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Allaham v. Naddaf

United States District Court, E.D. Pennsylvania

May 28, 2015

MILAD ALLAHAM, Plaintiff,
v.
FADI NADDAF, ELIAS NADAF, and MAJD NADAF, Defendants.

MEMORANDUM OPINION

EDWARD G. SMITH, District Judge.

In general, courts may not sua sponte dismiss complaints for lack of personal jurisdiction. When a plaintiff seeks the entry of a default judgment, however, this principle is turned on its head as courts have an affirmative obligation to ensure that personal jurisdiction is proper over each defendant against whom such a judgment is sought. This breach-of-contract case required the court to carry out that obligation when the defendants, citizens of the United Arab Emirates ("UAE"), failed to respond to the complaint. After hearing testimony from the plaintiff, the court was constrained to deny his motion for a default judgment and to dismiss this matter for want of personal jurisdiction. Leading to this matter's present posture, the plaintiff filed a timely motion to alter or amend the judgment pursuant to Federal Rule of Civil Procedure 59(e). For the reasons that follow, the court must deny this motion as well.

I. PROCEDURAL HISTORY

The plaintiff, Milad Allaham, commenced this action by filing a complaint on June 21, 2013, against the defendants, Fadi Naddaf, Elias Nadaf, and Majd Nadaf. Doc. No. 1. The plaintiff filed three proofs of service (one with respect to each defendant) on October 23, 2013. Doc. No. 2. After the defendants failed to respond to the complaint, the plaintiff filed a motion for a default judgment on March 20, 2014, in tandem with a request that the clerk of court enter a default against each defendant. Doc. No. 3. Chief Judge Petrese B. Tucker transferred this matter from the Honorable Joel H. Slomsky to the undersigned on April 22, 2014. Doc. No. 4.

To avoid any confusion with respect to the sequencing of requesting a default, as opposed to a default judgment, the court denied the motion for a default judgment without prejudice on June 2, 2014, and instructed the plaintiff to separately file a request for the entry of a default. Doc. No. 5. He filed that request on June 11, 2014. Doc. No. 6. On the same date, the clerk entered a default against each defendant. Unnumbered docket entry between Doc. Nos. 6-7. In response to a court order, the plaintiff filed a renewed motion for a default judgment on August 29, 2014. Doc. No. 8. The court scheduled a hearing on the motion to take place in December and invited the plaintiff to provide information prior to the hearing concerning the issue of personal jurisdiction. Doc. No. 10. Heeding the court's instruction, he filed a brief response, accompanied by an exhibit, on November 10, 2014. Doc. No. 11.

The court held a hearing on the default judgment motion on December 12, 2014, at which time the court heard testimony from the plaintiff with respect to the court's ability to exercise personal jurisdiction over the defendants. The court also provided the plaintiff with an opportunity to more fully address the jurisdictional issue in writing. To that effect, the plaintiff filed a "long-arm statute" brief on December 23, 2014, and later filed an accompanying exhibit on December 29, 2014. Doc. Nos. 13-14.

After reviewing the plaintiff's submissions and the evidence offered at the hearing, the court denied the motion for a default judgment and dismissed this action for lack of personal jurisdiction on December 30, 2014. Doc. No. 15. The plaintiff filed the instant Rule 59(e) motion on January 19, 2015, in which he asks the court to reconsider the December 30, 2014 ruling. Doc. No. 16.

II. DISCUSSION[1]

A. Standard of Review

Federal Rule of Civil Procedure 59(e) provides that "[a] motion to alter or amend a judgment must be filed no later than 28 days after the entry of the judgment." Fed.R.Civ.P. 59(e). "The purpose of a motion for reconsideration... is to correct manifest errors of law or fact or to present newly discovered evidence." U.S. ex rel. Schumann v. Astrazeneca Pharm. L.P., 769 F.3d 837, 848 (3d Cir. 2014) (internal quotation marks and citation omitted). "A proper Rule 59(e) motion therefore must rely on one of three grounds: (1) an intervening change in controlling law; (2) the availability of new evidence; or (3) the need to correct clear error of law or prevent manifest injustice." Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d Cir. 2010) (citation omitted).

B. Analysis

The sole basis for the Rule 59(e) motion is a contention that the court erred in denying the motion for a default judgment and dismissing this matter for lack of personal jurisdiction because the court failed to recognize that the defendants engaged in certain activities directed at Pennsylvania that supported an exercise of such jurisdiction. See Mot. Under Rule 59 of F.R.C.P. to Alter or Amend Order of Dec. 30, 2014 in the Nature of Recons. ("Mot. for Recons.") at ΒΆΒΆ 1-2, Doc. No. 16. In other words, the plaintiff effectively argues that the court clearly erred in denying his motion for a default judgment on personal jurisdiction grounds. To understand why this argument does not warrant a disturbance of the court's December 30, 2014 order, the court begins with a brief discussion of the governing standards for default judgments. The court then separately analyzes the issue of personal jurisdiction as a necessary component of those standards. Throughout the analysis, the court consults facts and evidence only to the extent necessary to resolve the relevant legal issues.

1. Standard for Default Judgments

"Prior to obtaining a default judgment under either Rule 55(b)(1) or Rule 55(b)(2), there must be an entry of default as provided by Rule 55(a)." Nationwide Mut. Ins. Co. v. Starlight Ballroom Dance Club, Inc., 175 F.Appx. 519, 521 n.1 (3d Cir. 2006) (internal quotation marks and citation omitted). After the entry of a default against a specific defendant, Rule 55 further provides that "a court may enter default judgment against that defendant." FirstBank P.R. v. Jaymo Props., LLC, 379 F.Appx. 166, 170 (3d Cir. 2010) (citation omitted). The entry of a default judgment is not a matter of right as it "is left primarily to the discretion of the district court." Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984) (citation omitted). "Three factors control whether a default judgment should be granted: (1) prejudice to the plaintiff if default is ...


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