UNITED STATES OF AMERICA FOR THE BENEFIT OF PACE CONSTRUCTION, INC. v. UNIVERSAL CONSTRUCTION COMPANY, INC. et al
Filing
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OPINION FILED. Signed by Judge Mary L. Cooper on 2/21/2014. (eaj)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
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Plaintiff,
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v.
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UNIVERSAL CONSTRUCTION COMPANY, :
INC., REGIMENT CONSTRUCTION
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CORP., and INTERNATIONAL
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FIDELITY INSURANCE COMPANY,
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Defendants.
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UNITED STATES OF AMERICA,
for the benefit of PACE
CONSTRUCTION INC.,
CIVIL ACTION NO. 11-2518 (MLC)
MEMORANDUM OPINION
IN THIS ACTION to recover payments allegedly owed for work
performed on a federal construction project: (1) the defendant
Regiment Construction Corp. (“RCC”) was the general contractor;
(2) the defendant International Fidelity Insurance Company
(“IFIC”) was RCC’s surety, which provided a payment bond for the
project; (3) the defendant Universal Construction Company, Inc.
(“UCCI”) was RCC’s subcontractor; and (4) the plaintiff, Pace
Construction Inc. (“PCI”), was UCCI’s subcontractor.
that it was not paid for its work.
PCI asserts
(See dkt. entry no. 1, Compl.
at 4-6; dkt. entry no. 63, UCCI Mem. of Law at 2; dkt. entry no.
64, RCC-IFIC Joint Mem. in Opp’n at 3.)
THE COURT granted the part of PCI’s motion seeking entry of
default judgment on the issue of liability against UCCI on
November 7, 2011.
(See dkt. entry no. 19, 11-7-11 Order.)
On
January 25, 2012, the Clerk of the Court entered default against
UCCI as to the cross-claims asserted by RCC and IFIC against UCCI
(“Cross-Claims”).
entry no. 33.)
(See unnumbered dkt. entry following dkt.
RCC and IFIC have not moved for entry of default
judgment against UCCI.
WHEN the aforementioned relief was awarded, UCCI had yet to
retain counsel.
29, 2013.
But counsel appeared on UCCI’s behalf on March
(See dkt. entry no. 57, 3-29-13 Notice of Appearance.)
UCCI is now represented by counsel and moves — by a motion
filed on June 21, 2013 (“Motion”) — to set aside (1) the default
judgment on the issue of liability entered in PCI’s favor (“PCI
Liability Judgment”), and (2) the entry of default in favor of
RCC and IFIC (“RCC-IFIC Default”).
63.)
(See generally dkt. entry no.
PCI has not filed opposition to the Motion, but RCC and
IFIC have filed opposition jointly.
no. 64.)
papers.
(See generally dkt. entry
The Court will address the Motion upon review of the
See L.Civ.R. 78.1(b).
The Court will grant the part of
the Motion seeking to set aside the RCC-IFIC Default.
In
addition, the Court will deny the part of the Motion seeking to
set aside the PCI Liability Judgment, but with leave to UCCI to
seek further relief in part.
UCCI argues in support of the Motion that: (1) it can assert
meritorious claims and defenses, e.g., RCC failed to pay UCCI,
and RCC and IFIC actually owe PCI the payment at issue; (2) there
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would be no prejudice suffered here because there has been little
discovery — e.g., only UCCI’s principal has been deposed — and
RCC has a paper file reflecting any payments made; (3) the delay
in retaining counsel was due to UCCI’s financial inability to do
so — about which UCCI’s principal advised the Court — and not the
result of contumacious conduct; and (4) UCCI’s principal attempted
to proceed on its behalf in the interim.
(See UCCI Mem. of Law
at 1-5, 8-13; dkt. entry no. 67, UCCI Reply Br. at 2.)
RCC AND IFIC in their joint opposition: (1) refute UCCI’s
financial-hardship argument, asserting that UCCI received
approximately $105,000 for the project; (2) argue that the
Magistrate Judge repeatedly advised UCCI’s principal to retain
counsel; and (3) argue that they “have incurred substantial
expenses for the many conferences conducted over the past two
years”.
(RCC-IFIC Joint Mem. in Opp’n at 2.)
RCC AND IFIC also argue that RCC “has taken an assignment of
[PCI’s] claim and its rights under [PCI’s Liability Judgment]”,
and RCC and PCI “would not have reached that agreement if [UCCI]
was going to be given another opportunity to proceed with its
affirmative claims”.
(Id.)
Indeed, following the filing of
opposition papers by RCC and IFIC, a stipulation of dismissal was
filed as to the claims asserted by PCI against RCC and IFIC.
