JUDITH C. McCARTHY, Magistrate Judge.
On July 25, 2014, Plaintiff Brian D. Pettiford ("Plaintiff') brought this action pursuant to 42 U.S.C. § 1983, alleging, inter alia, that Defendant City of Yonkers and Defendant Yonkers Police Officers Vinnie Devito, Alex Delladonna, Peter Schwartz, Dennis Molina and Christian Koch (jointly "Defendants") subjected him to false arrest, malicious prosecution, and unreasonable search and seizure during two separate arrests in 2012.
Plaintiff initially brought this action without representation. (Docket No. 1). On March 23, 2016, Paula Johnson Kelly, Esq. ("Ms. Kelly") filed a Notice of Appearance, indicating that she was now representing Plaintiff. (Docket No. 26). However, by letter dated October 17, 2016 and at the October 20, 2016 status conference before the undersigned, Ms. Kelly sought permission to withdraw as counsel, indicating that she had not had any contact with Plaintiff in months despite repeated and diligent efforts. (Docket No. 42). Accordingly, the Court instructed Ms. Kelly to file a motion to withdraw, (Docket No. 52), and further directed her to provide Plaintiff with notice of the attendant oral argument scheduled for December 7, 2016. Ms. Kelly timely filed her unopposed motion to withdraw and provided Plaintiff with notice of the oral argument. (Docket Nos. 53, 54). Counsel for the parties subsequently appeared for oral argument on December 7, 2016. The Court waited thirty minutes for Plaintiff to arrive, but he failed to appear and provided no explanation to the Court. After hearing argument, the Court granted Ms. Kelly's motion and mailed a copy of its Order to Plaintiff (Docket No. 55). The Court also scheduled a status conference for February 10, 2017 and directed Plaintiff to notify the Court as to whether he had either retained new counsel or was proceeding pro se. (Id.). The Court mailed a copy of the Minute Entry memorializing that Order to Plaintiff on December 8, 2016. Plaintiff did not contact the Court.
On February 10, 2017, the Court waited over an hour, but Plaintiff failed to appear. Plaintiff did not contact the Court or Defendants to advise that he would not appear. Accordingly, the Court directed Plaintiff to appear on March 3, 2017 to show cause as to why his case should not be dismissed for failure to prosecute and warned him that "failure to appear at the next conference may result in dismissal of this action." (See Feb. 10, 2017 Min. Entry). Thereafter, on February 13, 2017, the Court further issued an Order to Show Cause directing the parties to appear for a hearing on March 3, 2017. (Docket No. 56). The Order, mailed to Plaintiff on February 14, 2017, again warned Plaintiff that failure to appear could result in dismissal of his case. (Id.). Nevertheless, Plaintiff did not appear. Defendants subsequently moved to dismiss the case for failure to prosecute on March 31, 2017. (Docket Nos. 57, 58, 59). Plaintiff did not oppose the motion. On September 7, 2017, the undersigned granted Defendants' motion. (Docket No. 60).
By letter dated May 11, 2018, Plaintiff asked that the Court reopen his case. (Docket No. 62). Plaintiff states that on May 8, 2018, his criminal attorney notified him that his "conviction was being overturned . . . due to new found [sic] evidence that the officers lied to get a conviction[.]" (Docket No. 62 at 2). On June 12, 2018, the Court received another letter from Plaintiff indicating that the Westchester County District Attorney's Office planned to join in a motion to vacate judgment pursuant to N.Y. C.P.L. § 440.10. (Docket No. 65). Plaintiff's criminal conviction was ultimately vacated. (Id.). Plaintiff, who has already served the entirety of his three year prison sentence, now requests that his case be reopened "in the interest of justice." (Docket No. 62 at 2).
"Motions to set aside a dismissal for failure to prosecute are properly brought under Rule 60(b) which provides that . . . `the court may relieve a party . . . from a final judgment, order or proceeding.'" Canini v. United States Dep't of Justice Fed. Bureau of Prisons, No. 04 Civ. 9049 (CSH), 2008 WL 818696, at *2 (S.D.N.Y. Mar. 26, 2008)
Fed. R. Civ. P. 60(b). All Rule 60(b) motions must be made within a reasonable time, but motions made under Rule 60(b)(1)-(3) must be made no more than a year after the entry of the judgment.
"In deciding a Rule 60(b) motion, a court must balance the policy in favor of hearing a litigant's claims on the merits against the policy in favor of finality." Kotlicky v. United States Fidelity & Guar. Co., 817 F.2d 6, 9 (1987); Apex Emp. Wellness Servs., Inc. v. APS Healthcare Bethesda, Inc., No. 11 Civ. 9718 (ER), 2017 WL 456466, at *7 (S.D.N.Y. Feb. 1, 2017) ("Rule 60(b) motions are left to the sound discretion of the district judge."); see also United States v. Intl Bhd. of Teamsters, 247 F.3d 370, 391 (2d Cir. 2001) ("A motion for relief from judgment is generally not favored and is properly granted only upon a showing of exceptional circumstances."). Significantly, "[t]he heavy burden for securing relief from final judgments applies to pro se litigants as well as those represented by counsel." Broadway v. City of New York, No. 96 Civ. 2798 (RPP), 2003 WL 21209635, at *3 (S.D.N.Y. May 21, 2003). Where, as here, the movant fails to specify which subsection of Rule 60(b) on which he relies, the Court is required to consider whether the movant's argument falls "within one of the irst five subsections of Rule 60(b), before relying on the catch-all provision of Rule 60(b)(6)." New York City Dist. Council of Carpenters Pension Fund v. G & MDrywall Systems Inc., No. 07 Civ. 1969(CM), 2010 WL 2291490, at *1 (S.D.N.Y. June 1, 2010). Nevertheless, the Court finds that only subsection (6) is potentially relevant here.
Rule 60(b)(6) permits "courts to vacate judgments whenever necessary to accomplish justice[.]" Aczel v. Labonia, 584 F.3d 52, 61 (2d Cir. 2009). While Rule 60(b)(6) is a "grand reservoir of equitable power to do justice in a particular case," Matarese v. LeFevre, 801 F.2d 98, 106 (2d Cir. 1986) (internal quotation marks omitted), "that reservoir is not bottomless," Stevens v. Miller, 676 F.3d 62, 67 (2d Cir. 2012). Thus, "relief under Rule 60(b)(6) is only available in `extraordinary circumstances.'" Buck v. Davis, 137 S.Ct. 759, 777-78 (2017) (quoting Gonzalez v. Crosby, 545 U.S. 524, 535 (2005)). In determining whether extraordinary circumstances exist, a court may consider a wide range of factors, including, "the risk of injustice to the parties" and "the risk of undermining the public's confidence in the judicial process." Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 863-64 (1988); see also Radack v. Norwegian America Line Agency, Inc., 318 F.2d 538, 542 (2d Cir. 1963) ("[T]he rule should be liberally construed when substantial justice will thus be served."). Generally, the Second Circuit requires that a movant: (1) support its motion with highly convincing evidence; (2) show good cause for its failure to act sooner; and (3) prove that granting the motion will not impose any undue hardship on the other parties. See Kotlicky v. U.S. Fid. & Guar. Co., 817 F.2d 6, 9 (2d Cir. 1987); Green ex rel. Estate of Green v. Advanced Cardiovascular Imaging, No. 07 Civ. 3141(JCF), 2009 WL 3154317, at *2 (S.D.N.Y. Sept. 30, 2009); Broadway, 2003 WL 21209635, at *3.
Here, the Court finds "that the interests of justice dictate" reopening the case. Jackson v. Refined Sugars, Inc., 24 F.Supp.2d 322, 324 (S.D.N.Y. 1998). Given that "courts view Rule 60(b) motions more favorably where, as here, granting the motion will permit an adjudication on the merits," P.T. Busana Idaman Nurani v. Marissa by GHR Industries Trading, 151 F.R.D. 32, 36 (S.D.N.Y. 1993), the Court is persuaded that the circumstances are sufficiently extraordinary to invoke relief under Rule 60(b)(6).
Plaintiff's complaint alleges that Defendants subjected him to an illegal search. (See Docket No. 1). In response, Defendants had argued that the search was justified and based upon probable cause. However, Plaintiff now provides this Court with highly convincing evidence that his search lacked probable cause. (See Docket Nos. 62, 65). By letter dated May 10, 2018, the Westchester District Attorney's Office indicated that the affidavit sworn in connection with the search warrant application that led to Plaintiff's arrest and prosecution contained "statements of fact in conflict with the records of the Yonkers Police Department and the Yonkers Forensic Laboratory."
Given that Plaintiff served three years in connection with an arrest and prosecution that were based upon on an officer's misrepresentations, the Court finds that Plaintiff has provided this Court with highly convincing evidence that he would suffer an extreme hardship if he were not given a fair hearing on his claim. While the Court does not condone Plaintiff's prior conduct in this case, the Court is persuaded by "its duty to do justice." Peterson v. Term Taxi, Inc., 429 F.2d 888, 891 (2d Cir. 1970) (internal quotation marks omitted); Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95-96 (2d Cir. 1993) ("[A]n understandable zeal for a tidy, reduced calendar of cases should not overcome a court's duty to do justice in the particular case. It is the responsibility of the trial court to maintain a balance between clearing its calendar and affording litigants a reasonable chance to be heard."); Davis v. United Fruit Co., 402 F.2d 328, 331 (2d Cir. 1968) ("[A] court must not let its zeal for a tidy calendar overcome its duty to do justice."); see also LeBlanc v. Cleveland, 248 F.3d 95, 101 (2d Cir. 2001) ("[The movant] has demonstrated `extraordinary circumstances' under Rule 60(b)(6), because she would be left without a remedy if the motion were not granted.").
