United States District Court, S.D. New York
In re BOZEL S.A., et al., Debtors.
MICHEL MARENGERE, Appellee. TRILLIANT FUNDING, INC., as Plan Administrator of Bozel S.A. and Bozel LLC, Appellant
OPINION AND ORDER
L. CARTER, JR., United States District Judge
an appeal by the Plan Administrator Trilliant Funding, Inc.
("Trilliant" or "Appellant") from a
Memorandum Decision Granting Motion to Dismiss (the
"Decision"), issued April 14, 2016, and a
corresponding Order, entered on May 17, 2016. The bankruptcy
court dismissed the adversary proceeding instituted by
Trilliant against Michel Marengere ("Marengere" OR
"Appellee") for insufficient service of process.
For the reasons that follow, the Court affirms the order
dismissing the proceeding.
otherwise noted, the following facts are taken from
Bankruptcy Judge Sean Lane's Decision. Bozel S.A. and
Bozel LLC (together, the "Debtors") filed voluntary
petitions under Chapter 11 of the Bankruptcy Code. On January
4, 2012, Trilliant, as Plan Administrator under the
Bankruptcy Plan, brought suit against Marengere, a former
executive of the Debtors. Trilliant sought damages based on
Marengere's alleged misappropriation of the Debtors'
April 16, 2013, Trilliant filed an application seeking an
extension of time to effectuate service of process with
respect to a number of foreign defendants, including
Marengere. Several documents in the bankruptcy proceedings
indicated that Marengere resided at 29 Montee Du Golf, Lac
Beauport, Quebec G3B 0K3 (the "Quebec Address"). A.
74-128. In its application, Trilliant noted that
the 120-day limitation set forth in Fed.R.Civ.P. 4(m) does
not apply to service of individuals in a foreign country and
thus "sought an extension with regard to these
individual defendants to the extent that he might be able to
make service upon them within j this United States." A.
40-41. On May 2, 2013, the Court approved the application and
extended the time to serve on any defendant not previously
served by 180 days, setting a service deadline for October
letter dated August 7, 2013, a process server hired by
Trilliant reported that Marengere's wife resided at the
Quebec Address but that the residence was "empty and for
sale." In a report dated September 4, 2013, an
investigator hired by Trilliant reported that "there was
no movement on the property." At a conference held on
December 13, 2013, Trilliant's counsel told the
bankruptcy court that Marengere was "in Canada" and
"actively evading service, " but that he could
eventually be located. A. 340-341. In the summer of 2014,
Trilliant's counsel called Marengere's counsel,
inquiring about Marengere's location. Marengere's
counsel stated that he did not know where Marengere was or
have any documents showing his location. Finally, Trilliant
hired yet another investigator, who confirmed Marengere's
residence at the Quebec Address. Trilliant then had Marengere
served at the Quebec Address by the Canadian authorities on
February 20, 2015.
April 25, 2015, Marengere moved to dismiss the complaint
based on insufficient service of process. Oral argument was
held on July 28, 2015. The bankruptcy court dismissed the
complaint, holding that "Trilliant's efforts at
service and the resulting delay were not reasonable" and
the resulting delay in service prejudiced Marengere.
Decision, 549 B.R. at 450.
courts have jurisdiction over appeals from final orders of
the bankruptcy courts pursuant to 28 U.S.C. § 158(a).
The bankruptcy court's decision to dismiss the complaint
for untimely service of process is reviewed for abuse of
discretion. Meilleur v. Strong, 682 F.3d 56, 61 (2d
Cir. 2012). "A district court has abused its discretion
if it has (1) based its ruling on an j erroneous view of the
law, (2) made a clearly erroneous assessment of the evidence,
or (3) s rendered a decision that cannot be located within
the range of permissible decisions." Lynch v. City
of New York, 589 F.3d 94, 99 (2d Cir. 2009). This Court
reviews the bankruptcy court's findings of fact under a
clearly erroneous standard and reviews conclusions of law
de novo. In re Hyman, 502 F.3d 61, 65 (2d Cir.
review of the record, this Court has determined that the
bankruptcy court correctly applied the flexible due diligence
standard and did not abuse its discretion in dismissing the j
proceeding for untimely service of process.