(See dkt. entry no. 68, Stipulation of Dismissal.)
Claims presumably remain viable.
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The Cross-
BUT THE COURT notes that PCI has not filed opposition to the
part of the Motion seeking to set aside the PCI Liability
Judgment.
Also, despite the assertions by RCC and IFIC that they
have taken an assignment of PCI’s rights under the PCI Liability
Judgment, the Court’s electronic docket reveals that PCI’s
counsel remains unchanged from when the action was brought.
Docket, PCI Attorney To Be Noticed.)
(See
The standing of RCC and
IFIC to oppose the part of the Motion seeking to set aside the
PCI Liability Judgment is unclear.
THE PART of the Motion seeking to set aside the PCI
Liability Judgment is controlled by Federal Rule of Civil
Procedure (“Rule”) 60(b).
See Fed.R.Civ.P. 55(c).
But UCCI has
not referred to Rule 60(b) in support of that part of the Motion.
UCCI filed the Motion in June 2013, more than one year after
the entry of the PCI Liability Judgment in November 2011.
To the
extent that UCCI could have been afforded relief pursuant to Rule
60(b)(1) (concerning, inter alia, excusable neglect), Rule
60(b)(2) (concerning newly discovered evidence), or Rule 60(b)(3)
(concerning, inter alia, fraud), such relief is time-barred.
See
Fed.R.Civ.P. 60(c)(1) (stating motion under (b)(1), (b)(2), or
(b)(3) “must be made . . . no more than a year after the entry of
the judgment or order”).
Thus, the part of the Motion seeking
relief, in effect, under Rule 60(b)(1), 60(b)(2), and 60(b)(3)
will be denied.
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BUT it is plausible that UCCI could argue for relief under
the other subsections of Rule 60(b) (“Other Subsections”).
See
Fed.R.Civ.P. 60(c)(1) (stating also that motion under Other
Subsections “must be made within a reasonable time”).
In the
interests of justice, the Court will afford UCCI an opportunity
to properly brief such an argument with specific references to
the Other Subsections, Rule 60(c)(1), and the relevant case law.
See Farnese v. Bagnasco, 687 F.2d 761, 764 (3d Cir. 1982)
(stating default judgments are highly disfavored).
Thus, the
part of the Motion seeking relief, in effect, under the Other
Subsections will be denied without prejudice.
In doing so, the
Court anticipates that PCI may respond with a proper opposition
brief on its own behalf.1
THE PART of the Motion seeking to set aside the RCC-IFIC
Default is controlled by Rule 55(c), which permits such relief
“for good cause”.
Fed.R.Civ.P. 55(c).
The decision whether to
set aside an entry of default is in the Court’s discretion.
Farnese, 687 F.2d at 763-64.
See
Here, the Court must address
whether (1) RCC and IFIC will be prejudiced, (2) UCCI has a
1
The Court notes the argument by RCC and IFIC that RCC
would not have taken an assignment of PCI’s rights if UCCI would
be given another opportunity to proceed. However, the Court also
refers RCC and IFIC to Rule 60(b) and Rule 60(c), and the case
law generated therefrom, permitting a default judgment to be set
aside. Furthermore, such an agreement between certain parties
does not necessarily prevent a different party from otherwise
defending itself on the merits.
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litigable defense to the Cross-Claims, and (3) the default is the
result of UCCI’s culpable conduct.
See id. at 764.
THE COURT FINDS that RCC and IFIC will not be prejudiced if
the default is set aside, as they (1) do not allege that their
ability to pursue the Cross-Claims will now be hampered, (2) do
not refute UCCI’s assertion that discovery has been limited so
far, and (3) can ascertain the amount of damages to which they
are allegedly entitled if UCCI is held solely liable.
Mem. of Law at 1, 10-11; UCCI Reply Br. at 3, 6.)
(See UCCI
UCCI has
indeed presented litigable defenses to the Cross-Claims.
It also
appears that UCCI’s conduct — insofar as it pertains to RCC and
IFIC — was not willful or in bad faith, particularly in view of
the fact that counsel for UCCI has been retained.
Furthermore,
in view of the circumstances and the efforts of UCCI’s counsel to
now oversee UCCI’s representation, the lapse of time between the
entry of the RCC-IFIC Default and the Motion does not bar the
Court from setting aside that default.
FOR GOOD CAUSE APPEARING, the Court will issue an appropriate
order.
s/ Mary L. Cooper
MARY L. COOPER
United States District Judge
Dated:
February 21, 2014
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