Mainsail Development, LLC et al v. Rusco Investments, Inc. et al
Filing
66
ORDER: Defendant Ruth Liverpool's 65 construed motion to set aside the final default judgment is DENIED. Signed by Judge Virginia M. Hernandez Covington on 10/29/2012. (MEB)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
MAINSAIL DEVELOPMENT, LLC, and
AUSTIN PARK DEVELOPMENT, LLC,
Plaintiffs,
v.
Case No. 8:11-cv-45-T-33AEP
RUSCO INVESTMENTS, INC.,
PINNACLE MUTUAL, INC., LASS
ACCOUNTING AND BUSINESS
SERVICES, INC., JULIE HOLDEN,
RUTH LIVERPOOL, AND ALDWYN
LIVERPOOL,
Defendants.
________________________________/
ORDER
This cause is before the Court pursuant to Defendant Ruth
Liverpool's Motion for Appeal to Judgment (Doc. # 65), filed
on October 1, 2012.
Based on Defendant's pro se status, the
Court construes the filing as a motion to set aside the final
default judgment entered in Plaintiffs’ favor.
For the
reasons that follow, the Court denies the motion.
I.
Procedural History
Plaintiffs Mainsail Development, LLC and Austin Park
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).
The Complaint
alleges
counts
enrichment,
for
RICO
breach
of
violations,
contract,
conspiracy,
rescission,
unjust
unfair
and
deceptive trade practices, fraud, breach of fiduciary duty,
civil theft, replevin, and tortious interference with business
relationships.
On January 28, 2011, all of the Defendants
except for Julie 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
arbitration but had not received a response to emails and
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).
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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, requiring the Individual
Defendants, Ruth and Aldwyn Liverpool, to advise the Court
within 14 days whether they intended to proceed pro se or with
counsel in the case, and requiring the Corporate Defendants to
file a notice of appearance of new counsel within 14 days.
None of the Defendants responded to or complied with the
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Court's May 16, 2012, Order.
Thus, Plaintiffs filed a second
notion for default as 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 were
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 second 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 second motion for default for a hearing. (Doc. # 34).
the
At
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
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motion for default.
(Doc. ## 37, 38).
The Clerk entered
default against each of the Defendants on June 29, 2012. (Doc.
## 41-45).
On July 9, 2012, Defendant Ruth Liverpool, purportedly on
behalf of all Defendants, filed a motion which the Court
construed liberally as a motion to set aside the clerk’s
defaults. (Doc. # 46).
Upon finding that the Defendants
failed to establish good cause for setting aside the Clerk’s
entries of default, the Court denied the construed motion to
as to the Corporate Defendants on July 11, 2012, and denied
the motion as to the Individual Defendants on July 20, 2012.
(Doc. ## 47, 52).
Plaintiffs then filed a motion for final default judgment
on July 30, 2012. (Doc. # 54). The Court denied the motion
without prejudice on July 31, 2012, because the motion did not
state whether all of the Corporate Defendants were served with
the motion. (Doc. # 55).
Accordingly, Plaintiffs filed an
amended motion for final default judgment on August 2, 2012,
which indicated that all of the Defendants had been served
with the motion. (Doc. # 56).
Ruth Liverpool filed a letter
with the Court on August 8, 2012, which the Court construed as
a response to the motion for final default judgment.
57).
(Doc. #
On August 17, 2012, upon finding that Plaintiffs had
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established their entitlement to a default judgment and that
Ms. Liverpool’s construed response did not set forth good
cause to prevent the Court from entering a default judgment,
the
Court
granted
Plaintiffs’
judgment. (Doc. # 61).
motion
for
final
default
The Clerk entered a default judgment
in the amount of $1,211,681.10 in Plaintiffs' favor and closed
the case on August 20, 2012. (Doc. # 62).
Ms.
Liverpool
filed
the
instant
On October 1, 2012,
“Motion
for
Appeal
to
Judgment” which the Court construes as a motion to set aside
the final default judgment.
II.
Analysis
As an initial matter, the Court notes that it will
consider the motion to set aside the default judgment only as
to Ruth Liverpool.
Although the motion states that it is
filed on behalf of all Defendants, Ms. Liverpool is not an
attorney, and as such, cannot represent any party besides
herself in this action.
Pursuant to Federal Rule of Civil Procedure 55(c), “The
court may set aside an entry of default for good cause, and it
may set aside default judgment under Rule 60(b).”
