Goetz, et al v. Synthesys Technol

United States Court of Appeals
Fifth Circuit
F I L E D
July 1, 2005
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
_______________
m 04-50971
_______________
STEPHANIE GOETZ,
INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED;
KEVIN MCGILL,
INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
Plaintiffs-Appellees,
VERSUS
SYNTHESYS TECHNOLOGIES, INC., ET AL,
Defendants,
ENRIQUE F. GITTES,
ALSO KNOWN AS HARRY GITTES,
Defendant-Appellant.
_________________________
Appeal from the United States District Court
for the Western District of Texas
______________________________

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Before GARWOOD, SMITH, and CLEMENT,
Circuit Judges.
JERRY E. SMITH, Circuit Judge:
In this appeal, we confront the res nova
issue in this circuit regarding the application of
New York’s method of substituted service
known as “nail-and-mail,” N.Y. C.P.L.R.
§ 308(4). The district court, finding that ser-
vice was proper because the statute was prop-
erly applied and service did not violate due
process, rejected defendant Enrique Gittes’s
motion under Federal Rule of Civil Procedure
60(b)(4) to set aside a default judgment. We
reverse and remand, concluding that the dis-
trict court erred in finding that the due dili-
gence requirement of the statute was satisfied
where the plaintiff class failed to make even a
single attempt at personal service at a known
in-state residence.
I.
The plaintiffs, former employees of
Synthesys Technologies, Inc. (“STI”), sued to
recover unpaid wages and overtime compen-
sation pursuant to the Fair Labor Standards
Act, 29 U.S.C. §§ 201 et seq., with supple-
mental claims under Texas law against STI and
many of its officers/directors, including
Enrique Gittes, the chairman of the board.
According to Gittes’ uncontested affidavits,1
he is a United States citizen who resides in
Europe. He visits New York occasionally and
owns two pieces of property in that state: a
house in Southampton2 and an apartment in
Manhattan. Both of the properties are
reflected in public records, and his name and
address for the Southampton residence appear
in that town’s telephone directory. Gittes
states that when he visits New York State, he
usually stays at the Southampton house.
On the other hand, Gittes rarely stays at the
apartment and does not conduct business from
it, and only occasionally stays there if he is in
New York City at night. He asserts that mont-
hs go by between visits to the apartment, and
if he does stay, it is only for one or two nights.
He does not hold the apartment out as his
residence; it is not listed on his driver’s license
or any bank account, and he does not use it as
a regular mailing address, although he some-
times has mail forwarded there if he knows he
will stopping by soon. A cleaning woman has
keys to the apartment and comes weekly to
water the plants and to tidy the apartment but
does not forward mail.
The Southampton address was included as
the only address in the complaint as a location
where the defendant “may be served with pro-
cess.” This was repeated verbatim in each of
four amended complaints.
The plaintiffs first attempted to serve Gittes
in person at a business address, but it turned
out to be vacant. They then made two failed
attempts to serve him there at the Manhattan
apartment and tried to serve him through certi-
fied mail, but that summons was returned as
unclaimed. After a motion for substituted
service was granted, four more attempts were
made to serve Gittes at the Manhattan apart-
ment at different times of the day and different 1 In connection with his rule 60(b)(4) motion,
Gittes filed two affidavits. Plaintiffs have not
placed anything in the record to dispute assertions
that Gittes makes that are relevant to the disposi-
tion of this case on appeal.
2 Southampton is on Long Island, approxi-
mately 100 miles from New York City.