In addition, Plaintiff has shown good cause for his failure to act sooner. "To determine the timeliness of a motion brought pursuant to Rule 60(b)(6), [courts] look at the particular circumstance of each case and `balance the interest in finality with the reasons for delay.'" Grace v. Bank Leumi Trust Co., 443 F.3d 180, 190 n. 8 (2d Cir. 2006) (quoting Kotlicky, 817 F.2d at 9). Though Plaintiff filed his motion to vacate eight months after this Court dismissed his case for failure to prosecute, the Court does not find Plaintiff's delay unreasonable.
Defendants argue that reopening this case subjects Defendants to undue prejudice and is against the interest of judicial economy. (Docket No. 64 at 4). Nevertheless, the Court finds that the danger of prejudice to Defendants is not so great as to outweigh the injustice that Plaintiff would suffer through a dismissal. See Foley v. United States, 645 F.2d 155, 157 (2d Cir. 1981). While the Court recognizes that the alleged illegal searches underlying this matter occurred in 2012, discovery has already begun to take place. Compare Green, 2009 WL 3154317, at *3 (finding no prejudice to nonmoving party where discovery was well under way and the delay would not impact its ability to conduct discovery), with Williams v. New York City Dept. of Corrections, 219 F.R.D. 78, 86 (S.D.N.Y. 2003) (finding prejudice where underlying incident took place six years earlier and no discovery had taken place).
Thus, the Court will vacate the judgment in accordance with the Second Circuit's preference for a resolution of issues on their merits. See New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005). The Court emphasizes, however, that any further dilatory conduct by Plaintiff or disregard for the Court's orders may result in the imposition of sanctions to compensate Defendants for the costs incurred in addressing any continuing defaults in this action. See White Plains Housing Authority v. Getty Properties Corp., No. 13 Civ. 6282 (NSR), 2017 WL 1498041, at *6 (S.D.N.Y. Apr. 25, 2017).
For the reasons set forth above, Plaintiff's motion is granted. The parties are directed to appear for a conference on August 2, 2018 at 10:00 A.M. before Magistrate Judge Judith C. McCarthy in Courtroom 421, 300 Quarropas Street, White Plains, NY 10601. The Clerk of Court is respectfully requested to terminate the pending motion, (Docket No. 62), mail a copy of this Order to the pro se Plaintiff, and reopen this case.
Richard J. Zeitler, Iselin, New Jersey, for Plaintiff.
KARAS, J.
Plaintiff has been represented throughout this case by Richard J. Zeitler, and the Court is disturbed by Mr. Zeitler's conduct in this case. Initially, the Court doubts whether Mr. Zeitler is admitted to practice in this Court and remains in good standing in New Jersey.
This diversity case arises from injuries Plaintiff allegedly sustained when the ceiling of a Comp USA store in Manhattan collapsed. Plaintiff contends that the collapse, which allegedly occurred on April 4, 1999, was caused by the negligence of Defendant Comp USA and of Defendants Ameribuild Construction Management Inc. and Architectural Assoc., Inc., which allegedly designed and/or constructed the ceiling.
None of the Defendants has entered an appearance in this case. Plaintiff apparently had difficulty serving Defendants with process until April of this year, and even then the Court doubts that the attempted service was sufficient, as discussed below.
Plaintiff originally filed this case on April 20, 2001 in the United States District Court for the District of New Jersey. On May 14, 2001, that court transferred this case, sua sponte, to this Court under 28 U.S.C. § 1406 because New Jersey was not a proper venue.
On January 4, 2002, the Honorable John S. Martin, Jr., United States District Judge, dismissed the case for Plaintiff's failure to prosecute. (See Order signed Jan. 4, 2002.) Judge Martin noted that Plaintiff's counsel did not respond to several deadlines to report on the status of this case, did not return the Court's telephone messages, and did not appear for a hearing on the Court's order to show cause why the case should not be dismissed. (See Orders signed Dec. 20, 2001 & Jan. 4, 2002.)
Seven months after the case was dismissed, Plaintiff's counsel requested by letter a return date to file a motion to reopen the case. On August 8, 2002, Judge Martin ordered that Plaintiff may file a motion to set aside the dismissal without a return date from the Court, and that the Court would consider the motion upon submission. (See Order signed Aug. 8, 2002.) Nothing was filed for the next 17 months.
(Zeitler Cert. ¶ 13.)
The Court has difficulty understanding Mr. Zeitler's assertions regarding the alleged conference with Judge Martin. Nothing in the record, including the docket sheet and Judge Martin's Order signed on August 8, 2002, indicates that a conference was scheduled for that date. In fact, Mr. Murphy acknowledges that there was no record that a conference was scheduled, admitting that "[i]nasmuch asthere [sic] was no notice from the Court in the file advising me where [the conference] was to be held, I assumed that it was before Judge John S. Martin." (Attachment L to Zeitler Cert.) More significantly, no one named Ronald L. Allen is a Magistrate Judge of this Court. It is likely, however, that Mr. Zeitler intended to refer to the Honorable Ronald L. Ellis, the Magistrate Judge designated to this case. These befuddlements aside, it is unclear to the Court why an alleged mistake over a supposed conference should have kept Mr. Zeitler from promptly seeking relief from the dismissal. The Court notes that Mr. Zeitler provided no evidence that he took any steps after the conference date, such as the simple and effortless step of calling the Court, to resolve the confusion.
This matter was reassigned to this Court for all purposes on November 17, 2004.
Motions to set a aside a dismissal for failure to prosecute are properly brought under Rule 60(b) of the Federal Rules of Civil Procedure, which provides that "[o]n motion and upon such terms as are just, the court may relieve a party . . . from a final judgment, order, or proceeding." Fed.R.Civ.P. 60(b). "Properly applied, Rule 60(b) strikes a balance between serving the ends of justice and preserving the finality of judgments." Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir.1986). "In other words it should be broadly construed to do substantial justice, yet final judgments should not be lightly reopened." Id. (citations and quotations omitted.)
"Motions under Rule 60(b) are addressed to the sound discretion of the district court and are generally granted only upon a showing of exceptional circumstances." Mendell v. Gollust, 909 F.2d 724, 731 (2d Cir.1990) (citing Nemaizer, 793 F.2d at 61). The movant must adduce "highly convincing material" in support of the motion. United States v. Cirami, 563 F.2d 26, 33 (2d Cir.1977) ("Cirami II").
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party;
(4) the judgment is void;
(5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or
(6) any other reason justifying relief from the operation of the judgment.
Fed.R.Civ.P. 60(b).
The Court has reviewed Plaintiff's submissions and the record in an attempt to determine whether Plaintiff can meet his burden under Rule 60(b) to obtain relief. The Court notes that Plaintiff, in papers submitted by Mr. Zeitler, provides little in the way of argument and evidence to support relief; in fact, Plaintiff invokes none of the subsections of Rule 60, nor does he cite any other authority in support of the motion. Nonetheless, the Court finds that only subsections (1) and (6) are possibly relevant here.
Subsection (1) provides relief due to "mistake, inadvertence, surprise, or excusable neglect." Fed.R.Civ.P. 60(b)(1). However, this subsection is unavailable to Plaintiff because a motion under it must be asserted "not more than one year after the judgment, order, or proceeding was entered or taken." Fed.R.Civ.P. 60(b). Plaintiff filed the motion on January 12, 2004, approximately two years after Judge Martin dismissed the case.
Even if the motion was timely under Rule 60(b)(1), however, the Court would not grant relief. Where the order from which relief is sought is the result of "[c]ounsel's failure to read and obey an unambiguous court rule," counsel's omission is not excusable neglect. Canfield v. Van Atta Buick/GMC Truck, Inc., 127 F.3d 248, 251 (2d Cir.1997). The Second Circuit has "consistently refused to relieve a client of the burdens of a final judgment entered against him due to the mistake or omission of his attorney by reason of the latter's ignorance of the law or of the rules of the court, or his inability to efficiently manage his caseload." United States v. Cirami, 535 F.2d 736, 739 (2d Cir.1976) ("Cirami I"). While "[e]xcusable neglect encompasses `inadvertance, carelessness, and mistake,' and may be found where a party's failure to comply with filing deadlines is attributable to negligence," it will not be found "where there has been an abuse by a party." Fetik v. New York Law Sch., No. 99 CV 7746, 1999 WL 459805, at *4 (S.D.N.Y. June 29, 1999) (quoting Canfield, 127 F.3d at 250). In the end, the Court must make an equitable determination, which takes account of the'" prejudice to the adversary, the length of the delay, the reason for the error, the potential impact on the judicial proceedings, whether it was within the reasonable control of the movant, and whether the movant acted in good faith.'" Stemcor USA, Inc. v. Sea Ripple Mar., Inc., 99 Civ. 3530, 2003 U.S. Dist. LEXIS 7896, at *3 (S.D.N.Y. May 9, 2003) (additional internal quotations omitted) (quoting Fetik, 1999 WL 459805, at *4).
