Filed: Oct. 28, 2009
Latest Update: Feb. 21, 2020
Summary: [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FILED FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS _ ELEVENTH CIRCUIT OCTOBER 28, 2009 No. 09-10213 THOMAS K. KAHN Non-Argument Calendar CLERK _ D. C. Docket No. 07-00529-CV-4-RH-WCS UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, versus DON WARNER REINHARD, Defendant-Appellant. _ Appeal from the United States District Court for the Northern District of Florida _ (October 28, 2009) Before HULL, WILSON and FAY, Circuit
Summary: [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FILED FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS _ ELEVENTH CIRCUIT OCTOBER 28, 2009 No. 09-10213 THOMAS K. KAHN Non-Argument Calendar CLERK _ D. C. Docket No. 07-00529-CV-4-RH-WCS UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, versus DON WARNER REINHARD, Defendant-Appellant. _ Appeal from the United States District Court for the Northern District of Florida _ (October 28, 2009) Before HULL, WILSON and FAY, Circuit ..
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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
OCTOBER 28, 2009
No. 09-10213 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 07-00529-CV-4-RH-WCS
UNITED STATES SECURITIES
AND EXCHANGE COMMISSION,
Plaintiff-Appellee,
versus
DON WARNER REINHARD,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Northern District of Florida
_________________________
(October 28, 2009)
Before HULL, WILSON and FAY, Circuit Judges.
PER CURIAM:
Don Warner Reinhard, proceeding pro se, appeals the district court’s order
entering judgment against him in this civil enforcement action brought by the
Securities and Exchange Commission (the “SEC”) alleging securities fraud under
the Securities Act of 1933, the Securities and Exchange Act of 1934, and the
Investment Advisers Act of 1940. On appeal, Reinhard argues that the district
court (a) abused its discretion by denying his request for additional time to respond
to the SEC’s complaint; (b) erred in failing to hear testimony from the process
server before finding that Reinhard was properly served; and (c) erred in finding
that he waived any objection to improper service of process. After review, we
affirm.
I. BACKGROUND
On December 13, 2007, the SEC commenced a civil enforcement action
against Appellant Reinhard in the United States District Court for the Northern
District of Florida. The SEC’s complaint alleged that Reinhard controlled an
investment firm and a hedge fund, and made false and misleading statements and
omissions of material fact to his clients in the offer and sale of collateralized
mortgage obligations.
On February 13, 2008, a process server delivered a summons and complaint
to Reinhard’s home. The process server’s return of service states as the method of
service: “Drop serve after Mr. Reinhard answered door and slammed door.”
Reinhard avers that he found the papers on his porch on February 19, 2008, but
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does not deny that he answered and then slammed the door.
According to the SEC, on March 4, 2008, Reinhard’s counsel, William C.
Owen, spoke with the SEC’s counsel regarding the effectiveness of the February
13 service of process. Reinhard’s counsel agreed to accept service on Reinhard’s
behalf in exchange for the SEC’s agreeing to a 20-day extension for Reinhard’s
answer to the enforcement complaint (i.e., until March 24, 2008). Reinhard’s
counsel then sent a letter to the SEC’s counsel confirming the conversation and
enclosing a copy of Reinhard’s affidavit which counsel had intended to file in
support of a potential motion to quash service of process. On the same day, the
SEC’s counsel sent a letter to Reinhard’s counsel memorializing the parties’
agreement.
On March 20, 2008, Reinhard’s counsel informed the SEC’s counsel that he
would no longer be representing Reinhard. The SEC then agreed to grant Reinhard
an additional four days beyond the original extension date (i.e., until March 28,
2008) to file his answer.
On March 26, 2008, Reinhard pro se filed a motion for an additional
extension of time, arguing that he had not been served with a summons but had
contacted an attorney to represent him. Reinhard’s motion stated that he
understood his attorney had negotiated with the SEC regarding the effectiveness of
3
service of process. On April 11, 2008, the district court granted Reinhard’s pro se
motion and ordered him to answer no later than April 18, 2008.
On April 18, 2008, Reinhard sent a letter to the district court stating that he
did not receive the court’s order until April 17, thus allowing him only “1 day to
react and respond.” Also in the letter, Reinhard made a request for an additional
sixty days to answer the complaint. The district court denied this request.
On June 9, 2008, the SEC moved for entry of a default against Reinhard for
failure to answer. The clerk entered a default against Reinhard on June 12, 2008.
