Capitol One Bank USA, N.A. v. Kastner, No. 247-5-13 Wmcv (Wesley, J. May 15, 2014).

[The text of this Vermont trial court opinion is un official. It has been reformatted from the origina l. The accuracy of the text and the accompanying data included in the Vermont trial cou rt opinion database is not guaranteed.]



### Capital One Bank USA, N.A. vs. Kastner

ENTRY REGARDING MOTION

Count 1, Collection (247-5-13 Wmcv) Count 2, Fair Debt Collection Practice (247-5-13 Wm cv) Count 3, Fair Debt Collection Practice (247-5-13 Wm cv)

Title: Motion for Default Judgment against Capital & (Motion 12)
Filer: Jason C. Kastner Attorney: Pro Se Filed Date: April 7, 2014

Response filed on 04/24/2014 by Attorney Barney L. Brannen for party 1 Co-counsel Response filed on 05/06/2014 by Jason C. Kastner, D efendant Response filed on 05/12/2014 by Jason C. Kastner, D efendant

Title: Motion to Dismiss for Insufficiency of Serv ice (Motion 13) Filer: Howard Lee Schiff, PC Attorney: Gwendolyn W. Harris Filed Date: April 8, 2014

Response filed on 04/23/2014 by Jason C. Kastner, D efendant

Title: Motion (Cross) for Costs of Service (Motion 14)
Filer: Jason C. Kastner Attorney: Pro Se Filed Date: April 23, 2014

Defendant’s motion for default and Cross-claim Defe ndant’s motion to dismiss are DENIED but Defendant is awarded costs of making service.

So ordered. 

## S TATE OF 

## V ERMONT

SUPERIOR COURT CIVIL DIVISION Windham Unit Docket No. 247-5-13 Wmcv2 Opinion and Order Denying Kastner’s Motion for Default, Denying Schif f’s Motion to Dismiss, and Granting
Kastner’s Motion for Costs

Background

The Court currently has three motions that relate to the sufficiency of service. Defendant/Counterclaimant Jason Kastner filed a mot ion for default against Capital One and Howard Lee Schiff, PC. Schiff filed a motion to dis miss for lack of service. Kastner also filed a motion for the costs of serving Schiff.

The procedural history is important for understandi ng the positions of the pending motions. On May 28, 2013, Capital One sued Kastner to collect on credit-card debt. On July 9, 2013, Kastner answered and filed counterclaims for violations of the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, the d uty of good faith, and the Consumer Fraud Act. On July 19, 2013, Capital One answered Kastner’s co unterclaims. On December 23, 2013, the Court granted Kastner’s motion to amend his counter claim and to add Schiff as a defendant. The amended counterclaim raised the same claims aga inst Capital One as had been originally plead, and included Schiff on each claim. Kastner a lso added a count against Schiff for champerty. The Court’s December 23, 2013 order req uired previously unnamed parties to file an answer within fifteen days.

On January 29, 2014, Schiff filed for removal to t he District of Vermont. According to the federal docket sheet, Schiff also filed a motion to dismiss for insufficiency of process on January 31, 2014. On February 4, 2014, the Superior Court c losed this case based on the removal to
federal court. The federal court remanded to the Su perior Court on March 19, 2014.

On April 7, 2014, Kastner filed a motion for defau lt against both Capital One and Schiff. On April 24, 2014, Capital One opposed default beca use it answered Kastner’s counterclaims on July 19, 2013, and the amended counterclaims did no t allege a new cause of action against Capital One. Schiff filed a motion to dismiss for i nsufficient service on April 8, 2014. Schiff argues service was insufficient because Kastner ser ved Gwendolyn Harris, who is not a partner at Schiff and cannot accept service. On April 23, 2 014, Kastner opposed the motion to dismiss because Harris is the only attorney at Schiff’s Ver mont office and is therefore a managing or general agent. Kastner also seeks costs for serving Schiff. Kastner filed a proposed entry of default, with retroactive effect, on May 6, 2014. K astner filed a response to Capital One’s opposition on May 12, 2014.

Discussion

Schiff’s Motion to Dismiss for Insufficient Service of Process

The Court first considers Schiff’s motion to dismis s for insufficient service. See V.R.C.P. 12(b)(5). The sufficiency of service turns on whet her Harris was a person who could accept service for Schiff. A party may serve “the managing or general agent” of a corporation. V.R.C.P.3

4(d)(7). Vermont law does not define the meaning of managing agent, but cases from other jurisdictions and Wright and Miller provides a help ful overview. See Richards v. First Union Sec., Inc., 2006 WI 55, ¶¶ 33, 35, 714 N.W.2d 913; 4A Fed. Pra c. & Proc. Civ. § 1103. A person who is in charge of a corporation’s activities within a st ate is a general or managing agent. 4A Fed. Prac. & Proc. Civ. § 1103. Even if the person is no t in charge of the activities within a state the person qualifies “if the individual is in a positio n of sufficient responsibility so that it is reasonable to assume that the person will transmit notice of the commencement of the action to organizational superiors.” Id.

