Maggiore v. Barensfeld
Filing
13
Memorandum Opinion and Order granting plaintiff's 4 Motion to strike defendant's answer and counterclaim and denying Defendant's 7 alternative Motion for relief from judgment. This case is remanded. Judge Sara Lioi on 5/12/2011. (P,G)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
CHRISTOPHER D. MAGGIORE,
PLAINTIFF,
vs.
GLEN BARENSFELD,
DEFENDANT.
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CASE NO. 5:10cv2622
JUDGE SARA LIOI
MEMORANDUM OPINION
AND ORDER
Before the Court is plaintiff’s motion to strike defendant’s answer and
counterclaim. (Doc. No. 4.) Defendant filed a response, including an alternative motion for relief
from judgment (Doc. No. 7), plaintiff filed a reply (Doc. No. 10) and, with leave, defendant filed
a sur-reply (Doc. No. 12). For the reasons discussed below, the plaintiff’s motion (Doc. No. 4) is
GRANTED, defendant’s motion (Doc. No. 7) is DENIED, and this case is REMANDED.
I. PROCEDURAL BACKGROUND
On October 13, 2010, plaintiff filed a Complaint on a Note in Stark County Court
of Common Pleas. (Doc. No. 1, Ex. A.) He alleged that, on or about April 17, 2002, defendant
executed and delivered to plaintiff a cognovit promissory note (“Note”) in the amount of
$277,219.63 with interest at the rate of 8.5% per annum. A copy of the Note was attached to the
Complaint. Plaintiff alleged that, as collateral for the Note, defendant executed and delivered a
Mortgage Deed for real property located in Ohio and recorded in Medina County on May 23,
2002. The principal and interest on the Note was payable in full five (5) years from the date of
execution. Plaintiff alleged that more than five (5) years has passed and defendant has failed to
make any payment despite demand.
Defendant was served with the summons and complaint on October 18, 2010.
(Doc. No. 7 at 3; Doc. No. 4-3.) His answer was due on November 15, 2010;1 however, no
answer or responsive pleading was filed by that date. Therefore, on November 16, 2010, plaintiff
moved for a default judgment and supplied the state court with a proposed Judgment Entry.2
(Doc. Nos. 4, 4-3.) The court entered this default judgment at 2:20 p.m. on November 16, 2010.
(See Doc. No. 5.) On that very same day, November 16, 2010 at 5:13 p.m., defendant filed a
Notice of Removal in this Court. (See Receipt for Doc. No. 1.)3 On November 17, 2010 at 9:06
a.m., he filed a notice in the state court indicating that the case had been removed to federal
court, whereupon the state court closed its proceedings. (See Doc. No. 5.)
On November 22, 2010, six (6) days after removal, defendant filed an Answer and
Counterclaim. (Doc. No. 3.) One week later, on November 29, 2010, plaintiff filed a Notice of
1
Ohio Civ. R. 12(A)(1) provides that the defendant “shall serve his answer within twenty-eight days after service of
the summons and complaint upon him[.]” Ohio Civ. R. 6(A) provides, in relevant part: “In computing any period of
time prescribed or allowed by these rules, by the local rules of any court, by order of court, or by any applicable
statute, the day of the act, event, or default from which the designated period of time begins to run shall not be
included. The last day of the period so computed shall be included, unless it is a Saturday, a Sunday, or a legal
holiday, in which event the period runs until the end of the next day which is not a Saturday, a Sunday, or a legal
holiday.” Thus, the 28-day period began on October 19, 2010 and ended on November 15, 2010, a Monday that was
not a legal holiday.
2
It is unclear to this Court why plaintiff followed this particular procedure rather than the usual procedure of filing
both the Cognovit Complaint and the Cognovit Answer at the same time, with the Cognovit Answer confessing
judgment in light of the terms of the Cognovit Note. The court would then issue a Confessed Judgment. Instead, in
this case, plaintiff followed the usual route for a lawsuit, as if there were no cognovit note. He filed only the
Complaint, which he then served and, when no responsive pleading was filed, he moved for default judgment, which
the court granted because the damages were a sum certain.
