Coyote Logistics, LLC v. AMC Cargo Inc.
Filing
25
MEMORANDUM Opinion: AMCs motion to vacate is 13 granted. AMC has is to answer or otherwise respond to the Complaint by 6/8/2017. Status hearing set for 6/13/2017 at 9:30 AM. Signed by the Honorable Charles P. Kocoras on 5/9/2017. Mailed notice(vcf, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
COYOTE LOGISTICS, LLC,
Plaintiff,
v.
AMC CARGO INC.,
Defendant.
)
)
)
)
)
)
)
)
)
16 C 6371
MEMORANDUM OPINION
CHARLES P. KOCORAS, District Judge:
Before the Court is Defendant AMC Cargo Inc.’s (“AMC”) motion to vacate
Plaintiff Coyote Logistics, LLC’s (“Coyote”) default judgment entered on September
19, 2016. For the following reasons, the Court grants AMC’s motion.
BACKGROUND
This lawsuit derives from AMC’s alleged failure to deliver a shipment of beer
to the consignee. Coyote is a licensed property broker by United States Department
of Transportation, Federal Motor Carrier Safety Administration (“FMCSA”).
According to Coyote, on or about May 29, 2015, in its capacity as a broker, it entered
into a contract with AMC by which AMC would transport a freight of Heineken beer
(“the shipment”) from New Jersey to Illinois. Coyote further alleges that when it
tendered the shipment to AMC for delivery it was in good order, good condition, and
correct quantity. Coyote maintains that AMC never delivered the shipment to the
consignee. On June 20, 2016, Coyote filed this lawsuit pursuant to the Carmack
Amendment - a law governing interstate shipment and cargo loss. 49 U.S.C. § 14706.
Coyote seeks to recover $27,457.04.
Coyote served AMC’s Registered Agent, Marek Tomczyk (“Tomczyk”), on
June 22, 2016, with a copy of the Complaint.
AMC was required to file an
appearance and an answer by July 13, 2016. It failed to do either. Therefore, on
August 18, 2016, this Court granted Coyote’s motion for an order of default. With no
appearance or answer from AMC, on September 19, 2016, this Court granted default
judgment in favor of Coyote. On November 4, 2016, AMC made an appearance on
the record and moved to vacate the default judgment.
AMC contends that it did not receive notice of the lawsuit until September 21,
2016. According to Arek Cyran (“Cyran”), the principal of AMC, he received an
email from Coverall Agency Inc. (“Coverall”), notifying AMC of the motion for
default judgment. AMC alleges that, immediately after receiving the email, Cyran
attempted to retain legal counsel, a feat made more difficult because he only speaks
Polish. The first two Polish-speaking lawyers that AMC contacted were unable to
represent it based on conflicts of interest with Coyote. On October 28, 2016, AMC
secured the assistance of counsel, and on November 4, 2016, filed the present motion
to vacate default judgment, which we grant.
2
LEGAL STANDARD
Fed. R. Civ. P. 55(c) and 60(b) govern motions to vacate default judgments.
Pretzel & Stouffer, Chartered v. Imperial Adjusters, Inc., 28 F.3d 42, 44–45 (7th Cir.
1994). The standards for evaluating a motion to vacate under Rules 55(c) and 60(b)
are the same for all practical purposes, Davis v. Hutchins, 321 F.3d 641, 646 (7th Cir.
2003), although they are applied more stringently when a party wishes to vacate a
judgment rather than a mere order. Jones v. Phipps, 39 F.3d 158, 162 (7th Cir. 1994).
Rule 60(b)(1) permits relief from judgment on grounds of “mistake, inadvertence,
surprise, or excusable neglect.” Easley v. Kirmsee, 382 F.3d 693, 697 (7th Cir. 2004).
Relief from a judgment under Rule 60(b)(1) is “an extraordinary remedy and is
granted only in exceptional circumstances.” C.K.S. Engineers, Inc. v. White Mountain
Gypsum Co., 726 F.2d 1202, 1204–05 (7th Cir. 1984). To receive relief from a
default judgment, AMC bears the burden of establishing: “(1) good cause for the
default; (2) quick action to correct it; and (3) a meritorious defense to the complaint.”
