J & J SPORTS PRODUCTIONS, INC. v. ARGUETA et al
Filing
19
MEMORANDUM OPINION AND ORDER signed by JUDGE THOMAS D. SCHROEDER on 11/6/2013, that Sanchez Argueta's motion to set aside the judgment (Doc. 15 ) is GRANTED and this court's July 31, 2013, default judgment against him is SET ASIDE. (Lloyd, Donna)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
J & J
INC.,
SPORTS
PRODUCTIONS,
Plaintiff,
v.
MARCOS TULIO SANCHEZ ARGUETA
AND
JOSE
M.
SORTO,
INDIVIDUALLY
AND
D/B/A
EL
TAMARINDO RESTAURANT,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
)
1:12cv1329
MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, District Judge.
Before the court is a motion by the Defendant, Marcos Tulio
Sanchez
Argueta
judgment
(“Sanchez
entered
against
Argueta”)
him
to
pursuant
Federal Rules of Civil Procedure.
set
to
aside
Rule
(Doc. 15.)
a
60(b)
default
of
the
For the reasons
set forth in the opinion below, the court will grant the relief
Sanchez Argueta seeks and set aside the entry of the default
judgment.
I.
BACKGROUND
Plaintiff J & J Sports Productions, Inc. (J & J), filed its
complaint
against
(“Sorto”)
on
Sanchez
December
13,
Argueta
2012.
and
Jose
(Doc.
1.)
M.
Sorto
The
Rivera
complaint
alleged that Sanchez Argueta and Sorto, doing business as El
Tamarindo Restaurant (“the Restaurant”), located at 2609 High
Point Rd. in Greensboro, North Carolina (id. ¶¶ 6–7), willfully
intercepted, published, and exhibited “Tactical Warfare”: Manny
Pacquiao
v.
Championship
Antonio
Fight
Margarito,
Program
(“the
WBO
Light
Program”)
Middleweight
(id.
¶¶
9,
12).
J & J alleges that this conduct violated 47 U.S.C. §§ 530 & 605.
(Id. ¶¶ 14, 19.)
After Sanchez Argueta failed to respond to the complaint,
J & J moved for an entry of default against him pursuant to Rule
55(a), and the Clerk of Court in this district entered default
on March 11, 2013.
(Docs. 7, 8.)
On June 4, 2013, J & J moved
for entry of default judgment pursuant to Rule 55.
10.)
(Docs. 9,
This court granted J & J’s motion and entered default
judgment against Sanchez Argueta on July 31, 2013.
(Doc 13.)
On August 14, 2013, Sanchez Argueta moved to set aside the
default judgment pursuant to Rule 60(b).
(Docs. 15, 16.)
J & J
responded to the motion (Doc. 17), and Sanchez Argueta filed a
reply (Doc. 18).
II.
The motion is now ready for decision.
ANALYSIS
“[I]n order to obtain relief from a default judgment under
Rule 60(b), a moving party must show that his motion is timely,
that he has a meritorious defense to the action, and that the
opposing party would not be unfairly prejudiced by having the
judgment set aside.
If the moving party makes such a showing,
he must then satisfy one or more of the six grounds for relief
2
set forth in Rule 60(b) in order to obtain relief from the
judgment.”
Park Corp. v. Lexington Ins. Co., 812 F.2d 894, 896
(4th Cir. 1987).
This standard applies to Rule 60(b) motions
for relief from a default judgment.
See United States v. Assad,
179 F.R.D. 170, 172 (M.D.N.C. 1998).
The Fourth Circuit has
taken “an increasingly liberal view of Rule 60(b)” where default
judgments are at issue.
v.
Fodor
Contracting
See Augusta Fiberglass Coatings, Inc.
Corp.,
843
F.2d
808,
810–11
(4th
Cir.