4(m) of the Federal Rules of Civil Procedure, made applicable
through Fed.R.Bankr.P. 7004, allows 120 days to serve a
defendant before dismissal of the action is required.
Fed.R.Civ.P. 4(m). However, the text of Rule 4(m) provides
that the 120-day limit does not apply to service in a foreign
country. Id; see Lozano v. Bosdet, 693 F.3d 485, 488
(5th Cir. 2012). In this Circuit, the foreign country
exception to Rule 4(m) does not apply unless a plaintiff
makes no attempt to begin service on a foreign defendant
within 120 days. See USHA (India), Ltd. v. Honeywell
Int'l Inc., 421 F.3d 129, 133-34 (2d Cir. 2005);
see also Moreira v. Ministerio de Exonomia y Production
de la Republica Argentina, No. 10 Civ. 266 (LTS)(KNF),
Order at 3 (S.D.N.Y. May 27, 2011) ("exemption from Rule
4(m) requires reasonable good faith effort by a plaintiff to
serve the international defendant within 120 days").
the foreign country exception does apply, the court
"use[s] a flexible due diligence standard to determine
whether service of process was timely." Bur da
Media, Inc. v. Blumenberg, No. 97 Civ. 7167(RWS), 2004
WL 1110419, at *5 (S.D.N.Y. May 18, 2004) (quoting
Trovers Tool Co. v. Southern Overseas Express Line,
Inc., 98 Civ. 8464, 2000 WL 194781, at *1 (S.D.N.Y. Feb.
17, 2000)), aff'd, 417 F.3d 292 (2d Cir. 2005).
The plaintiff has the burden of proof in showing that it
exercised due diligence in not timely serving the defendant.
See AIG Managed Market Neutral Fund v. Askin Capital
Management, L.P., 197 F.R.D. 104, 108 (S.D.N.Y. 2000).
Under this standard, the court assesses the reasonableness of
j the plaintiffs efforts and the prejudice to the defendant
from any delay. Gordon v. Hunt, 116 F.R.D. 313, 319
(S.D.N.Y. 1987) (citing Lyell Theater Corp. v. Loews
Corp., 682 F.2d 37, 42-43 (2d Cir. 1982)) ("A
finding of lack of due diligence depended on two factors:
first, whether the delay was 'unreasonable' or
'moderate or excusable, ' and second, if the delay
fell into the latter category, whether the delay in service
had caused 'actual prejudice' to the
defendant."); see also In re
Crysen/Montenay, 166 B.R. 546, 553 (Bankr. S.D.N.Y.
1994); U.S. ex rel Thomas v. Siemens AG, 708
F.Supp.2d 505, 522 (E.D. Penn. 2010); Papst Licensing
GMBH & Co. KG v. Sunonwealth Elec. Machine Ind. Co.,
332 F.Supp.2d 1142, 1151 (N.D. Ill. 2004).
the foreign policy exception to 4(m) applies. Trilliant began
the process of serving Marengere within the initial 120 days
by requesting an extension of time for service of process and
representing in the application that a process server or
local agent was working on service. See Nylok Corp v.
Fastener World Inc.,396 F.3d 805, 807 (7th Cir. 2005)
(finding plaintiff attempted service when he hired a process
server); Moreira, No. 10 Civ. 266, Order at 3
(contracting with process server constituted attempt at
service). In Bur da Media, the district court held
that the foreign service exception applied because plaintiff
attempted service domestically before requesting two
extensions of the time limit to serve, where there was
uncertainty surrounding whether service would take place
domestically or internationally. 2004 WL 1110419, at *6.
Similarly, Trilliant's request for an extension in light
of that same uncertainty about the location of service
constituted an attempt. Id. ("While [plaintiff]
may have known the address of [defendant's home] since
1996, it does not follow that [plaintiff] knew that
[defendant] would be present there at the time [plaintiff]
sought to effect service."). Further, within the
additional 180 day extension, there were additional steps