Subsection (6) provides relief "for any other reason." Fed. R. Civ. P 60(b). Relief under this subsection may be proper when the movant has shown the existence of "extraordinary circumstances justifying relief" and "when the judgment may work an extreme and undue hardship." Nemaizer, 793 F.2d at 63. A motion under subsection (6) must be made within a "reasonable time." Fed.R.Civ.P. 60(b).
Putting aside the timeliness issue for now, the Court finds that Plaintiff is not entitled to relief under subsection (6) for Mr. Zeitler's neglect. Relief based on neglect is generally available only under subsection (1). See Grabois v. Dura Erect Corp., 981 F.Supp. 295, 298 (S.D.N.Y.1997). Litigants may not circumvent the one-year limitations period associated with subsection (1) by seeking relief for neglect under subsection (6). Id.
Nonetheless, relief under subsection (6) may be warranted in extraordinary circumstances involving neglect. See, e.g., Klapprott v. Unites States, 335 U.S. 601, 613 (1949) ("And of course, the one-year limitation [under subsection (1)] would control if no more than `neglect' was disclosed by the petition. . . . But petitioner's allegations set up an extraordinary situation which cannot fairly or logically be classified as mere `neglect' on his part.").
In this Circuit, an attorney's negligence alone is not a basis for relief under Rule 60(b)(6). See Cirami I, 535 F.2d at 740-41. But the Second Circuit has held that a litigant may be entitled to relief under subsection (6) where the neglect of an attorney results from mental illness or other severe personal problem. Cirami II, 563 F.2d at 34; see also P.T. Busana Idaman Nurani v. Marissa, 151 F.R.D. 32, 34-35 (S.D.N.Y.1993) ("Nevertheless, the Second Circuit has held that an attorney's mental illness can constitute an 'extraordinary circumstance' justifying relief under Rule 60(b)(6)."); Ituarte v. Chevrolet Motor Div., No. 86 Civ. 2843, 1989 WL 10562, at *4 (E.D.N.Y. Feb. 2, 1989) ("An attorney's mental state can form the basis for Rule 60(b) (6) relief, even in the absence of medical evidence."). In such unusual instances, relief under Rule 60(b)(6) may be granted where there was "the possibly unique fact of what we may term the `constructive disappearance' of defendants' attorney, who was allegedly suffering from a psychological disorder which led him to neglect almost completely his clients' business while at the same time assuring them that he was attending to it, and who had made himself unavailable even to the trial judge." Cirami II, 563 F.2d at 34.
Plaintiff argues that he "will suffer serious prejudice" because "[t]he statute of limitations has already run." (Zeitler Cert. ¶ 16.) Plaintiff further argues that defendants would not suffer prejudice if the dismissal were vacated. (Id.) Plaintiff cites no authority to support these arguments.
The Court finds that the running of the limitations period, alone, does not entitle Plaintiff to relief under Rule 60(b) (6). See Wager Spray Tech Corp. v. Wolf, 113 F.R.D. 50, 53 (S.D.N.Y.1986) ("The effect of a time bar without more does not constitute the basis for 60(b)(6) relief."). Plaintiff has offered no excuse as to why he was not diligent in pursuing this matter, and therefore the Court finds that he has not met his burden under Rule 60(b)(6) to show "extraordinary circumstances" and that he has suffered an "extreme and undue hardship."
Furthermore, the Court rejects Plaintiffs' contention that Defendants would suffer no prejudice here. The very fact that the limitations period has run while Plaintiff has failed to duly prosecute this case indicates that Defendants would be prejudiced in defending Plaintiff's potentially stale claims. "Statutes of limitation, like the equitable doctrine of laches, in their conclusive effects are designed to promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared." Order of R.R. Tels. v. Ry. Express Agency, Inc., 321 U.S. 342, 348-49 (1944). Here, over five years have passed since Plaintiff was allegedly injured (it will be six years in April 2005). There is no indication that any meaningful steps have been taken by Plaintiff towards the resolution of this case on its merits since it was filed in 2001; in fact, it appears that the Defendants have never been properly served. Accordingly, the Court finds that to reopen this case now would prejudice Defendants.
In turning to the timing of Plaintiff's motion, the Court finds that Plaintiff did not make the motion within a reasonable period as required by the rule. The Court is aware that there is no set time for making a motion under subsection (6) and that "[w]hat is a `reasonable time' is a question to be answered in light of all the circumstances of the case." Cirami II, 563 F.2d at 32. But Plaintiff delayed making the instant motion for two years, asserting only that Mr. Zeitler and his colleagues were confused about a court conference and that case files were "mislaid" in Mr. Zeitler's office. Mr. Zeitler's delay here cannot be considered "reasonable" under any standard. Accordingly, the Court is finds that the motion is untimely.
This Court applies state-law limitations periods to statelaw causes of action brought under the Court's diversity jurisdiction. Quinn v. Thomas H. Lee Co., 61 F.Supp.2d 13, 21-22 (S.D.N.Y.1999). State law also determines when an action is commenced for limitations purposes. See Morse v. Elmira Country Club, 752 F.2d 35, 37-38 (2d Cir.1984). In New York, the statute of limitations for personal injury caused by negligence is three years. N.Y. C.P.L.R. § 214(5); Sawyer v. Wight, 196 F.Supp.2d 220, 228 (E.D.N.Y.2002). Under New York law, the running of the limitations period is tolled only by service of process, although the Federal Rules of Civil Procedure govern the proper method of effective service. See Morse, 752 F.2d at 38.
Plaintiff contends that he was injured due to Defendants' negligence on April 4, 1999. (Comply ¶¶ 10-14.) Thus, the three-year limitations period ran from that date and concluded in April 2002. No evidence appears in the record that any of the Defendants was properly served with process within that time. In fact, it appears that Plaintiff did not serve process on Defendants prior to April 2, 2004. (See Returns of Service dated Apr. 2, 2004 (Docket Entries 5-7).)
While the Court would ordinarily seek to adjudicate Plaintiff's claims on their merits, it appears that such an adjudication would not be possible in this case because of the running of the limitations period. Thus, the Court believes that Plaintiff's motion should be denied in the interest of finality.
The Court has determined that Plaintiff has failed to meet his burden under subsections (1) and (6) of Rule 60(b), and that the motion was not timely made under either of those provisions. The Court also finds that Plaintiff's claims are likely barred by the statute of limitations and therefore equitable considerations call for denying relief. The Court accordingly DENIES Plaintiff's motion.
Accordingly, it is hereby
ORDERED that plaintiff's motion (Docket No. 8) to set aside the dismissal for failure to prosecute is DENIED. It is further
ORDERED that counsel for Plaintiff, Richard J. Zeitler, shall appear at 10:30 am on January 27, 2005, in courtroom 21D, 500 Pearl Street, New York, New York, to show cause why this case should not be referred under Local Rule 1.5(f) to the Chief Judge for possible disciplinary proceedings. It is further
ORDERED that Mr. Zeitler will serve a copy of this opinion and order on his client and shall file with the Court an affidavit of service indicating that he has done so by January 27, 2005.
ORDERED that this case remains CLOSED.
SO ORDERED.
Not Reported in F.Supp.2d, 2005 WL 66605, 60 Fed.R.Serv.3d 802
Jeff Edward Butler, Clifford Chance US LLP, New York, NY, for Plaintiff.
Zachary David Rosenbaum, Lowenstein Sandler LLP, New York, NY, for Defendant.
Ramos, D.J.:
Plaintiff moves the Court for an order awarding Plaintiff: (1) prejudgment interest based on the jury verdict; (2) litigation expenses, including attorneys' fees; (3) interest on the litigation expenses; and (4) post-judgment interest pursuant to 28 U.S.C. § 1961(a). Doc. 113. Defendant moves for "relief from final judgment pursuant to Federal Rules of Civil Procedure 59(e) and 60(b)(2) and (3)," including for a new trial to the extent necessary. Doc. 126.
The following facts are undisputed except where otherwise noted and are taken from the parties' previous summary judgment submissions.
Summit is a Michigan corporation that develops healthcare programs for businesses and health plans. Compl. ¶ 3. Its programs offer preventative care services, including health screenings, at employees' and plan members' worksites. Id. Its chief executive officer at the relevant time was Richard Pennington, and its chief operating officer was Douglas Finch. Decl. of Richard Penington (MSJ) ¶ 1; Decl. of Douglas C. Finch (MSJ) ¶ 1. Jason Moczul, the national account manager assigned to the program at issue in this case, was APS's primary contact at Summit with respect to operational matters. Decl. of Jason Moczul (MSJ) ¶¶ 1-2.
APS, an Iowa corporation with its principal place of business in White Plains, New York, administers state and local government health plans and provides healthcare services to government employees. Complaint ("Compl.") (Doc. 1) ¶ 4; Answer (Doc. 7) ¶ 4. During the time period at issue in this case, its president and chief operating officer was Jerome Vaccaro, its chief financial officer was John McDonough, and the in-house attorney who served as the "point man" in negotiations with Summit was Paul Dominianni. Decl. of Jeff E. Butler (MSJ) Ex. 27, at 6:5-6, 71:18-72:14; id. Ex. 29, at 19:12-15. David Glazer, a senior vice president in White Plains who was responsible for operations in the eastern United States, oversaw a team of employees based in Tennessee. Id.