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days of the week. Finally, a process server af-
fixed a summons and complaint to the front
door of the Manhattan apartment address and
completed service pursuant to N.Y. C.P.L.R.
§ 308(4) by mailing another copy to that ad-
dress, following the technicalities specified by
the statute.
Gittes did not timely answer or otherwise
defend the lawsuit, and a no-answer default
judgment was brought against him. Gittes
brought a motion to vacate the default judg-
ment on the basis that the court lacked per-
sonal jurisdiction over him based on improper
service, under Federal Rule of Civil Procedure
60(b)(4). The district court denied the motion,
which is the subject of this appeal.
II.
An order denying a rule 60(b)(4) motion to
set aside a judgment as void for want of per-
sonal jurisdiction is reviewed de novo. See
Carter v. Fenner, 136 F.3d 1000, 1005 (5th
Cir. 1998). We review the district court’s
findings of fact underlying its disposition of a
rule 60(b)(4) motion for clear error.3
III.
A rule 60(b)(4) motion allows a party to re-
ceive relief from a final judgment, order, or
proceeding if the underlying judgment is void.
Gittes asserts that the default judgment is void
and he is entitled to rule 60(b)(4) relief be-
cause he was never properly served.4
Plaintiffs assert that Gittes was properly
served in compliance with Federal Rule of
Civil Procedure 4(e)(1), which allows for
service “pursuant to the law of the state . . . in
which service is effected.” They claim that
they legally served Gittes in New York under
section 308(4) of the New York Civil Practice
Law and Rules (“CPLR”). In his rule 60(b)(4)
motion, Gittes challenges the propriety of the
service as being defective under New York
law and invalid because it violates his due pro-
cess rights under the Fourteenth Amendment.
New York’s statute describing proper
methods for service of process, N.Y. C.P.L.R
§ 308, provides, in relevant part:
Personal service upon a natural person shall
be made by any of the following methods:
1. by delivering the summons within the
state to the person to be served; or
2. by delivering the summons within the
state to a person of suitable age and discre-
tion at the actual place of business, dwell-
ing place or usual place of abode of the
person to be served and by either mailing
the summons to the person to be served at
his or her last known residence or by mail-
ing the summons by first class mail to the
person to be served at his or her actual
place of business . . .
. . .
4. where service under paragraphs one and
two cannot be made with due diligence, by
3 See Cleere Drilling Co. v. Dominion Explo-
ration and Prod., Inc., 351 F.3d 642, 645 (5th Cir.
2003) (noting that all district court factual findings
are reviewed for clear error).
4 Recreational Props., Inc. v. Southwest Mort-
gage Serv. Corp., 804 F.2d 311, 314 (5th Cir.
1986) (“If a court lacks jurisdiction over the
(continued...)
4(...continued)
parties because of insufficient service of process,
the judgment is void and the district court must set
it aside.”)

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affixing the summons to the door of either
the actual place of business, dwelling place
or usual place of abode within the state of
the person to be served and by either mail-
ing the summons to such person at his or
her last known residence or by mailing the
summons by first class mail to the person to
be served at his or her actual place of busi-
ness . . .
N.Y. C.P.L.R § 308.
Gittes was served under subsection (4),
which is colloquially known as “nail-and-mail
service.” It is a disfavored method of service
in New York; under the plain text of the stat-
ute, a plaintiff is required to exercise “due dili-
gence” to complete service either through per-
sonal delivery or through a combination of
leaving the summons with a competent person
at the defendant’s residence or place of busi-
ness, combined with mailing a copy of it to his
last known address or actual place of busi-
ness.5 The New York Court of Appeals
(which is the state’s highest court) has con-
strued the statutory requirements for § 308(4)
service strictly, having noted that “liberaliza-
tion of the requirements for service would jeo-
pardize the primary statutory purpose of en-
suring that defendants receive actual notice of
the pendency of litigation against them.”6
Gittes first challenges the lawfulness of the
“nail-and-mail” service on the ground that the
plaintiffs failed to fulfill their statutory duty
first to exercise “due diligence” to satisfy ser-
vice under § 803(1) or (2).7 The plaintiffs
have the burden to show that they satisfied
their duty to exercise due diligence.8 It is well-
settled that this requirement is to be “strictly
observed, given the reduced likelihood that a
summons served pursuant to that action will be
received.”9 “The intensive judicial scrutiny of,
and the abundance of case law on, substituted
service and what constitutes ‘due diligence’ .
. . indicates that a plaintiff who resorts to
CPLR 308(4) should be prepared to make a
detailed showing of the efforts constituting
due diligence, inasmuch as rigid adherence to
the requirement of due diligence is ex-
pected.”10 Although rigid adherence is re-
quired, the caselaw contains very few bright-
line rules about when “due diligence” is and is
not satisfied, and reviewing courts look to the
5 See N.Y. C.P.L.R. § 308(4); City of New York
v. Chem. Bank, 470 N.Y.S.2d 280, 284 (N.Y. Sup.
Ct. 1983) (“‘Nail and mail’ service requires affixa-
tion of the summons to the door of the defendant’s
place of business, dwelling or place of abode, plus
mailing and filing, and proof that personal delivery
or ‘deliver and mail’ substituted service cannot be
made by ‘due diligence.’”)
6 Feinstein v. Bergner, 397 N.E.2d 1161, 1164
(N.Y. 1979).
7 Silber v. Stein, 731 N.Y.S.2d 227, 228 (N.Y.
App. Div. 2001) (“It is well settled that ‘nail and
mail’ service pursuant to CPLR 308(4) may be
used only where personal service under CPLR
308(1) and (2) cannot be made with ‘due dili-
gence.’”).
8 See State Higher Educ. Servs. Corp. v. Cacia,
652 N.Y.S.2d 883 (N.Y. App. Div. 1997) (noting
that plaintiff has the burden of showing due dili-
gence for the purposes of N.Y.C.P.L.R. § 308(4)).
9 Lemberger v. Khan, 794 N.Y.S.2d 416 (N.Y.
App. Div. 2005); see also Reed Holdings, Inc. v.
O.P.C. Corp., 122 F.R.D. 441, 443 (S.D.N.Y.
1988) (collecting New York state court decisions).
10 Jack B. Weinstein, Harold L. Korn & Arthur
R. Miller, CPLR 308(4): Nailing and Mailing
Authorized Where Service Under Subd. (1) and
(2) Cannot Be Made with Due Diligence, NEW
YORK CIVIL PRACTICE: CPLR P 308.14 (2004).

