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No. 06-3917, UNITED STATES OF AMERICA,, Plaintiff-Appellee, v. LAWRENCE J. LIGAS, Defendant-Appellant.

Before BAUER, EVANS, and SYKES, Circuit Judges.SYKES, Circuit Judge.

Lawrence Ligas appeals the district court’s grant of summary judgment to the government for $319,883.60 in unpaid taxes, interest, and penalties. Although Ligas raises multiple arguments in support of reversal, we need only consider one: lack of personal jurisdiction. The government never properly served Ligas. 2 No. 06-3917

While the government w 1 as trying to serve Ligas, it amended its complaint to add Labe Bank as a defendant. Labe Bank held the mortgage on Ligas’s Chicago home, and the government wanted to foreclose its liens against Ligas’s home. The bank filed a counterclaim against the United States to establish the priority of its lien and a third-party complaint against Ligas to foreclose its mortgage. On February 28, 2005, the bank successfully used a sheriff’s deputy to personally serve Ligas at his home. The details of the bank’s actions against the government and Ligas are otherwise irrelevant for purposes of this appeal. Ligas asked the court to reconsider the March 1 order (this time he was acting through an attorney), and the district court agreed. Two intervening developments persuaded the court to vacate its order. First, Labe Bank, which held a mortgage on Ligas’s property and was added as a codefendant, had filed and successfully served a third-party complaint by using the sheriff’s department to personally serve Ligas at his home.1 Second, one of the private process servers the government used could not provide evidence of its pre-2005 attempts to serve Ligas. The district court was troubled by the fact that the government had not used federal or state agencies to try to serve process and instead relied on “seemingly inept process servers.” Taken together, these developments convinced the court that the government had not diligently attempted to serve Ligas, had not shown good cause for its failure to serve Ligas, and was not entitled to a fourth extension of time. On May 17, 2005, the district court dismissed the complaint for failure to serve Ligas within the period of time prescribed by Rule 4(m).

A district court may not exercise personal jurisdiction over a defendant unless the defendant has been properly served with process, see Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 350 (1999), and the service requirement is not satisfied merely because the defendant is aware that he has been named in a lawsuit or has received a copy of the summons and the complaint, see McMasters v. United States, 260 F.3d 814, 817 (7th Cir. 2001). Acceptable methods for service of process are specified in Rule 4 of the Federal Rules of Civil Procedure; the preferred approach is for the plaintiff to mail the defendant a copy of the complaint and summons and obtain a waiver of personal service from the defendant under Rule 4(d). But if the defendant does not waive service and if no federal statute otherwise supplies a method for serving process, then Rule 4(e)’s list of methods is exclusive: personal service (Rule 4(e)(2)(A)); leaving a copy of the complaint and summons at the defendant’s “usual place of abode” with someone of suitable age and discretion who resides there (Rule 4(e)(2)(B)); delivering a copy of the complaint and summons to an agent authorized to accept service (Rule 4(e)(2)(C)); or any other manner of serving process permitted by the law of the state where the district court sits (Rule 4(e)(1)).

The civil procedure rules also specify the manner by which a defendant may object to a plaintiff’s failure to serve process. Under Rule 12(b) a defendant may move for dismissal based on the court’s lack of personal jurisdiction, the insufficiency of process, or the insufficiency of service of process. FED. R. CIV. P. 12(b)(2), (4)-(5). However, unlike subject-matter jurisdiction, these objections can be waived. See Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703 (1982). For example, if a defendant does not object to the manner in which he was served in his answer or his first motion to the court (whichever occurs first), he waives the objection. FED. R. CIV. P. 12(h)(1). Similarly, a defendant who properly raises a jurisdictional defense can nevertheless waive the defense by his subsequent conduct. See Compagnie des Bauxites, 456 U.S. at 702-07; Trs. of Cent. Laborers’ Welfare Fund v. Lowery, 924 F.2d 731, 732-33 (7th Cir. 1991).

In this case, the district court correctly dismissed the government’s complaint under Rule 4(m) for failure to serve Ligas within the designated—and here, much extended—time period. However, the court thereafter reversed course and reinstated the complaint based on Ligas’s request to extinguish the tax liens, which the judge treated as a waiver of Ligas’s previous objections to personal jurisdiction. We review the district court’s decision to reconsider and vacate the dismissal order for an abuse of discretion. See Deere & Co. v. Ohio Gear, 462 F.3d 701, 706 (7th Cir. 2006). “A district court by definition abuses its discretion when it makes an error of law,” Koon v. United States, 518 U.S. 81, 100 (1996), and here, the court committed No. 06-3917 9 a legal error when it construed Ligas’s motion to quash as a waiver of his objection to personal jurisdiction.

A district court may reconsider a prior decision when there has been a significant change in the law or facts since the parties presented the issue to the court, when the court misunderstands a party’s arguments, or when the court overreaches by deciding an issue not properly before it. See Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990). The district court thought this case fell within the first category, holding that Ligas’s effort to extinguish the tax liens was a significant change in the facts before the court. But nothing new indicated that Ligas had been properly served after all or that the government had in fact shown good cause and was consequently entitled to a fourth extension of time to accomplish service. Rather, the district court simply interpreted Ligas’s motion to quash the liens as a request for affirmative relief that waived his previously asserted jurisdictional objection.