Summit and APS were parties to the Summit Health Services Agreement (the "Agreement"), which was effective as of January 1, 2011. Pl.'s 56.1 Stmt. ¶ 3; Def.'s 56.1 Stmt. ¶ 3.
The pricing terms were set forth in Exhibit B to the Agreement. Id. at 3, 17-20. The terms included a $37 fee for each screening Summit performed. Id. at 17. That price was the product of negotiations between the parties. See Decl. of Richard Penington (MSJ) ¶ 10. Exhibit B also included various fees, including a "standard minimum" for "health screening clinics" that was described as follows: "40 screenings, or 90% of Customer projection, whichever is greater." Agreement at 17. This per-clinic minimum fee provision was the subject of the litigation, and was heavily contested on summary judgment and at trial. The provision appeared in all drafts of Exhibit B that the parties exchanged. Pl.'s 56.1 Stmt. ¶ 8; Def.'s 56.1 Stmt. ¶ 8.
On December 21, 2010, Dominianni sent Finch an email in which he referenced the parties' earlier agreement to reduce the per-screening rate to $37 and informed Finch that all other provisions of Exhibit B were "acceptable to APS." Decl. of Douglas C. Finch (MSJ) Ex. 5. Summit began performing under the Agreement in January 2011, although the Agreement was not actually signed until March 15, 2011. Pl.'s 56.1 Stmt. ¶¶ 20, 23; Def.'s 56.1 Stmt. ¶¶ 20, 23. At Summit's request, Watson and his team began providing Summit with clinic-by-clinic participation estimates (the "Watson estimates"). See Decl. of Troy Watson (MSJ) ¶¶ 5, 10; id. Ex. C. Glazer testified at his deposition that he knew the Watson estimates were being provided but that he believed they would be used solely for staffing (and not for billing) purposes. Decl. of Jeff Butler (MSJ) Ex. 26, at 114:19-116:2, 117:2-117:6. Watson testified that he typically tried to provide an estimate at least two weeks prior to a given clinic. Id. Ex. 30, at 115:20-116:10. He expected that Summit would staff and supply the clinics based on those estimates. Id. Ex. 30, at 78:25-79:4, 169:7-9. Both he and Glazer provided deposition testimony indicating that Watson's figures represented good-faith estimates of expected clinic participation. Decl. of Jeff Butler (MSJ) Ex. 26, at 130:23-131:15, 170:23-171:6; id. Ex. 30, at 76:9-15. However, Watson repeatedly indicated to Summit that the numbers he was providing were "guesses." See, e.g., Decl. of Troy Watson (MSJ) Ex. E-F.
Id. Ex. P at SUM 10973. At his deposition, Moczul testified that he did not recall having any follow-up discussions about the issues raised in these emails, nor did he recall informing Watson that the estimates would be used for billing purposes. Id. Ex. D, at 33:7-12, 211:19-212:3. Penington and Finch similarly could not recall subsequent discussions concerning Moczul's email. Decl. of Howard S. Wolfson (Amend) Ex. M, at 207:5-208:23; id. Ex. T, at 296:10-17. Moczul prepared an initial invoice for January 2011 in February of that year, but he informed Penington and Finch that he would hold off on sending it until the Agreement was signed. Decl. of Howard S. Wolfson (MSJ) Ex. R, S.
In early 2011, still prior to the execution of the Agreement, there were a number of performance issues with the online appointment system, including a glitch that allowed a limited number of participants to see other participants' appointments. Decl. of Richard Penington (MSJ) ¶¶ 13-14. To remedy the privacy issue, the system had to be shut down for over two weeks in March. Id. ¶ 14. On March 8, Vaccaro alerted Penington to additional complaints about Summit's performance. Id. ¶ 15. These complaints included issues with the level of staffing being provided, allegations that staff members were inadequately trained, and reports of equipment malfunctions. Id. Also around that time, Summit realized that screening results, which included confidential patient information, were being provided to APS without a Business Associate Agreement ("BAA") in place, exposing Summit to potential HIPPA liability. Id. ¶ 16; Decl. of Douglas C. Finch (MSJ) ¶¶ 6, 31-32. Rather than executing a stand-alone BAA, the parties had included the document as Exhibit C to the Agreement, which at that point still remained unsigned. Decl. of Douglas C. Finch (MSJ) ¶ 31; see Agreement at 21-30. Summit therefore suspended the electronic data feed that was transmitting the results to APS. Decl. of Douglas C. Finch (MSJ) ¶ 32; Decl. of Richard Penington (MSJ) ¶ 16. APS asked Summit to sign a standalone BAA at that point, but Finch informed APS on March 10 that Summit would only sign the BAA "in conjunction with a signed contract." Decl. of Douglas C. Finch (MSJ) ¶ 33; id. Ex. 11. This appears to have accelerated any remaining negotiations, and the Agreement was signed five days later. Finch and McDonough were the signatories for their respective companies. Agreement at 8.
Finch and Glazer met in White Plains on March 17, 2011, two days after the Agreement was signed. Decl. of Douglas C. Finch (MSJ) ¶ 40. It was during this conversation that the minimum fee issue came to the fore, with Finch informing Glazer that the Watson estimates resulted in large minimum fees for January and February. Id. ¶ 41; Decl. of Jeff E. Butler (MSJ) Ex. 26, at 113:6-116:2. Glazer emailed Finch on March 18, copying Shulman and Hines. Decl. of Douglas C. Finch (MSJ) Ex. 16. In the email, Glazer noted that the Tennessee staff had not been aware of the minimum fee provision because the Agreement "had never been completed in during [sic] those early months." Id. He then referenced the staffing issues at the clinics, along with weather-related reductions in expected turnout, before writing:
Id. Hines sent Finch a follow-up email later that day, copying Glazer and Shulman (the "Hines email"). The Hines email read:
Id. Ex. 17.
As the program progressed, Summit continued to request participation estimates from Watson and his team, indicating that additional clinics could not be added to APEX without that data. See Decl. of Howard S. Wolfson (MSJ) Ex. PP. Watson thus began providing uniform estimates of either 75 or, if the clinic was being held in a large city, 100. Decl. of Troy Watson (MSJ) ¶ 21; see Decl. of Jeff Butler (MSJ) Ex. 21, at APS 9186.
Summit sent APS its first invoice, covering the screenings performed in January, on March 30, 2011. Pl.'s 56.1 Stmt. ¶ 24; Def.'s 56.1 Stmt. ¶ 24. In the cover email accompanying that invoice, Finch described some "accommodations" that Summit made in light of APS's concerns. Decl. of Douglas C. Finch (MSJ) Ex. 24. The "accommodations" included an "Alternative Minimum Calculation" whereby minimum fees were calculated based on an estimate of actual screening capacity rather than on the Watson estimates. Id. The February invoice was similarly discounted based on the "Alternative Minimum Calculation." Id. ¶ 48; see Decl. of John McDonough (MSJ) Ex. F. APS ultimately received six invoices, one for each month of the program. Decl. of Douglas C. Finch (MSJ) Ex. 18-23.
Plaintiff filed the instant action for breach of contract on December 30, 2011, alleging that APS owed Plaintiff $2,248,520.88 in damages attributable to the unpaid balance of the invoices. Compl. ¶¶ 35-36. Defendant filed an Answer on March 1, 2012, asserting eight affirmative defenses. Doc. 7. The parties engaged in extensive discovery from April 2012 to January 2013. See Doc. 130 at 2. During this period, the parties took a total of 13 depositions, including the deposition of Douglas Finch. Id. (citing Doc. 131, Butler Decl. Ex. 2).
The remaining issues were resolved in a jury trial that took place from July 28 to August 1, 2014. The jury found that Plaintiff was entitled to bill APS for standard minimum fees after the 150
While Plaintiff's Motion for Attorneys' Fees was pending, Defendant filed a Notice of Appeal on August 27, 2014. Doc. 125. Defendant then filed its Motion for Relief from Final Judgment with this Court on September 2, 2014. Doc. 126.
"The filing of a notice of appeal is an event of jurisdictional significance—it confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal." Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982). However, the filing of an appeal "only divest[s] the district court of jurisdiction respecting the questions raised and decided in the order that is on appeal." N.Y. State Natl Org. for Women v. Terry, 886 F.2d 1339, 1350 (2d Cir. 1989).
First, as to Plaintiff's Motion for Attorneys' Fees, Nontaxable Expenses, and Interest, "notwithstanding a pending appeal, a district court retains residual jurisdiction over collateral matters, including claims for attorneys' fees." Tancredi v. Metro, Life Ins. Co., 378 F.3d 220, 225 (2d Cir. 2004); see also White v. N.H. Dep't of Emp't Sec., 455 U.S. 445, 452 n.14 (1982) (discussing "collateral character of [attorney's fee] issue[s]"). Accordingly, this Court retains jurisdiction over claims concerning attorneys' fees and interest while a merits determination is pending on appeal.