Wehrs v. Wells, 688 F.3d 886, 890 (7th Cir. 2012) (citing Sun v. Bd. of Trs. of Univ. of
Ill., 473 F.3d 799, 810 (7th Cir. 2007)). A decision related to default judgment should
consider the well-established principal that favors a trial on the merits above a default
judgment. Cracco v. Vitran Exp., Inc., 559 F.3d 625, 631 (7th Cir. 2009); Sun, 473
F.3d at 811.
3
DISCUSSION
I.
Good Cause
Under Rule 60(b)(1), good cause can include “excusable neglect,” which
encompasses “both simple, faultless omissions to act and, more commonly, omissions
caused by carelessness.” Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship,
507 U.S. 380, 388 (1993).
The Seventh Circuit uses a “limited and stringent”
definition of “excusable neglect” under Rule 60(b)(1), which “requires something
more compelling than ordinary lapses of diligence or simple neglect to justify
disturbing” the judgment. Jones, 39 F.3d at 162.
AMC does not allege that Coyote erred in service; instead, it claims that its
registered agent, Tomczyk, never informed AMC of this litigation. Coyote argues
that because it properly served Tomczyk, any failing on his part to forward the
complaint or the summons to AMC is “legally insufficient to support a motion to
vacate.” (citing J & J Sports Productions, Inc. v. Weiner, 2014 WL 1096171 (E.D.
PA. Mar. 20, 2014)).
However, J & J Sports Productions is non-binding and distinguishable. In that
case, the court denied a motion to vacate default judgment under Rule 60(b)(1)
because the defendant did not “set forth any legal argument” in support of its motion
and because it did not address the two additional factors beyond good cause. Id. at *3.
Here, AMC provides a legal argument supporting good cause for its default. It also
4
addresses the two additional factors necessary to support a motion to vacate default
judgment.
Even though AMC’s default judgment derives from its registered agent’s
failure to notify it of the pending litigation, we find that AMC has demonstrated
excusable neglect. The degree to which a party’s or its agent’s carelessness can be
termed excusable neglect is a matter largely within the discretion of this Court. Robb
v. Norfolk & W. Ry. Co., 122 F.3d 354, 359 (7th Cir. 1997). Generally, a client is
bound by his chosen agent’s deeds. U.S. v. 8136 S. Dobson St., Chi., Ill., 125 F.3d
1076, 1084 (7th Cir. 1997).
However, in determining whether a defendant has
established good cause for its default, courts should consider whether it “willfully
ignore[d] the pending litigation.” Wehrs, 688 F.3d at 890 (finding good cause when a
defendant’s counsel failed to provide him with the deadline for a pleading); Cracco,
559 F.3d at 629–31 (finding good cause when a registered agent forwarded the
summons and the complaint to an employee who “did not understand their
significance”).
AMC did not act willfully in ignoring the litigation. Similar to the defendant in
Cracco, AMC “should have taken measures to ensure that service of process on its
registered agent was forwarded to the appropriate employee.” 559 F.3d at 631.
However, there is no evidence that AMC intentionally failed to respond to the
Complaint. Id. Like the defendant in Cracco, AMC’s behavior, once becoming
aware of the pending litigation, suggests that its default was due to inadvertence,
5
rather than willful ignorance. Id. AMC filed its motion to vacate judgment just six
days after securing counsel, which is less than the eight days taken by the defendant in
Cracco. Id. In addition, nothing in the record suggests a pattern of disregard for the
Court’s orders. See Passarella, 810 F.2d at 677 (suggesting that a “willful pattern of
disregard for the court’s orders and rules” supports the absence of good cause). Since
filing an appearance, AMC has complied with every deadline imposed by the Court.
Therefore, AMC has demonstrated good cause for its default.
II.
Quick Action
AMC contends that Cyran acted diligently because, upon notification of the
litigation, he took immediate actions to secure counsel. Coyote, basing its contentions
upon its proper service, does not contest this argument. “What constitutes ‘quick
action’ varies from case to case” and relies heavily upon the specific circumstances of
the case. Trade Well Int’l v. United Cent. Bank, 825 F.3d 854, 861 (7th Cir. 2016).
“In some cases a delay of even a few weeks is unacceptable.” Jones, 39 F.3d at 158.
