WINSLOW MARINE INC v. J SUPOR & SON TRUCKING & RIGGING INC
ORDER ON MOTION TO VACATE DEFAULT JUDGMENT granting 30 Motion to Vacate By JUDGE NANCY TORRESEN. (MMB)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
WINSLOW MARINE, INC.,
J. SUPOR & SON TRUCKING &
) Docket No. 2:15-cv-312-NT
IBERDROLA ENERGY PROJECTS, )
Third-Party Defendant. )
ORDER ON MOTION TO VACATE DEFAULT JUDGMENT
Third-Party Defendant Iberdrola Energy Projects, Inc. (“IEP”) moves pursuant
to Federal Rule of Civil Procedure 60(b)(1) to vacate the default judgment entered
against it. (ECF No. 30). Supor & Son Trucking & Rigging (“Supor”) opposes the
motion. (ECF No. 32). I find that the circumstances of this case constitute “mistake”
or “excusable neglect,” and I will grant the motion to vacate.
FACTS AND PROCEDURAL BACKGROUND
In April 2015, IEP contracted with Supor to perform services, including
transporting concrete pilings from a shore side facility in Portsmouth, New
Hampshire to a waterfront project in Salem, Massachusetts. Decl. of Elias Lopez
Salmeron ¶ 3 (ECF No. 30-3). Supor in turn contracted with Winslow Marine, Inc.
(“Winslow Marine”) to provide tug boat and barge services between Portsmouth,
New Hampshire and Salem, Massachusetts to transport the pilings. Compl. ¶ 9 (ECF
No. 1). Supor completed the contract work, and IEP paid Supor the full amount of the
lump sum contract. Lopez Salmeron Decl. ¶ 5.
On July 24, 2015, after work was complete, Supor sent IEP a change order for
an additional $216,261.87 claiming that it was entitled to more money as a result of
alleged “greater widths and lengths of piles on the project.” Lopez Salmeron Decl. ¶
6. IEP rejected the change order because Supor had not provided evidence of
additional compensable costs. Lopez Salmeron Decl. ¶ 7; Decl. of Isabel Perez Palacio
¶ 2 (ECF No. 30-5). Thereafter, in a conversation with IEP, Supor explained that the
change order was the result of invoices that included additional charges from
Winslow Marine. Perez Palacio Decl. ¶ 2. Supor told IEP that it did not believe
Winslow Marine’s additional charges were appropriately supported. Perez Palacio
Decl. ¶ 2. Supor told IEP that it thought that the additional charges were the result
of Winslow Marine’s inefficient loading and unloading of the barges. Perez Palacio
Decl. ¶ 2. Supor asked for IEP’s support in resisting Winslow Marine’s request for
extra compensation. Perez Palacio Decl. ¶ 2. Because Supor’s explanation accorded
with IEP’s view that there had been no material change in the contract requirements,
IEP agreed to support Supor in opposing Winslow Marine’s request. Perez Palacio
Decl. ¶ 2. Supor agreed to send IEP evidence to support its change order if it decided
to press the issue further. Perez Palacio Decl. ¶ 2.
On August 6, 2015, Winslow Marine filed suit against Supor seeking
compensation for the alleged overage. Compl. On October 8, 2015, Supor answered
the Complaint. Answer (ECF No. 9). On October 22, 2015, Supor filed a Third-Party
Complaint against IEP, asserting that IEP had not paid a change order in the amount
of $216,261.87. Third-Party Compl. ¶ 12 (ECF No. 11). On October 27, 2015, the
Kennebec County Sheriff served the Third-Party Complaint on CT Corporation
System (“CT Corp.”), IEP’s registered agent for service of process, in Readfield,
Maine. Summons (ECF No. 16). On October 30, 2015, CT Corp. delivered the ThirdParty Complaint by FedEx to the Rochester, New York address that CT Corp had for
IEP. Decl. of Sergio Ruiz Gonzalez ¶ 4 & Ex. A (ECF Nos. 30-1 and 30-2). A few
months earlier, however, IEP had moved its offices to Salem, Massachusetts, and in
October of 2015, IEP had no employees left at the Rochester office. Ruiz Gonzalez
Decl. ¶ 2. A security officer not employed by IEP signed for the package in Rochester.
Ruiz Gonzalez Decl. ¶ 5 & Ex. A. What the security officer did with the Third-Party
Complaint remains a mystery, but IEP has no record of ever receiving it. Ruiz
Gonzalez Decl. ¶ 5.
With no responsive pleading filed, Supor moved for default against IEP on
December 4, 2015. Mot. for Entry of Default (ECF No. 17). The Clerk entered a
default on December 7, 2015. Order (ECF No. 18). After a judicial settlement
conference attended by Supor and Winslow Marine, Supor consented to the entry of
judgment against it and in favor of Winslow Marine in the amount of $470,000. Joint
Stipulation of Facts (ECF No. 27). On April 20, 2016, Supor and Winslow Marine filed
a joint motion for entry of final judgment seeking default judgment against IEP. Joint
Mot. for J. on Compl. and Default J. on Third-Party Compl. (ECF No. 26). On the
same day, the Court entered final judgment against IEP for $216,261.87 plus interest
and costs, which was the sum requested in the Third-Party Complaint. Final J. (ECF
No. 28). On July 12, 2016, IEP received a letter from Supor demanding satisfaction
of judgment. Ruiz Gonzalez Decl. ¶ 3. On September 1, 2016, IEP filed this motion
to vacate the judgment. Mot. to Vacate Default J. and Set Answer Deadline (ECF No.
