BHTT Entertainment, Inc. v. Brickhouse Cafe & Loun , 858 F.3d 310 ( 2017 )

Case: 16-10687 Document: 00514006158 Page: 1 Date Filed: 05/24/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-10687 FILED
May 24, 2017
Lyle W. Cayce
Clerk
BHTT ENTERTAINMENT, INCORPORATED,
Plaintiff–Appellee,
versus
BRICKHOUSE CAFÉ & LOUNGE, L.L.C.;
BRICKHOUSE RESTAURANT AND BAR, L.L.C;
JONAH INVESTMENTS, L.L.C.,
Defendants–Appellants.
Appeal from the United States District Court
for the Northern District of Texas
Before SMITH and HAYNES, Circuit Judges, and JUNELL, District Judge.*
JERRY E. SMITH, Circuit Judge:
Brickhouse Café & Lounge, LLC, Brickhouse Restaurant and Bar, LLC,
and Jonah Investments, LLC (collectively, “Brickhouse”), appeal a default
judgment. BHTT Entertainment, Incorporated (“BHTT”), challenges this
* District Judge of the Western District of Texas, sitting by designation.
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court’s jurisdiction and contends that, in the event we do have appellate juris-
diction, we should affirm the default. We conclude that we do have jurisdiction
and that the district court was correct to enter default judgment.
I.
This case began as a garden-variety trademark dispute. BHTT owns the
trademarks to Brick House Tavern + Tap and Brick House Subs (collectively,
“the BHTT Marks”). Brickhouse operates two restaurants in the Dallas area—
one in Arlington, one in Desoto—promoted at various times as The Brickhouse
Lounge, Brickhouse Café & Lounge, and Brickhouse Grill & Bar (collectively,
“the Brickhouse Marks”). BHTT concluded that Brickhouse’s usage of the
Brickhouse Marks infringed on the BHTT Marks, so it sued Brickhouse Café
& Lounge LLC (and only that specific LLC), alleging trademark infringement,
in August 2015.
After an entry of default against Brickhouse Café & Lounge, LLC, BHTT
discovered that the other two defendants also had managerial roles with
regard to the Brickhouse Lounge. BHTT amended its complaint to add them
as defendants and attempted to serve its complaint on Charles Bailey, the
registered agent for each component of Brickhouse. Bailey proved elusive; his
listed address was an open field beside Interstate 20 in Grand Prairie, Texas,
and attempts to contact him at other businesses and residences associated with
him met with failure. Faced with Bailey’s elusiveness, BHTT successfully
moved for substituted service under Federal Rule of Civil Procedure 4(e)(1) and
Texas Rule of Civil Procedure 106(b)(2), whereupon BHTT served Brickhouse
in the manner the district court had prescribed.
Brickhouse did not respond. BHTT moved for an entry of default, the
clerk entered it, BHTT moved for a default judgment, and the district court
entered a default judgment in April 2016. Only then did Brickhouse deign to
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appear; it did not contest the default judgment in district court but instead
appealed.
Brickhouse’s initial brief in this court was due August 1, 2016, but it
failed to meet both that deadline and an extended deadline granted after a
motion for extension of time. Faced with that dilatory conduct, the clerk of this
court entered an order dismissing Brickhouse’s appeal for want of prosecution
pursuant to Fifth Circuit Rule 42.3. That dismissal returned the mandate to
the district court. Brickhouse’s counsel moved to reinstate the appeal; the
clerk initially denied that motion but granted it upon reconsideration and re-
opened the case. The order the clerk issued reopening the case, however, did
not state explicitly that it was recalling the mandate from the district court.
Briefing in this case has continued without any major problems since that
time.
