B a n k r .
P. 7004(e), was effective under F e d . R. C i v . P. 4 (m). That
understanding of F e d . R. C i v . P. 4 (m) was legally incorrect, for

                                    20
B.R. at 208   ("ignorance of the service requirements, although

certainly an explanation for defective service, is not an

excuse")   (citing Tuke v. United States, 

 (7th

Cir. 1996)); In re Casev, 

 ("A mistaken assumption

or mere inadvertence does not establish good cause.")       (citations

omitted); Broitman v. Kirkland (In re Kirkland), 

,

(10th Cir. 1996)   ("Mistake of counsel or ignorance of the rules .

. . usually do not suffice [to establish good cause].")       (citing

Putnam v. Morris, 

 (10th Cir. 1987); Despain v.

Salt Lake Area Metro Gang Unit, 

 (10th Cir.


reasons already given.   Second, Premier believed that it was
barred from re-serving DeCarolis while the bankruptcy court was
considering his first motion to dismiss. Premier cites no
authority for that proposition, and the court is aware of none.
Third, Premier believed that the court might, sua sponte, order
the issuance of a second alias summons, in response to
DeCarolis's first motion to dismiss. Again, Premier cites no
legal basis for that belief.    Fourth, Premier believed that
instead of directing it to obtain and serve a new alias summons,
the bankruptcy court might simply grant DeCarolis additional time
to reply to the summons that had been ineffectively served on
November 8. However, both F e d . R. B a n k r . P. 7004(e) and relevant
precedent make clear that the exclusive cure for defective
service, when recognized within the 120-day service period, is
re-service.   See, e.g., Campbell v. Castelo (In re Campbell) 

 (B.A.P. 9th Cir. 1989) ("Bankruptcy Rule 7004(f) [now
Rule 7004(e)] does not limit the number of summonses a plaintiff
may receive for the purposes of curing defective service.")
 (citing Sanghui v. Alpha Omega Travel, Ltd. (In re Terzian), 

 (Bankr. S.D.N.Y. 1987); Client's Security Fund of
N.Y. v. Dahowski (In re Dahowski), 

 (Bankr.
S.D.N.Y. 1985)).

                                   21
1994)); In re Love, 

      (finding no good cause for

failure to serve within 120 days when defendant informed

plaintiff of defective service with thirty-four days left in

service period, and plaintiff made no attempt to re-serve).



     B.   Permissive Extension Under F e d . R. C i v . P. 4 (m)

     It is not readily apparent from the transcript of the

hearing on DeCarolis's motion to dismiss that the bankruptcy

court separately considered a permissive extension of the time

for service.     It is, however, apparent that the bankruptcy judge

was not inclined to grant discretionary relief under the

circumstances.    Declining to permissively extend the time for

service also did not constitute an abuse of discretion.



     While the bankruptcy court did not explicitly state that it

considered extending the time for service, notwithstanding its

determination that Premier had not shown good cause, the

transcript does disclose that counsel for both parties raised the

good cause standard and also argued that the court could extend

the time for service even absent a showing of good cause.          (See

Appellant's App. at 74, 86-87.)      Therefore, it cannot be said



                                   22
that the bankruptcy judge was unmindful of the option of his

power to grant a permissive extension when he decided to dismiss

Premier's complaint.    Because the record discloses that the

bankruptcy court was aware of its ability to grant an extension

even in the absence of good cause, and given that court's wide

latitude in deciding whether to grant such an extension, see In

re Sheehan, 

 (citing Cooter & Gell v. Hartmarx

Corp., 

 (1990)), the bankruptcy court did not

abuse its discretion in failing to permissively extend the time

to perfect service, under the circumstances it found to exist.5


     5 While Premier correctly points out that "the running of
the limitations statute alone could be reason to extend time for
service," Casev, 223 B.R. at 884 (citing Petrucelli, 

 n.8) (emphasis added); see also In re Ferguson, 

 (citing F e d . R. C i v . P. 4 (m), advisory committee notes, 1993
Amendments); Barr v. Barr (In re Barr), 

 (Bankr.
W.D. Wash. 1998)), the Casev court's decision that a bankruptcy
court would not necessarily abuse its discretion by granting an
extension based exclusively upon the running of the statute of
limitations does not, of course, mean that a court would abuse
its discretion should it decide not to extend time for service
under such circumstances.

     The running of the statute of limitations does not
     require that a district court extend the time for
     service of process under [Fe d . R. C i v . P. 4 (m)].
     Petrucelli, 

. Rather, absent a finding
     of good cause, a district court may in its discretion
     still dismiss a case even after considering that the
     statute of limitations has run.

Panaras, 94 F.3d at 341.

