US Securities and Exchange Commission v. Brown, No. 9:2019mc80503 - Document 11 (S.D. Fla. 2019)
Court Description: ORDER denying 8 Plaintiff's Motion for Alternative Service of Process By Publication. Signed by Magistrate Judge William Matthewman on 7/11/2019. See attached document for full details. (kza)
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US Securities and Exchange Commission v. Brown Doc. 11 UN ITED STA TES D ISTRICT COU RT SO U THERN DISTRICT OF FLOR ID A CA SE N O .I9-m C-8OSO3-SM ITH /M A TTH EW M AN SECU RITIES AN D EX CH AN GE COM M ISSION , FILED BY Plaintiff/A pplicant, D.C . JLL 11 2218 M ICH AEL P.BRO W N , ANGELA E.NOBLE CLERK U S DIST.C7: s.n.oF#LA.-w.R:. D efendantc espondent. O RD ER DEN YIN G PLA IN TIFF'S M O TIO N FO R A LT ERN A TIV E SER VIC E O F PROCESS BY PUBLICATION IDE 81 TH IS C AU SE isbefore the Courtupon Plaintiff,Securitiesand Exchange Com m ission's (ks-l-heSEC'')M otion forAlternativeServiceofProcessbyPublication.gDE 81.Thismatterwas referred to the undersigned by U nited StatesD istrictR odney Sm ith.See D E 10. Background The SEC filed itsPetition inthiscaseon April11,2019,seeking an entry ofjudgment enforcing D efendant's com pliance w ith a finalCom m ission O rder,entered againstD efendanton M ay 20,2015,which required Defendantto pay disgorgement of $15,000 and a civilmoney penaltyof$750,000.gDE 11.OnApril16,2019,theHonorableUnitedStatesDistrictJudgeBeth Bloom l entered an Order to Show Cause, requiring D efendant to show cause why the Court should notentera judgmentenforcing Defendant's compliance with the Commission Order enteredagainsthim onM ay20,2015.(DE 3,pg.21.ThatOrderalsorequiredtheSEC tofileproof ofserviceupon Defendantofthe Orderto Show Causeon orbeforeApril25,2019.f#. l' I-hiscasewasreassignedtotheHonorableU nited StatesD istrictJudgeRodney Sm ithonJunel7,2019(DE9),and totheundersignedUnitedStatesMagistrateJudgeonJuly 1,2019.(DE l0J. 1 Dockets.Justia.com OnApril26,2019,theSEC filedaNoticeofService(DE 41,inwhichtheSEC advisedthe Courtthat itw as having difficulty locating D efendant.The SEC attached the D eclaration ofEric M .Turnbaugh,generalmanagerofCavalierCourier& ProcessService($$CCPS''),which stated thatCCPS had m ade severalattem pts to serve D efendantw ith the Orderto Show Cause atseven differentaddresses,butwasultimately unsuccessfulin locating Defendant.gDE 4-1).The SEC requested an additionalm onth to attem ptto locate D efendant,and asked thatifitcould notlocate D efendant,itbe pennitted to Cisend notice to a11known addressesthatitbelieves m ay be valid,a1l known e-m ailaddresses and to provide notice via publication and for thisto be deem ed adequate service.''(DE 41.On April29,2019,the Courtgranted the SEC'Srequestforan extension and orderedtheSEC to fileproofofserviceupon DefendantonorbeforeM ay 27,2019.(DE 61.On M ay 30,2019,theCourtentered an Orderwhich stated thatthe SEC hadnotfiledproofofservice uponDefendantasrequiredinitsApril29,2019Order(DE 6)andOrderedtheSEC tofileproofof serviceuponDefendantbyJune3,2019orfacesanctions.rDE 7J. OnJtme3,2019,theSEC tiled itsStattzsReportRegardingNoticeofService.