1988). 1
Sanchez Argueta argues that he satisfies the three initial
elements
required
by
Rule
60(b),
especially
that
he
has
a
meritorious defense to the action and that J & J will not be
prejudiced
satisfies
by
at
the
least
relief
one
of
granted. 2
Rule
relief from a final judgment.
He
60(b)’s
then
argues
conditions
that
to
he
obtain
These arguments will be addressed
in turn.
1
J & J cites Robinson v. Wix Filtration Corp., LLC, 599 F.3d 403, 412
n.12 (4th Cir. 2010), for the proposition that Sanchez Argueta must
also show “exceptional circumstances warranted relief from the
judgment.” That case involved a plaintiff’s attorney who neglected to
file a response to the opposing party’s motion for summary judgment.
The plaintiff subsequently sought relief from the district court’s
grant of summary judgment to the defendant.
Id. at 405–06.
It did
not involve Augusta’s more liberal construction of Rule 60(b) when
relief is sought from a default judgment.
The case cited by the
Robinson court similarly did not involve a default judgment.
See
Dowell v. State Farm Fire & Cas. Auto Ins. Co., 993 F.2d 46 (4th Cir.
1993).
2
J & J does not argue that Sanchez Argueta’s Rule 60(b) motion is
untimely, and the motion is in fact timely.
3
A.
Meritorious Defense
Sanchez Argueta’s proffered meritorious defense is that he
was not the owner of the Restaurant, never received compensation
from the Restaurant, and could not have authorized the Program’s
airing in the Restaurant.
Therefore, he argues that he cannot
be held liable under the applicable statutes.
defense
requires
a
finding
for
defaulting
the
proffer
valid counterclaim.”
of
evidence
party
or
which
which
“A meritorious
would
would
Augusta, 843 F.2d at 812.
permit
a
establish
a
“The underlying
concern is to determine whether there is some possibility that
the outcome of the suit after a full trial will be contrary to
the
result
achieved
by
the
default.”
10A
Wright,
et
al.,
Federal Practice & Procedure (3d ed.), § 2697; Augusta, 843 F.2d
at 812; Assad, 179 F.R.D. at 172.
A defendant need not prove
his meritorious defense by a preponderance of the evidence; he
need
only
“make
a
proffer
finding in [his] favor.”
of
evidence
which
would
Assad, 179 F.R.D. at 172.
permit
a
Any doubts
should be resolved in favor of the movant for relief.
Augusta,
843 F.2d at 812.
In this case, Sanchez Argueta has submitted an affidavit
laying out his defenses to J & J’s complaint.
13.)
control
(Doc. 16 at 11–
He claims that he cannot be liable because he had no
over
the
Restaurant,
was
never
an
employee
of
the
Restaurant, never received any compensation from the Restaurant,
4
and
is
connected
to
the
Restaurant
solely
by
obtained an ABC permit for it to assist Sorto.
¶¶ 5–9.)
the
fact
he
(Id. at 11–12
According to the affidavit, Sorto’s niece ordered that
the Program be shown on the Restaurant’s television and Sanchez
Argueta had no involvement with the decision.
If
the
testimony,
U.S.C.
§
trier
it
could
605
affirmative
of
or
find
credited
that
47
U.S.C.
by
acts
communications.
fact
the
he
(Id. ¶¶ 10–13.)
Sanchez
did
not
§ 553.
violate
Both
defendant
to
Argueta’s
either
statutes
intercept
sworn
47
require
licensed
See J & J Sports Productions, Inc. v. Lara
Sport House Corp., No. 1:10–cv–01369, 2011 WL 4345114, at *4–5
(E.D. Va. Aug. 26, 2011) (discussing the application of Sections
605 and 553 in a nearly identical case involving interception of
the cable signal for a sporting event).
If Sanchez Argueta’s
affidavit is true, he cannot be liable for any damages under
Sections
605
or
553
because
he
had
no
connection
with
the
Restaurant other than the ABC permit and occasional dishwashing
without compensation.
believed,
affirmative
statutes.
Sanchez
acts
(Doc. 16 at 12 ¶ 9.)