Since a
default judgment has been entered against Ruth Liverpool, the
more stringent standard set forth in Rule 60(b) applies. Rule
60(b), Fed. R. Civ. P., allows the Court to relieve a party
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from a final judgment for the following reasons:
(1) mistake, inadvertence, surprise, or excusable
neglect;
(2) newly discovered evidence that, with reasonable
diligence, could not have been discovered in time
to move for a new trial under Rule 59(b);
(3) fraud . . . , misrepresentation, or misconduct
by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or
discharged; it is based on an earlier judgment that
has been reversed or vacated; or applying it
prospectively is no longer equitable; or
(6) any other reason that justifies relief.
Rule 60(b), Fed. R. Civ. P.
Defendant has failed to establish that any of the Rule
60(b) factors might justify the relief she seeks.
In her
motion, Defendant does not identify any “newly discovered
evidence” or “fraud” that might warrant relief from the
default judgment, and does not argue that the judgment is void
or otherwise defective. Thus, factors (2) through (5) are not
applicable here.
A.
Rule 60(b)(1)
Regarding
the
first
factor,
to
establish
mistake,
inadvertence, or excusable neglect under Rule 60(b)(1), a
defaulting party must show that: “(1) it had a meritorious
defense that might have affected the outcome; (2) granting the
motion would not result in prejudice to the non-defaulting
party; and (3) a good reason existed for failing to reply to
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the complaint.” In re Worldwide Web Systems, Inc., 328 F.3d
1291, 1295 (11th Cir. 2003)(internal quotation and citation
omitted).
The moving party must establish a meritorious defense “by
a clear and definite recitation of the facts.”
Gibbs v. Air
Canada, 810 F.2d 1529, 1538 (11th Cir. 1987). Furthermore, “a
general denial of the plaintiff’s claims contained in an
answer or another pleading is not sufficient.” S.E.C. v.
Simmons, 241 F. App’x 660, 664 (11th Cir. 2007).
Rather, the
moving party “must make an affirmative showing of a defense
that is likely to be successful.”
Solaroll Shade & Shutter
Corp. v. Bio-Energy Sys., Inc., 803 F.2d 1130, 1133 (11th Cir.
1986).
The Court finds that Defendant has failed to present a
meritorious defense.
While Defendant’s motion includes more
than a general denial of Plaintiff’s claims and includes
additional
factual
allegations,
these
allegations
are
uncorroborated and unsupported by any evidence in the record.
Furthermore,
Defendant’s
allegations
are
rambling
and
disjointed and do not provide any semblance of a cogent or
viable defense to Plaintiffs’ claims.
Accordingly, the Court
determines that Defendant has not established a defense that
is likely to be successful, and as such, relief under Rule
-8-
60(b)(1) is not warranted.
Additionally,
even
if
Defendant
could
establish
a
meritorious defense, the Court, as it has found on previous
occasions, finds that setting aside the default judgment would
unduly prejudice Plaintiffs.
As the Court has previously
explained:
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 the
denial of due process for Plaintiffs, who were
foreclosed from pursuing this action due to
Defendants’ demand for arbitration.
(Doc. # 52 at 8-9).
Defendant has not demonstrated any
ability to actively participate in this case and setting aside
the default judgment would result in even further delay for
Plaintiffs in obtaining resolution of this matter. Due to the
substantial
delay
already
caused
by
Defendant
and
the
additional delay that would result from setting aside the
default
judgment,
the
Court
finds
that
Plaintiffs
would
experience prejudice if the default judgment were set aside.
Finally,
to
show
excusable
neglect
under
60(b)(1),
Defendant must demonstrate that a good reason existed for her
failure to participate in the arbitration process and to
otherwise
defend
this
action;
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Defendant
has
failed
to
demonstrate such good reason exists here.
Instead, Defendant
continues to blame her failures to defend this action on her
former counsel who she alleges “confirm[ed] no activity until
the date of his withdrawal filing [in] February 2012.”
# 65 at 4).
(Doc.
However, even if Defendant's former counsel
represented to her that there was "no activity" or motions
pending at the time of his withdrawal, the Court fails to
understand why such a statement would lead Defendant to
believe that no future action was required on her part, as she
was
already
well
aware
that
the
Court
had
compelled
arbitration in this case, at her request, in July 2011, and
that such arbitration was far from completed.
