                                                                                                                           Opinions of the United
2009 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


5-4-2009

Chiang v. US Small Bus Admn
Precedential or Non-Precedential: Non-Precedential

Docket No. 07-2686




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                                            NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEAL
                           FOR THE THIRD CIRCUIT


                                  No. 07-2686


                           GAIL WATSON CHIANG;
                          CALEDONIA SPRINGS, INC.,

                                            Appellants

                                       v.

                       UNITED STATES SMALL BUSINESS
                             ADMINISTRATION


                 On Appeal from the United States District Court
                      for the District of the Virgin Islands
                         (D.C. Civil No. 00-cv-00071)
                     District Judge: Hon. Harvey Bartle, III


                   Submitted Under Third Circuit LAR 34.1(A)
                                April 23, 2009

           BEFORE: BARRY, HARDIMAN and COWEN, Circuit Judges

                              (Filed: May 4, 2009)


                                   OPINION


COWEN, Circuit Judge
          Gail Watson Chiang and her Virgin Island’s based company, Caledonia Springs,

Inc., appeal from the District Court’s order dismissing the Amended Complaint for failure

to timely serve the U.S. Small Business Administration and the Attorney General of the

United States (collectively “the Government”). Because Appellants, who were

represented by counsel, inexplicably delayed for almost four years before perfecting

service on the SBA and the Attorney General, we find that the District Court did not

abuse its discretion in declining to grant an extension of time for service of process and

dismissing Appellants’ Amended Complaint without prejudice. Accordingly, we will

affirm.

                                             I.

          On October 31, 2000, Chiang filed an Amended Complaint on behalf of herself

and the company she runs with her father and her husband, Caledonia Springs, Inc. The

three count Amended Complaint alleged breach of contract and fiduciary duty by the U.S.

Small Business Administration (“SBA”) and discrimination against Chiang. The

allegations arose out of a twelve year course of dealing between Caledonia Springs and

the SBA.

          The Amended Complaint was properly served on the U.S. Attorney for the District

of the Virgin Islands in November of 2000. A copy of the Amended Complaint was also

mailed to the Attorney General; however an affidavit from the Attorney General’s Office

states that it has no record of ever having received the complaint. Both the original



                                             2
Complaint and the Amended Complaint were personally served on Carl Christensen, an

Economic Development Specialist for the SBA; however the District Court found nothing

in the record to establish that Christensen was authorized to accept service on behalf of

the SBA. No further attempts to perfect service were made at that time.

       In July of 2004, approximately four years after the filing of the original Complaint,

the Government entered a limited appearance and filed a motion to dismiss for lack of

proper service. No significant activity occurred on the District Court docket between the

filling of the Amended Complaint and the filing of the Government’s motion to dismiss.

Following the filing of the Government’s motion to dismiss, Chiang’s husband, Peter,

sent copies of the Amended Complaint by certified mail to the SBA and to the Attorney

General, finally effecting proper service.

       In ruling on the Government’s motion, the District Court conducted a two-step

analysis, considering first whether Appellants had shown good cause as to why they had

not complied with the requirements of Rule 4 of the Federal Rules of Civil Procedure.

Finding that Appellants had failed to offer any reason for their non-compliance with

requirements of Rule 4, the District Court then considered whether any additional factors

existed that warranted granting Appellants an extension of time in which to serve the

Amended Complaint, despite the lack of good cause shown. The District Court was not

persuaded that relief was justified on account of the expiration of the statute of

limitations, which would bar the refiling of the action, because no other factor weighed in



                                              3
favor of granting an extension of time. Finding no reason to exercise its discretion to

extend the time for service, the District Court dismissed the Amended Complaint without

prejudice for failure to effect proper service. Chiang filed a timely appeal.

                                                II.

         This Court reviews a dismissal pursuant to Rule 4(m) for abuse of discretion.

Boley v. Kaymark, 123 F.3d 756, 758 (3d Cir. 1997). We have jurisdiction over this

appeal pursuant to 28 U.S.C. § 1291 and 28 U.S.C. § 1294.

         Proper service is an essential step in establishing a district court’s personal

jurisdiction over the defendants. Rule 4(i) of the Federal Rules of Civil Procedure very

clearly sets out the requirements for service of a summons and complaint on the United

States and its agencies. “The plaintiff is responsible for having the summons and

complaint served within the time allowed by Rule 4(m).” Fed. R. Civ. P. 4(c)(1). “If a

defendant is not served within 120 days after the complaint is filed, the court . . . must

dismiss the action without prejudice against that defendant or order that service be made

within a specified time.” Fed. R. Civ. P. 4(m). If a plaintiff can show “good cause” for

the failure to timely serve a defendant, “the court must extend the time for service for an

appropriate period.” Id. This Circuit has equated good cause with the concept of

excusable neglect. See Petrucelli v. Bohringer & Ratzinger, 46 F.3d 1298, 1312 (3d Cir.