(DE 81.ln the Status Report,the SEC advisesthe Courtthatithad continued to attem ptto locate Defendant butwas unsuccessful.The SEC asserts thatithas been unable to personally serve Defendant, although ithasbeen diligentin itsattemptsto serve Defendant.The SEC furtherstatesthatitis Ginot contident'' that it w ill be able to locate D efendant for personal service, even given an additionalthirty days.The SEC advisesthatitbelievesD efendantresidesin South Florida because he receives m ailat an address in South Florida,and also believes thatD efendant w as recently traveling in M ichigan.The SEC included a supplem ental D eclaration of M r.Tum baugh,w ho stated that CCPS visited a Sun-rrtzst balzk in Boca Raton, Florida, a H oliday lnn Express in Petoskey,M ichigan,and a residence in Boca Raton,Florida whereD efendant'sbusiness associate resides,in M ay, 2019 but could not locate D efendant.Thus, in light of the substantial efforts expended to personally serve Defendant,the SEC asks the Court to allow the SEC to serve D efendantby publication in Florida and M ichigan. II. Service by Publication ddu nlessfederallaw providesotherw ise,an individual--otherthan am inor,an incom petent person,orapersonwhosewaiverhasbeenfiled maybeservedinajudicialdistrictoftheUnited Statesby:(1)following the state law forserving a summonsin an action broughtin courtsof generaljurisdictioninthestatewherethedistrictcotlrtislocatedorwhereserviceismade;...''Fed. R.Civ.P.4(e)(l). W hile Florida penuits service on any person, corporation, or other legal entity by publication,it lim its service by publication to fifteen enum erated actions specified in Florida Statutej49.011.Ifsenricebypublication ispermittedunderFla.Stat.j49.011,apartyseeking serviceby publication isrequired to filetda statement...in theaction executed by theplaintiff,the plaintiff s agent or attorney, setting fol' th substantially the m atters hereafter required, which statem entm ay be contained in a veritied pleading,or in an affidavitorothersworn statem ent''in itsrequestforalternativeservice.Fla.Stat.j49.03141).Thesworn statementshouldshow: (1)Thatdiligentsearch and inquiry have been made to discoverthe name and residence ofsuch person,and thatthe sam e is setforth in said sw orn statem entas particularly as isknow n to the aftiant;and (2)W hethersuchpersonisoverorundertheageof18years,ifhisorherageis know n,orthatthe person'sage isunknow n;and (3)Inadditiontotheabove,thattheresidenceofsuchpersonis,either: (a)Unknowntotheaffiant;or (b)ln somestateorcountryotherthan thisstate,stating said residenceif know n;or (c)ln thestate,butthatheorshehasbeen absentfrom the stateformore than 60 daysnextpreceding the m aking ofthe sw orn statem ent,orconceals him self or herself so that process cannot be personally served,and that affiant believes thatthere is no person in the state upon w hom service of processw ould bind said absentorconcealed defendant. Fla.Stat.j49.041. Cases intep reting the Florida statutes hold thatdsthere m ustbe strictcom pliance w ith the requirementsofserviceofprocessbypublication''andthattheSkltlailuretostrictlycomplyrenders a subsequentjudgmentvoidable.''United States v.Cornwell,No.6:18-CV-2194-ORL-22TBS, 2019W L 1470231,at#1-2(M .D.Fla.Apr.3,2019)(citingGodsellv.UnitedStatesResidential lns.,923So.2d 1209,1213(Fla.5thDCA 2006)(quotingFloydv.FederalNat1MortgageAss' n, 704 So.2d 1110,1112 (F1a.5th DCA 1998)).Thecourtshave explained thatSswhen aplaintiff seeks service of process by publication, 1an honest and conscientious effort, reasonably appropriate to the circum stances, m ust be m ade to acquire the inform ation necessary to fully comply with thecontrolling statutes.'''f#.,at1214 (quotingKlingerv.Milton Holding Co.,136 Fla.50,68,186So.526,534(F1a.1939)).Cçltisbasicthattoconstitutediligentsearch andinquiry to discoverthe whereaboutsofa party,thatinquiry should be m ade ofperscm s likely orpresum ed toknow suchwhereabouts.''1d,at1215(quotingDorCha,1ncv.Hollingsworth,876So.2d 678, 680(Fla.4thDCA 2004)). Service by publication is generally appropriate when a defendant is m issing,calm ot be located,and m ay be avoiding service.M