Belfor USA Group Inc v. Banks et al
ORDER denying 73 Motion to Set Aside Judgment. Signed by Honorable David C Norton on January 26, 2017.(span, ) (Main Document 81 replaced on 1/26/2017) (jbry, ). Modified on 1/26/2017 to replace with corrected document from chambers (jbry, ).
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
BELFOR USA GROUP, INC.,
JAMES BANKS and REBECCA BANKS, )
This matter comes before the court on defendants and counterclaimants James and
Rebecca Banks’s (“the Banks”) motion to set aside judgment, ECF No. 73. For the
reasons set forth below, the court denies the Banks’s motion.
Belfor USA Group (“Belfor”) is a Colorado corporation with a principal place of
business in Birmingham, Michigan. Compl. ¶ 2. Belfor operates as a restoration
company providing emergency disaster recovery and property restoration. Id. ¶ 8. The
Banks are citizens of South Carolina. Id. ¶ 3. On November 11, 2011, a fire partially
destroyed the Banks’s home located on 816 South Main Street in Summerville, South
Carolina. Id. ¶ 9. The parties entered into a contract on November 13, 2011, under
which Belfor agreed to perform fire-remediation and fire-restoration work on the Banks’s
home and their personal property. Id. ¶ 10.
Under the terms of the contract, the Banks “transfer[red], assign[ed], and
convey[ed]  their right, title, and interest in and to [any] insurance policy proceeds”
owed in connection with the fire to Belfor. Compl. Ex. A, Belfor Contract. The Banks
also agreed to “immediately endorse and tender all drafts produced” to Belfor. Id. Belfor
performed the fire-remediation and restoration work and issued invoices to the Banks
totaling $337,928.64. ECF No. 40 at 1. Belfor alleges that the Banks have refused to pay
the remaining balance of $161,593.79, despite receiving payment from its insurer for
Belfor’s materials and services. Compl. ¶¶ 18–19.
On April 28, 2015, Belfor filed the present action against the Banks, bringing
claims for breach of contract, conversion, and quantum meruit. On May 18, 2015, the
Banks filed an answer, asserting counterclaims against Belfor for negligence, negligence
per se, and violation of the South Carolina Unfair Trade Practices Act (“SCUPTA”). On
September 9, 2015, the court granted in part and denied in part Belfor’s motion to dismiss
and dismissed the Banks’ SCUPTA claim without prejudice. Belfor filed a motion for
summary judgment pertaining to its breach of contract claim and the Banks’s negligence
and negligence per se counterclaims, and motions to exclude the Banks’s construction
and antique experts on April 11, 2016. The court issued an order dated July 14, 2016,
granting the motions to exclude, and granting in part and denying in part the motion for
summary judgment as to the Banks’s counterclaims (“July 2016 order”). ECF No. 65.
On July 20, 2016 the Supreme Court of South Carolina suspended the Banks’s previous
counsel, David Collins (“Collins”), from the practice of law. ECF No. 73, Ex. A, South
Carolina Supreme Court Order.
The Banks filed the present motion to set aside judgment on August 30, 2016.
ECF No. 73. Belfor filed a response on September 16, 2016. ECF No. 77. The Banks
filed a reply on September 26, 2016. ECF No. 78. The motion has been fully briefed and
is now ripe for the court’s review.
Federal Rule of Civil Procedure 60(b) provides:
[o]n motion and just terms, the court may relieve a party or its legal
representative from a final judgment, order, or proceeding for the
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not
have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic),
misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment 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; or
(6) any other reason that justifies relief.
Fed. R. Civ. P. 60(b). In order to obtain relief under Rule 60(b) the moving party must
“show (1) that the Rule 60(b) motion is timely; (2) that [the non-moving party] will not
suffer unfair prejudice if the default judgement is set aside; and (3) that that [the movant's
defense] is meritorious.” Westlake Legal Group v. Yelp, Inc., 599 F. App’x 481, 484
(4th Cir. 2015) (quoting Heyman v. M.L. Mktg. Co., 116 F.3d 91, 94 n. 3 (4th Cir.
