Case Name: James H. HOLMES v. COAST TRANSIT AUTHORITY
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 2002-05-02
Citations: 815 So. 2d 1183
Docket Number: No. 1999-CA-01848-SCT
Parties: James H. HOLMES v. COAST TRANSIT AUTHORITY.
Judges: PITTMAN, C.J., SMITH, P.J., COBB, DIAZ, CARLSON AND GRAVES, JJ., CONCUR. McRAE, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY EASLEY, J.
Reporter: Southern Reporter, Second Series
Volume: 815
Pages: 1183–1189

Head Matter:
James H. HOLMES v. COAST TRANSIT AUTHORITY.
No. 1999-CA-01848-SCT.
Supreme Court of Mississippi.
May 2, 2002.
William W. Dreher, Jr., Gulfport, attorney for appellant.
James B. Galloway, Brian Walker Sand-erson, Jackson, attorneys for appellee.

Opinion:
WALLER, J., for the Court.
¶ 1. The Circuit Court of the First Judicial District of Harrison County, Mississippi, dismissed a complaint filed by James H. Holmes against Coast Transit Authority (CTA)for failing to serve process on CTA within 120 days of the filing of the complaint, as prescribed by Rule 4(h) of the Mississippi Rules of Civil Procedure. Holmes moved the circuit court to allow "out of time" service "for good cause shown" and, in the alternative, for "excusable neglect," but the circuit court denied Holmes's motion and dismissed the case with prejudice. We affirm and modify.
FACTS AND PROCEDURAL HISTORY
¶2. On July 21, 1997, Holmes was a passenger on a bus when the bus struck an obstruction in the roadway, injuring Holmes. He did not immediately file a complaint but instead began settlement negotiations with CTA, the owner of the bus. As both parties concede, CTA is a governmental entity, and, therefore, the one-year statute of limitations of the Mississippi Tort Claims Act ("MTCA") applied. On June 4,1998, 53 days before the expiration of the statute of limitations, Holmes gave CTA a notice of claim under the MTCA tolling the statute of limitations for 95 days. Holmes then timely filed a complaint on September 3,1998.
¶ 3. On September 4, 1998, Holmes attempted to serve process on CTA's chief executive officer, Thomas Hearn, by mailing a summons and complaint along with two Notice and Acknowledgment forms pursuant to Rule 4(c)(3) of the Mississippi Rules of Civil Procedure. CTA neither returned the Acknowledgment form nor filed an answer.
¶ 4. CTA continued settlement negotiations with Holmes until approximately February 1, 1999. Throughout this time, CTA and Holmes exchanged documents, including dispatch records of CTA and Holmes's medical records. Any offers of settlement required approval by CTA's board of directors, which met once a month. When Holmes rejected CTA's final settlement offer on approximately February 1,1999, the negotiations broke down.
¶ 5. CTA then notified Holmes that it had not and would not accept service of process by mail. Holmes then personally served CTA on February 3, 1999. On March 4, 1999, CTA moved to dismiss the suit, claiming that it had not been properly served process within 120 days of the filing of the suit and that the one-year statute of limitations had expired. Holmes moved the trial court to allow "out of time" service on CTA "for good cause shown" and, in the alternative, for "excusable neglect." The trial court dismissed the case with prejudice, and Holmes appeals.
STANDARD OF REVIEW
¶ 6. A trial court's finding of fact on the existence of good cause for the delay in service of process has been deemed "a discretionary ruling . and entitled to deferential review" on appeal. Rains v. Gardner, 731 So.2d 1192, 1197-98 (Miss.1999). When reviewing fact-based findings, we will only examine "whether the trial court abused its discretion and whether there was substantial evidence supporting the determination." Id. at 1197. However, a decision to grant or deny an extension of time based upon a question of law will be reviewed de novo. Id. at 1198.
DISCUSSION
WHETHER HOLMES DEMONSTRATED GOOD CAUSE TO PERMIT SERVICE OF CTA PAST THE 120-DAY PERIOD ALLOWED BY M.R.C.P. 4(h) BY OFFERING EVIDENCE OF DOCUMENT EXCHANGES AND SETTLEMENT NEGOTIATIONS BETWEEN THE PARTIES.
¶ 7. M.R.C.P. 4(h) provides that a failure to serve process within 120 days will only cause a complaint to be dismissed if the plaintiff cannot show good cause for failing to meet the deadline. Filing a complaint tolls the applicable statute of limitations 120 days, but if the plaintiff fails to serve process on the defendant within that 120-day period, the statute of limitations automatically begins to run again when that period expires. Watters v. Stripling, 675 So.2d 1242, 1244 (Miss.1996). A plaintiff who does not serve the defendant within the 120 day period must either re-file the complaint before the statute of limitations ends or show good cause for failing to serve process on the defendant within that 120 day period; otherwise, dismissal is proper. Id. at 1244; Brumfield v. Lowe, 744 So.2d 383, 387 (Miss.Ct.App.1999). The plaintiff bears the burden of establishing good cause. M.R.C.P. 4(h).
¶ 8. In the instant case, Holmes filed the complaint on September 3, 1998, and had 120 days from that date in which to serve process on CTA. As CTA points out, the 120-day period expired on January 4, 1999. The only attempt by Holmes to serve CTA before that date occurred on September 4, 1998, when Holmes mailed process to CTA. However, this attempted service was not proper under M.R.C.P. 4(d)(8), which clearly provides that service of process on "any governmental entity" such as CTA shall be made "by delivering a copy of the summons and complaint to the person, officer, group or body responsible for the administration of that entity or by serving the appropriate legal officer, if any, representing the entity."