Second, as to Defendant's Motion for Relief from Final Judgment, generally, a district court may entertain and deny a Rule 60(b) motion during the pendency of an appeal, but "may grant a [R]ule 60(b) motion after an appeal is taken only if the moving party obtains permission from the circuit court." Toliver v. County of Sullivan, 957 F.2d 47, 49 (2d Cir. 1992) (emphasis in original); accord King v. First Am. Investigations, Inc., 287 F.3d 91, 94 (2d Cir. 2002). In this regard, the Second Circuit has emphasized that "if [the district court] decides in favor of [the Rule 60(b) motion], then and then only is the necessary remand by the court of appeals to be sought." Toliver, 957 F.2d at 49 (internal quotation marks and citation omitted). Additionally, where a notice of appeal is filed while a timely filed Rule 59(e) motion is pending, "the trial court retains jurisdiction over the postjudgment motion . . ." Basciano v. Lindsay, No. 07 Civ. 421 (NGG), 2008 WL 1700442, at *1 (E.D.N.Y. Apr. 9, 2008), affdsub nom. Basciano v. Martinez, 316 Fed.Appx. 50 (2d Cir. 2009).
The Federal Rules of Civil Procedure allow a litigant subject to an adverse judgment to file either a motion to alter or amend the judgment pursuant to Rule 59(e) or a motion seeking relief from the judgment pursuant to Rule 60(b). "Although the two rules appear similar, they are in fact quite distinct." Robinson v. Wix Filtration Corp. LLC, 599 F.3d 403, 411 (4th Cir. 2010). Rule 59(e) is "a device to relitigate the original issue decided by the district court, and [it is] used to allege legal error." United States v. Fiorelli, 337 F.3d 282, 288 (3d Cir. 2003). The moving party must show one of the following to prevail on a Rule 59(e) motion: (1) an intervening change in the controlling law; (2) the availability of new evidence that was not available when the court issued its order; or (3) the need to correct a clear error of law or fact or to prevent a manifest injustice. Virgin Atl. Airways, Ltd. v. Natl Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992). "Rule 60(b) allows a party to seek relief from a final judgment, and request reopening of his case, under a limited set of circumstances including fraud, mistake, and newly discovered evidence." Gonzalez v. Crosby, 545 U.S. 524, 528 (2005).
Defendant's motion invokes both Rule 59(e) and Rule 60(b). The version of Rule 59(e) that was in effect at the time of Defendant's judgment contains a 28-day time-limit on filing motions under Rule 59(e). Fed. R. Civ. P. 59(e).
Here, it is unclear which judgment that Defendant seeks to "alter or amend" under Rule 59(e). Defendant confusingly states it seeks "relief from the portion of the Court's August 4, 2014 Judgment in favor of plaintiff . . . that applied the January 24, 2014 Opinion and Order Granting in Part and Denying in Part Plaintiff's Motion for Summary Judgment." Doc. 127 at 1. Under the twenty eight day rule, a Rule 59(e) motion related to the January 24 Opinion needed to be filed by late February 2014, and Defendant did not file the instant motion until September 2, 2014. So to the extent Defendant seeks to amend the January 24 Opinion, its motion under Rule 59(e) is untimely. However, a 59(e) motion related to the entry of final judgment dated August 4, 2014 was required to be filed by September 2, 2014, and therefore the 59(e) motion in relation to that decision was timely filed.
Rule 60(b) provides, in relevant part, that "the court may relieve a party . . . from a final judgment, order or proceeding for . . . reasons [of]: . . . (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); [and] (3) fraud . . . misrepresentation, or misconduct by an opposing party . . ." Fed. R. Civ. P. 60(b). Here, Defendant seeks relief under both 60(b)(2) and 60(b)(3).
Rule 60(b) "allows extraordinary judicial relief." Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986) (citation omitted). "A [Rule 60(b)] motion for relief from judgment is generally not favored and is properly granted only upon a showing of exceptional circumstances." United States v. Int'l Bhd. of Teamsters, 247 F.3d 370, 391 (2d Cir. 2001). "In deciding a Rule 60(b) motion, a court must balance the policy in favor of hearing a litigant's claims on the merits against the policy in favor of finality." Kotlicky v. United States Fid. & Guar. Co., 817 F.2d 6, 9 (2d Cir. 1987) (citation omitted). Moreover, Rule 60(b) motions are left to the sound discretion of the district judge. See Natl Petrochemical Co. of Iran v. The MIT Stolt Sheaf, 930 F.2d 240, 244 (2d Cir. 1991). The burden of proof is on the party seeking relief from the judgment. Pichardo v. Ashcroft, 374 F.3d 46, 55 (2d Cir. 2004).
Defendant seeks relief from this Court's granting in part of summary judgment under both Rules 60(b)(2) and 60(b) (3) of the Federal Rules of Civil Procedure.
Rule 60(b)(2) contemplates "newly discovered evidence which by due diligence could not have been discovered in time" for the disposition at issue. Fed. R. Civ. P. 60(b)(2). A movant seeking relief under Rule 60(b)(2), must meet an "onerous standard" by showing that: (1) the newly discovered evidence is of facts that existed at the time of trial or other dispositive proceeding; (2) the moving party is justifiably ignorant of the facts despite using due diligence to learn about them; (3) the newly discovered evidence is admissible and of such importance that it probably would have changed the outcome; and (4) the newly discovered evidence is not merely cumulative or impeaching. United States v. Int'l Bhd. of Teamsters, 247 F.3d 370, 392 (2d Cir. 2001). These requirements must be "strictly met." United States v. All Right, Title and Interest in Property and Premises Known as 710 Main Street, Peekskill, N.Y., 753 F.Supp. 121, 126 (S.D.N.Y. 1990). Moreover, the newly discovered evidence must be "highly convincing." Kotlicky, 817 F.2d at 9.
Defendant's core argument is that the trial testimony of Douglas Finch, Summit's Chief Operating Officer, revealed that Summit lied about the fact that the "principal purpose" of the customer projections was to allow Summit to bill based on them and that Summit misrepresented that the estimates were required for staffing. Doc. 127 at 1-3. Based on this allegedly newly discovered evidence, Defendant seeks to reinstate its equitable estoppel and covenant of good faith and fear dealing defenses. Doc. 127 at 4-5.
Id. (citing Trial Tr. at 409:3-8).
Specifically, Defendant claims that throughout the proceedings Mr. Finch "obfuscated the truth" because at his previous deposition he testified that the estimates were used for "multiple purposes" and Plaintiff cannot point to a single instance in which Summit disclosed "that the
Defendant fails to satisfy the 60(b)(2) standard because it has failed to establish that it was justifiably ignorant of the existence of this evidence despite the exercise of due diligence. APS could have learned of Mr. Finch's opinion about whether billing was the "principal purpose" during his deposition. Mr. Finch was noticed for a deposition during fact discovery and his deposition took place on December 20, 2012. Doc. 131 Ex. 2. Mr. Finch's deposition testimony addressed the multiple purposes for which Summit requested customer projects:
Doc. 131, Butler Decl. Ex. 2 at 176-77 (emphasis added). However, it is of no consequence that Mr. Finch did not testify during his deposition that the "principal purpose" of the customer projections was so that Summit could bill APS based on those projects. This is of no consequence because Defendants do not point to an instance where Mr. Finch was actually asked in his deposition what the "principal purpose" of the projections were.
If the standard for under Rule 60(b)(2) simply required that a question be asked at trial that has not previously been asked before in a deposition—as Defendant essentially suggests with its motion—the Rule would encourage parties to take incomplete depositions in the hopes of "discovering" new information at trial.
Additionally, although it does not form the primary basis of Defendant's motion, Defendant also references the trial testimony of Jason Moczul, Summit's national account manager assigned to the program to further suggest that Mr. Finch lied. The testimony relates to a trial exhibit in which Mr. Finch wrote to APS's senior management that "Summit believes those clinics were appropriately staffed based on Summit Health staffing guidelines." APS Trial Ex. CR, Doc. 128, Rosenbaum Decl., Ex. 2. Mr. Moczul testified that he actually wrote that sentence in the email and that the statement was "false" because the company "did not have staffing guidelines." Trial Tr. 218:6-8, Doc. 128, Rosenbaum Decl., Ex. 1. For the same reasons as discussed above, there is no indication that Defendant could not have discovered this testimony regarding whether the statement was false earlier through reasonable diligence. There is no allegation that the exhibit itself, Trial Ex. CR, was newly discovered.
First, with respect to the affirmative defense of estoppel, the Court found in its January 24 Opinion that "even assuming that Summit did engage in concealment or misrepresentation" and APS relied to its detriment by providing estimates, "the detriment arose only because APS provided what proved to be erroneously high estimates, and the Agreement's minimum fee provision clearly allocated that risk to APS." Doc. 61 at 32. Thus, the Court found, inter alia, that Defendant had not shown that APS detrimentally relied on any misrepresentation or concealment because the detriment to Defendant was suffered because its projections were high, not because the projections were provided in the first place. Id. Therefore, the Court agrees with Plaintiff's argument that even if Mr. Finch's or Mr. Moczul's testimony could be considered evidence that altered the Court's finding regarding whether concealment or misrepresentation occurred, the testimony does not alter the Court's decision on the affirmative defense of estoppel because this evidence does not bear on the element of detrimental reliance.