1997)). When a moving party seeks relief under the catch-all provision of subsection
(b)(6), he must also show the existence of “extraordinary circumstances.” Murchison v.
Astrue, 466 F. App’x 225, 229 (4th Cir. 2012) (quoting Reid v. Angelone, 369 F.3d 363,
370 (4th Cir. 2004)). “[E]xtraordinary circumstances [are those] that create a substantial
danger that the underlying judgment was unjust.” Id. (alterations in original) (quoting
Margoles v. Johns, 798 F.2d 1069, 1073 (7th Cir. 1986)).
The Banks argue that they are entitled to relief under Rule 60(b)(6) because
Collins, their previous counsel, “seriously neglected” the case, and ask the court to set
aside the July 2016 order to allow the Banks to submit expert disclosures and pursue
discovery. ECF No. 73 at 1, 6. Belfor counters that this is not the type of
“extraordinary” case for which Rule 60(b)(6) was designed, and that the Banks must be
held accountable for Collins’s “poor” handling on the case. ECF No. 77 at 2.
Rule 60(b)(6) authorizes the Court to relieve a party from a final judgment for
“any other reason that justifies relief.” Relief in this “catch all” category is exceedingly
rare, In Re: Guidant Corp. Implantable Defibrilators Prod. Liab. Litig., 496 F.3d 863, 868
(8th Cir. 2007), and rests on a highly fact-intensive balancing of finality and doing
justice, West v. Carpenter, 790 F.3d 693, 697 (6th Cir. 2015).
Although relief under Rule 60(b)(6) is rare, some courts have granted Rule
60(b)(6) motions in circumstances where a client seeks relief from judgment on the basis
of extremely gross negligence of, or abandonment by, counsel. See, e.g., United States v.
Cirami, 563 F.2d 26, 34 (2d Cir. 1977) (finding an attorney’s “constructive
disappearance” from a case due to a psychological disorder is an “exceptional
circumstance” justifying Rule 60(b)(6) relief); James v. United States, 215 F.R.D. 590,
594 (E.D. Cal. 2002) (finding “extraordinary circumstances” where attorney assured
plaintiffs that everything was proceeding as planned even though he had missed the
administrative filing deadline and was facing a motion to dismiss which he never
opposed); Cmty. Dental Servs. v. Tani, 282 F.3d 1164, 1170 (9th Cir. 2002), as amended
on denial of reh’g and reh’g en banc (Apr. 24, 2002) (finding gross negligence sufficient
for a Rule 60(b)(6) motion where attorney ignored repeated requests from the plaintiff’s
attorney, failed to engage in settlement discussions despite a court order, failed to attend
numerous hearings, and did not oppose a motion to strike the defendant’s answer).
Here, Collins responded to pleadings, engaged in motions practice,1 and
participated—albeit with sanctions—in discovery. He attended the hearing for the
motions to exclude expert testimony and motion for summary judgment, and the court
ultimately allowed the Banks to proceed on their breach of contract claim. ECF No. 65 at
1. The Banks contend that Collins gave them “no reason at all” to believe that he was
unable or unwilling to fully represent their interests. ECF No. 73 at 3. However, a
review of the Banks’s testimony regarding their interactions with Collins in the months
leading up to Collins’s July 20, 2016 suspension forecasts negligence. The Banks testify
that they “continuously reached out” to Collins about the status of the case but that “most
of the time it would take him days or weeks to respond,” and that in the months of June
and July 2016 Collins failed to respond to five separate requests from the Banks for an
update on the case. ECF No. 73, Ex. 2 Banks Affidavit ¶ 10. The Banks also testify that
Collins did not contact them to prepare for their depositions on March 1, 2016, and that it
There is certainly a disparity in the volume of briefing for the motions to exclude
and motion for summary judgment before the court, with the Banks’s joint response to all
three motions before the court comprising six pages, in comparison to the hundreds of
pages of documents that Belfor submitted. However, excessive briefing is not necessarily
an indicator of a more effective argument. See Waybright v. Frederick Cnty., 528 F.3d
199, 210 (4th Cir. 2008) (“[W]isdom may reside in recognizing that less is sometimes
more and that zealous advocacy need not always part company with forbearance and
restraint.”); see also W. Shakespeare, Hamlet, Act 2, scene ii (“[B]revity is the soul of
wit.”). In any event, a six-page response filed during the course of motions practice is
not the type of “extraordinary circumstance” that courts have relied on when granting
Rule 60(b)(6) motions.