On June 24, 2008, Reinhard filed an “objection and response” to the SEC’s
motion for default, asserting that his former attorney had filed a motion to
withdraw and that Reinhard was “under the impression this motion [to withdraw]
had to [sic] taken up before anything else could be done.” Reinhard also argued
that the action should be dismissed on the ground that an automatic stay was
triggered upon his filing for bankruptcy. On July 1, 2008, the SEC filed a response
opposing Reinhard’s request that the default be set aside. On July 8, 2008, the
SEC moved for entry of a final default judgment against Reinhard.
On July 14, 2008, the district court, construing Reinhard’s “objection and
response” filing as a motion to vacate the default, denied the motion, observing
that no attorney ever appeared in this action for Reinhard and that there was no
4
motion pending for leave to withdraw as counsel. The district court also ruled that
Reinhard’s bankruptcy petition did not bar this action, reasoning that, pursuant to
11 U.S.C. § 362(b)(4), the Bankruptcy Code’s automatic stay does not apply to
enforcement actions brought by the government. The district court granted the
SEC’s motion for a default judgment.
On July 22, 2008, Reinhard moved for “reconsideration and clarification” of
the court’s order declining to set aside the default. Reinhard’s reconsideration
motion stated that he believed he would not be able to secure legal counsel, but that
his defenses to the enforcement action were meritorious. Reinhard requested that
the court set aside the default judgment and allow him to proceed pro se.
Reinhard’s motion further argued that the automatic stay in his bankruptcy case
barred the SEC’s request for disgorgement.1 The district court denied Reinhard’s
motion for reconsideration and clarification.
On October 3, 2008, the district court ordered Reinhard to pay for
disgorgement of ill-gotten gains, plus prejudgment interest, and a civil money
penalty; enjoined him from violating various provisions of the securities laws; and
set a date of December 8, 2008 for a bench trial to determine the amounts of the
1
Because Reinhard does not raise any bankruptcy stay issues on appeal, these issues are
waived. See Greenbriar, Ltd. v. City of Alabaster, 881 F.2d 1570, 1573 n.6 (11th Cir. 1989)
(stating that an issue not raised on appeal is waived).
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disgorgement and civil penalty.
On October 16, 2008, Reinhard moved to quash or strike the service of
process, arguing that the summons was not personally delivered to his residence.
At the December 8, 2008 bench trial, Reinhard agreed to have the service of
process issue “resolved based on the written papers already submitted.” The
district court ultimately denied Reinhard’s motion to quash the service of process
on the ground that Reinhard waived any objection to service of process by failing
to raise the issue earlier. Alternatively, the district court found that the service on
Reinhard was sufficient, crediting the process server’s statement that, when he
attempted to serve Reinhard at his home, Reinhard answered the door but then
slammed it.
Also at the December 8, 2008 bench trial, the district court found that
Reinhard had received the amount of $5,857,241.09 as a result of the fraud alleged
in the enforcement complaint and ordered him to disgorge that amount, together
with prejudgment interest of $2,258,940.58. The district court also imposed on
Reinhard a civil penalty of $120,000.
II. DISCUSSION
A. Extension of Time
Reinhard first argues that the district court erred in granting him only a
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seven-day extension of time, until April 18, 2008, because this gave him
insufficient time to respond to the enforcement complaint.2
Reinhard’s argument lacks merit because Reinhard was actually given over
two months to answer the complaint. Service of process was effected on February
13, 2008, and thus Reinhard was required to serve his answer no later than March
4, 2008. See Fed. R. Civ. P. 12(a)(1)(A)(i) (a defendant must serve an answer
within 20 days after being served with a summons and complaint). After
discussions with Reinhard’s counsel, the SEC’s counsel informally agreed to
extend that deadline to March 24. Reinhard’s counsel then withdrew, at which
time the SEC’s counsel agreed to an additional four-day extension, until March 28.
On March 31, Reinhard filed a pro se motion for an extension of time. The district
court granted that motion on April 11, and gave Reinhard an additional seven days,
until April 18, to file a responsive pleading. Thus, Reinhard had more than two
months from the time he was first put on notice of the complaint, February 13,
2008, to the time his answer was due, April 18, 2008.3
We recognize that Reinhard relies on Sicker v. Commissioner, 815 F.2d
2
We review the district court’s decision whether to extend, pursuant to Fed. R. Civ. P.
6(b), the time required to complete an act for an abuse of discretion. Woods v. Allied Concord
Fin. Corp.,
373 F.2d 733, 734 (5th Cir. 1967).
3
Even assuming that Reinhard did not have actual notice of the complaint until February
19, 2008, the date that Reinhard alleges he first found the summons and complaint on his porch,
he was still afforded just under two months to file his answer.