ullane v.Cent.H anover Bank d: Tr.Co.,339 U .S.306, 317,70S.Ct.652,658,94L.Ed.865(1950).W hileitiscleartotheCourtfrom theDeclarations ofEricTurnbaugh(DE 4-1.DE 8-11thatCCPShasmadediligenteffortstolocateDefendantand sim ply cannot find him ,the SEC'S M otion,im properly contained in a Status R eport,and the included D eclaration are insufticient for the Court to grant the SEC 'S request for service by publication.First,aNoticeisnotaM otion.Second,LocalRule7.1(a)(1)oftheSouthernDistrict ofFlorida requires every m otion to contain a m em orandum of law citing supporting authorities, which the SEC 'S Status Reportdoes not contain.Third,even ifthe SEC asserted a sound legal basis to pennit service by publication, it appears that the D eclaration of M r. Turnbaugh is insufficientpursuanttotherequirementsFloridaStatutej49.041,whicharedelineatedabove.For exam ple,nowhere in the D eclaration does M r.Turnbough state w hetherDefendantisoverthe age of 18.This is not ksstrict com pliance w ith the w ith the requirem ents of service of process by publication''asrequired in thisCourt.See Cornwell,2019 W L 1470231 at*1-2. Therefore, for the reasons stated herein,the SEC'S M otion for A lternative Service of ProcessbyPublication (DE 8)isDENIED.ThisdenialiswithoutprejudicetotheSEC'Stilinga corrected m otion foralternative service asdiscussed below .The Courtw illfirstallow the SEC an additional45daystoattempttopersonally servethisOrderandtheOrderto Show CausegDE 31 upon D efendant.Second,afterthe additional45 daysto attem ptto personally serve D efendanthas expired,and the SEC deem s it necessary and legally proper,it m ay file a corrected m otion for alternative service in accordance with the LocalRules ofthe Southern DistrictofFlorida,the Federal Rules of Civil Procedure,and any applicable Florida Statutes on or before A ugust 28, 2019.Accordingly,itis hereby O R D ERED and A DJUD G ED asfollow s: The SEC shallhave 45 days from the date of this order to effectpersonal service upon Defendant.The SEC shallfile proof ofpersonalservice upon D efendantofthisO rderand theCourt'sOrderto Show Cause(DE 3)onorbeforeAugust26,2019. 2. Ifafterdiligentand sufticientefforts,the SEC isunableto personally serve D efendant,the SEC m ay file a corrected m otion foralternative service in accordance w ith the LocalRules of the Southern D istrict of Florida, the Federal Rules of Civil Procedure, and any applicable Florida Statutes on orbefore August28,2019. Failure by the SEC to com ply with this Orderm ay resultin sanctions. 4. D efendant shall show cause w hy the Court should not enter judgment enforcing com pliance by D efendant w ith the Com m ission Order entered against him on M ay 20, 2015.Defendantm ustserve and tile any opposing papers w ithin 20 days ofbeing served withtheOrderto Show CausegDE 3)and thisOrder.Defendant'sservice shallbemade by:(l)physicaldeliverytoM ichaelRoessner,SecuritiesandExchangeCommission,100 F Street, M ail Stop 5631, W ashington, DC 20549-0022; (2) via e-mail roessnerm@ sec.gov;or(3)theCM /ECF system ofthisCourt. lfD efendantservesand filesany opposing papers,the SEC m ay serve and filereply papers w ithin ten days ofthe filing of date of any opposing papers,and itm ay serve such reply papersby:(1)physicaldeliverytoDefendantattheaddressdesignatedintheiropposition papers;(2)e-mailtosuchaddressasDefendantmaydesignate;or(3)theCM/ECF system ofthis CourtifD efendantappearsby counsel. D JNEANDORDEREDinChambersatWestPalmBeach,PalmBeachCounty,Florida, thisIlM yofJuly,2019. > W ILLIA M M TTHEW M AN UN ITED STA TES M A GISTR ATE JU D GE 6
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