Similarly, in regards to the breach of the implied covenant of good faith and fair dealing, the Court previously rejected this defense as a matter of law "absent evidence of any cognizable damages sustained by APS as a result of a breach by Summit." Doc. 61 at 28. The purported new testimony does not provide any additional evidence of damages, so the testimony does not change the Court's ruling with regards to this affirmative defense.
Additionally, Defendant points to a number of cases holding that under New York law, a party is required to tell the "full truth" after undertaking to speak. See Doc. 127 at 9-10; Doc. 136 at 5-7. The basis of Defendant's argument is that had Summit told "the whole truth" that the "principal purpose" of the customer estimates was billing, "APS would not have assumed the risk of providing
Thus, because Defendant has not satisfied each of the elements necessary to obtain relief from judgment, the Court finds that this case does not present circumstances warranting the relief sought under Rule 60(b)(2).
Defendant also argues that the Court should vacate the judgment under Rule 60(b)(3) based on Plaintiff's failure to fully disclose Mr. Finch's belief that staffing was not a principal reason Summit sought the participation estimates and Mr. Moczul's trial admission that he March 12, 2011 email contained a false statement regarding staffing guidelines. A court may grant relief from final judgment under Rule 60(b)(3) in case of "fraud . . . misrepresentation, or other misconduct of an adverse party." Fed. R. Civ. P. 60(b)(3). Rule 60(b)(3) is "invoked where material information has been withheld or incorrect or perjured evidence has been intentionally supplied." Matter of Emergency Beacon Corp., 666 F.2d 754, 759 (2d Cir. 1981). A party must demonstrate that the opponent's misconduct substantially interfered with his ability to fully and fairly prepare his case and defend the motion. See Fleming v. N.Y. Univ., 865 F.2d 478, 484-485 (2d Cir. 1989); see also Travelers Cas. & Sur. Co. v. Crow & Sutton Assocs., 228 F.R.D. 125, 131 (N.D.N.Y. 2005), aff'd sub nom. Travelers Cas. & Sur. Co. v. Crow & Sutton Assocs., Inc., 172 Fed.Appx. 382 (2d Cir. 2006). It is well established that "a Rule 60(b)(3) motion cannot be granted absent clear and convincing evidence of material misrepresentations and cannot serve as an attempt to relitigate the merits." Fleming, 865 F.2d at 484.
Here, both parties had access to the March 12, 2011 email to APS management regarding staffing and the ability to depose Mr. Finch and Mr. Moczul. Where a movant has access to documents and depositions but fails to ask the same relevant questions in a deposition as it does at trial, it cannot credibly claim that it was prevented from "fully presenting its case." See Progressive Casualty Ins. Co. v. Liberty Mutual Ins. Co., 1996 WL 524339, at *2 (S.D.N.Y. Sept. 13, 1996) (holding 60(b)(3) relief inappropriate where documents were in possession of party at the time summary judgment was filed); see also Taylor v. Texgas Corp., 831 F.2d 255, 259-60 (11th Cir. 1987) (where party alleges witness was "less than truthful" at a hearing where he "failed to tell the Court" relevant information, but the questions asked at the hearing did not address certain topics, the defendant cannot establish that the plaintiff's failure to reveal that same information prevented it from fully and fairly presenting its case). Even assuming a misrepresentation or fraud occurred, there still would not be grounds for Rule 60(b)(3) since Defendant has not shown how Plaintiff prevented Defendant from presenting those facts to the Court or representing the case. See In re Shen, 501 B.R. 216, 223 (Bankr. S.D.N.Y. 2013) ("Even assuming that the Debtor knew that Bank of America's mortgage should have been satisfied by the refinancing and knew that MERS had issued a satisfaction of the mortgage, and even if the Debtor failed to disclose those facts to the Court, there still would not be grounds for Rule 60(b)(3) relief since EverBank has not alleged how the Debtor prevented EverBank from presenting those facts to the Court in opposition to the [Motion].").
Plaintiff's motion seeks three forms of relief: (1) prejudgment interest at the statutory rate of nine percent per annum; (2) all reasonable expenses of litigation based on the Services Agreement between Summit and APS, including attorneys' fees, as well as interest on those expenses at the statutory rate; and (3) post-judgment interest on each money judgment entered in this matter. Doc. 114 at 2. Defendant does not dispute that Plaintiff is entitled to (1) pre-judgment interest at the state statutory rate of 9% per annum, (2) interest on litigation expenses at the state statutory rate of 9% per annum or (3) post-judgment interest at the federal statutory rate of 0.12% per annum.
Plaintiff seeks an award of prejudgment interest under New York law. "In a diversity case, state law governs the award of prejudgment interest." Schipani v. McLeod, 541 F.3d 158, 164 (2d Cir. 2008). Under New York law, in an action at law for breach of contract, "prejudgment interest is recoverable as of right." Trademark Research Corp. v. Maxwell Online, Inc., 995 F.2d 326, 342 (2d Cir. 1993). New York's prejudgment interest rate for breach of contract cases is 9% per annum, which accrues on a simple, rather than a compound, basis. See N.Y. CPLR § 5004; Marfia v. T.C. Ziraat Bankasi, 147 F.3d 83, 90 (2d Cir. 1998) ("New York courts have held that in a breach of contract action of this sort prejudgment interest must be calculated on a simple interest basis at the statutory rate of nine percent.") (citations omitted).
Defendant neither disputes that Plaintiff is entitled prejudgment interest at the state statutory rate of 9% per annum or the amount of prejudgment interest calculated by Plaintiff, totaling $435,574. See Doc. 114 at 4.
The Second Circuit has outlined the options a district court has regarding a motion for fees when an appeal on the merits is pending—the district court may: (1) "rule on the claim for fees;" (2) "defer its ruling on the motion;" or (3) "deny the motion without prejudice, directing . . . a new period for filing after the appeal has been resolved." Tancredi, 378 F.3d at 225-26 (citing Fed. R. Civ. P. 54(d) advisory committee's note). Thus, a district court is not required to resolve the motion for attorneys' fees before the appeal is completed. Indeed, Courts in this Circuit regularly defer the award of attorneys' fees or deny the motion without prejudice pending the resolution of an appeal on the merits. See, e.g., Gill v. Bausch & Lomb Supplemental Ret. Income Plan I, 6:09-Civ-6043 (MAT), 2014 WL 1404902, at *1 (W.D.N.Y. Apr. 10, 2014) ("Where the losing party takes an appeal on the merits of case, the district court has the discretion to defer ruling on the prevailing party's motion for attorney's fees") (citation omitted); Doe ex rel. Doe v. E. Lyme Bd. of Educ., No. 3:11 CV 291 (JBA), 2014 WL 4370504, at *3 (D. Conn. Sept. 2, 2014) (denying motion for attorney's fees and costs "without prejudice to renew such motion . . ."). Deferring a ruling on Plaintiff's motion for attorneys' fees until the Second Circuit resolves Defendant's appeal ensures that this Court only has to address the motion for attorneys' fees by the party that ultimately prevails. See Gill, 2014 WL 1404902, at *1. Thus, the Court finds that delaying the resolution of the attorneys' fees issue until the appeal on the merits has been decided is the most prudent course of action because "immediate resolution of the . . . issue of . . . attorneys[`] fees is unlikely to assist the Court of Appeals." Id. (citation omitted); see also Matsumura v. Benihana Nat. Corp., No. 06 CIV. 7609 (NRB), 2014 WL 1553638, at *6 (S.D.N.Y. Apr. 17, 2014), appeal withdrawn (Aug. 1, 2014) (noting that deferral of award of attorneys' fees "does not prevent the merits judgment we have rendered from being considered final for purposes of appeal"). Accordingly, the Court finds that ruling on the issue of attorneys' fees, expenses, and interest on those expenses is deferred pending the appeal in the Second Circuit
Plaintiff correctly requests that the post-judgment interest run from the date the judgment was entered and Defendant does not dispute that the post-judgment interest is proper or that the appropriate interest rate for this judgment as set by the Treasury is ".12 percent per annum." See Doc. 114 at 7. Therefore, Plaintiff is awarded post-judgment interest of .12 percent on that judgment for each day that payment is delayed.
For the reasons set forth above, Defendant's Motion pursuant to Rule 59(e) and Rule 60(b) is DENIED. Plaintiffs motion for fees and interest is GRANTED in part and DEFERRED in part. Specifically, Plaintiff's motion is GRANTED with respect to their request for prejudgment interest and post-judgment interest. It is hereby:
ORDERED that Plaintiff is awarded prejudgment interest at 9 percent per annum against Defendant and that the previously-entered judgment shall be amended to include prejudgment interest in the amount of $435,574. The Clerk of the Court is directed to enter an amended judgment for Plaintiff against Defendant for damages and prejudgment interest in the amount of the $1,522,176 awarded in the judgment (Doc. 112), plus the $435,574 in prejudgment interest ordered here, for a total of $1,957,750; and it is further
ORDERED that Plaintiff is awarded post-judgment interest on the August 4, 2014 judgment (Doc. 112) at 12 percent per annum against Defendant.
Plaintiff's motion with respect to attorneys' fees, nontaxable expenses, and interest on the litigation expenses is DEFERRED pending appeal.
The Clerk of the Court is respectfully directed to terminate the motions, Doc. 113, Doc. 126.
It is SO ORDERED.
