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Summarizing by Lars Fuller


Case Type:
Case Status:
20-14515 (11th Circuit, Sep 23,2021) Published
Bankruptcy courts have discretion under Fed. R. Bankr. P. 7004(m) to extend the time for a plaintiff to properly serve the summons and complaint on a debtor and its attorney, even if the extension of time would allow service after the expiration of the statute of limitations. A bankruptcy court's decision to extend the time for service is reviewable only for abuse of discretion.
Procedural context:
Following entry of default on an adversary proceeding seeking to have a state-court judgment deemed nondischargeable, the debtor appealed to the district court. As discussed in the Facts, below, the district court ultimately affirmed the bankruptcy court. The debtor then appealed to the Court of Appeals.
To quote the opinion, "[t]he essential facts are found in the procedural history of this case." Mehrdad Elie and Gregory Lee Cutuli (the debtor) were partners in a business before Cutuli filed his bankruptcy petition. Elie sued Cutuli in California state court and was awarded a $14,814,107.48 fraudulent transfer judgment against Cutuli. Cutuli and his wife file bankruptcy. Cutuli pled guilty to the crime of conspiring to fraudulently transfer or conceal an asset in anticipation of bankruptcy (18 U.S.C. § 371) and was sentenced to six months in federal prison. Cutuli then retained bankruptcy counsel and filed a personal chapter 7 case in the Middle District of Florida. Cutuli listed a Plant City, Florida, address in his bankruptcy. Elie commenced an adversary proceeding against Cutuli on September 15, 2017, seeking to have the California judgment deemed nondischargeable under § 523(a)(6). Elie attempted mail service on the Plant City address, but Cutuli was already in prison and did not receive the summons and complaint. Upon learning that the attempted service was unsuccessful, Elie obtained a new summons and served Cutuli in prison on September 27, 2017. Cutuli did not answer the complaint or move for an extension of his time to answer. Elie moved for default judgment. Cutuli's attorney objected, arguing that the summons and complaint had not been served on the attorney as required by Fed. R. Bankr. P. 7004(g). Elie served the attorney the complaint, and a copy of the summons issued in September, on December 14, 2017. Cutuli, through his attorney, moved to dismiss under Fed. R. Civ. P. 12(b)(4) and (5) (as made applicable by Fed. R. Bankr. P. 7012(a)) on the grounds of insufficiency of process and insufficiency of service of process because the summons was not served within the 7-day period required by Rule 7004(e). Cutuli's attorney, however, stated that he was making a "limited appearance" for Cutuli solely for the purpose of making the motion. The bankruptcy court ordered Cutuli to answer the complaint. Cutuli failed to do so. Elie again moved for default. Cutuli appeared at the hearing and said that he didn't have money for an attorney and did not intend to object to the entry of default. Notwithstanding his statement to the bankruptcy court, Cutuli appealed. The district court reversed and held that Elie's failure to serve a "fresh" summons on Cutuli's attorney made service ineffective and deprived the bankruptcy court of personal jurisdiction over Cutuli. (389 F. Supp. 3d 1051 (M.D. Fla. 2019)). The district court remanded the case to the bankruptcy court with the instruction to determine whether to extend the time for Elie to serve process. Elie appealed, but the appeal was dismissed because the district court's order was not a final order. Elie then asked the bankruptcy court to extend the time for service of process under Fed. R. Civ. P. 4(m). The bankruptcy court granted the motion on both mandatory and discretionary grounds. Elie obtained a new summons and properly and timely served Cutuli and his attorney. Cutuli claimed that service did not occur until 845 days after the complaint was filed. Cutuli did not answer the complaint or move to seek an extension of time. Elie again moved for entry of default and a default judgment. Cutuli again appealed to the district court, which denied Cutuli's appeal and affirmed the bankruptcy court.
JILL PRYOR, LUCK, and MARCUS, Circuit Judges

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