was only during these depositions that they learned Collins had agreed to a sanction of
$2,500 for failing to participate in discovery. Id.
In Smith v. Bounds, 813 F.2d 1299, 1305 (4th Cir. 1987), the Fourth Circuit
found that the district court properly struck denied a 60(b)(6) motion where the
defendants “knew or should have known” that counsel had a history of failing to respond
to the court’s orders, based on counsel’s “decade-old pattern of neglect and delay.”
While Collins may not have displayed the decades-long pattern of neglect of the attorney
in Bounds, the Banks suspected that Collins may have been negligently handling their
case—if not by March 1, 2016 when Collins failed to prepare them for their depositions,
then certainly by June 2016 when Collins stopped responding to the Banks’s repeated
requests for status updates on the case. The Banks’s testimony demonstrates that
although they had concerns regarding Collins’s representation, they made the decision to
continue with him as their attorney until Collins was suspended and they were forced to
find a new lawyer.
Additionally, the Banks have not asserted that Collins’s suspension was in any
way related to his conduct working on their case, simply stating that Collins was being
investigated “for some kind of alleged professional misconduct.” ECF No. 73 at 3. A
review of the South Carolina Supreme Court order suspending Collins does not reveal if
Collins was disciplined for his work on the Banks’s case. Matter of Collins, 789 S.E.2d
577 (S.C. 2016). Although the timing of Collins’s suspension from the practice of law
may have been fortuitous for the Banks to file this motion, the mere fact that Collins was
suspended six days after the court issued the July 2016 order does not mean that he was
suspended as a result of his work on the Banks’s case.
Further, the Banks argue that because of Collins’s “serious[s] neglect[t]” they are
without a means to remedy the damage caused by the 2011 fire to their home, and that
without an order to set aside judgment, Belfor will receive a windfall profit. ECF No. 73
at 1. In Thomas v. Cumberland Cty. Sch., 2011 WL 10045248, at *4 (E.D.N.C. Mar. 18,
2011), aff’d, 435 F. App’x 231 (4th Cir. 2011), the court denied a Rule 60(b)(6) motion
where its previous order on the stipulation of dismissal did not bar a plaintiff’s Title VII
retaliation action. Similarly, while the July 2016 order granted summary judgment on the
Banks’s counterclaims for negligence per se, negligent construction, and negligent
damage to antiques counterclaims, it allowed the Banks to proceed to trial on the breach
of contract claim. ECF No. 65 at 20. The Banks will have an opportunity to litigate the
remaining breach of contract claim before a jury.
The party seeking relief under Rule 60(b)(6) must also demonstrate that the
opposing party will not suffer unfair prejudice by having the judgment set aside. Aikens
v. Ingram, 612 F.3d 285, 289 (4th Cir. 2010). The Banks argue that while Belfour has
received a favorable order in the motion for summary judgment there has been no final
judgment on the case. That may be, but the Banks ask the court to set aside the July 2016
order and reset the scheduling order to allow the Banks to submit expert disclosures and
pursue discovery. ECF No. 73 at 6. Belfor contends that this would be unfair prejudice
because it has already engaged in discovery, taken depositions and paid for court
reporters, and subpoenaed nonparties. ECF No. 77 at 12. Belfor states that it has spent
over $90,000 in attorney’s fees and costs in the case so far, including the costs associated
with the drafting and arguing of the very dispositive motions that the Banks now seek to
relitigate. Id. If the court were to set aside judgment and grant the Banks the new
scheduling order that they seek, it would necessitate reopening discovery and force
Belfor to go through the entire process and expense once again. To force Belfor to go
through the entire process and expense of discovery and relitigating dispositive motions
would unfairly prejudice Belfor.