Slip Copy, 2017 WL 456466
Citizen brought civil rights action against city and police officers. Judgment was entered against citizen for failure to prosecute. On citizen's motion to vacate judgment, the District Court, Patterson, Jr., J., held that citizen failed to establish facts to show that his circumstances were sufficiently extraordinary to vacate judgment entered against him.
Motion denied.
West Headnotes (1)
Ellis Broadway Jr., Marcy, NY, Pro Se Plaintiff.
Michael A. Cordozo, Esq., Corporation Counsel, for Defendants, City of New York.
ROBERT P. PATTERSON, JR., U.S.D.J.
On April 18, 1996, the Plaintiff, filed a Complaint alleging a civil rights violation against the City of New York, et. al.
On May 7, 1997, Plaintiff's appeal was filed with the Second Circuit. The Second Circuit granted Plaintiff the opportunity to appeal his case and a scheduling order was filed on June 3, 1997. On June 5, 1997, a notice for a change of address was filed and is reflected on the District Court docket sheet.
On November 4, 1997, the Plaintiff moved to reinstate his appeal. On November 5, 1997, an order was filed in the Court of Appeals denying Plaintiff's motion without prejudice to renewal upon submission of a brief and appendix. The Court of Appeals docket contains no entry since November 6, 1997, when the notice of the order was filed. The Plaintiff failed to perfect his appeal before the Court of Appeals.
On July 18, 2002, the Plaintiff sent the Court a Pro Se Memorandum indicating an address change to Sing Sing Correctional Facility.
On September 19, 2002, Plaintiff filed the instant pro se motion to reopen this case. Attached to his notice of motion, Plaintiff included pages 10-12 of his Criminal History report which indicate that on February 6, 1997 his parole was revoked and he was admitted to Downstate Correctional Facility.
On November 2, 2002, this Court stated, by memo endorsement, that it would deny Plaintiff's motion pursuant to Rule 60 of the Fed.R.Civ.P. unless Plaintiff filed an affidavit prior to December 6, 2002, stating good and sufficient reasons (1) for his failure to move to reopen this case pursuant to the Court's order of May 5, 1997, at any time prior to September 19, 2002 and (2) for his failure to perfect his appeal as permitted by the order of the Court of Appeals on November 5, 1997.
On December 12, 2002, Plaintiff filed additional material in support of his November Affidavit related to his physical and mental health treatment. The medical reports reflect medical examinations in January through May of 1997 and earlier. The Plaintiff was also admitted to St. Barnabas Correctional Services on April 4, 2000 for a blood test and discharged on April 5, 2000. He was also examined on April 20, 2000 by a psychiatrist. The medical reports did not indicate any lengthy hospital stays, or describe any condition which would have prevented his making a motion pursuant to Rule 60(b) at an earlier date.
Plaintiff moves under Fed.R.Civ.P. 60(a) and (b), requesting the Court to exercise discretionary authority to grant relief from the judgment. A motion under Rule 60(a) applies to "clerical mistakes" in judgments and is not applicable here. Rule 60(b) permits this Court to relieve a party from a final judgment for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence; (3) fraud; (4) the judgment is void; (5) the judgment has been satisfied; or (6) any other reason justifying relief from the operation of the judgment.
Rule 60(b)(1), (2), and (3) motions must be made "not more than one year after judgment." Fed.R.Civ.P. 60(b). As both the judgment of this Court and the mandate of the Court of Appeals were in 1997, the Plaintiff's motion to vacate dated September 19, 2002 is time-barred for relief under Rule 60(b)(1), (2) and (3).
Motions seeking relief under 60(b)(4), (5), or (6), must be made within a "reasonable time." Fed.R.Civ.P. 60(b). On their face, sections (4) and (5) of Rule 60(b) are not applicable to the Plaintiff's case. Accordingly, this motion is treated as one pursuant to Rule 60(b)(6), the "catch-all" provision. See United States v. Cirami, 563 F.2d 26, 32 (2d Cir.1977) ( Rule 60(b)(6) "represents a grand reservoir of equitable power that should be liberally applied").
*3 A three-part test must be met for a Rule 60(b) motion to prevail: first, there must be "highly convincing" evidence supporting the motion; second, the moving party must show good cause for failing to act sooner; and third, the moving party must show that granting the motion will not impose an undue hardship on the other party. See Kotlicky v. United States Fidelity Guar. Co., 817 F.2d 6, 9 (2d Cir.1987). In addition, a motion cannot be filed under Rule 60(b)(6) if it could have been filed under Rule 60(b)(1), (2) or (3) but for the one-year time limit. See Cirami, 563 F.2d at 32. Moreover, the heavy burden for securing relief from final judgments applies to pro se litigants as well as to those who are represented by counsel. See Jedrejcic v. Croatian Olympic Comm., 190 F.R.D. 60, 77 (E.D.N.Y.1999); Ovadiah v. New York Assoc. for New Americans, 1997 U.S. Dist. LEXIS 8803, at *14, No. 95 Civ. 10523(SS), 1997 WL 342411, at *5 (S.D.N.Y. June 23, 1997); Salter v. Hooker Chem., Durez Plastic & Chem. Div., 119 F.R.D. 7, 9 (W.D.N.Y.1988). While Rule 60(b) was designed to strike a balance between the interests of fairness and the finality of judgments, "final judgments should not be lightly reopened." Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir.1986); see also Fetik v. New York Law Sch., 1999 U.S. Dist. LEXIS 9755, at *10, No. 97 Civ. 7746(DLC), 1999 WL 459805, at *3 (S.D.N.Y. June 29, 1999).
In considering whether a Rule 60(b)(6) motion is made within a reasonable time, the particular circumstances of the case must be scrutinized, and the interest in finality must be balanced against the reasons for the delay. See PRC Harris, Inc. v. Boeing Co., 700 F.2d 894, 897 (2d Cir.1983). As a result, there is a high burden for the movant to demonstrate good cause for the failure to act sooner. See Kotlicky, 817 F.2d at 9. Considering the potentially broad scope of Rule 60(b), relief should be reserved for and granted only where the movant had demonstrated "extraordinary circumstances" or "extreme hardship." PRC Harris, Inc., 700 F.2d at 897; Truskoski v. ESPN, Inc., 60 F.3d 74, 76 (2d Cir.1995) (motion filed eighteen months after grounds for motion became apparent was not filed within a "reasonable time" under Rule 60(b)(6)); Rodriguez v. Mitchell, 252 F.3d 191, 201 (2d Cir. 2001) (motion under Rule 60(b)(6) denied for an incarcerated petitioner because three and one-half years was not within a "reasonable time" and the moving party failed to show "extraordinary circumstances" to warrant relief).
In support of his civil rights complaint being reopened, Plaintiff states that such a result would be justified as a result of "[i]n[ad]vertence due to los[s] of documents and mental damage[], pain and suffering and not be[ing] able to litigate [his] case, [being denied the opportunity to] gather[] document[s] sooner, excusable neglect, conspiracy and fear of [his] life, T.N.T. officers [taking his] personal [belongings] and case file, [which served to] defer [][his] case to [the] present time." See Plaintiff's Reply Affidavit filed November 14, 2003 at 3.
The Plaintiff's motion pursuant to Fed.R.Civ.P. 60(b)(6) is denied. Plaintiff's discovery request dated March 18, 2003, pursuant to Fed.R.Civ.P. 30, 34, and 45 is denied as moot. The Clerk of the Court is directed to close this case.
IT IS SO ORDERED.
Not Reported in F.Supp.2d 2003 WL 21209635
HAIGHT, Senior District Judge.
On February 27, 2004, Plaintiff was charged with a federal crime and incarcerated at the Metropolitan Corrections Center (hereinafter "MCC"). See Pl.'s Compl. ¶¶ 7-8. Plaintiff states that he was transported in a van owned and operated by the purported defendant, "U.S. Department of Justice-Federal Bureau of Prisons" ("BOP") from the MCC to a local hospital for a hearing test. Id. at ¶ 9. He alleges that while en route to the hospital, the "van passed over the corner of a curb when making a turn at excessive speed, causing the van to jump and be jolted." Id. at ¶ 11. Plaintiff claims that as a result of defendant's negligence in operating the van, he sustained "serious and permanent" injuries to his left eye and neck. Id. at ¶¶ 13-18.
Plaintiff first filed an administrative claim with the Northeast Regional Office of the United States Department of Justice, Federal Bureau of Prisons ("BOP") on March 24, 2004. He claims, however, that the BOP failed to make final disposition of his claim within six months after it was filed.
More than one year later, in mid-2006, the Court contacted Aaron M. Goldsmith, Esq., plaintiff's counsel of record, by telephone to check on the status of the case. See Pl's Mem. at 7. Counsel stated that he "expect[ed] to commence motion practice in the proceeding weeks." Id. But plaintiff took no further action in the case. Given the passage of time and this level of inactivity, the Court sua sponte entered an order dismissing the action for failure to prosecute.
Almost another year passed. Then, on August 27, 2007, Mr. Goldsmith, plaintiff's attorney of record (hereinafter "counsel"), filed the instant motion pursuant to Rule 60(b), Fed.R.Civ.P., requesting restoration of the case to the Court's calendar. Counsel contends in the motion papers that he became aware of the dismissal while updating the case file in February 2007. Pl.'s Mem. at 8.
