Employers and Operating Engineers Local 520 Pension Fund et al v. Green Trac, LLC
Filing
24
ORDER denying 18 Motion to Set Aside Default. Signed by Chief Judge David R. Herndon on 7/30/14. (klh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
EMPLOYERS AND OPERATING
ENGINEERS LOCAL 520 PENSION
FUND, et al.,
Plaintiffs,
v.
No. 13-0501-DRH
GREEN TRAC, LLC,
Defendant.
MEMORANDUM and ORDER
HERNDON, Chief Judge:
Introduction and Background
Pending before the Court is defendant’s motion to set aside default judgment
(Doc. 18).
Plaintiffs oppose the motion (Doc. 20).
The Court agrees with
plaintiffs’ reasoning and denies the motion.
This is an action for delinquent fringe benefits contributions owed to the fund
associate with Operating Engineers Local 520. The plaintiffs are various employee
benefit funds affiliated with Operating Engineers Local 520 and the trustees thereof.
Pursuant to the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §
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1132, and the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185,
plaintiffs filed suit against Green Trac, Inc., on May 30, 2013 (Doc. 2). Plaintiffs
seek an audit to determine the amounts owed. Plaintiffs served defendant with the
summons and complaint on July 9, 2013. On November 7, 2013, plaintiffs moved
for entry of default which was granted that same day (Docs. 6 & 8). Thereafter,
plaintiffs filed a motion for extension of time to file a motion for default judgment
indicating that plaintiffs are “engaging in discussions with defendant in regards to
the amounts owed pursuant to a payroll audit and are attempting to resolve this
matter.” (Doc. 9). The Court granted the motion and allowed plaintiffs up to and
including December 27, 2013 to file the motion (Doc. 10).
On December 27, 2013, plaintiffs moved for default judgment (Doc. 11). On
January 2, 2014, the Court granted the motion and entered judgment in favor of
plaintiffs for $41,892.14 (Doc. 15). On January 17, 2014, defendant filed the
motion to set aside default judgment (Docs. 18 &19). Plaintiff filed an opposition
on January 21, 2014 (Doc. 20). As the motion is ripe, the Court turns to address
the merits.
Standard
Federal Rule of Civil Procedure 60(b) allows the Court to relieve a party from
final judgment in the following circumstance, among others: “(1) mistake,
inadvertence, surprise, or excusable neglect.” A motion for such relief “must be
made within a reasonable time,” after entry of a judgment, and for subsections (1)
through (3), no later than one year after the entry of judgment.
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60(c)(1). In order to have a default judgment vacated, the moving party must
demonstrate: (1) good cause for the default; (2) quick action to correct it; and (3)
meritorious defense to the complaint.” Wehrs v. Wells, 688 F.3d 886, 890 (7th
Cir. 2012).
The above stated test is the same whether a party is moving to set aside the
entry of default under Rule 55(c) or moving to vacate a default judgment under Rule
60(b). See, e.g., United States v. DiMucci, 879 F.2d 1488, 1495 (7th Cir.1989).
Importantly, however, the standard is applied in a more stringent way when a
default judgment has been entered. This is sensible because of the importance of
“finality” that go along with judgments. Jones v. Phipps, 39 F.3d 158, 162 (7th
Cir.1994). In the context of a motion to vacate a default judgment, a party must
show “something more compelling than ordinary lapses of diligence or simple
neglect....” Id. In other words, to vacate a default judgment, the defaulting party
must surmount a “high hurdle.” Id. So in contrast to the “liberally applied” test used
for Rule 55(c), see Cracco v. Vitran Exp., Inc. ., 559 F.3d 625, 630-31 (7th Cir.