That interpretation flowed from an erroneous legal conclusion about the effect of Ligas’s motion on his prior jurisdictional objection. Under the circumstances of this case, Ligas’s motion is closely analogous to an answer that includes both a jurisdictional defense and a counterclaim. The general rule is that a defendant does not waive an asserted jurisdictional defense when his answer also requests relief in the form of a counterclaim, a cross-claim, or a third-party claim. See, e.g., Rates Tech. Inc. v. Nortel Networks Corp., 399 F.3d 1302, 1308 (Fed. Cir. 2005); Bayou Steel Corp. v. M/V Amstelvoorn, 809 F.2d 1147, 1149 (5th Cir. 1987); Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1330 (9th 10 No. 06-3917 Cir. 1984); Chase v. Pan-Pac. Broad., Inc., 750 F.2d 131, 132 (D.C. Cir. 1984). As these cases explain, the federal rules permit defendants to simultaneously seek relief and raise a jurisdictional defense without waiving that defense. In some cases, the requested relief is completely unconnected to the jurisdictional argument, such as when a defendant files a counterclaim unrelated to the merits of the plaintiff’s claim. See, e.g., Frank’s Casing Crew & Rental Tools, Inc. v. PMR Techs., Ltd., 292 F.3d 1363, 1372 (Fed. Cir. 2002) (noting that personal jurisdiction is not waived “where an unrelated claim is brought as a permissive counterclaim against the plaintiff” if the proper jurisdictional objection is raised by motion or answer). In other cases, the sought-after relief is consistent with the jurisdictional objection because a court’s decision to grant the relief is simply the logical extension of a ruling in the defendant’s favor on jurisdictional grounds. See Neifeld v. Steinberg, 438 F.2d 423, 425 n.4 (3d Cir. 1971) (declining to find defendant waived jurisdictional objection when it filed a motion to extinguish a writ of attachment and a motion to dismiss for lack of jurisdiction).

An additional 2 observation about the statute-of-limitations issue is appropriate. There is a difference between dismissing a suit without prejudice and dismissing a suit with leave to reinstate; after a dismissal without prejudice, the plaintiff can resurrect his lawsuit only by filing a new complaint. See Richmond v. Chater, 94 F.3d 263, 267-68 (7th Cir. 1996). We have previously implied that when the statute of limitations prevents a lawsuit that has been dismissed under Rule 4 from being refiled, reinstatement is not possible either. See McLaughlin, 470 F.3d at 701. At the same time, Rule 60(b) may permit a district court in some circumstances to reinstate a suit it erroneously dismissed without prejudice, but the district court did not rely on Rule 60(b) as the basis for reconsidering and vacating its order dismissing the government’s complaint. expired.2 Ligas’s motion to extinguish the liens was a logical extension of the jurisdictional dismissal of the complaint, following necessarily from the court’s Rule 4(m) order. In opposing the government’s fourth request for an extension of time, Ligas had asked the district court to remove the liens if it dismissed the complaint. By renewing that request after the Rule 4(m) dismissal, Ligas did not voluntarily submit to the jurisdiction of the court.

However, the existence of these alternative remedies does not make Ligas’s motion to quash the tax liens improper, nor does it mean that by making the motion he waived his objection to personal jurisdiction. Just as the assertion of a counterclaim does not waive an asserted jurisdictional defense, Ligas’s motion to quash did not waive the jurisdictional objection he maintained throughout the proceedings.3 The motion to quash was not at all inconsistent with his long-standing jurisdictional objection. To the contrary, like the Fifth Circuit, “we cannot fathom how a motion premised on a jurisdictional objection could simultaneously operate as a waiver of that very objection.” PaineWebber Inc. v. Chase Manhattan Private Bank (Switz.), 260 F.3d 453, 461 (5th Cir. 2001); cf. Neifeld, 438 F.2d at 425 n.4, 431 (affirming district court’s decision to simultaneously dismiss a case for lack of jurisdiction and quash a writ of attachment).

Nor did Ligas waive his objection by subsequently filing an answer and litigating the merits of the government’s complaint. We have previously held that a defendant does not waive a jurisdictional argument when it properly raises the defense but participates in litigation at the district court’s direction. See IDS Life Ins. Co. v. SunAmerica Life Ins. Co., 136 F.3d 537, 540 (7th Cir. 1998). In short, given that Ligas had consistently maintained his objection to personal jurisdiction and only entered limited appearances for that purpose, we cannot identify anything to support the government’s contention that Ligas waived his service-of-process objection.

Ligas was never properly served, and the court’s decision to reconsider and vacate the Rule 4(m) dismissal order and reinstate the complaint was based on a legally erroneous conclusion that Ligas’s motion to quash waived his objection to personal jurisdiction. Accordingly, we REVERSE the judgment of the district court and REMAND the case to the district court with instructions to dismiss the complaint.

EVANS, Circuit Judge, dissenting. The majority concludes that Ligas’s motion to quash tax liens did not waive his previous objection to service of process and invest the district court with personal jurisdiction. I disagree. In the first instance, it is somewhat regrettable that we are squabbling over service of process; Ligas was clearly dodging service and gaming the system. But service of process represents an important value on the whole—notice to defendants that they are being sued—even if it seems like a frustrating formality from time to time (as in this case where Ligas knew the government was after him). See United States v. Jiles, 102 F.3d 278, 282 (7th Cir. 1996) (“[S]ervice of process laws are designed to ensure defendants receive notice in accordance with concepts of due process.”); cf. McMasters v. United States, 260 F.3d 814, 817 (7th Cir. 2001) (“Actual notice to the defendant is insufficient; the plaintiff must comply with the directives of Rule 4.”).