Additionally,
the Court's subsequent May 16, 2012, Order expressly directed
Defendant to respond, yet Defendant failed to comply with the
Order.
Such failure cannot be blamed on Defendant's former
counsel who withdrew in February 2012.
The Eleventh Circuit has “demonstrated its wariness of
grants of Rule 60(b)(1) relief for excusable neglect based on
claims of attorney error.”
“At
the
very
least,
a
Simmons, 241 F. App’x at 663-64.
party
must
demonstrate
his
own
diligence, even where the attorney commits gross misconduct.”
Id. at 664.
As stated in Link v. Wabash Railroad Co., 370
U.S. 626, 633-34 (1962):
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[Defendant] voluntarily chose this attorney as his
representative in the action, and he cannot now
avoid the consequences of the acts or omissions of
this freely selected agent. Any other notion would
be
wholly
inconsistent
with
our
system
of
representative litigation, in which each party is
deemed bound by the acts of his lawyer-agent and is
considered to have notice of all facts, notice of
which can be charged upon the attorney.
Id.
Based on the Defendant's conduct described above, the
Court finds that Defendant has not demonstrated her own
diligence in defending this case and cannot rely on any
statements or misstatements by her former counsel to establish
a good reason for her subsequent failure to defend this action
after counsel's withdrawal.
Thus, the Court determines that
Defendant has failed to satisfy the final factor –-“good
reason”–- required to establish mistake, inadvertence, or
excusable neglect under Rule 60(b)(1).
In re Worldwide Web
Sys., Inc., 328 F.3d at 1295.
B.
Rule 60(b)(6)
As explained above, Rule 60(b)(6), allows a court to
relieve a party from a final judgment for "any other reasons
that justifies relief."
pursuant
to
Rule
However, "a movant seeking relief
60(b)(6)
must
show
extraordinary
circumstances justifying the reopening of a final judgment."
Santa v. U.S., No. 11-14540, 2012 WL
-11-
5233564,
*2 (11th Cir.
Oct. 24, 2012).
"The party seeking relief has the burden of
showing that absent such relief, an 'extreme' and 'unexpected'
hardship will result."
Griffin v. Swim-Tech Corp., 722 F.2d
677, 680 (11th Cir. 1984).
Even then, "whether to grant the
requested relief is a matter for the district court's sound
discretion."
Toole v. Baxter Healthcare Corp., 235 F. 3d
1307, 1317 (11th Cir. 2000).
In her motion, Defendant has failed to make any showing
of extraordinary circumstances that might render her eligible
for the catch-all provisions of Rule 60(b)(6).
Defendant has
not shown
that
much
"extreme"
or
Furthermore,
absent
relief,
"unexpected"
Defendant
has
a
hardship,
hardship,
failed
to
would
show
that
less
an
result.
she
"is
faultless in the delay." Pioneer Inv. Servs. Co. v. Brunswick
Assocs. Ltd. P'ship, 507 U.S. 380, 393 (1991).
Accordingly,
this case does not present equitable factors warranting relief
under Rule 60(b0(6).
III. Conclusion
The Court recognizes that “there is a strong policy of
determining cases on their merits.” Sloss Indus. Corp. v.
Eurisol, 488 F.3d 922, 934 (11th Cir. 2007).
However, this
Court must also consider the interests of finality as well as
practical concerns.
As stated in African Methodist Episcopal
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Church, Inc. v. Ward, 185 F.3d 1201, 1203 (11th Cir. 1999):
[I]nherent in the adversary system of justice is
the idea that each side ought to be heard prior to
a court’s entry of final judgment. However, that
same system requires that the court have the power
to compel parties to appear before it. The threat
of default (and default judgment) is the court’s
primary means of compelling defendants in civil
cases to appear before the court. If these defaults
could be put aside without cause, the threat of
default would be meaningless, and courts would lose
much of their power to compel participation by
civil defendants.
Id.
Here, Defendant failed to provide a compelling reason for
her failure to participate in Court-ordered arbitration and
her failure to comply with Court orders.
Under the facts
presented, the Court denies Defendant's construed motion to
set aside the final default judgment.
Accordingly, it is hereby
ORDERED, ADJUDGED, and DECREED:
Defendant's Motion for Appeal to Judgment (Doc. # 65),
construed as a motion to set aside the final default judgment
is DENIED.
DONE and ORDERED in Chambers, in Tampa, Florida, this
29th day of October, 2012.
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Copies: All Parties and Counsel of Record
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