3
Removal was on the basis of diversity jurisdiction. 28 U.S.C. § 1332.
2
Default Judgment coupled with the instant Motion to Strike. (Doc. No. 4.) The motion was fully
briefed and is ripe for determination.4
II. DISCUSSION
Plaintiff argues in his motion that the Answer and Counterclaim must be stricken
from the record because defendant already had a default judgment against him in state court by
the time he filed his notice of removal in both this Court and the state court.
Defendant is of the view that he had thirty (30) days from the date of service (not
counting the actual date of service) under 28 U.S.C. § 1446(b) to remove the action and
thereafter had seven (7) days under Fed. R. Civ. P. 81(c)(2)(C) to file his answer. He asserts that
“state and federal law provide two different times in which Defendant may respond.” (Doc. No.
7, at 1.)
Put differently, defendant’s view is that he could either file an answer in the state
court within 28 days of receipt of service (Ohio R. Civ. P. 12(A)(1)) or remove the action to
federal court within 30 days of receipt of service (28 U.S.C. § 1446(b)). Then, after removal, he
would have seven (7) days to file an answer pursuant to Rule 81(c)(2)(C).
Defendant refers to this as a “quirk in the rules” which has been described as a
“prickly little technical problem.” (Doc. No. 7, at 1, quoting Burroughs v. Palumbo, 871 F.Supp.
870 (E.D. Va. 1994).)5 Defendant argues that, since he removed the action on the 29th day after
service and thereafter filed his Answer and Counterclaim within six (6) days, he has followed all
the rules and his Answer and Counterclaim should not be stricken.
4
This Court granted counter-defendant Maggiore an extension of time until ten days after the motion to strike is
resolved to respond to the counterclaim. (Non-document Order dated 12/13/10.)
5
Defendant’s brief incorrectly cites to volume 891 of the Federal Supplement.
3
Defendant’s argument has no merit. First, defendant has improperly relied upon
Burroughs, which does not support his position. In Burroughs, the defendant timely filed a
notice of removal when he was already out of time for filing his answer but before any default
judgment had been entered against him in state court. After removal, but before defendant gave
notice of the removal, the state court entered default judgment against him. He asked the federal
court to set aside the default judgment on the ground that the state court had lost its jurisdiction
to enter judgment once the case was removed, even if it had not yet received the notice of the
removal. The “prickly little technical problem” identified by the district court was this: “During
the period between the filing of the notice of removal in federal court and the filing in state court,
which court had jurisdiction?” Burroughs, 871 F.Supp. at 871. The court held that “jurisdiction
was concurrent and that this case was properly removed with the default judgment intact.” Id.
The district court then found “sufficient grounds to set aside the default judgment.” Id. at 872.
Defendant had testified that “he was out of town at the time that the Secretary of the
Commonwealth mailed the motion for judgment to his Florida address and that he did not return
until September 23, 1994.” Id.
The facts in Burroughs are unlike the facts in the instant case, where default
judgment had already been entered by the time of both the removal and the filing of the notice of
removal in state court. However, Burroughs does support the plaintiff’s assertion that, at the time
of removal, the “default judgment [was] intact.” Id. at 871.
More to the point is Butner v. Neustadter, 324 F.2d 783 (9th Cir. 1963), an action
on a promissory note, where the defendant timely removed the case to federal court after a
default judgment had already been entered against him in state court. Two weeks later, within the
time permitted for the filing of an answer in a removed action under Fed. R. Civ. P. 81 in its
4
then-current form, he filed a motion to set aside the default judgment which the district court
denied. On appeal, the Ninth Circuit, although ultimately concluding that the district court had
abused its discretion in refusing to set aside the default judgment entered by the state court,6
pointed out that the statute and rule setting forth the time periods for removal and then for
answering after removal, “obvious[ly] [...] did not contemplate a situation in which the action
had proceeded to final judgment before removal.” Butner, 324 F.2d at 785. It further noted that
the federal court “takes the case as it finds it on removal and treats everything that occurred in
the state court as if it had taken place in federal court.’” Id.; see also, Feller v. National
Enquirer, 555 F.Supp. 1114, 1119 (N.D. Ohio 1982) (quoting Butner with approval).