Argueta
required
could
to
be
not
liable
If the evidence is
have
committed
under
the
the
applicable
Therefore, Sanchez Argueta has met the standard for
showing a meritorious defense to the action.
5
B.
Prejudice
Sanchez Argueta also must show that J & J would not be
unfairly prejudiced by having the default judgment set aside.
He argues that no special circumstances exist in this case that
would prejudice J & J “beyond that suffered by any party which
loses a quick victory.”
(Id. at 6.)
J & J argues that this
conclusion is not enough to meet Sanchez Argueta’s burden to
show the lack of prejudice and points out that J & J could be
left without a remedy should the default judgment be set aside,
since
the
case
against
Sorto
has
been
dismissed.
However,
Sanchez Argueta’s seemingly conclusory statement illustrates the
difficulty plaintiffs have in demonstrating prejudice: there are
no circumstances in this case that would tend to show that J & J
would be prejudiced any more than would the normal losing party
on a Rule 60(b) motion.
See, e.g., Augusta, 843 F.2d at 812
(“As to prejudice, we perceive no disadvantage to Augusta beyond
that suffered by any party which loses a quick victory.”).
Plaintiff’s argument that it cannot obtain relief because
Sorto has been dismissed from the case is unavailing for two
reasons.
prejudice.
a
proper
First,
Sorto’s
dismissal
(Doc. 13 at 5.)
party
from
whom
from
the
case
is
without
Second, if Sanchez Argueta is not
to
obtain
recovery,
it
cannot
be
prejudice to J & J to prevent it from holding an innocent party
liable for the alleged statutory violations.
6
See Compton v.
Alton S.S. Co., 608 F.2d 96, 103 (4th Cir. 1979) (“Nor can the
plaintiff
be
said
to
be
prejudiced
by
the
vacation
of
his
judgment for statutory penalty wages, to which he is not legally
entitled.”).
Thus, Sanchez Argueta is correct that J & J would
suffer no prejudice beyond that of a typical plaintiff which
loses a default judgment.
C.
Rule 60(b) Conditions
Sanchez Argueta next must satisfy one of the six conditions
of Rule 60(b).
He argues that he is entitled to relief under
60(b)(1), (4), and (6).
Because excusable neglect exists under
Rule 60(b)(1), Sanchez Argueta’s other arguments need not be
addressed and the default judgment will be set aside.
In support of his contention that excusable neglect exists
in this case, Sanchez Argueta submits that, having received only
the equivalent of a second grade education (Doc. 16 at 11 ¶ 4),
he relied on his former attorney’s advice and did not respond to
the complaint because that attorney told him to do nothing and
let the court figure out that he was an improper defendant in
this case (id. at 12 ¶¶ 15, 17).
education
Argueta
and
did
prior
what
relationship
his
attorney
current default judgment.
attorney’s
error
led
to
On account of his lack of
with
the
recommended,
attorney,
leading
(Id. at 12 ¶¶ 19–20.)
his
default,
he
argues,
should be set aside based on excusable neglect.
7
Sanchez
to
the
Because his
the
default
J & J argues, citing Link v. Wabash Railroad Co., 370 U.S.
626,
634
(1962),
that
because
Sanchez
Argueta
chose
his
attorney, he cannot now avoid the consequences of his attorney’s
bad advice.
The Fourth Circuit, however, has not applied this
holding to Rule 60(b) motions, and the Supreme Court in Link
expressly declined to express a view on that question.
635–36.
Id. at
On the contrary, the Fourth Circuit has indicated that
when the fault for a default judgment lies with an attorney,
Rule 60(b) relief is more likely to be granted.
In
Augusta,
the
court
discussed
the
seemingly
disparate
holdings in Park and United States v. Moradi, 843 F.2d 808 (4th
Cir. 1982), and determined that “the results of these two cases
are
entirely
consistent
when
one
considers
that
in
Park
the
party alone was responsible for its default, whereas in Moradi
the attorney alone was responsible for the default.”
