United States v. Ligas

еmployee as an of the speaking kins was personal grievances, we and about

Sheriff erred in

conclude that the district court summary

denying the Sheriffs motion for

judgment. also find that Houskins’s We necessarily claim fails because

Monell rights were not

Houskins’s constitutional Accordingly,

violated. the Sheriff is Re-

district

versed, and the case is RemaNded to the to enter

district court with instructions

judgment for the Sheriff. America,

UNITED STATES

Plaintiff-Appellee, LIGAS, Defendant-

Lawrence J.

Appellant.

No. 06-3917. Appeals,

United States Court of

Seventh Circuit.

Argued Dec. 2007.

Decided Dec.

SYKES, Judge. Circuit Ligas appeals Lawrence summary judgment of to the grant court’s $319,883.60in tax- unpaid for government es, interest, Although Li- penalties. multiple arguments support gas raises reversal, only we need consider one: jurisdiction. govern- lack of The served It ment never sought multiple extensiоns of time to effec- service, asserting that if the case was tuate personal jurisdiction, dismissed for lack of the statute it could not be refiled because expired. giving limitations had After government nearly year gov- the district court dismissed the Ligas, complaint for failure to serve ernment’s required as under Rule Federal Rules Procedure. Civil imposed Because the Ligas’s property, Ligas two liens on subse- quently asked the court to Ligas’s liеns. The district court treated motion for affirmative relief as prior objection that waived his jurisdiction and on that basis reinstated government’s complaint. That was an Although jurisdictional error. defenses waived, may Ligas’s be tax with his liens was not inconsistent jurisdictional objection, which he continu- ously pre- maintained and on which he vailed when the district court dismissed 4(m). the case under Rule only ment’s tax liens were valid judgment against obtained a Ligas; removing consequence them was a Justice, Tebbets, Department of Andrea dismissal, of and consistent with the since DC, Washington, Plaintiff-Appellee. for maintained that suit could not be refiled. motion to IL, E. Ligas, Chicago, M. James Lisa voluntary quash was not submission Associates, IL, Dahl, Chicago, Dahl & jurisdiction, the court’s so there was no Defendant-Appellant. com- basis reinstate EVANS, SYKES, re- BAUER, plaint. Accordingly, we reverse and Before mand with instructions dismiss. Judges. ‍‌‌‌​​​​‌‌​‌‌‌​​‌‌​​​‌​‌​‌​‌‌‌‌​‌‌​​​‌​​​​​​​‌‌​‌‍Circuit 4(e)(1) Background publication permitted by I. as and 735 Ill. Comp. Stat. 5/2-206. stems from Lawrence This case late 2004 the missed two $300,000 taxes, pay failure more than obvious accomplish chances to service. interest, Between and penalties. and Following the district court’s September 9 1990, $26,134 that he owed Ligas reported authorizing order service by publication, tax, in individual federal income but he did agents IRS left a copy of the summons and payment not submit when he filed his tax residence, at complaint Ligas’s claimed addition, Ligas presi- returns. was the by publication perfected, service was and dent, stockholder, sole and director of L.J. moved for default judgment Ligas when Inc., an Ligas, contracting electrical com- did not complaint. answer the Appearing it, too, pany, and owed back taxes. More for the limited purpose challenging specifically, company pay failed to sufficiency process, Ligas asked the $88,314 in income and FICA taxes it court to vacate September 9 order and employee pay- claimed it from withheld by the service publication. At a in final quarters checks three of 1987 7, 2004, hearing on December quarter and the first In 1991 the 1988. court government concluded that the Internal Revenue Service determined that not complied requirements with the of 735 a Ligas responsiblе person corpo- of a Comp. Ill. Stat. and quashed the 5/2-206 willfully pay ration that failed to taxes by publication. service The court then § penal- under I.R.C. 6672 and assessed a government invited the personally serve ty against him. Ligas pay When failed to there; Ligas right pres- then and he was assessments, these federal tax liens auto- court, having appeared ent pro se for matically property attached to his under hearing. gоvernment’s attorney The § Although I.R.C. acci- IRS copy did not have a of the summons and dently they released the liens however, complaint, and opportunity were reinstated in 2003. As of gave was lost. The court the government government Ligas calculated that owed January a third extension—until $319,883.60. Ligas. 2005—to serve 6, 2004, February just On before the 10- January On 2005—after the third year statute of expired, limitations extension of time had expired gov- —the complaint seeking filed a ernment asked for a fourth extension. On reduce to unpaid assess- March granted gov- the court ments of federal income taxes and the ernment’s and authorized service penalty. Although Ligas received 4(e)(1) under Rule and 735 Ill. Comp. Stat. copy of the and summons in 5/2-203.1, which allows court to order mail, he refused to waive “in any service manner consistent with due process. service of The thus process.” permitted The district сourt embarked on an unsuccessful 15-month under section effort to serve When the by posting copy com- of the 5/2-203.1 initially difficulty ment encountered serv- plaint and summons on the door to ing Ligas 120-day peri- home, within the normal mailing copies and od, it asked the district court for additional summons to home first-class mail, time. The district granted court two ex- by faxing and certified the com- tensions of time to plaint and on and summons to the number listed Septembеr authorized on Ligas’s pro appearance se form. time.) responded with to reconsider the court asked to reconsid- (this asking the court acting cross-motion time he was March order May dismissing the com- er its order attorney), and the district through view, when In the intervening develop- plaint. Two agreed. extinguish the asked the court to to vacate its the court persuaded ments liens, any objection to service of Bank, he wаived First, which held a Labe order. jurisdic- and consented to Ligas’s property mortgage on codefendant, filed and suc- tion. added as a complaint by cessfully served about-face, the district court In another personal- to department using the sheriffs Ligas’s motion to Construing agreed. Second, one at his home.1 ly Ligas serve previous a waiver of his quash the liens as govern- the private process servers of the jurisdiction, the objections personal to evidence of its provide not ment used could order, the dismissal reinstat- court vacated Ligas. The attempts to serve pre-2005 complaint, and denied government’s ed the fact that troubled the district court was proceeded The case quash. the motion to or not used federal

