Mainsail Development, LLC et al v. Rusco Investments, Inc. et al

Filing 52

ORDER: Defendants Ruth and Aldwyn Liverpool's Motion for Extension of Time to Comply 46 , construed as a Motion to Set Aside Clerk's Default, is DENIED. Plaintiffs are directed to file a Motion for Final Default Judgment forthwith. Failu re to file such motion by July 30, 2012, may result in the dismissal of this action. No extensions of time will be granted absent extraordinary circumstances. See Order for details. Signed by Judge Virginia M. Hernandez Covington on 7/20/2012. (KAK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
MAINSAIL DEVELOPMENT, L.L.C. and
AUSTIN PARK DEVELOPMENT, L.L.C.,
Plaintiffs,
v.

Case No. 8:11-cv-45-T-33AEP

RUSCO INVESTMENTS, INC., PINNACLE
MUTUAL, INC., LASS ACCOUNTING AND
BUSINESS SERVICES, JULIE HOLDEN,
RUTH
LIVERPOOL,
and
ALDWYN
LIVERPOOL,
Defendants.
________________________________/
ORDER
This cause is before the Court pursuant to pro se
Defendants Ruth Liverpool and Aldwyn Liverpool’s Motion for
Extension of Time to Comply (Doc. # 46), filed on July 9,
2012, which this Court will construe as a Motion to Set Aside
Clerk’s

Default.

Ruth

Liverpool

also

supplement (Doc. # 50) on July 20, 2012.

filed

a

pro

se

Plaintiffs filed a

Response in Opposition to the Motion (Doc. # 49) on July 16,
2012.

For the reasons that follow, the Court declines to set

aside

the

Clerk’s

Default

and

denies

the

Motion

as

to

Defendants Ruth and Aldwyn Liverpool.
I.

Background
Plaintiffs Mainsail Development, LLC and Austin Park

1

Development, LLC initiated this action on January 6, 2011, by
filing a fifteen count verified complaint against Defendants
Rusco

Investments,

Inc.,

Pinnacle

Mutual,

Inc.,

Lass

Accounting & Business Services, Inc., Julie Holden, Ruth
Liverpool, and Aldwyn Liverpool.

(Doc. # 1).

On January 28,

2011,

except

Julie

all

of

the

Defendants,

for

Holden,

responded to the complaint by filing a Motion to Compel
Arbitration.1

(Doc. # 4).

The Magistrate Judge issued a Report & Recommendation on
June 20, 2011, in which he recommended granting the Motion to
Compel Arbitration. (Doc. # 17). On July 19, 2011, the Court
adopted the Report & Recommendation, and granted the Motion to
Compel Arbitration. (Doc. # 21).

The Court also stayed and

administratively closed the case pending the resolution of the
arbitration proceedings and directed the parties to file a
joint

status

report

within

90

days

and

every

90

days

thereafter. Id.
Plaintiffs filed unilateral status reports on September
19, 2011, December 19, 2011, and January 16, 2012, which
indicated that Plaintiffs were attempting to proceed with

1

Following Julie Holden’s failure to respond to the
complaint, Plaintiffs moved for entry of a Clerk’s Default on
February 18, 2011, and the Clerk entered Default against
Holden on February 22, 2011. (Doc. ## 9, 10).
2

arbitration but had not received a response to emails and
written letters from Defendants’ counsel. (Doc. ## 22, 23,
24).
On February 15, 2012, Defendants’ counsel, Shendell &
Pollock, moved to withdraw as counsel for Defendants.

(Doc.

# 27). On February 29, 2012, the Magistrate Judge granted the
motion, but warned Defendants that "[p]ursuant to Local Rule
2.03(e), a corporation may appear and be heard only through
counsel admitted to practice in the Court." Accordingly, the
order directed the Corporate Defendants to obtain new counsel
within 30 days. (Doc. # 28).

Shendell & Pollock provided a

copy of the Court's order to all Defendants by certified mail
on March 1, 2012. (Doc. # 29).
Despite the Court's warning, the Corporate Defendants
failed to retain new counsel in the time provided by the
Court's order.

Based on this failure, Plaintiffs filed a

Motion for Default as to all Defendants on May 15, 2012 (Doc.
# 30).