BHTT avers that the clerk’s order reopening the appeal did not suffice to
recall the mandate and that the failure to recall the mandate divests us of
appellate jurisdiction. In the alternative, BHTT contends that Brickhouse’s
failure to contest the default judgment first in the district court means that all
its issues in the court of appeals are waived, based on our well-known practice
of generally not considering arguments not first made before the district court. 1
And, finally, BHTT contends that the district court was correct in its judgment
of default regardless. Brickhouse does not respond to the first two arguments
raised by BHTT; it confines its appeal to challenges to service of process and
answers to BHTT’s trademark claims on the merits. 2
1 See, e.g., Little v. Liquid Air Corp., 37 F.3d 1069, 1071 n.1 (5th Cir. 1994) (en banc).
2Because we uphold the default judgment, we do not reach the merits of the trade-
mark claims. Indeed we could not—because we conclude that service was properly effected,
we affirm the default judgment regardless of the merits of BHTT’s trademark claims. But
even if we were to conclude service was improper, the remedy would not be to examine the
3
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II.
BHTT urges that this court never recalled the mandate that issued when
this case was initially dismissed for want of prosecution and that the failure to
recall the mandate is fatal to appellate jurisdiction. The list of cases in which
this court states unequivocally that the district court re-assumes jurisdiction
once the mandate issues is long. 3 Equally numerous are the cases in which
this circuit has debated whether to recall the mandate as a means of once again
having jurisdiction over a given case. 4 We have no difficulty in concluding that
the mandate is the jurisdictionally significant document here and that recall
of the mandate is necessary for this court to regain jurisdiction over an appeal
dismissed for want of prosecution.
BHTT presents two theories why the clerk could not have recalled the
mandate. First, it points out that the clerk’s order reinstating this appeal
merely stated that the “[c]ase is reopened”; BHTT suggests that that terse
statement did not suffice to recall the mandate. Second, BHTT contends that,
even in the event the clerk’s pronouncement purported to recall the mandate,
the clerk lacked the power to do so under the Fifth Circuit’s rules, and so any
supposed recall was ineffective.
We dispense with the second argument first. The circuit’s rules leave us
with the firm conviction that the clerk can recall a mandate under the
trademark claims but to dismiss the case. Brickhouse’s attempt to have us examine the
merits suggests a fundamental misunderstanding of what a default judgment is.
3 See, e.g., Arenson v. S. Univ. Law Ctr., 963 F.2d 88, 90 (5th Cir. 1992) (“The district
court regained jurisdiction over the case upon our issuance of the mandate.”).
4 See, e.g., Goodwin v. Johnson, 224 F.3d 450, 459 (5th Cir. 2000) (“To consider Good-
win’s . . . claim, we must identify a means of asserting jurisdiction over it. An individual
seeking to avoid the effects of an appellate court’s prior decision may bring to the court a
motion to recall its mandate.”); see also, e.g., 16 CHARLES ALAN WRIGHT & ARTHUR R. MIL-
LER, FEDERAL PRACTICE AND PROCEDURE § 3938 (3d ed. updated Jan. 2017) (discussing power
of appellate courts to regain jurisdiction by recalling the mandate).
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circumstances presented here. Fifth Circuit Rule 27.1.6 gives the clerk the
authority to “reinstate appeals dismissed by the clerk”; this is the rule under
which Brickhouse moved to reinstate its appeal. No one contests that the
mandate issues immediately upon the dismissal of an appeal by the clerk, and
it would make little sense to give the clerk the authority to reinstate appeals
he dismissed but to render any such reinstatement jurisdictionally infirm from
its inception.
BHTT counters that Rule 27.2.7 explicitly states that only a judge is
empowered to recall the mandate, as distinguished from the various motions
that a clerk may rule on listed in Rule 27.1. This is correct, in some sense,
though BHTT omits relevant context; Rule 27.2.7 permits a single judge to
“stay the issuance of mandates or . . . recall same pending certiorari.” It is
silent on the power to recall a mandate where certiorari does not loom. More-
over, the internal operating procedures (“IOPs”) to Rule 27 state that “[t]he
clerk or a single judge, as appropriate, decides a motion for stay or recall of
mandate pending action on a petition for writ of certiorari . . . .” Given the
conflict between Rule 27.2.7 and its IOPs, as well as their limitation to situa-
tions in which certiorari is a factor, the clerk’s power to recall a mandate is
coterminous with his power to reinstate an appeal under Rule 27.1.