the had court eventu- discovery, and the district to and try to serve agencies state for ally granted “seemingly inept process relied on instead summary Ligas and ordered develop- together, these servers.” Taken taxes, interest, $319,883.60 and in back pay govern- the court that the ments convinced followed. penalties. appeal This attempted to serve diligently ment had not Analysis II. good cause for its Ligas, had not shown entitled Ligas, and was not failure to serve may not exercise A district court 17, May of time. On to a fourth extension un personal jurisdictiоn over defendant the com- 2005, court dismissed properly the defendant has been less Ligas within the plaint for failure serve Bros., process, Murphy with see served 4(m). by Rule prescribed time period of Inc., Pipe Stringing, Inc. v. Michetti prejudice, but was without The dismissal 350, 1322, 143 L.Ed.2d 119 S.Ct. U.S. in mo- represented its (1999), requirement and the service time that it could not extension of tions for the defendant merely not satisfied because the statute of complaint refile been nаmed in a is aware that he has run. limitations had copy or received a of the sum lawsuit has (that day) complaint, see McMasters immediately very same mons and States, tax Cir. the federal United moved the court 2001). (This for service of Acceptable not methods property. his against liens specified in Rule 4 of the requested such are time the first Procedure; pre relief; court to remove Federal Rules Civil had asked the he of to mail approach ferred is for opposing brief complaint and copy defendant a request for an extension of ment’s fourth mortgage. trying plaint against to foreclose its 1. While the successfully to add Labe Ligas, February it amended its the bank On Bank held the a defendant. Labe personally Bank as deputy used a sheriff's home, Ligas's Chicago mortgage and at his home. The details of bank’s its liens government wanted to foreclose Ligas are actions against Ligas's The bank filed coun- home. purposes ap- of this otherwise irrelevant to establish against the United States terclaim peal. corn- priority of its lien and obtain a waiver of waived. Corp. summons and See Ins. Ir. v. Compag Guinee, from the defendant under Rule service nie des Bauxites de 456 U.S. 4(d). (1982). But if the defendant does not waive 102 S.Ct. 72 L.Ed.2d 492 if no federal service and statute otherwise For example, a defendant does not ob supplies serving process, a method for ject to the manner in which he was served 4(e)’s then Rule list of methods is exclu- in his answer or his first motion to the (Rule 4(e)(2)(A)); sive: service (whichever first), occurs he waives leaving copy and sum- 12(h)(1). Sim Fed.R.Civ.P. at place mons the defendant’s “usual ilarly, a defendant who raises a ‍‌‌‌​​​​‌‌​‌‌‌​​‌‌​​​‌​‌​‌​‌‌‌‌​‌‌​​​‌​​​​​​​‌‌​‌‍age abode” with someone of suitable jurisdictional can defense nevertheless (Rule discretion who resides there wаive the subsequent defense con 4(e)(2)(B)); delivering copy of the com- Bauxites, duct. Compagnie See des plaint agent and summons to an authorized 702-07, 2099; U.S. at 102 S.Ct. Trs. of (Rule 4(e)(2)(C)); accept any or Cent. Laborers’ Lowery, Fund v. Welfare serving process permitted other manner of 732-33 by the law of the state where the district case, In this (Rule 4(e)(1)). court