Here, it cannot be disputed that a default judgment was already entered in the
state court before the case was removed. Therefore, it was improper for defendant to file an
answer and counterclaim, even though it did so within the time that would have been appropriate
had there been no judgment entry.
In his response brief, defendant asserts an alternative motion for relief from
judgment. He argues that a default judgment entered prior to removal does not defeat removal
jurisdiction. This Court does not disagree. However, as support for his assertion that courts
addressing the issue have “overwhelmingly held that the proper course of action is to vacate the
6
The court reached this conclusion largely because of the particular facts of the case. The defendant, an Arkansas
resident who was temporarily in Los Angeles on business, was personally served with process in Los Angeles in a
suit before a California state court. He made contact with his attorney in his Arkansas home town and gave
directions for him to arrange for a lawyer from a particular Los Angeles law firm to immediately make an
appearance and seek time for him to plead. The Los Angeles attorney tried several times unsuccessfully to reach
plaintiff’s counsel and left phone messages. Unfortunately, by the time plaintiff’s counsel got the messages and
returned the calls, he had already caused the default judgment to be entered against the defendant. The Ninth Circuit
concluded that it was an abuse of discretion to deny the motion to set aside the default judgment because, although
the defendant had tried “to take action on the complaint within the allotted ten days[,] [he] was frustrated by certain
events[,]” Butner, 324 F.2d at 787, and was “not guilty of inexcusable neglect.” Id. at 786. Further, defendant
claimed to have a meritorious defense, namely, that the promissory note was obtained by means of fraud and that the
plaintiff was not a holder in due course.
5
state court default, so the case may proceed on its merits[,]” (Doc. No. 7 at 2), defendant cites
cases that are distinguisable from the instant case.
First, he cites Butner, discussed above. However, in Butner, the defendant timely
removed the case and then filed a motion to vacate the default judgment within the time Rule
81(c)(2) would have permitted for filing an answer. Defendant in the instant case improperly
filed an answer instead of any motion.7 His motion, in fact, was not filed until December 17,
2010, when it was made part of his response to plaintiff’s motion to strike. This was close to a
month after the motion could have been timely filed under Rule 81. Butner does not apply.
Second, defendant cites Cox v. Sprung’s Transport & Movers, Ltd., 407
F.Supp.2d 754 (D.S.C. 2006). However, Cox involved only an entry of default not a default
judgment. The standards for setting aside an entry of default are considerably more lenient than
those for setting aside a default judgment. Cox does not apply.
Third, defendant cites Burroughs, supra, which, as already explained has an
entirely different fact pattern and stands for a somewhat different legal principle, i.e., concurrent
jurisdiction. Burroughs does not apply.
7
Defendant asserts that no separate motion to “lift default” is required. (Doc. No. 7 at 8.) As authority, he cites
Meehan v. Snow, 652 F.2d 274, 276 (2nd Cir. 1981). That case is completely inapplicable. It involved a case timely
removed to federal court. The defendants timely answered and counterclaimed. Nearly a year later, plaintiffs
successfully moved to amend the complaint. Defendants were 10 days late filing an answer to the amended
complaint and, despite having actually received the answer, plaintiffs moved for default judgment. After a hearing,
the district court entered a default judgment for damages and granted 30 days for the defendants to move to set it
aside. When they did so under Rule 60(b), the court denied the motion. On appeal, the Second Circuit noted that the
Federal Rules of Civil Procedure contemplate a two-step process following a defendant’s failure to move or plead.
