R4 Transportation and Logistics LLC et al v. J.A.G. Express Corporation et al

Filing 27

Opinion Order Granting Motion to Set Aside Clerks Default and Requiring the Plaintiffs to File Report on Status of International Service Status Report due by 12/13/2018. Signed by Judge Robert N. Scola, Jr on 12/6/2018. See attached document for full details. (cqs)

United States District Court
for the
Southern District of Florida
R4 Transportation and Logistics,
)
LLC and E2 Logistics LLC, Plaintiffs, )
)
v.
)
Civil Action No. 18-21977-Civ-Scola
)
)
J.A.G. Express Corporation, and
others, Defendants.
)
)
Opinion Order Granting Motion to Set Aside Clerk’s Default and
Requiring the Plaintiffs to File Report on Status of International Service
Before the Court is motion to set aside Clerk’s default filed by Defendants
Julian Gorosito (“Gorosito”) and American Growing Business Corp. (“AG,” with
Gorosito, the “Defaulting Defendants”). (the “Motion,” ECF No. 22.) After
reviewing the parties’ submissions, including the Plaintiffs’ opposition brief,
and the applicable law, the Court grants the Motion as follows.
1.

Relevant Factual Background

The Plaintiffs filed this action on May 17, 2018, asserting claims under
the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”),
Florida RICO, common law fraud and common law conspiracy to commit fraud.
(the “Complaint,” ECF No. 1.) Gorosito was served with process on May 30,
2018, and was required to respond to the Complaint by June 20, 2018. (ECF
No. 10); Fed. R. Civ. P. 12(a)(1). A summons and complaint was served on AG
on June 1, 2018, thus requiring it to respond by June 22, 2018. (ECF No. 13);
Fed. R. Civ. P. 12(a)(1). Neither party responded by that date and, on the
Plaintiffs’ motion, the Clerk entered default against the Defaulting Defendants
on July 16, 2018. 1 (ECF Nos. 14, 16.)
Two days later, on July 18, 2018, counsel filed a notice of appearance on
behalf on the Defaulting Defendants. (ECF No. 18.) The Motion was filed five
days after that. (ECF No. 20.) At the Plaintiffs’ request, the Court stayed and
administratively closed this case on July 16, 2018, to allow for service on
certain foreign defendants. (ECF No. 17.) Nearly five months have passed and

Clerks default was also entered against two other defendants, Barbara
Stratos and J.A.G. Express Corporation, neither of whom have appeared or
moved to set aside default. This order does not apply to those defendants.
1

there is no indication that the Plaintiffs made any progress in serving these
foreign defendants.
In the Motion, the Defaulting Defendants request that the Court vacate
the Clerk’s default because: (i) they have meritorious defenses, some of which
are included in an proposed answer and affirmative defenses attached to the
Motion; (ii) they were not culpable or willful in failing to respond to the
Complaint within the required time; and (iii) setting aside Clerk’s default will
not prejudice the Plaintiffs. (ECF No. 22.)
The Plaintiffs oppose the Motion, arguing that: (i) the proposed
affirmative defenses are meritless; (ii) the Defaulting Defendants willfully and
culpably failed to respond to the Complaint; and (iii) the Plaintiffs will be
prejudiced if default is set aside. (ECF No. 23.)
2.

Legal Standard

“It is the general rule that default judgments are ordinarily disfavored
because cases should be decided upon their merits whenever reasonably
possible.” Creative Tile Marketing, Inc. v. SICIS Int’l, 922 F. Supp. 1534, 1536
(S.D. Fla. 1996) (Moore, J.). A court may set aside a clerk’s default for good
cause shown. Fed. R. Civ. P. 55(c); see also Compania Interamericana ExportImport, S.A. v. Compania Dominicana de Aviacion, 88 F.3d 948, 951 (11th Cir.
1996). “‘Good cause’ is a mutable standard, varying from situation to situation.
It is also a liberal one—but not so elastic as to be devoid of substance.” Id. To
determine whether good cause exists, the Court considers (1) whether the
default was culpable or willful; (2) whether setting it aside would prejudice the
adversary; and (3) whether the defaulting party presents a meritorious defense.
Id.
3.

Analysis

The Court sets aside Clerk’s default, as it relates to the Defaulting
Defendants. First, the Defaulting Defendants sought to set aside Clerk’s default
within a month of their deadline to respond to the Complaint and within a
week of the entry of the default. While the parties are expected to comply with
applicable rules of procedure, those facts establish that the Defaulting
Defendants acted relatively expeditiously after the entry of default and belie the
Plaintiffs’ suggestion of willful or culpable conduct.
Next, setting aside default will in no way prejudice the Plaintiffs, and
their suggestion otherwise is baseless. At the Plaintiffs’ request, the Court
stayed and administratively closed this case on July 16, 2018—the same day
default was entered. (See ECF Nos. 16, 17.) The case has remained closed since
that time to allow the Plaintiffs to effect international service on certain

defendants in Argentina so this case can proceed on the merits. In other words,
this case has not progressed at the request of the Plaintiff. Thus, the Court will
not hear any suggestion by the Plaintiffs that setting aside default would cause
prejudice to them.
Finally, the Court acknowledges that the Defaulting Defendants filed a
proposed answer and affirmative defenses as an exhibit to the Motion. (ECF No.
22 at Ex. A (arguing, for example, improper extraterritorial relief, lack of
subject matter jurisdiction, standing and various pleading deficiencies).) The
Court is satisfied by that showing and declines to engage in a full-blown merits
inquiry at this stage, as the Plaintiffs request. See Grupo Especializado de
Servicios Aeros S de RL de CV v. VP Sales & Consulting, Inc., No. 16-cv-60937,
2016 WL 10953911, at *2 (S.D. Fla. June 30, 2016) (Scola, J.) (holding that
parties moving to set aside Clerk’s default need only make a “hint of
suggestion” of a meritorious defense).
4.

Conclusion

In sum, the Court grants the Motion (ECF No. 22) and sets aside Clerk’s
default (ECF No. 16) only as to Julian Gorosito and American Growing
Business Corp. Julian Gorosito and American Growing Business Corp. shall
promptly file their answer and affirmative defenses. The Plaintiffs are ordered
to file by December 13, 2018, a report detailing the status of service on all
defendants in this case, including a detailed description of what progress has
been made to serve the international defendants. The Clerk is instructed to
close this case.
2018.

Done and ordered, in chambers, in Miami, Florida, on December 6,

Robert N. Scola, Jr.
United States District Judge