court sits correctly dismissed the com 4(m) generally requires Rule a 4(m) plaint under Rule for failure to serve plaintiff days, to serve within 120 designated here, within the —and plaintiff may but a move for additional much period. However, extended —time plain time to serve the defendant. If the the court thereafter reversed course and tiff good shows cause for his failure to reinstated Ligas’s the based on accomplish designated service within the request liens, to extinguish the tax which time, period of then the court district must the judge treated as a waiver оf Ligas’s grant extension. v. United States previous objections personal jurisdic to (7th 470 McLaughlin, F.3d 700 Cir. tion. We review the district court’s deci 2006). plaintiff If the good cannot show sion to reconsider vacate the dismissal cause, grant then the decision to an exten order for an abuse of discretion. See sion is left to the discretion of the district Gear, Deere & Co. v. Ohio States, court. Henderson v. United 517 706 “A by district court 654, 662-63, U.S. 116 S.Ct. definition abuses its discretion it when (1996). L.Ed.2d 880 a When fails law,” makes an error of v. Koon United period within the of time States, 518 U.S. 116 S.Ct. 4(m) prescribed by rules, the federal (1996), here, 135 L.Ed.2d 392 the court requires the district court to dismiss the legal committed a error it when construed prejudice. without Ligas’s quash motion to as a waiver of his procedure The civil spec rules also objection jurisdiction. ify may the manner which a defendant object a plaintiffs failure to A pro may district court reconsider a 12(b) сess. Under Rule may prior defendant decision when there has been a sig move for dismissal based on the nificant change court’s ‍‌‌‌​​​​‌‌​‌‌‌​​‌‌​​​‌​‌​‌​‌‌‌‌​‌‌​​​‌​​​​​​​‌‌​‌‍the law or facts since personal jurisdiction, lack of parties presented insuffi the issue court, ciency process, or insufficiency when the court misunderstands 12(b)(2), process. service of party’s arguments, or when the court over Fed.R.Civ.P. (4)-(5). However, subject-matter unlike deciding reaches an issue not jurisdiction, objections these can be before it. Bank See v. Roch- of Waunakee jurisdic to the Sales, Inc., completely unconnected F.2d is