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totality of the circumstances to determine
whether the service was “reasonably calculated
to give the defendant notice.”11
The district court found that plaintiffs sat-
isfied their burden to demonstrate that they
fulfilled the “due diligence” requirement be-
cause before they resorted to “nail-and-mail”
service under § 803(4), they made numerous
attempts to effect personal service under
§ 803(1) by stopping by the Manhattan apart-
ment on at least seven different occasions at
different times and on different days of the
week; made one attempt at Gittes’s business
address (although that location turned out to
be vacant), and one attempt through certified
mail (which failed because it was returned as
unclaimed). A handful of New York courts
have found “due diligence” to be satisfied
where service is attempted on repeated occa-
sions at multiple locations.12
Gittes does not dispute that plaintiffs at-
tempted to serve him at the Manhattan apart-
ment and at the Park Avenue business address
as described above, but he argues that plain-
tiffs failed to exercise “due diligence” because
they only attempted to serve him at the Man-
hattan apartment, a location where Gittes
claims that he only stayed for overnight stays
very infrequently, while making no attempts to
serve him at his more permanent Southampton
address, a location he alleges plaintiffs were
aware of.13
New York courts have repeatedly found
that due diligence is absent where the plaintiffs
have failed to make any attempts to perform
service at known addresses.14 The record
11 Hanover New England v. MacDougall, 608
N.Y.S.2d 561, 561-62 (N.Y. App. Div. 1994)
(“There is no rigid standard by which the due dili-
gence requirement is measured, and whether a par-
ty has satisfied that requirement will necessarily
depend upon the facts of each case.”); Hochhauser
v. Bungeroth, 578 N.Y.S.2d 170 (N.Y. App. Div.
1992) (“No rigid rule has been prescribed for
determining whether ‘due diligence’ has been
exercised in attempting to effect service so as to
permit the use of substituted service pursuant to
CPLR 308, subd. 4 . . . .”).
12 See, e.g., Hanover New England, 608
N.Y.S.2d at 562 (finding that the plaintiff exer-
cised due diligence by attempting to serve defen-
dant at his residence on three different occasions at
different times of day and by inquiring neighbor
about the defendant’s place of employment); see
also Hochhauser, 578 N.Y.S.2d at 170 (finding
that three attempts at service at different times of
day was sufficient to establish due diligence); see
(continued...)
12(...continued)
also Matos v. Knibbs, 588 N.Y.S.2d 911 (N.Y.
App. Div. 1992) (same).
13 Plaintiffs aver that this argument is waived by
Gittes for failure to raise it below. We refrain from
finding the argument waived; although plaintiffs
are correct to note that Gittes did not raise this
argument in his initial motion to vacate the default
judgment, the district court responded to this
argument in its order denying relief. Although the
issue was admittedly raised in a muddled fashion,
the fact that the district court was able to rule on
the issue is sufficient for us to consider it raised,
even in a refined form on appeal. In re Liljeberg
Enters., 304 F.3d 410, 427 n.29 (5th Cir. 2002)
(“[A]n argument is not waived on appeal if the
argument on the issue before the district court was
sufficient to permit the district court to rule on it.”)
14 See, e.g, McNeely v. Harrison, 617 N.Y.S.2d
879 (N.Y. App. Div. 1994) (finding lack of due
diligence where plaintiff failed to attempt serving
the defendant at known business address);
Schwartzmann v. Musso, 607 N.Y.S.2d 953 (N.Y.
App. Div. 1994) (finding no due diligence where
(continued...)