Did he do so here? True, the order reopening this case did not explicitly
recall the mandate, and Brickhouse’s motion also called for reopening the case
instead of recalling the mandate. But to hold that such a minor change in
wording deprives us of appellate jurisdiction would be to privilege form too
much over function. A motion to recall the mandate and a motion to reopen
the case have the same effect; they both ask this court to resurrect a matter it
had finally disposed of. Thus, we conclude that the clerk had the power to
recall the mandate here, that its order reopening the case did do so, and that
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we have appellate jurisdiction. 5
III.
BHTT maintains that Brickhouse has waived its insufficient-service-of-
process argument by failing to raise it first in the district court. In BHTT’s
view, after the default judgment was entered Brickhouse should have moved
to set it aside under Federal Rule of Civil Procedure 60(b)’s provisions for relief
from a final judgment, then appealed from a denial of that order if unsuccess-
ful. To permit Brickhouse to appeal directly from the default judgment, BHTT
posits, would be to countermand this court’s long-held rule that arguments not
brought in the district court are waived 6 and would force three-judge appellate
panels to decide questions better decided by one-judge district courts with
factfinding powers.
There is a circuit split on this issue. 7 But, given the weakness of Brick-
house’s arguments for vacating the default judgment, choosing sides fully and
5 One additional approach, not mentioned by either side, might have some salience
here. In Colbert v. Brennan, 752 F.3d 412 (5th Cir. 2014), we refused to reinstate an appeal
after the appellant had voluntarily dismissed his initial notice. That was because the volun-
tary dismissal “plac[ed the appellant] in the same position as someone who never filed an
appeal,” and the motion to reinstate the appeal came far outside the time limit set by the
Federal Rules of Appellate Procedure to file an initial appeal. Id. at 416–17. This was so
even though a judge of this court had issued a previous order reinstating the appeal. Id.
Colbert, however, is easily distinguished; there was no voluntary dismissal here. A dismissal
for want of prosecution does not operate similarly to a voluntary dismissal, in that it does not
render the appellant equivalent to someone who has not filed an appeal. As long as the
motion to reinstate the appeal/recall the mandate is timely, the clerk, a single judge, or a
panel of three judges can grant the motion as appropriate.
6 See, e.g., Hardiman v. Colvin, 820 F.3d 142, 152 (5th Cir. 2016).
7 Compare Consorzio del Prosciutto di Parma v. Domain Name Clearing Co., 346 F.3d
1193, 1196 (9th Cir. 2003) (holding that challenges to default judgments must first be brought
under Rule 60(b); CFTC v. Am. Commodity Grp. Corp., 753 F.2d 862, 865–66 (11th Cir. 1984)
(per curiam) (same) with Pecarsky v. Galaxiworld.com Ltd., 249 F.3d 167, 170 (2d Cir. 2001)
(permitting challenges to a default judgment to be brought first in the court of appeals). In
an unpublished opinion, we agreed with Pecarsky. See SUA Ins. Co. v. Buras, 421 F. App’x
384, 385 n.2 (5th Cir. 2011).
6
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finally is best left for another day. We assume arguendo that Brickhouse can
challenge the default judgment without first bringing a Rule 60(b) motion in
the district court, 8 and we turn to consideration of that challenge.
IV.
Brickhouse maintains that the default judgment must be set aside be-
cause service of process was invalid. “This court reviews a district court’s deci-
sion on entry of a default judgment for abuse of discretion.” Cambridge Toxi-
cology Grp., Inc. v. Exnicios, 495 F.3d 169, 179 (5th Cir. 2007). The validity or
invalidity of service of a defendant in a federal district court is governed by
federal law, 9 and the federal law of service is provided by Federal Rule of Civil
Procedure 4. Because service was effected under Rule 4(e)(1), which permits
service by “following state law in courts of general jurisdiction in the state
where the district court is located or service is made,” we look to Texas law to
determine whether service of process on Brickhouse was proper. See, e.g.,
Harper Macleod Solicitors v. Keaty & Keaty, 260 F.3d 389, 398 (5th Cir. 2001).