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1400 (11th Cir. 1987), but that case is materially different. In Sicker, the Tax
Court refused to consider a taxpayer’s petition for redetermination of a tax
deficiency because the petition was not timely filed. Id. at 1401. The Internal
Revenue Code requires that a petition for redetermination must be filed within 90
days of the date when the notice of deficiency is mailed.
Id. Because the IRS
incorrectly addressed Sicker’s notice of deficiency, he did not receive it until eight
days before the deadline.
Id. In these circumstances, the Sicker Court concluded
that, “[a]s a matter of law, eight days cannot be considered ample time in which to
prepare a petition for redetermination.”
Id. Unlike the taxpayer in Sicker who had
only eight days, Reinhard had more than two months to answer the enforcement
complaint. Moreover, Sicker is a case construing a particular statutory provision
(not at issue here) as to the deadline for filing a tax deficiency redetermination
petition, not a case about an extension of time to respond to a complaint. Thus,
Sicker does not help Reinhard at all.
For all of these reasons, the district court did not abuse its discretion by
granting an additional extension of only seven days in its April 11 order.4
B. Service of Process
4
Reinhard’s various other arguments, such as comparing the time to answer a complaint
to rules governing the amount of notice required prior to a deposition or hearing, do not concern
the time required to file an answer to a complaint and are also inapposite.
8
Reinhard next asserts that the district court erred in determining that service
was valid without hearing testimony from the process server.5 This argument also
lacks merit. For starters, Reinhard expressly consented to having the service of
process issue resolved “based on the written papers already submitted.” In
addition, Reinhard relies on Cavic v. Grand Bahama Dev. Co., 701 F.2d 879 (11th
Cir. 1983), but that decision is not on point. Although there was an evidentiary
hearing in Cavic, nothing in that decision states that the district court is required to
hold an evidentiary hearing.6
Moreover, we agree with the district court that service of process on
Reinhard was properly effectuated.7 Under Federal Rule of Civil Procedure
4(e)(1), service of process may be effected by “following state law for serving a
summons in an action brought in courts of general jurisdiction in the state where
the district court is located or where service is made.” Where, as here, the person
5
We review the district court’s decision to rule on a motion without an evidentiary
hearing for abuse of discretion. Sunseri v. Macro Cellular Partners, 412 F.3d 1247, 1250 (11th
Cir. 2005).
6
In fact, the district court is not obligated to hold a hearing in resolving jurisdictional
issues, but may resolve these issues on affidavits alone. See Washington v. Norton Mfg., Inc.,
588 F.2d 441, 443 (5th Cir. 1979) (“[T]he judge may determine these [jurisdictional] issues by
receiving affidavits, interrogatories, depositions, oral testimony, or any combination of the
recognized methods of discovery.”).
7
In considering a district court’s decision concerning the sufficiency of service of
process, we review the district court’s legal conclusions de novo and its factual findings for clear
error. Prewitt Enters., Inc. v. OPEC, 353 F.3d 916, 920 (11th Cir. 2003).
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to be served answers the door and then retreats into his residence, only to find the
service papers at his door at a later date, process is deemed sufficient under Florida
law. Palamara v. World Class Yachts, Inc., 824 So. 2d 194, 194-95 (Fla. Dist Ct.
App. 2002) (upholding a default judgment when the server attempted to serve
appellant outside his place of business, appellant ran inside and would not come
out, appellant was informed of the contents of the notice, the notice was placed on
the door through which appellant later came out, and appellant later retrieved the
papers); Liberman v. Commercial Nat’l Bank of Broward County,
256 So. 2d 63,
63-64 (Fla. Dist. Ct. App. 1971) (upholding a finding that service was proper
where the person to be served “sought to avoid service of process by the expedient
of running into his house and closing the door upon seeing the process server
approach,” and the process server left the process papers in the person’s mailbox
and stayed to watch him bring them into his house); Olin Corp. v. Haney,
245 So.
2d 669, 670-71 (Fla. Dist. Ct. App. 1971) (concluding that where “the person to be
served flees from the presence of the process server in a deliberate attempt to avoid
service of process, [the Florida service of process statute] may be satisfied if the
process server leaves the papers at a place from which such person can easily
retrieve them and takes reasonable steps to call such delivery to the attention of the
person to be served”). As a consequence, the district court did not err in finding
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that Reinhard was properly served.8
Accordingly, we affirm the district court’s judgment in favor of the SEC and
against Reinhard.
AFFIRMED.
8
Because we conclude that Reinhard was properly served, we need not address the
district court’s alternative determination that Reinhard waived his right to challenge service of
process under Rule 12(b).
11