843
F.2d
at
811
(in
Park,
the
insurance
company
Augusta,
defendant
received process in its mailroom and simply lost the papers,
whereas in Moradi the defendant’s answer was rejected by the
court
for
failure
to
comply
with
the
local
rules
and
his
attorney failed to file another answer or appear at a pre-trial
conference).
See also Point PCS, LLC v. Sea Haven Realty &
Constr., 95 F. App’x 24, 27 (4th Cir. 2004). 3
3
The Augusta court
Unpublished decisions of the Fourth Circuit have no precedential
value but are valuable for their persuasive reasoning. See Collins v.
8
found that “[the defendant] is largely blameless for the default
below, which was due primarily to its attorney's carelessness in
his handling of the amended complaint.”
Augusta, 843 F.2d at
812.
In this case, Sanchez Argueta’s limited education and his
previous relationship with his former attorney led him to rely
on poor advice not to respond to J & J’s lawsuit.
While Sanchez
Argueta may not be entirely blameless for the default judgment
and considering all of the circumstances, it was reasonable for
him to believe his attorney and follow the recommendation not to
answer
the
complaint.
Moreover,
the
Fourth
Circuit
has
expressed a strong policy in favor of deciding cases on the
merits.
See, e.g., United States v. Shaffer Equip. Co., 11 F.3d
450, 462–63 (4th Cir. 1993) (in the context of dismissal for
breach of duty of candor to the court by an attorney); Panhandle
Cleaning & Restoration, Inc. v. Vannest, No. 5:11CV178, 2012 WL
1354572, *2 (N.D. W. Va. Apr. 18, 2012) (“[T]his Court agrees
that
‘strong
merits
and
public
not
by
policy
default
favors
resolving
judgment.’”
disputes
(quoting
on
Pecarsky
Galaxiworld.com Ltd., 249 F.3d 167, 172 (2d Cir. 2001))). 4
the
v.
Other
Pond Creek Mining Co., 468 F.3d 213, 219 (4th Cir. 2006) (recognizing
that “we ordinarily do not accord precedential value to our
unpublished decisions” and that such decisions “are entitled only to
the weight they generate by the persuasiveness of their reasoning”
(citation omitted)).
4
In Shaffer, the court listed six factors to be considered before the
court exercises its inherent power to dismiss a case without deciding
9
courts have observed that “[t]he presumption against default is
particularly strong where . . . substantial sums of money are
demanded.”
State
Street
Bank
&
Trust
Co.
v.
Inversiones
Errazuriz, Limitada, 230 F. Supp. 2d 313, 316 (S.D.N.Y. 2002).
In this case, the default judgment against Sanchez Argueta
was for $12,000, exclusive of attorney fees.
This
is
a
significant
sum
to
him.
For
all
(Doc. 13 at 4.)
these
reasons,
therefore, the court will grant Sanchez Argueta’s motion and set
aside the default judgment.
III. CONCLUSION
IT IS THEREFORE ORDERED that Sanchez Argueta’s motion to
set aside the judgment (Doc. 15) is GRANTED and this court’s
July 31, 2013, default judgment against him is SET ASIDE.
/s/ Thomas D. Schroeder
United States District Judge
November 6, 2013
it on the merits.
Those factors are: “(1) the degree of the
wrongdoer's
culpability;
(2)
the
extent
of
the
client's
blameworthiness if the wrongful conduct is committed by its attorney,
recognizing that we seldom dismiss claims against blameless clients;
(3) the prejudice to the judicial process and the administration of
justice; (4) the prejudice to the victim; (5) the availability of
other sanctions to rectify the wrong by punishing culpable persons,
compensating harmed persons, and deterring similar conduct in the
future; and (6) the public interest.”
Shaffer, 11 F.3d at 462–63.
These factors weigh in favor of granting Sanchez Argueta relief from
the default judgment.
10
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