                                  23
      According to the advisory committee notes to the 1993

amendments to the Federal Rules of Civil Procedure, an extension

of the 120-day deadline, even without good cause, "may be

justified . . .   if the defendant is evading service or conceals a

defect in attempted service."    In such a circumstance, a court

would be justified in exercising its discretion to grant a

permissive extension to a diligent plaintiff who has been unable

to serve a wily defendant.    See, e.g.. In re Barr, 

   (granting plaintiff, who failed to show good cause,

additional thirty days to serve defendant "who took no action to

advise the Plaintiff of the defect in service") ; cf. In re

Anderson, 

 (determining that plaintiff had good

cause for failing to serve defendant who knew service was

defective, but did not challenge service until after the 120-day

service period ran, seeking instead "to reap a technical windfall

by [its] inertia", by filing motion to vacate default granted to

plaintiff); In re Couts, 

 (denying defendant's

motion to vacate default judgment based upon defective service of

process when defendant knew that service was defective and made

tactical decision to move for dismissal, after service period had

run and plaintiff had secured default judgment).



                                 24
      But this case presents the mirror image of In re Barr.

Here, DeCarolis did not conceal the defect in Premier's attempted

service, but, like the debtor in In re Love, 

,

promptly informed Premier of the service defect well before the

120-day service period had run, despite having no obligation to

do so, see In re Ferguson, 

               ("Debtor's counsel had

no obligation to inform Plaintiff of the rules").               And Premier,

rather than obtaining and serving a second alias summons, sat

back under the erroneous assumptions that:               (1) it could not or

should not obtain and serve another summons while DeCarolis's

motion to dismiss was pending;               (2) the court might, sua sponte,

order the issuance of another summons; and (3) rather than

ordering the issuance of another summons, the court might simply

extend the time for DeCarolis's response to what Premier then

recognized as an improperly served complaint.                (Premier's failure

to re-serve DeCarolis is especially striking given its concession

that it knew, as soon as DeCarolis filed his first motion to

dismiss, that its attempt at service was ineffective, at least

under F e d . R. B a n k r . P. 7004 (e) .   See In re Love, 

(deciding not to exercise discretion to grant permissive

extension in part because plaintiff's counsel acknowledged



                                             25
familiarity with bankruptcy rule under which service was found to

be ineffective).)             Because Premier did not fulfill its obligation

"to use diligence in making service of process," In re Campbell,

 (citations omitted), even after DeCarolis

identified the defect in service when that defect was eminently

correctable as of right, under F e d . R. B a n k r . P. 7004(e), the

bankruptcy court's decision not to grant Premier additional time

to properly serve DeCarolis cannot be deemed an abuse of its

discretion.           The question, of course, is not whether a different

judge might have granted an extension, but whether it was an

abuse of discretion for the bankruptcy judge in this case not to

have done so.



        C.      Excusable Neglect Under F e d . R. B a n k . P. 9006(b)

        As previously noted, a bankruptcy court may grant an

extension of the 120-day deadline, on plaintiff's motion, under

F e d . R. B a n k r . P.   9006(b), upon a showing of excusable neglect.

See In re Sheehan, 

.             Here, however. Premier made

no such motion.             Thus, the bankruptcy court had no cause to

consider an extension based upon excusable neglect, and that

issue is not before this court.              In any event, it would appear



                                           26
unlikely that Premier could meet the excusable neglect standard,

given that:    (1) the only excuses proffered for its failure to

effectively serve DeCarolis are the various mistakes described in

footnote four; and (2) "inadvertence, ignorance of the rules, or

mistakes construing the rules do not usually constitute

'excusable' neglect," Graphic Communications Int'l Union, Local

12-N v. Ouebecor Printing Providence, Inc., 

 (1st

Cir. 2001)    (quoting Pioneer Inv. Servs. Co. v. Brunswick Assocs.

Ltd. P'ship, 

 (1993)).



                              Conclusion

     Because the bankruptcy court did not err in concluding that

DeCarolis was not properly served within 120 days, and because

the court did not abuse its discretion in failing to grant an

extension of the 120-day service deadline, the decision of the

bankruptcy court is affirmed.




                                  27
      SO ORDERED.




                          Steven J. McAuliffe
                          United States District Judge

January 4, 2002

cc:   Michael s. Askenaizer, Esq.
      Carolyn a. Bankowski, Esq.
      Edward R. Hayes, Esq.
      Edmond J. Ford, Esq.
      Nancy H. Michels, Esq.
      James V. DeCarolis
      Estate of James V. DeCarolis
      Donald C. Crandlemire, Esq.
      George Vannah, US Bankruptcy Court




                                28