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plainly demonstrates that the plaintiffs had
actual knowledge of Gittes’s Southampton
address, which was specifically articulated in
the complaint as the proper place to serve
him.15 In addition, plaintiffs had knowledge of
the address from the deposition of Michael
Fleischhauer, the President and Chief Operat-
ing Officer of STI, who indicated that Gittes
owned two places in New York, including the
Southampton home.16
Plaintiffs claim that the cases cited by
Gittes, for the proposition that the due dili-
gence requirement is not satisfied where the
plaintiff does not attempt service at a known
address, are distinguishable because they either
involve no attempts to serve a defendant at a
known business address, or involve no at-
tempts to serve a defendant at any known res-
idence. We reject this argument and rather
read the cases broadly because of New York’s
strong commitment to strict observance of the
due diligence requirement.17 Distinguishing
the cases cited by Gittes on the narrow
grounds argued by plaintiffs would ignore our
duty to look to the totality of the circumstanc-
es to see whether service was reasonably cal-
14(...continued)
plaintiff only attempted to serve defendant at
apartment building he owned but did not live at,
and no attempts made at residence listed in tele-
phone directory); Pizzolo v. Monaco, 588
N.Y.S.2d 910 (N.Y. App. Div. 1992) (finding no
due diligence where plaintiff made no attempts to
serve defendant at place of his employment, which
was “easily ascertainable from the complaint it-
self”); Burkhardt v. Cuccuzza, 438 N.Y.S.2d 594,
596 (N.Y. App. Div. 1981) (finding no due dil-
igence where plaintiff made no attempt to serve
defendant at address noted on police accident
report).
15 Curiously, although nothing in the record in-
dicates that service was attempted at the South-
ampton address, it was later cited as the proper
address when plaintiffs sought to collect on their
default judgment; the petition for issuance of a
turnover order filed in federal district court indi-
cated that Gittes “may be served at his residence at
354 S. Main Street, Southhampton [sic], New
York” and an execution against the Southampton
house, also filed in federal court, listed the house as
Gittes’s“address” and “last known address.”
16 The district court found that the plaintiffs did
not have to serve Gittes at the Southampton ad-
dress because they were not aware of the address,
given that Fleischhauer was unable to provide a
specific address during his deposition. It was
clearly erroneous for the district court to make a
factual finding that plaintiffs had no knowledge of
(continued...)
16(...continued)
the specific address of the house, because the
record contains pleadings submitted by the plain-
tiffs that specifically mention the exact address.
Moreover, assuming arguendo that plaintiffs
only first learned of the Southampton address at
this deposition, it would not have absolved them
from the obligation to attempt to perform some
investigation into the location of the residence as
part of their due diligence inquiry; New York
courts have found that a plaintiff failed to satisfy
due diligence where it fails to attempt to serve the
defendant at an address that could be easily ascer-
tainable with little investigation, such as through
the telephone book. See, e.g., Schwartzmann, 607
N.Y.S.2d at 953. Such is the case hereSSthe un-
controverted deposition testimony of Gittes indi-
cated that his Southampton address is publicly
listed in the telephone directory.
17 Lemberger, 794 N.Y.S.2d at 416 (stating that
the due diligence requirement is to be “strictly
observed, given the reduced likelihood that a sum-
mons served pursuant to that action will be re-
ceived.”)

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culated to give notice.18 As in each of the cas-
es cited by Gittes, the instant plaintiff class
failed to take the simple step of making a sin-
gle attempt at service to a known in-state lo-
cation before resorting to disfavored nail-and-
mail service.19
REVERSED and REMANDED.
18 See Hanover New England, 608 N.Y.S.2d at
561-62.
19 See Sartor v. Utica Taxi Ctr., Inc., 260 F.
Supp.2d 670, 677 (S.D.N.Y. 2003) (“[T]he due
diligence requirement refers to the quality of the
efforts made to effect personal service, and cer-
tainly not to their quantity or frequency.”) (citing
Barnes v. City of New York, 416 N.Y.S.2d 52 , 54
(N.Y. App. Div. 1979); Cooney v. East Nassau
Med. Group, 528 N.Y.S.2d 364, 368 (N.Y. App.
Div. 1988)). Because we conclude that service
was defective under the New York statute, we do
not reach the issue of whether service in this case
violated due process.

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