ester Cheese Cir.1990). a defendant argument, court such as The district tional when cate- to the merits within the first a counterclaim unrelated fell files this case thought See, effort to extin- Frank’s Ligas’s e.g., claim. holding plaintiffs that gory, Tools, change a significant Inc. v. PMR tax liens & Rental guish Casing Crew (Fed.Cir. nothing Techs., Ltd., the сourt. But facts before in the proper- 2002) had been jurisdiction that is indicated (noting new all or that claim is ly served after “where an unrelated not waived cause and good had in fact shown counterclaim permissive brought as a fourth extension consequently proper jurisdic entitled plaintiff’ Rather, the service. accomplish of time an by motion or objection tional is raised interpreted simply swer). cases, district sought-after оther as a motion jurisdictional with relief is consistent previous- that waived relief affirmative decision to objection a court’s objection. jurisdictional ly asserted simply logical exten grant relief is ruling in the defendant’s favor sion of from interpretation flowed That jurisdictional grounds. See Neifeld legal conclusion about an erroneous (3d 423, 425 n. 4 Cir. Steinberg, 438 F.2d juris prior motion on effect of 1971) waived (declining to find defendant circum Under dictionаl objection it filed a mo jurisdictional when case, Ligas’s stances of this attachment and tion to writ of in to an answer analogous closely jurisdic lack of a to dismiss for and a jurisdictional a defense cludes both tion). that a general rule is counterclaim. ju does not waive asserted defendant Ligas’s request also when his answer defense risdictional category of falls into this second tax liens a counter in the form of relief requеsts unenforceable cases were because cross-claim, claim. claim, or a a gov once the district dismissed See, Inc. v. Nortel Net Rates Tech. e.g., tax were complaint. The liens ernment’s (Fed.Cir. 1302, 1308 F.3d Corp., 399 works govern that the only to the extent valid 2005); Corp. v. Amstelv Bayou Steel M/V prevailed against have ment could (5th Cir.1987); oom, 1147, 1149 809 F.2d main dissenting colleague our Although Jensen, 743 F.2d Learjet Corp. v. Gates case was not government’s “the tains that (9th Cir.1984); v. Pan Chase 1330 destroyed by dismissal of its obviously Broad., Inc., F.2d 132 Pac. complaint,” p. (D.C.Cir.1984). explain, cases As these infra so; had con thought itself to si permit defendants the federal rules not refile sistently maintained that it could juris and raise multaneously relief seek of limita because the that de the lawsuit statute waiving without dictional defense to ex- cases, expired.2 Ligas’s motion requested relief tions had fense. In some implied previously that whеn the We about the statute- have observation An additional prevents a lawsuit that of limitations appropriate. There is a statute is of-limitations issue being Rule 4 from dismissing has been dismissed under without suit difference between refiled, possible either. dismissing leave reinstatement not a suit prejudice and with reinstate; McLaughlin, at 701. At the prejudice, See 470 F.3d a dismissal without after time, 60(b) may permit a district only by same resurrect lawsuit can to reinstate cоmplaint. court in some circumstances filing See Richmond a new preju- Chater, erroneously without suit it dismissed 267-68 logical extension of tion. tinguish the liens was Just as the assertion of a counter- com- jurisdictional dismissal of the claim jurisdic- does not waive an asserted necessarily following defense, from plaint, tional quash motion to did 4(m) opposing court’s Rule order. jurisdictional not waive the objection he request fourth for an exten- throughout maintained the proceedings.3 time, Ligas had asked the district sion of quash The motion to was not at all incon- the liens if it court to remove dismissed long-standing jurisdictional sistent with his By renewing complaint. objection. contrary, To the like the Fifth 4(m) dismissal, Ligas after the Rule did Circuit, “we cannot fathom how a motion voluntarily jurisdiction not submit to the of premised jurisdictional on a objection the court. simultaneously operate could aas waiver very objection.” of that PaineWebber Inc. apparently thought