On May 16, 2012, the Court entered an endorsed order

denying the Motion without prejudice and stating as follows:
ENDORSED ORDER denying without prejudice Motion for
default. At this juncture, default is not the
appropriate remedy. There are two individual
defendants, Ruth Liverpool and Aldwyn Liverpool.
They are free to represent themselves pro se in
this proceeding if they desire. As for the
corporate defendants, Rusco, Pinnacle, and Lass
3

Accounting, the Local Rules require that they be
represented by counsel. Because they have filed a
responsive pleading to the complaint, default at
this juncture is premature and that remedy would be
appropriate upon the pleadings being stricken.
Within 14 days, the individual defendants are
ordered to file a status report with the Court
informing the Court of their desire to proceed pro
se in this case or whether they intend to proceed
with counsel. Also within 14 days they shall file a
response to the motion to set aside abatement. The
corporate defendants are reminded that they can not
proceed without counsel in this Court. Their
pleadings are subject to being stricken and
judgement being entered against them. Corporate
defendants are to file a notice of appearance of
counsel within 14 days as well as file a response
to the motion to set aside abatement. If the
defendants fail to comply with this order, the
Court will lift the stay in this case, and the case
will be reopened. The Clerk is directed to mail a
copy of this Order to all of the defendants.
(Doc. # 32).
Copies of the Court’s order were mailed to the Defendants
on May 17, 2012, but were returned as undeliverable by all
Defendants except for Ruth Liverpool. On June 7, 2012, copies
of the Court’s order were successfully re-mailed to updated
addresses

for

the

Corporate

Defendants

and

for

Aldwyn

Liverpool.
Based on the Corporate Defendants’ failure to timely
retain new counsel and the failure of all Defendants to comply
with the Court’s May 16, 2012, order, Plaintiffs filed a
Second Motion to Set Aside Abatement and Motion for Default as

4

to all Defendants on June 5, 2012. (Doc. # 33).

In the

Motion, Plaintiffs asserted that they had attempted, since
July 2011, to contact the Defendants regarding beginning the
arbitration

process,

but

received

no

response

to

their

telephone calls and written letters. Plaintiffs also supplied
evidence showing that the Corporate Defendants have been
administratively dissolved and have not filed an annual report
since April 2010. (Doc. # 33-1). Plaintiffs requested the
Court

to

lift

the

abatement

of

the

action,

strike

the

pleadings of all Defendants and enter a default as to all
Defendants for failure to comply with the Court’s May 16,
2012, order and for failure to obtain counsel.

None of the

Defendants filed a response to the Motion for Default.
On June 22, 2012, the Court entered an order lifting the
stay imposed on July 19, 2011, reopening the case, and setting
the Motion for Default for a hearing. (Doc. # 34).

At the

hearing held on June 28, 2012, none of the Defendants appeared
at the hearing, nor did anyone appear on their behalf.
Accordingly, based on the Defendants' failure to comply with
Court orders, failure to appear at the hearing, and the
Corporate Defendants' failure to retain new counsel, the Court
struck the Defendants' pleadings and granted the Motion for
Default. (Doc. ## 37, 38). The Clerk entered Default against
5

each of the Defendants on June 29, 2012. (Doc. ## 41-45).
On July 9, 2012, Defendant Ruth Liverpool, on behalf of
all

Defendants,

filed

the

instant

correspondence. (Doc. # 46).

Motion

and

attached

In the motion, the Defendants

blame their failure to retain new counsel on their prior
counsel's statement that the case was closed and there were
"no open items." Id. The Defendants state that they "have
every intent in moving forward with the arbitration process to
bring this matter to a resolve (sic)" and request a 60-day
extension of time to comply with the Court's May 16, 2012,
order and to retain new counsel.

Mrs. Liverpool also states

that she "has been incarcerated since July 18, 2011, and
unable to easily comply with the motions." (Doc. # 46 at 1).
She also indicates that she is "some what handicap." Id.
On July 11, 2011, the Court denied the construed Motion
to Set Aside Clerk’s Default as to the Corporate Defendants
Rusco Investments, Inc., Pinnacle Mutual, Inc., and Lass
Accounting & Business Services, Inc. (Doc. # 47).

The Court

directed Plaintiffs to brief the Court as to why the Clerk's
Default should not be set aside as to Mr. and Mrs. Liverpool,
the individual pro se Defendants. Id.

