Opinion
Case No. 1:05 CV 2089.
May 1, 2006
Order
Introduction
This matter is before the Court upon defendant's Motion for Relief from Judgment pursuant to Federal Rule of Civil Procedure 60(b)(1) (Doc. 10). For the following reasons, the motion is DENIED.
Discussion
A Complaint in this matter was filed on August 31, 2005 and defendant was duly served. The ERISA Complaint seeks allegedly delinquent and unpaid contributions owed by defendant, an employer, pursuant to agreements between the parties. On October 25, 2005, plaintiffs filed an Application for Entry of Default as defendant failed to answer the Complaint. Default was entered. On October 28, 2005, this Court set a default hearing for November 14, 2005. Defendant failed to answer or appear and default judgment was entered on that day. The Judgment Entry ordered, inter alia, that defendant make its books and records for the relevant period available for inspection by plaintiffs' auditor, and stated that judgment was entered in the amount of $2,155.20 plus attorneys' fees, interest and costs. On March 22, 2006, defendant filed the Motion for Relief from Judgment now pending before the Court.
Defendant moves pursuant to Federal Rule of Civil Procedure 60(b)(1) which states, "On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect."
Defendant asserts that it committed excusable neglect by failing to file a timely responsive pleading. In particular, defendant states the following. Its president, Brenda Wilber, made telephone calls "and thought she had taken care of the situation." Wilber left many messages with plaintiffs and when she did speak with a representative of plaintiffs, it was her understanding that "they would get back with her which they never did." The representative told Wilber that "she should hold off and that they would get back with her, which is what she did." Ms. Wilber and John Wilber, also a corporate officer, "felt the situation was in hand and that there was no need to see an attorney." (Doc. 10 at 2) None of the statements is verified by affidavit.
A two-pronged inquiry is utilized in evaluating motions to vacate a default judgment. Burrell v. Henderson, 434 F.3d 826 (6th Cir. 2006) (citations omitted). Rule 55(c) provides that an entry of default may be set aside for good cause shown. Three equitable factors are considered in determining whether good cause has been shown: "(1) whether culpable conduct of the defendant led to the default, (2) whether the defendant has a meritorious defense, and (3) whether the plaintiff will be prejudiced." Id. Where, as here, however, the entry of default has "ripened into a default judgment," these equitable factors are considered as well as whether defendant has satisfied the stricter requirements of Rule 60(b). Id. "Culpability is `framed' by the specific language of [Rule 60(b)] i.e., a party demonstrates a lack of culpability by demonstrating . . . excusable neglect." Williams v. Meyer, 346 F.3d 607, 613 (6th Cir. 2003 (citations omitted). "And because Rule 60(b)(1) mandates such a demonstration, it is only when the party seeking relief can carry this burden that he will be permitted to demonstrate that he also can satisfy the other two factors: the existence of a meritorious defense and the absence of substantial prejudice to the other party." Id.
Thus, the initial inquiry before this Court is whether defendant has demonstrated excusable neglect. If defendant fails to do so, the Court need not proceed to a determination of whether the other factors have been met.
Plaintiffs assert that defendant has failed to demonstrate that its neglect was excusable. Defendant did not file a reply brief and, therefore, does not refute this assertion.
Nor does defendant's motion contain any discussion of law and, consequently, it does not address whether its conduct is considered excusable.
This Circuit recognizes that
the finding of excusable neglect is an equitable one, taking account of all relevant circumstances surrounding the party's omission. Considerations relevant to the determination include: (1) the danger of prejudice to the opposing party; (2) the length of delay and potential impact upon the current proceedings; (3) the basis for the neglect and whether it was within the reasonable control of the moving party; and (4) whether the moving party acted in good faith. Wuliger v. Cohen, 215 F.R.D. 535, 538 (N.D.Ohio 2003) (citing Pioneer Inv. Services v. Brunswick Assocs., 507 U.S. 380, 395 (1993)), Gumble v. Waterford Twshp., 2003 WL 751376 (6th Cir. March 23, 2006).
Defendant states that it placed unanswered telephone calls to plaintiffs and were eventually told to "hold off." There is no indication as to when any of these alleged contacts were made. Plaintiffs submit evidence that approximately nine months prior to the filing of the Complaint, plaintiffs notified Ms. Wilber by letter of the delinquency and gave her a deadline within which to respond to prevent a lawsuit. (Doc. 11 Ex. A). Thus, the contacts could have been made prior to the filing of the Complaint. Moreover, plaintiffs submit their counsel's affidavit wherein she avers, "At no time during the litigation was counsel for plaintiffs . . . contacted by any agent [of defendant]." (Wednesday M. Szollosi aff.) This averment is uncontroverted. Thus, defendant does not set forth an adequate basis for the neglect.
Additionally, defendant does not dispute that it received a copy of the Complaint, the Application for Entry of Default, the entry of default, or this Court's notice setting the default hearing. Defendant was warned by the Court that failure to answer the Complaint or appear for the default hearing may result in judgment rendered against it. Despite these advisements, there is no indication that defendant attempted to prevent default being entered against it. Defendant, therefore, fails to demonstrate that it has acted in good faith.
Finally, plaintiffs present evidence showing that nearly three months following entry of default judgment, defendant provided some audit information but was notified by plaintiffs that further information was needed. (Doc. 11 Ex. D) Defendant did not supply the information but filed the pending Motion for Relief from Judgment instead. As a result, plaintiffs assert that it will be prejudiced if the Judgment Entry is vacated due to increased difficulties in acquiring the information and greater opportunity for collusion by defendant. Because defendant did not file a reply brief, it fails to address this purported prejudice.
For these reasons, defendant has failed to demonstrate excusable neglect.
Conclusion
For the foregoing reasons, defendant's Motion for Relief from Judgment is denied.
IT IS SO ORDERED.