IEP acknowledges that service was properly made on its registered agent, CT
Corp. IEP explains that it did not receive the Third-Party Complaint until after it
learned of the default judgment because of a mistake in the delivery of service caused
in part by its own failure to update its address with its registered agent. These
circumstances, IEP asserts, constitute “mistake” or “excusable neglect” under Rule
Rule 60(b) provides that on “just terms” a court “may relieve a party . . . from
a final judgment” for various reasons, including “mistake, inadvertence, surprise, or
excusable neglect.” Fed. R. Civ. P. 60(b). “Because Rule 60(b) is a vehicle for
extraordinary relief, motions invoking the rule should be granted only under
exceptional circumstances.” Dávila-Álvarez v. Escuela de Medicina Universidad Cent.
del Caribe, 257 F.3d 58, 64 (1st Cir. 2001) (citation and internal quotation omitted).
Rule 60(b) “must be applied so as to recognize the desirability of deciding disputes on
their merits, while also considering the importance of finality as applied to court
judgments.” Id. at 64 (citation and internal quotation omitted).
Excusable neglect is an “elastic concept” that requires an equitable
determination that takes into account “all relevant circumstances surrounding the
party’s omission.” Pioneer Inv. Serv. Co. v. Brunswick Assocs. Ltd., 507 U.S. 380, 392,
395 (1993); see also Stonkus v. City of Brockton Sch. Dep’t, 322 F.3d 97, 101 (1st Cir.
2003). Factors considered in evaluating a claim of excusable neglect “typically include
such things as ‘the danger of prejudice to the non-movant, the length of the delay, the
reason for the delay, and whether the movant acted in good faith.’ ” Rivera-Velázquez
v. Hartford Steam Boiler Inspection & Ins. Co., 750 F.3d 1, 4 (1st Cir. 2014) (quoting
Dávila-Álvarez, 257 F.3d at 64 (applying Pioneer factors to a Rule 60(b) motion); Pratt
v. Philbrook, 109 F.3d 18, 19 (1st Cir. 1997). While all relevant circumstances should
be considered, the factors are not equally weighted: the reason for the delay is “by far
the most critical” factor. Dimmitt v. Ockenfels, 407 F.3d 21, 23-24 (1st Cir. 2005); see
also Graphic Commc’n Int’l Union, Local 12–N v. Quebecor Printing Providence, Inc.,
270 F.3d 1, 5 (1st Cir. 2001) (“the reason-for-delay factor will always be critical to the
inquiry” (citations omitted)).
Reason for the Delay
IEP asserts that it did not receive the Complaint “[a]s a result of a mistake in
the delivery of service by the registered agent.” Mot. to Vacate 6. The record indicates
that IEP’s registered agent—CT Corp.—was timely served with the Third-Party
Complaint. Summons. On October 30, 2015, however, CT Corp. delivered the ThirdParty Complaint to IEP’s former office in Rochester, New York, where it was signed
for by a security guard not associated with IEP. Ruiz Gonzalez Decl. ¶ 5. Although
IEP should have notified CT Corp. of its change of address, that inadvertent oversight
was compounded by circumstances that were out of IEP’s control. Had the security
guard declined the FedEx package that he was not authorized to receive, IEP would
likely have learned of the lawsuit in a timely fashion. Under these circumstances, I
find that the reason for the delay was in part beyond IEP’s control.
Prejudice to Supor
When it entered into the settlement agreement with Winslow Marine, Supor
relied on the fact that IEP’s default would allow Supor to recover some of the $470,000
it agreed to pay to Winslow Marine. Third-Party Plaintiff’s Opp’n to Mot. to Vacate 9
(ECF No. 32). Supor argues that its reliance was reasonable because IEP’s registered
agent had been properly served. Supor further asserts that it will be prejudiced if the
judgment against IEP is set aside since Supor will still be obligated to satisfy the
judgment in favor of Winslow Marine without any concomitant contribution from
IEP. But whether Supor will have to singularly satisfy the settlement agreement
depends on the strength of its third-party claim against IEP, which remains to be
litigated. Further, by choosing not to notify its former business partner that Winslow
Marine was insisting on payment for the overage, and by relying on IEP’s default,
Supor took a chance that the default judgment would not be vacated.
Length of the Delay
A motion under Rule 60(b)(1) must be made within a reasonable time, which
may be “no more than a year after the entry of the judgment or order or the date of
the proceeding.” Fed. R. Civ. P. 60(c)(1). The motion to vacate was filed approximately
eight months after default judgment was entered and about six weeks after IEP first
learned of the judgment against it.
There is no question that a reasonable corporation should ensure that its
registered agent can properly forward service of process. Here, IEP failed to inform
CT Corp. of its new address. While, as IEP concedes, this was an error on its part,
there does not appear to be any lack of good faith on IEP’s part.
By contrast, Supor’s hands are not entirely clean. Before the lawsuit was filed,
Supor agreed to send IEP evidence to support the change order if it was going to press
the matter further. Perez Palacio Decl. ¶ 2. IEP understood that the matter was
closed unless it heard further from Supor. Perez Palacio Decl. ¶ 2. Because Supor
never sent IEP confirming documentation of the change order as it had promised, IEP
had no reason to believe that a conflict existed or that a lawsuit would be filed. Perez
Palacio Decl. ¶ 2. Once judgment was entered, however, Supor sent the notice of
default judgment to IEP in Salem, Massachusetts. These actions suggest that Supor
knew how to notify IEP when it wanted to do so, but it chose not to advise IEP that
it was pursuing the change order.
Considering the Pioneer factors, weighing the reason for the delay most
heavily, and recognizing the desirability of deciding disputes on their merits, I find
that under these unusual circumstances, IEP has established excusable neglect
under Rule 60(b)(1). For the reasons stated above, I GRANT IEP’s motion to vacate
/s/ Nancy Torresen
United States Chief District Judge
Dated this 14th day of December, 2016.
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