1995).

         District courts conduct a two-part analysis when determining whether to extend the



                                                4
time for service of a summons and complaint. Boley, 123 F.3d at 758. First, the district

court must determine “whether good cause exists for a plaintiff’s failure to effect timely

service.” Id. If good cause does not exist, the district court must then “consider whether

to grant a discretionary extension of time.” Id.

A. Mandatory Extension for Good Cause

       A showing of good cause “requires a demonstration of good faith on the part of the

party seeking an enlargement and some reasonable basis for noncompliance within the

time specified in the rules.” MCI Telecomms. Corp. v. Teleconcepts, Inc., 71 F.3d 1086,

1097 (3d Cir. 1995). Indeed, the “primary focus” of the good cause inquiry “is on the

plaintiff’s reasons for not complying with the time limit in the first place.” Boley, 123

F.3d at 758 (quoting MCI, 71 F.3d at 1097).

       Despite Appellants’ arguments to the contrary, they have not shown good cause for

an extension of time for service. The District Court was presented with nothing that was

sufficient to excuse Appellants’ lack of diligence. See Boley, 123 F.3d at 758.

Appellants properly served the Amended Complaint on the U.S. Attorney for the District

of the Virgin Islands but they ignored the unequivocal instructions of Rule 4(i) and used

unauthorized methods of service on the SBA and the Attorney General. Appellants have

offered no explanation for why they were unable to comply with the requirements of Rule

4(i). Nor have Appellants explained why it took them almost four years to move for an

enlargement of time and complete service. Indeed, Appellants did not even ask for an



                                              5
extension of time until after the Government had filed its motion to dismiss. The fact that

Appellants initially made good faith efforts to serve the Attorney General and the SBA,

which may have put them notice of the legal action, is of no consequence. The “absence

of prejudice alone can never constitute good cause to excuse late service.” MCI, 71 F.3d

at 1097.

B. Discretion to Extend Time for Service

       Even if good cause is not shown, other factors may warrant an extension of time

for service. Petrucelli, 46 F.3d at 1307. A district court may consider actual notice of the

legal action; prejudice to the defendant; the statute of limitations on the underlying causes

of action; the conduct of the defendant; and whether the plaintiff is represented by

counsel, in addition to any other factor that may be relevant when deciding whether to

grant an extension or dismiss the complaint. See Fed. R. Civ. P. 4(m) Notes of Advisory

Committee on 1993 amendments; Boley, 123 F.3d at 759.

       Appellants present two factors that cut in favor of an extension of time that they

argue were not properly considered by the District Court. First, Appellants assert that a

dismissal without prejudice would effectively bar their action because in the four years

that it took the Government to file its motion to dismiss, the statute of limitations expired

on the their underlying causes of action. Second, Appellants contend that the

Government had actual notice of the legal action despite imperfect service, and therefore

would not suffer any prejudice on account of the delay.



                                              6
       Although the expiration of the statute of limitations and the lack of prejudice cut in

favor of extending the time for service, when balanced against the other factors in this

case, it cannot be said that the District Court abused its discretion in denying Appellants’

request for an extension of time for service of process. The running of the statute of

limitations may be “a factor supporting the discretionary granting of an extension of time

to make service under Rule 4(m),” Boley, 123 F.3d at 759, but it “does not require the

district court to extend time for service of process,” Petrucelli, 46 F.3d at 1306 (emphasis

added). A district court may “still dismiss the case, even after considering that the statute

of limitations has run and the refiling of an action is barred.” Id. In addition, the District

Court found that Appellants had been put on notice by a letter from the U.S. Attorney

following the improper service of the original complaint that the Government was

expecting perfect service and would not waive any defects. Still, it took Appellants

almost four years to perfect service on the SBA and the Attorney General. During this

time Appellants, who were represented by counsel, did not ask the District Court for an

extension of time for service until they were facing a motion to dismiss.

                                             III.

       Given Appellants’ lack of explanation for the four year delay in perfecting service

on the Government and the other detracting factors, we find that the District Court did not

abuse its discretion in denying Appellants’ request for an extension of time for service of




                                              7
process and dismissing the Amended Complaint.1 Consequently, we will affirm the order

of the District Court.




  1
     Appellants argue that the District Court abused its discretion because it refused to
give them reasonable time to cure a failure of service on the Attorney General and the
SBA after they had properly served the U.S. Attorney for the District of the Virgin
Islands, as required by Rule 4(i)(4). Although the District Court did not directly address
this question, it can be gleaned from the court’s discussion of whether to grant an
extension of time for service under Rule 4(m) that three and a half years is not a
reasonable time in which to complete service under Rule 4(i). This is not an unreasonable
conclusion. Accordingly, the District Court did not deprive Appellants of the reasonable
time allowed by Rule 4(i) to perfect service on the Government.

                                            8