Finality is another important consideration here. Rule 60(b)(6) is construed
strictly to preserve the finality of judgments, so that only “extraordinary circumstances”
will justify relief. Reid, 369 F.3d at 370; see Wagner Spray Tech Corp. v. Wolf, 113
F.R.D. 50, 51 (S.D.N.Y. 1986) (“[The movant’s] interest in undoing the results of a
litigation strategy which, in hindsight, appears unwise fails to outweigh the judiciary’s
interest in the finality of judgments.”). Collins may have made some strategic choices in
the briefing for the summary judgment motion and the motions to exclude that were
ultimately unwise, but the Banks have failed to demonstrate that his inattentiveness rose
to the level of gross negligence that would justify the extraordinary relief that they seek.
See Robinson v. Wix Filtration Corp. LLC, 599 F.3d 403, 411 (4th Cir. 2010).
The court is sympathetic to the Banks’s predicament, but finds that Collins’s
allegedly sloppy lawyering is not grounds for granting such an extraordinary remedy as a
60(b)(6) motion. The Supreme Court has reasoned that where a party “voluntarily
chooses” his attorney
he cannot  avoid the consequences of the acts or omissions of this freely
selected agent. Any other notion would be wholly inconsistent with our
system of representative litigation, in which each party is deemed bound
by the acts of his lawyer-agent and is considered to have ‘notice of all
facts, notice of which can be charged upon the attorney.’
Link v. Wabash R. Co., 370 U.S. 626, 632 (1962) (internal citations omitted). Link did
not decide whether it would have been an abuse of discretion to deny a Rule 60(b)
motion, since the aggrieved party never filed one. Id. at 634. However, the Court has
applied the principle that clients must be held accountable for the acts and omissions of
their attorneys in a number of situations. See, e.g., United States v. Boyle, 469 U.S. 241
(1985) (holding that a client can be penalized for his attorney’s untimely filing of a tax
return); Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 397
(1993) (holding that clients are accountable for their counsel’s failure to file their proofs
of claim in a case under Bankruptcy Rule 9006(b)(1)). The Fourth Circuit has similarly
held that “a lawyer’s ignorance or carelessness do not present cognizable grounds for
relief under [Rule] 60(b).” Evans v. United Life & Accident Ins. Co., 871 F.2d 466, 472
(4th Cir. 1989). The court hesitates to expand the scope of Rule 60(b)(6)’s application to
encompass what is essentially a legal malpractice claim.2 Accordingly, the court denies
the Banks’s motion.
The Banks state that Collins “apparently” has no malpractice coverage, and so
without the court setting aside the July 2016 order that the Banks will have “no other
remedy.” ECF No. 73 at 5. In granting a 60(b)(6) motion, some courts have found it
persuasive that an attorney lacked malpractice insurance. See James v. United States,
215 F.R.D. 590, 594 (E.D. Cal. 2002) (In granting a 60(b)(6) motion, court considered
that “a malpractice action is clearly an inadequate remedy in this case because Olives . . .
apparently has no malpractice insurance or assets to his name.”). However, the court is
unaware of any in-circuit decisions holding that an attorney’s lack of malpractice
insurance is sufficient to grant a 60(b)(6) motion where there are no independent
“extraordinary circumstances” to warrant it.
For the reasons set forth above, the court DENIES the Banks’s motion to set
aside the judgment.
AND IT IS SO ORDERED.
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
January 26, 2017
Charleston, South Carolina
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