In this case, Harris was a managing agent of Schif f. Schiff only has one law office in Vermont and Harris is the only attorney in that off ice. Harris has discretion on how to handle Schiff’s Vermont cases. Moreover, Harris is in cont act with Schiff’s managers and could have relayed the message. Instead, Harris received notic e of the suit and contested service. Service was proper and the Court will not dismiss the claim s. See id.

Kastner’s Motion for Default Judgment

The Court may enter a default judgment against a p arty that fails to respond to a complaint. V.R.C.P. 55(a). The Court has discretion in entering a default judgment. See Ayer v. Hemingway , 2013 VT 37, ¶ 21, 193 Vt. 610. The Court should n ot issue a default judgment unless a party fails to answer or defend against a complaint. Dougherty v. Surgen , 147 Vt. 365, 366–67 (1986). V.R.C.P. 55 must be construed in fav or defendants and the Court prefers to resolve disputes on their merits. Desjarlais v. Gilman , 143 Vt. 154, 158–59 (1983).

The Court denies Kastner’s motion for default agai nst Capital One. Capital One answered Kastner’s complaint and it would be pointl ess to require it to repeat the same filing. Because Capital One already answered the complaint, a default judgment is not appropriate. See Dougherty , 147 Vt. at 366–67. The Court’s December 23, 2013 order only required previously unnamed parties to file an answer, and K astner supplies an overly strained interpretation of that order to argue that Capital One was required to repeat the denials it had already made.

Default judgment against Schiff is also inappropri ate. Harris was a proper person to accept service for Schiff. However, Schiff did not ignore the complaint but rather sought
removal to federal court and filed a motion to dism iss. Again, the Court will not enter default judgment where a party appears and defends against a suit. See Dougherty , 147 Vt. at 366–67. The purpose of Rule 55 would not be served by a def ault in this case, and the Court seeks to
resolve this case on the merits. See Desjarlais , 143 Vt. at 158–59. 1

Myers v. Brown does not mandate entry of a default judgment. See 143 Vt. 159, 167 (1983). In Myers , a corporate defendant sought relief from judgment on the grounds of lack of

1 The Court acknowledges the untimeliness of Schiff’ s filing, as Kastner argues. On December 23, 2013, the Court ordered Schiff to respond within fifteen days. Schi ff waited until January 29, 2014 to respond, which Schiff did by seeking removal. Schiff did not file a motion to di smiss in this Court until April 8, 2014. The Court will not enter default against Schiff because it is too extreme of a remedy and the Court prefers to resolve cases on their merits. See Ayer , 2013 VT 37, ¶ 21; Desjarlais , 143 Vt. at 158–59. Nonetheless, Schiff’s assumpti ons about the Court’s exercise of discretion put it in peril of default.4

service. Id. at 160. The defendant had actual notice of suit bu t claimed service was insufficient because the plaintiff did not serve the corporation ’s agent. See id. at 160–62. The corporation waited to object until after the trial court issued a default judgment. See id. Although service was ineffective, the defendant received actual noti ce and defenses to service may be waived.
See id. at 164. The corporation waived its defense of impr oper service and therefore could not reopen the judgment. Id. at 167. In this case, Schiff did not ignore the f iling but sought removal to federal court. In federal court, Schiff challeng ed service and now challenges it again. Unlike Myers , no default judgment has issued here. The procedu ral posture is different and neither
Rule 55 nor the Court’s resources would be well ser ved by granting default. See Desjarlais , 143

Vt. at 158–59.

Its motion to dismiss having been denied, Schiff m ust now file an answer within ten days. See V.R.C.P. 12(a)(3).

Kastner’s Motion for Costs of Service (MPR 14)

Finally, the Court grants Kastner’s motion for th e costs of service. Under V.R.C.P. 4(l), parties have a duty to save the costs of service. W here a party refuses to waive service and requires the opposing party to rely on traditional means, the opposing party is entitled to the costs of service. V.R.C.P. 4(l)(6). As explained by Wright and Miller, the Court should impose these costs unless the defendant can show good caus e. See 4A Fed. Prac. & Proc. Civ. § 1092.1. Here, Schiff failed to waive the requirements of se rvice. As described above, Schiff’s arguments that Harris was not a proper person to serve are in correct. Additionally, Schiff did not make these arguments in the timeframe imposed by the Cou rt. The Court imposes the costs of service, $65.46, against Schiff.

Order

WHEREFORE, it is hereby ORDERED : The Court DENIES Kastner’s motion for default .
The Court DENIES Schiff’s motion to dismiss; Schiff shall file an a nswer witin 10 days. The Court

GRANTS Kastner’s motion for costs and imposes Kastner’s c osts of $65.46 against Schiff.

Electronically signed on May 14, 2014 at 04:37 PM p ursuant to V.R.E.F. 7(d).

______________________________________ John P. Wesley Superior Court Judge

Notifications: Barney L. Brannen (ERN 1146), Attorney for Plaintif f Capital One Bank USA, N.A.
Defendant Jason C. Kastner Barney L. Brannen (ERN 1146), Attorney for party 1 Co-counsel Michael F. Bevacqua (ERN N/A), Attorney for party 1 Co-counsel Daniel Ginzburg (ERN 6455), Attorney for party 1 Co -counsel Gwendolyn W. Harris (ERN 1734), Attorney for third- party defendant Howard Lee Schiff, PC5

wesley