And under Texas law, BHTT must prove that Brickhouse (1) was amenable to
service and (2) was served in a manner in keeping with Texas’s service rules. 10
8 Federal courts cannot use “hypothetical jurisdiction” to assume that they have juris-
diction for purposes of deciding the merits. See Steel Co. v. Citizens for a Better Env’t,
523 U.S. 83, 94 (1998). But courts can consider one procedural issue that impacts jurisdiction
over another issue that does so. Sinochem Int’l Co. v. Malay. Int’l Shipping Corp., 549 U.S.
422, 432 (2007) (stating that there is no specific sequencing to procedural issues affecting
jurisdiction). Here, the appellee is contending that we cannot reach the appellant’s argument
that service was defective because a Rule 60 motion challenging defective service is a predi-
cate to deciding the question of defective service. Defective service, however, is itself an issue
that bears not on the merits but on the court’s power to hear the case. See Carimi v. Royal
Carribean Cruise Line, Inc., 959 F.2d 1344, 1345 (5th Cir. 1992). Thus, we address the issue
of defective service and either dismiss for defective service or conclude that there was no such
defect, thus vitiating appellee’s Rule 60 argument.
9 See Hanna v. Plumer, 380 U.S. 460, 461, 474 (1965).
Bludworth Bond Shipyard, Inc. v. M/V Caribbean Wind, 841 F.3d 646, 649 (5th Cir.
10
1988); Whitney v. L&L Realty Corp., 500 S.W.2d 94, 95–96 (Tex. 1973).
7
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Although Brickhouse has not challenged its amenability to service, its
briefing raises three arguments as to why service was improper under Texas
law. First, it claims that “each of the sworn affidavits of service state [sic] that
each defendant was served on March 12, 2016 at 3:35 pm, by the same process-
server, at three different addresses, which is physically impossible.” Second,
it posits that Section 5.251(1)(B) of the Texas Business Organizations Code
requires that the Secretary of State be served if a corporation’s registered
agent cannot be located, but the Secretary of State was not served here.
Finally, Brickhouse states without elaboration that “each of the affidavits fails
to properly identify the address where process was served and/or fails to cor-
rectly indicate the time at which process was served, which violates the
requirements of Tex. R. Civ. P. 107.”
To Brickhouse’s first contention—under Texas Rule of Civil Procedure
106(a), service is normally to be effected by in-person delivery or certified mail
on a corporation’s designated agent. BHTT repeatedly tried to effect service in
that way, but all of those attempts were unsuccessful because, as detailed
above, Brickhouse’s registered agent, Charles Bailey, could not be found at any
of the addresses associated with him. Because of that, BHTT elected to request
the district court to permit substituted service under Rule 106(b)(2), which per-
mits a court to authorize service “in any other manner that the affidavit or
other evidence before the court shows will be reasonably effective to give the
defendant notice of the suit.” The district court granted that request, stating
that BHTT could serve Brickhouse by leaving the summons and amended
complaint with “anyone over sixteen years of age during regular business
hours at Brickhouse Café & Lounge at 2525 East Arkansas Lane, Arlington,
Texas 76010.”
In other words, the district court directed BHTT to serve all three
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defendants at once, by leaving the summons and complaint with one person in
one location. And the process-server stated in his affidavits that he served the
defendants in the manner prescribed by the district judge. Contrary to Brick-
house’s suggestion, those affidavits do not assert that the server was in three
different places at the same time; they merely list the respective addresses of
the various Brickhouse defendants as identifying information and do not
suggest that service was actually effected at the listed addresses. The process-
server served all three Brickhouse defendants at one time and in one place, per
the district court’s instructions. Brickhouse’s theory suggesting the opposite
has no merit.