First, default is entered by the Clerk upon plaintiff’s request. Thereafter, under Rule 55(c), the defendant has an
opportunity to have the default set aside. If that motion is not made or is unsuccessful, judgment by default may be
entered (after a hearing for damages, if necessary). Then a motion to set aside the judgment can be filed pursuant to
Rule 60(b). Because the district court in Meehan had omitted the first step of entering a default, the Second Circuit
concluded that there had been no need to file a motion to lift the default and defendants had proceeded properly by
simply opposing the plaintiffs’ motion for judgment. It is this conclusion that defendant here relies upon.
Unfortunately, there is no two-step process for obtaining a default judgment under the Ohio Rules of Civil
Procedure and, in this case, the default judgment was entered by an Ohio court. A proper and timely motion to set it
aside had to be filed either in the state court or in the federal court after removal.
6
Fourth, defendant cites Wright v. Central States, Southeast and Southwest Areas,
Health and Welfare Fund, 440 F.Supp. 1235 (D.S.C. 1977). However, in that case, removal was
accomplished before the plaintiff even moved in the state court for a default judgment. Wright
does not apply.
Finally, defendant cites Kizer v. Sherwood, 311 F.Supp. 809 (M.D. Pa. 1970), a
case which is very different on its facts when compared to the instant case. In Kizer, plaintiff
filed a state court suit against a government employee as a result of an automobile accident
which caused property damage. A default judgment was obtained, but, under the Federal Tort
Claims Act, a trial on damages could still be held if the defendant requested one by a certain
date. Two days before that date, the United States Attorney for the Middle District of
Pennsylvania petitioned for removal, certifying that the defendant had been acting within the
scope of his employment with the federal government at the time of the accident. Plaintiff filed a
motion to remand, arguing that removal had been untimely. The court denied the motion and
determined that removal prior to the deadline for requesting a damages hearing was timely. The
court also determined that the original state court action had not been properly instituted because
it had been filed outside the two-year statute of limitations. For that reason, the court indicated
that it would entertain a motion by the government to set aside the default judgment under Rule
60(b). Clearly, Kizer does not apply.
Defendant also argues that Fed. R. Civ. P. 55(c) permits a district court to set
aside default upon a showing of “good cause.” That is true; however, it applies only in a situation
where default has been entered, or noted, by the Clerk. It does not apply where, as here, a default
judgment has already been entered.
7
In the latter situation, Fed. R. Civ. P. 60(b) applies. As explained in Waifersong
Ltd. Inc. v. Classic Music Vending, 976 F.2d 290 (6th Cir. 1992):
Under the rule, a stricter standard applies for setting aside a default once it
has ripened into a judgment. When a defendant seeks relief from a default that has
been entered by the clerk upon a plaintiff’s request, the district court enjoys
considerable latitude under the “good cause shown” standard. But once the court
has determined damages and a judgment has been entered, the district court’s
discretion to vacate the judgment is circumscribed by public policy favoring
finality of judgments and termination of litigation. Rule 60(b) reflects this public
policy by requiring greater specificity from a moving party before a court will set
aside a default judgment. While the standards for granting relief differ, the factors
to be considered by the court are said to be similar and to include:
(1)
(2)
(3)
Whether culpable conduct of the defendant led to the default,
Whether the defendant has a meritorious defense, and
Whether the plaintiff will be prejudiced.
See United Coin Meter Co. v. Seaboard Coastline R.R., 705 F.2d 839, 845 (6th
Cir.1983); 10 Charles A. Wright et al., Federal Practice and Procedure § 2692,
2694 (1983).