Plaintiffs filed their

response on July 16, 2012, arguing that the Liverpools have
not established good cause for setting aside the Default.
6

As

explained below, the Court agrees.
II.

Analysis
To

overcome

the

Clerk’s

Defaults

against

them,

the

Liverpools must show good cause pursuant to Rule Fed. R. Civ.
In Tyco Fire and Security, LLC v. Alcocer, 218 F.

P. 55(c).

App’x 860 (11th Cir. 2007), the court explained, “[t]he entry
of a default against a defendant, unless set aside pursuant to
Rule 55 (c), severely limits the defendant’s ability to defend
the action.” Id. at 863.

The court further explained, “while

a default is not treated as an absolute confession by the
defendant of his liability and of the plaintiff’s right to
recover,

a

defaulted

defendant

is

deemed

to

admit

the

plaintiff’s well-pleaded allegations of fact.” Id. (internal
citations omitted).

On the other hand, the Eleventh Circuit

has noted that “defaults are seen with disfavor because of the
strong policy of determining cases on their merits.” Florida
Physician’s Ins. Co. v. Ehlers, 8 F.3d 780, 783 (11th Cir.
1993).
In balancing these considerations and determining whether
to set aside a Clerk’s entry of Default, courts generally
evaluate the following factors: (1)

whether the default is

culpable or willful; (2) whether setting aside default would
prejudice the adversary; and (3) whether the defaulting party
7

presents a meritorious defense. Compania Interamerica ExportImport, S.A. v. Compania Dominicana De Aviacion, 88 F.3d 948,
951 (11th Cir. 1996).
Here, although given ample opportunity, the Liverpools
have not demonstrated good cause for setting aside the Clerk's
Default.

Due to the circumstances described above, the Court

finds that the entry of Default against the Liverpools is
willful based on their reckless disregard for the judicial
proceedings.

“If a party willfully defaults by displaying

either an intentional or reckless disregard for the judicial
proceedings, the court need make no other findings in denying
relief.” Compania, 88 F.3d at 951-52.
In addition, the Court finds that setting aside the
Default

would

prejudice

Plaintiffs.

As

explained

by

Plaintiffs, “Defendants, for nearly a year, were unresponsive
to

Plaintiffs’

arbitration,

a

efforts
remedy

to

resolve

sought

by

this

case

Defendants,

through

which

only

resulted in an abatement of the civil action.” (Doc. # 49 at
4).

Plaintiffs have suffered through enough delay.

Had

Defendants timely and in good faith participated in the
arbitration process, a process that they requested, the result
here would be much different.

Defendants’ conduct, including

their failure to participate in the arbitration, resulted in
8

the denial of due process for Plaintiffs, who were foreclosed
from pursuing this action due to Defendants’ demand for
arbitration.
Furthermore, the Court declines to set aside the Default
because the Liverpools, who have yet to file an answer to the
operative complaint, have failed to come forward with any
semblance of a meritorious defense.

As explained in Gibbs v.

Air Canada, 810 F.2d 1529, 1538 (11th Cir. 1987), a party must
show a meritorious defense “by a clear and definite recitation
of facts.”

Through their various submissions, the Liverpools

have fallen woefully short of this standard.

As noted in

Compania, “good cause is a mutable standard, varying from
situation to situation . . . but [it is] not so elastic as to
be devoid of substance.” 88 F.3d 951-52.

To set aside the

Default in this case, this Court would have to ignore the good
cause requirement.

The Court declines to do so.

Therefore,

the Court denies the construed Motion to Set Aside Clerk’s
Default as to the Liverpools.
In order to bring this matter to a final resolution
without delay, Plaintiffs are directed to file a motion for
final default judgment immediately.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
9

(1)

Defendants

Ruth

and

Aldwyn

Liverpool’s

Motion

for

Extension of Time to Comply (Doc. # 46), construed as a
Motion to Set Aside Clerk's Default, is DENIED.
(2)

Plaintiffs are directed to file a Motion for Final
Default Judgment forthwith.

Failure to file such motion

by July 30, 2012, may result in the dismissal of this
action.

No extensions of time will be granted absent

extraordinary circumstances.
DONE and ORDERED in Chambers in Tampa, Florida, this 20th
day of July 2012.

Copies: All Counsel and Parties of Record

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