2009), relief under 60(b) is an “extraordinary remedy,” and only given in
“exceptional circumstances.” McCormick v. City of Chicago, 230 F.3d 319, 327
(7th Cir.2000) (quoting Dickerson v. Board of Educ. of Ford Heights, Ill., 32 F.3d
1114, 1116 (7th Cir.1994)). Typical reasons held up in this circuit and elsewhere
as bona fide excuses under Rule 60(b) include illness, incarceration, and lack of
access to legal counsel. See Jones, 39 F.3d at 163-64 (collecting cases) (citing
Klapprott v. United States, 335 U.S. 601, 69 S.Ct. 384, 93 L.Ed. 266 (1949);
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United States v. Forty-Eight Thousand, Five Hundred Ninety-Five Dollars, 705
F.2d 909, 913 (7th Cir.1983).
The Seventh Circuit allows district courts “considerable latitude” or
“discretion piled on discretion,” in making decisions under Rule 60. Id.
(citing Swaim v. Moltan Co., 73 F.3d 711, 722 (7th Cir. 1996)). It is the policy of
the Seventh Circuit to favor trials on the merits over default judgments. Passarella
v. Hilton Int'l Co., 810 F.2d 674, 675 (7th Cir. 1987).
Analysis
Defendant maintains that the default judgment against is a result of mistake
and excusable neglect; that it has good reason for the default; that it acted promptly
to cure the default and that it has a meritorious defense to this cause of action.
As to the good reason for the default, defendant maintains that it acted in
good faith when it did not answer plaintiffs’ complaint because, upon learning that
the lawsuit was not in fact previously resolved, it attempted to resolve audit related
issues with plaintiffs and it did not willfully disregard the lawsuit or court orders.
Specifically, defendant maintains that based on a July 19, 2013 letter from
plaintiffs’ counsel to the City of Mount Vernon regarding the Horace Mann School
demolition project, it believed that since it paid $5,320.34 to the Funds that the
lawsuit had been resolved. Defendant further asserts that upon learning that the
lawsuit had not been resolved, it attempted to determine whether liability existed.
Defendant maintains that when it received the motion for entry of default, it
requested that plaintiffs withdraw the claims so that the parties could establish
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what, if any, it owed to plaintiffs. The Court agrees with plaintiffs that the facts of
this case reflect otherwise.
Defendant admits and the record reflects that it was served with the
complaint.
The complaint seeks an audit as plaintiffs allege that “it will be
impossible for plaintiffs to determine the amounts that are owed.” (Doc. 2, ¶ 15).
Further, the July 19, 2013 letter indicates that it pertained to only one project for a
specific time period, May through June 2013. At that time, defendant clearly was
aware that it was working on more than one project for that it had not paid
contributions, inter alia, the Granite City water treatment facility.
Further, defendant admits that it received the entry of default that was filed
on November 6, 2013. In a letter dated November 14, 2013, plaintiffs’ counsel
advised defendant of the following:
I am legal counsel to the Employers and Operating Engineers
Local 520 benefit funds. By letter dated November 8, 2013, to the
Funds’ administrative manager Dave Glastetter, you questioned why
my firm was proceeding with having you held in default in the
above-captioned lawsuit. You stated that the audit being performed
reflects that your corporation overpaid its contributions.
Please be advised that you are incorrect. Enclosed is a
prelimary draft of the audit report which reflects that your company
owes $40,265.73 in contributions. Unless you make immediate
arrangements to pay this amount, we will proceed with obtaining a
default judgment against you.
(Doc. 20-1).
suggests.
Clearly, this demands payment and not documents as defendant
Moreover, defendants were aware that the Court granted plaintiffs’
motion for extension of time to dispose of the case and that the Court allowed
plaintiffs up to and including until December 27, 2013 to dispose of the case or
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move for default judgment. Based on these facts, the Court finds that defendants
have not shown good cause for failure to file an answer. As the Court finds that
there was not good cause, it need not address the remaining elements.
Conclusion
Accordingly, the Court DENIES the motion to set aside default judgment
(Doc. 19).
IT IS SO ORDERED.
Digitally signed by
David R. Herndon
Date: 2014.07.30
16:22:22 -05'00'
Signed this 30th day of July, 2014.
Chief Judge
United States District Court
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