In practice, however, the methodology for considering these factors and
the weight to be accorded them depends on whether the court is confronted by an
entry of default or a default judgment. When asked to set aside an entry of default,
a court considers the first factor, defendant’s culpability, in the general context of
determining whether a petitioner is deserving of equitable relief. But when it is a
judgment the defendant is seeking to avoid, the specific requirements of Rule
60(b) narrow the scope of the court’s equitable inquiry. When relief is sought
under Rule 60(b)(1), [footnote omitted] the culpability factor is framed in terms of
“mistake, inadvertence, surprise, or excusable neglect.” Furthermore, while it may
be argued that the three factors are to be “balanced” by the court in determining
whether to set aside an entry of default, balancing is demonstrably inappropriate
when a court initially proceeds, as in the instant case, under Rule 60(b)(1). That is
because the rule mandates that a defendant cannot be relieved of a default
judgment unless he can demonstrate that his default was the product of
mistake, inadvertence, surprise, or excusable neglect. It is only when the
defendant can carry this burden that he will be permitted to demonstrate
that he also can satisfy the other two factors: the existence of a meritorious
defense and the absence of substantial prejudice to the plaintiff should relief
be granted.
Id. at 292 (bolding added).
8
Defendant has made no attempt to convince this Court that he failed to timely file
his answer in state court due to “mistake, inadvertence, surprise, or excusable neglect.” Instead
he argues in his response brief only that he has a meritorious defense and that plaintiff will not
suffer prejudice, the two factors that are not even reached until Rule 60(b)(1) is satisfied.
Further, in his sur-reply defendant relies on the catch-all ground in Rule 60(b)(6)
(i.e., “any other reason that justifies relief”) and asserts that the “other reason” for setting aside
the default judgment is his “correct interpretation of the rules.” (Doc. No. 12 at 1.)
Unfortunately, defendant did not apply a correct interpretation of the rules governing the
interplay between state and federal courts with concurrent jurisdiction in cases of removal.
Furthermore, Rule 60(b)(6) provides relief “only in exceptional and extraordinary
circumstances,” which are defined as those “unusual and extreme situations where principles of
equity mandate relief.” Jinks v. AlliedSignal, Inc., 250 F.3d 381, 387 (6th Cir.2001) (citations
and emphases omitted). In addition to the requirement of exceptional circumstances, a Rule
60(b)(6) movant must also satisfy the three equitable factors required for Rule 55 relief: (1) lack
of prejudice to the plaintiff; (2) a meritorious defense; and (3) whether the defendant’s culpable
conduct led to the judgment. Thompson v. Am. Home Assur. Co., 95 F.3d 429, 433 (6th
Cir.1996). The Court does not find the current situation to constitute “exceptional and
extraordinary circumstances.”
Finally, almost as an afterthought, in a single paragraph without any citation to
case law and without any evidentiary support, defendant asserts that the default should be set
aside under Rule 60(b)(4) or (5).
9
Rule 60(b)(4) allows for setting aside a judgment if it is void. Defendant makes
no attempt to explain why the default judgment would be void. Therefore, the Court rejects this
argument.
Rule 60(b)(5) permits setting aside a final judgment if it “has been satisfied,
released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or
applying it prospectively is no longer equitable[.]” Although he makes no argument specific to
this Rule, presumably he is attempting to rely on his assertion that the debt has already been paid
by him to the person to whom plaintiff assigned the loan. Although this might have been the best
avenue for relief, it is no longer available because of defendant’s utter failure to abide by the
rules of procedure in both the state and federal courts. In any event, this Court will not set aside a
default judgment properly entered in state court on the basis of a one-paragraph argument not
even made in a proper motion to set aside the default judgment and not supported by any law or
record evidence.
III. CONCLUSION
For the reasons set forth above, plaintiff’s motion to strike the answer and
counterclaim (Doc. No. 4) is GRANTED. Defendant’s alternative motion for relief from
judgment (Doc. No. 7) is DENIED. This case is REMANDED.
IT IS SO ORDERED.
Dated: May 12, 2011
HONORABLE SARA LIOI
UNITED STATES DISTRICT JUDGE
10
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