The district court v. Chase Manhattan Private Bank meth- had alternative (Switz.), ‍‌‌‌​​​​‌‌​‌‌‌​​‌‌​​​‌​‌​‌​‌‌‌‌​‌‌​​​‌​​​​​​​‌‌​‌‍Cir.2001); extinguishing the tax that re- ods liens (af- Neifeld, 438 F.2d at 425 n. quired jurisdic- him to submit to a court’s cf. firming district court’s decision to simulta- tion, his effort to seek such relief this neously jurisdic- dismiss a case for lack of ju- proceeding constituted waiver of his attachment). tion and a writ of risdictional It is true that procedural had other avenues to remove objection, Nor did waive his example, the liens. For under I.R.C. subsequently filing an and litigat answer 6325(a)(1), Secretary Treasury ing the merits of the government’s com days a lien within after the must release plaint. previously We have held that a unenforceable,” “legally liens become jurisdictional defendant does not waive a judg- which would not occur until the final argument when it raises the de government. ment was entered participates litigation fеnse but at the liens, Secretary If the did not release the district court’s direction. See IDS Life brought then could have suit under Co., Ins. Co. v. SunAmerica Ins. Life § damages. Similarly, I.R.C. 7432 for Li- short, In F.3d gas un- separate could have filed action given consistently that main title, quiet der 28 2410 to or he U.S.C. objection jurisdiction tained his to could have waited until the only appearances and entered limited filed a second lawsuit to assert the statute- purpose, identify anything that we cannot of-limitations defense. support government’s the contention However, the existence of these alterna- that Ligas service-of-process waived his tive remedies does not make mo- quash improper, tion to the tax liens nor by making does it mean that the motion he The government argues nonetheless that objection personal jurisdie- waived his the district decision court’s to reinstate its dice, rely mortgage but the district court did not would be inferior to the federal tax 60(b) reconsidering Rule the as basis for and Ligas reasonably liens. Given that believed vacating dismissing govern- its order the agree no lender would to refinance his home complaint. ment's long as as the federal tax liens remained on property, Ligas understandably his wanted response to Labe Bank’s suit possible the liens removed as soon to in- as mortgage, Ligas him to his foreclose successfully refinancing crease his chances apparently mortgage. wanted to refinance the home. out, pointed long As he as as the federal tax home, any liens remained on the refinanced formality from time to frustrating like a govern- because the proper complaint (as in this case where knew in time March Ligas on ment served him). was after See United court’s March the district accordance with Jiles, States v. authorizing pursuant 1, 2005 order Cir.1996) (“[Sjervice laws are 4(e)(1) Comp. 735 Ill. Stat. and to Rule receive no- designed to ensure defendants for the problem The 5/2-203.1. concepts of due tice in accordance with properly it served is that even McMasters v. United process.”); 5/2-203.1, period of time under section cf. (7th Cir.2001) States, 4(m) required it to serve in which Rule (“Actual is insuffi- notice to the defendant elapsed. At the time already Ligas had cient; comply must with the govern- court ordered the district 4.”). of Rule directives dismissed, given it had complaint ment’s January until however, here, is not question The True, court’s was effectuat- whether service for ser- extended the time 1 order March court, Judge Hold- The district Chief ed. date, the court vacat- beyond that but vice not, decided that it was presiding, erman the alternative quashed this order and ed only us now and the case is before it dismissed service when subsequently the court shifted course have concluded that complaint. We ment’s previously found that waived his to reconsider and va- decision the court’s objection. As to the issue of sustained premised order was waiver, cate this dismissal majority Judge holds must be reversed. legal error and upon erred as a matter of law be- Holderman Ligas’s request cause served, and never Ligas was of a “simply logical liens was extension va- to reconsider and the court’s decision jurisdic- ruling in the defendant’s favor on 4(m) order and dismissal cate the grounds.” tional on a was based reinstate conclusion legally erroneous Judge thought Is that so? Holderman objection waived not, agree. I tend to Accordingly, we personal jurisdiction. Re- majority’s I see with the problem of the district veRse reasoning is that case district court case to the and Remand destroyed by the dis- obviously was not сomplaint. to dismiss with instructions pro- on service of missal of its the dismissal was grounds. cess Since EVANS, dissenting. Judge, Circuit prejudice, without that mo- majority concludes and make ability lodge new not waive his tax liens did tion True, process. run at of a fresh of objection to service previous spot light in a was bad court with and invest the district However, the of limitations. statute jurisdiction. disagree. I of ruling district court on service instance, the statute of limi- nothing it re- to dо with is somewhat the first application of the potential ser- tations. The grettable squabbling that we are over limitations, an affirmative de- clearly dodging statute of process; Ligas vice of was prove would have to even system. But ser- fense that gaming service and statements an in the face of the process represents important vice of time-barred, might hinged to defendants that the suit be value on the whole—notice to a including pertaining those they being if it seems are sued—even facts— likely argument equitable tolling —that POWERS, Robert Plaintiff-Appellant, litigated. Auto were not See General Chicago, City Serv. Station v. (7th Cir.2008) (the 991, 1001 statute of defense);

limitations affirmative George RICHARDS, ‍‌‌‌​​​​‌‌​‌‌‌​​‌‌​​​‌​‌​‌​‌‌‌‌​‌‌​​​‌​​​​​​​‌‌​‌‍al., E. et Am., Travelers Cas. & Sur. Co. Inc. v. Defendants-Appellees. Co., Northwestern Mut. Ins. Life No. 06-2866. Cir.2007) (equitable tolling a plaintiff to extend the statute “enablefs] United States Appeals, Court of circumstancеs”). in exigent of limitations Seventh Circuit. So, while a defeat for the final invalid, Argued have rendered the liens see Jan. would 2008. 6325(a)(1), that defeat U.S.C. did not Decided Dec. here, extinguishing happen necessarily” did not “follow from the dis prejudice.

missal without may hypertechnical

That all seem like a procedure. civil But

approach keep Judge “Ligas

mind Holderman’s take: has

litigated procedure.” Ligas this case on

sought to avoid the merits of the lawsuit—

and skirt hundreds of thousands of dollars obligations, including remitting

in tax taxes he withheld from employ-

FICA paychecks by evading pro-

ees’ service of — every step. say

cess at To rights by

within his to demand service say that approach

book is not to circumstances,

laudable. Under these exacting application pro-

district court’s

cedure other on the end seems more than

reasonable. The court simply gave Ligas medicine;

a taste of his own those who live procedural the sword of technicalities they

cannot complain when die it.

Because I do not believe the district discretion, I respectfully abused its

dissent.

Case Details

Case Name: United States v. Ligas

Court Name: Court of Appeals for the Seventh Circuit

Date Published: Dec 1, 2008

Citation: 549 F.3d 497

Docket Number: 06-3917

Court Abbreviation: 7th Cir.