So too for its next argument. Brickhouse avers that the procedure in
Section 5.251(1)(B)—namely, serving the Secretary of State if the registered
agent for a corporate entity cannot be found—represents the only acceptable
means of serving Brickhouse. Again, this notion is frivolous; Section 5.256—
part of the very same subchapter—explains that “[t]his chapter does not pre-
clude other means of service of process . . . on a domestic or foreign entity as
provided by other law.” Rule 106(b)(2) is, of course, other law, and the proce-
dure laid out in Section 5.251(1)(B) does not preclude it.
Brickhouse’s final position is that the affidavits of service do not properly
identify the time and location at which service was effected, rendering service
invalid. Cited as authority is Texas Rule of Civil Procedure 107, but it has no
requirement that location be noted on the return of service; it says only that
the return of service “shall state when the citation was served and the manner
of service and be signed by the officer officially or by the authorized person,”
without mentioning location. And, contrary to Brickhouse’s complaints, each
affidavit does in fact state the time at which it was served. So the affidavits at
issue here meet Rule 107’s requirements. Moreover, Rule 107 states that
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“[w]here [service] is executed by an alternative method as authorized by
Rule 106, proof of service shall be made in the manner ordered by the court.”
As discussed above, service in this case was under Rule 106, so Rule 107 is
irrelevant to the merits of service here.
Post-briefing, Brickhouse raised three additional barriers to proper ser-
vice: two via Fifth Circuit Rule 28(j) letter and one at oral argument. In its
Rule 28(j) letter, Brickhouse contends first that Harper Macleod establishes
that Texas law governs service under the Texas Rules of Civil Procedure. We
do not disagree. In Harper Macleod, 260 F.3d at 398–99, this circuit set aside
a default judgment because service did not strictly comply with the relevant
portion of Texas’s service rules. But what Harper Macleod has to do with this
case beyond that uncontroversial proposition is unclear. It dealt with service
under Section 17.044(b) of the Texas Civil Practice and Remedies Code, which
“provide[d] for substituted service on the Secretary for nonresident defendants
doing business in Texas that do not maintain a regular place of business in
Texas.” Harper Macleod, 260 F.3d at 398. As discussed above, Brickhouse’s
place of business is in Texas, so Section 17.044(b), and thus that portion of
Harper Macleod, is neither here nor there.
The second case that appears for the first time in Brickhouse’s Rule 28(j)
letter is Uvalde Country Club v. Martin Linen Supply Co., 690 S.W.2d 884 (Tex.
1985) (per curiam). There the court deemed service improper where service
nominally effected on Uvalde’s registered agent, Henry Bunting, Jr., was in
fact made on someone denoted on the return of service as just “Henry Bunting.”
Id. Here, of course, Brickhouse’s registered agent was never served, because
he could not be located. Instead, service was effected in accordance with other
relevant provisions of Texas law. Uvalde Country Club, too, is inapposite.
Finally, for the first time at oral argument, Brickhouse raised Bailey’s
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Furniture, Inc. v. Graham-Rutledge & Co., 2012 WL 6554420 (Tex. App.—
Dallas 2012, no pet.) (mem.), to recommend that, under Texas law, the only
way to effect substituted service on a corporation is through the Secretary of
State. Bailey’s Furniture, however, does not even mention the Secretary of
State. Instead, the court ruled service improper because “service was sought
upon Bailey’s Furniture, but the affidavit upon which the trial court based its
decision to order substituted service identified the defendant as Charles
Bailey.” Id. at *2. 11 The dissonance between the affidavit accompanying the
request for substituted service and the actual defendant rendered service
improper in that case. Id. But no such conflict is present here.
Service in this case was unremarkable. The only wrinkle was Bailey’s
elusiveness. Brickhouse’s protestations to the contrary reveal not some here-
tofore unseen flaw in service but rather its apparent ignorance of proper
methods of service under both Texas and federal law. The judgment of default
is AFFIRMED.
11 This appears to be the same Charles Bailey who proved so evasive in the case at
bar.
11