“In others, a ten-week delay is still considered prompt action.” Sullivan, 2007 WL
1030236, at *4 (citing Smith v. Widman Trucking & Excavating, Inc., 627 F.2d 792,
797–98 (7th Cir. 1980)).
The action that a party takes after notification of the
litigation should be what courts use in determining whether a defendant acted quickly.
Trade Well Int’l, 825 F.3d at 861. Therefore, our inquiry begins when AMC received
notification of the default judgment from Coverall.
6
AMC began to search for counsel immediately once it gained knowledge of the
lawsuit. However, for various reasons it took six weeks to obtain representation.
Because Cyran only speaks Polish, his pool of potential attorneys was limited. The
first two Polish-speaking attorneys that Cyran attempted to retain were unable to assist
AMC based on conflicts of interest. Cyran found a third attorney, one who was
willing to take the case, on October 28, 2016. Once AMC acquired counsel, it took
only one week for its attorney to make an appearance and to file a motion to vacate
judgment. Therefore, AMC took quick action.
III.
Meritorious Defense
As a meritorious defense, AMC contends that it did not enter into a contractual
agreement with Coyote to transport the shipment.
In response, Coyote raises two
arguments. First, Coyote alleges that AMC did not provide “evidence of a meritorious
defense” but merely provided statements “wishing and hoping” for a meritorious defense
“with no reasonable basis.” Second, Coyote contends that AMC’s defense does not
shield it from liability because AMC’s defense does not directly address any of the three
enumerated issues in a Carmack suit.1 We address these two contentions separately in
determining the sufficiency of AMC’s defense.
First, Coyote correctly asserts that a party must provide evidence to support a
meritorious defense.
The evidence must develop a legal and a factual basis for a
meritorious defense, beyond general statements. Cracco, 559 F.3d at 630. This basis
1
To hold a carrier liable under 49 U.S.C. § 14706 the plaintiff must show that: (i) the goods were
in good condition when given to the shipper; (ii) the goods were damaged when delivered (or
were not delivered); and (iii) the amount of damages.
7
requires a party to provide more than “bare legal conclusions” but “less than a definitive
showing that the defense will prevail.” Parker v. Scheck Mech. Corp., 772 F.3d 502, 505
(7th Cir. 2014). Here, AMC alleges more than simple conclusory legal statements to
bolster its meritorious defense.
In support of its defense, AMC notes that although the Rate Confirmation2
provided by Coyote lists AMC, it lacks a signature by AMC.
Additionally, AMC
produces evidence that a different company altogether entered into the agreement with
Coyote to transport the shipment. In Cyran’s supplemental affidavit, AMC alleges that
Highway Xpress (“Highway”) offers similar services and maintains offices in the same
building as AMC. AMC notes that the Bill of Lading for the shipment provided by
Coyote lists Highway as the transporter. Furthermore, AMC provides a separate Bill of
Lading for the same shipment. Here, “Highway” is crossed out as the transporter and
“AMC Cargo” is handwritten in its place. Cyran alleges to have found this separate Bill
of Lading in the common office space that Highway and AMC share. Moreover, Cyran’s
supplemental affidavit contends that, after speaking with AMC’s drivers, he was unable
to find anyone with whom Coyote had contracted to transport the shipment in question.
These statements and documents provide the necessary evidentiary support to establish a
meritorious defense.
Finally, Coyote asserts that AMC’s defense does not directly address any of the
three elements involved its Carmack suit.
2
REI Transport, Inc. v. C.H. Robinson
A rate confirmation is a document that is given to a carrier by a freight broker that lists all the
pertinent information related to the load being transported.
8
Worldwide, Inc., 519 F.3d 693, 697–98 (7th Cir. 2008).
Here, AMC disputes the
existence of any contract with Coyote relating to the shipment, or that a shipment even
took place. Moreover, AMC has given a legal and a factual basis for its meritorious
defense, beyond general statements. Cracco, 559 F.3d at 630. At this legal juncture,
AMC has satisfied the allegations pertaining to shipment. Therefore, AMC has a
meritorious defense.
CONCLUSION
For the aforementioned reasons, AMC’s motion to vacate is granted. AMC has
thirty days to answer or otherwise respond to the Complaint. It is so ordered.
ENTER:
Charles P. Kocoras
United States District Judge
DATE: May 9, 2017
9
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?