¶ 9. While Holmes does not debate the propriety of the September 4,1998, service of CTA by mail, Holmes does maintain that the personal service of CTA on February 3,1999, cures any past problems and prevents us from affirming the trial court's dismissal. The 120-day service period ended on January 4, 1999, with approximately 53 days remaining on the applicable statute of limitations. Holmes did not re-file the complaint against CTA before the remaining 53 days passed; and, therefore, his suit is barred by the statute of limitations unless he can show good cause for failing to serve process within the 120-day period.
¶ 10. In an effort to show "good cause" for untimely service of process, Holmes contends that, by engaging in discovery and settlement negotiations, CTA improperly lulled him into believing it had accepted service by mail and argues that, therefore, the trial court should have permitted "out of time" service.
¶ 11. We have held that, at a minimum, a plaintiff attempting to establish "good cause" must show "at least as much as would be required to show excusable neglect, as to which simple inadvertence or mistake of counsel or ignorance of the rules usually does not suffice." Watters, 675 So.2d at 1243 (quoting Systems Signs Supplies v. United States Dep't of Justice, 903 F.2d 1011, 1013 (5th Cir.1990)).'
¶ 12. A leading treatise states that
good cause is likely (but not always) to be found when the plaintiffs failure to complete service in timely fashion is a result of the conduct of a third person, typically the process server, the defendant has evaded service of the process or engaged in misleading conduct, the plaintiff has acted diligently in trying to effect service or there are understandable mitigating circumstances, or the plaintiff is proceeding-pro se or in forma pauperis.
4B Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1137, at 342 (3d ed.2000).
¶ 13. While several courts outside our jurisdiction have held that good faith negotiations constitutes good cause for failure to effect service within 120 days of the filing of the complaint, we think the better reasoning is found in the case of Healthcare Compare Corp. v. Super Solutions Corp., 151 F.R.D. 114 (D.Minn.1993) (discussing F.R.C.P. 4(j), the equivalent to M.R.C.P. 4(h)):
Rule 4(j) clearly places the burden upon the plaintiff to demonstrate that it is entitled to the good cause relaxation of the 120 day limit. HCC argues that Rule 4(j) should not be applied harshly.... It is, of course true that the court has discretion in determining whether good cause exists. This court has held that the rule should not be used "to penalize plaintiffs who demonstrate reasonable diligence" in effecting timely service on defendants. HCC has .not even argued that such diligence was involved in its deliberate decision not to serve within the 120 day time limit of Rule 4(j). Thus, a strict application of Rule 4(j) here is not harsh.
. Plaintiffs would have no incentive to comply with the 120 day limit if they could always find shelter from the rule by claiming that they had begun negotiations in good faith. Such a situation was clearly not intended by the Congress in adopting Rule 4(j).
Healthcare Compare, 151 F.R.D. at 115-16 (citations omitted).
¶ 14. We adopt the rationale of the Healthcare Compare court and find that good faith negotiations do not constitute good cause for failure to effect timely service of process under M.R.C.P. 4(h). Here, as in Healthcare Compare, Holmes makes no claim that he acted diligently in attempting to effect service of process. Rebanee on indefinite good faith negotiations clearly subverts the purpose of Rule 4(h), which is to bring claims to a court for judicial review in a timely manner. There is no reason why, if parties are engaged in good faith negotiations, service of process cannot be timely had. Service of process by a plaintiff on a defendant does not undermine the plaintiffs good faith. Timely service of process merely protects the plaintiffs right to litigate and would not cab a halt to negotiations. Furthermore, parties should engage in settlement negotiations up to the time a final judgment is entered.
¶ 15. We therefore find that Holmes has not demonstrated good cause for failing to effect service of process on CTA within 120 days of the filing of the complaint and that the Circuit Court of the First Judicial District of Harrison County, Mississippi, did not abuse its discretion in dismissing the complaint. However, in the recent case of LeBlanc v. Allstate Ins. Co., 809 So.2d 674, 679 (Miss.2002), we held that Rule 4(h) dismissals should be made mthout prejudice, not with prejudice, as the circuit court did here. We therefore modify the dismissal of complaint to be without prejudice.
CONCLUSION
¶ 16. The judgment of the Circuit Court of the First Judicial District of Harrison County, Mississippi is affirmed but modified to dismiss without prejudice.
¶ 17. AFFIRMED AS MODIFIED.
PITTMAN, C.J., SMITH, P.J., COBB, DIAZ, CARLSON AND GRAVES, JJ., CONCUR. McRAE, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY EASLEY, J.
. James T. Holmes died on November 21, 1998. The Chancery Court of the First Judicial District of Harrison County permitted thirteen of Holmes's heirs at law, all of whom have the last name "Holmes," to be substituted as the real parties in interest. To simplify matters, we will refer to the plaintiffs-appellants as "Holmes."
. CTA agrees that Holmes sent notice under the MTCA but does not concede that such notice was proper.
. The full text of Rule 4(h) is as follows:
Summons: Time Limit for Service. If a service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint and the party on whose behalf such service was required cannot show good cause why such service was not made within- that period, the action shall be dismissed as to that defendant without prejudice upon the court's own initiative with notice to such party or upon motion.