Fed.R.Civ.P. 60(b).
In Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir.1986), the Second Circuit held generally: "Properly applied Rule 60(b) strikes a balance between serving the ends of justice and preserving the finality of judgments. In other words it should be broadly construed to do substantial justice, yet final judgments should not be lightly reopened. Since 60(b) allows extraordinary judicial relief, it is invoked only upon a showing of exceptional circumstances." See also United States v. International Board of Teamsters, 247 F.3d 370, 391(2d Cir.2001) ("A motion for relief from judgment is generally not favored and is properly granted only upon a showing of exceptional circumstances."). As a consequence, before a court will grant a motion for relief pursuant to Rule 60(b), it normally requires that a movant: (1) support its motion with "highly convincing" evidence; (2) show good cause for its failure to act sooner; and (3) prove that granting the motion will not impose any undue hardship on the other parties. Kotlicky v. United States Fidelity & Guar. Co., 817 F.2d 6 (2d Cir.1987). A motion for relief under Rule 60(b) is a matter addressed to the discretion of the district court, Dodson v. Runyon, 86 F.3d 37, 39 (2d Cir.1996) (internal citations omitted), and an appellate court will not reverse the denial of such a motion except for abuse of discretion. Rodriguez v. Mitchell, 252 F.3d 191, 200 (2d Cir.2000).
The question of whether plaintiff complied with the relevant requirements of notice and service in bringing this action against the government arises because plaintiff's counsel attempts to support this motion for restoration by stressing that the government never answered the complaint. But that argument is not available if the complaint was not properly served at the time it was filed.
Counsel maintains that the BOP is an agency of the United States and is therefore a properly named defendant in this action. He further alleges that service of the summons and complaint was made on the BOP on both December 7, 2004 and May 13, 2005. Pl.'s Mem. at 2.
Furthermore, the delivery of a summons and complaint to an agency of the United States does not constitute service upon the United States itself. Federal Rule of Civil Procedure 4(d)(4) provides that service is effected upon the United States
Id. The record in the case at bar makes clear that plaintiff failed to deliver a copy of the summons and the complaint to either the United States Attorney for this district or the Attorney General of the United States. Consequently the United States, the proper defendant in this matter, was not served in accordance with the Rule. The failure to serve the United States is sufficient reason to refuse to set aside the dismissal. See Rule 4(m), Fed.R.Civ.P. ("If service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint, the court upon motion or on its own initiative after notice to the plaintiff, shall dismiss the action without prejudice. . . ."). Further, as discussed below, the Second Circuit has consistently held that plaintiff's counsel's ignorance of the law cannot serve as the grounds for plaintiff to reopen the case under Rule 60(b). See Part III. B. 3., infra.
Plaintiff next asserts that he is entitled to relief because of "excusable neglect" on the part of his attorney. However, the Court is not persuaded that his counsel's reasons for failing to act in a timely manner support a finding of excusable neglect, as contemplated by Rule 60(b).
In Pioneer Investment Services v. Brunswick Associates Limited Partnership, 507 U.S. 380 (1993), involving the bar dates for filing late proofs of claim in a bankruptcy proceeding, the Supreme Court provided a list of factors to be weighed in determining whether there is excusable neglect. Those include: "the danger of prejudice to the [non-movant], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith." Pioneer Investment, 507 U.S. at 391. The Second Circuit Court of Appeals has applied the Pioneer Court's definition of excusable neglect to a Rule 60(b) motion. See Canfield v. VanAtta, 127 F.3d 248, 250-51 (2d Cir.1997) (holding that Pioneer's excusable neglect definition is applicable beyond the bankruptcy context and applying definition to a Rule 60(b) motion); see also Weinstock v. Cleary, Gottlieb, Steen & Hamilton, 16 F.3d 501, 503 (2d Cir.1994) (applying the Pioneer court's definition of excusable neglect to Fed. R.App. Proc. 4(a)(5)). Thus, in analyzing whether counsel's delay in prosecuting the action qualifies as excusable neglect under Rule 60(b)(1), I will consider each of the Pioneer factors in turn.
In considering a motion to vacate pursuant to Rule 60(b)(1), in the default judgment context, the Second Circuit has cautioned that "delay alone is not a sufficient basis for establishing prejudice." Davis v. Musler, 713 F.2d 907, 916 (2d Cir.1983) (citations omitted). Rather, it must be shown that delay will "result in the loss of evidence, create increased difficulties of discovery, or provide greater opportunity for fraud and collusion." Id. However, "prejudice may be presumed as a matter of law in certain cases, but the issue turns on the degree to which the delay was lengthy and inexcusable." United States ex rel. Drake v. Norden Sys., 375 F.3d 248, 256 (2d Cir.2004).
In this case, the prejudice to defendant amounts to more than delay. Discovery has not yet commenced in this action and four years after the incident at issue, it may be difficult to retrieve records and to locate individuals who have knowledge of the facts or who may be able to recall information regarding the circumstances of this case. Furthermore, prejudice to the defendants may be presumed because, as discussed in Part III. B. 2., infra, plaintiff's delay was both "lengthy and inexcusable." Accordingly, while not dispositive, this factor militates against a finding of excusable neglect.
In evaluating the second and third Pioneer factors, the Court finds that in this case the length of the delay and the asserted reasons for the delay weigh strongly against a finding of excusable neglect. First, plaintiff failed to prosecute his lawsuit over a prolonged period. As noted above, plaintiff filed this action on November 17, 2004. The summons and complaint were allegedly served on the BOP in December 2004 and in May 2005. Thereafter, neither plaintiff nor counsel took any action in this matter for sixteen months prior to the Court's dismissal of the case on September 17, 2006. See Chira v. Lockheed Aircraft Corp., 634 F.2d 664, 666-68 (2d Cir.1980) (plaintiff's failure to pursue action for six months warranted dismissal under Rule 41(b)); Drake, 375 F.3d at 255 (finding plaintiff's seventeen month delay in filing amended complaint significant). During that period of time, in response to the Court's inquiry regarding the status of the case, counsel stated that "he expected to commence motion practice within a few weeks." Yet, he failed to do so. In fact, the record indicates that this was counsel's last communication with the Court regarding the case until August 27, 2007, when he filed the instant motion, almost a year after the Court dismissed the action for failure to prosecute.
The Court finds counsel's description of poor communication with his client equally unpersuasive. He alleges plaintiff had not contacted him for several months in 2006 and that he was unable to locate plaintiff on the BOP database. However, the record indicates that while counsel believed plaintiff had been relocated to a different BOP facility, see Pl.'s Mem. at 7-8, he remained incarcerated at the MCC for the time period at issue, Id. at 8. There is no indication that counsel made any attempt to call or submit a letter to the MCC to ascertain plaintiff's whereabouts. Such efforts would have certainly revealed plaintiff's location.
Finally, as noted supra, counsel relies on that fact that defendant did not answer the complaint as another excuse for his delay in prosecuting this matter. However, as discussed in Part III. A. of this opinion, the defendant did not receive notice of plaintiff's complaint because counsel neither named the proper party defendant in this action nor effected service of the complaint in accordance with the Federal Rules. The Court therefore finds counsel's assertion that defendant's failure to answer the complaint contributed to his delay unavailing.
The Court has concluded that counsel failed to produce reasonable explanations for his delay in this case. The Court also finds that counsel's inexcusable neglect should be imputed to plaintiff. Plaintiff himself, while submitting an affidavit in support of this motion, has provided no indication of a good faith effort on his part to prosecute this case. Generally, a plaintiff is not excused from the consequences of his attorney's acts because the plaintiff voluntarily chose the attorney as his or her representative. See Link v. Wabash, 370 U.S. 626,633-34(1962). As the Second Circuit explained:
Courts in this circuit have carved out an exception to the general rule that an attorney's inexcusable neglect may be imputed to a client. If the client monitors his own case and counsel made false assurances regarding the status of the lawsuit, the attorney's actions will not be imputed to his client. See Securities and Exchange Commission v. Breed, No. 01Civ.7798 CSH, 2004 WL 1824358, at * 11 (S.D.N.Y. August 13, 2004) (discussing cases). However, in the case at bar, the record indicates that plaintiff made little or no effort to prosecute this case prior to its dismissal. He did not endeavor to contact counsel, retain other counsel or communicate directly to the Court. Further, there is no evidence that counsel made false assurances regarding the status of the lawsuit. Indeed, counsel admits that he did not speak with plaintiff nor receive any correspondence from plaintiff for more than two years. Thus, Goldsmith's conduct may fairly be imputed to plaintiff. See Dominguez v. United States, 583 F.2d 615, 618 (2d Cir.1978) (upholding refusal to vacate default where "there was no particularized showing of exceptional circumstances explaining [counsel's] gross negligence and no indication of diligent efforts by appellant to induce him to fulfill his duty"); see also McNulty, 137 F.3d at 740 ("where the attorney's conduct has been found to be willful, the willfulness will be imputed to the party himself where he makes no showing that he has made any attempt to monitor counsel's handling of the lawsuit").
As discussed above, plaintiff based his motion to restore the case upon Rule 60(b). Rule 60 is captioned "Relief from Judgment or Order." Plaintiff sought relief in the form of restoration from the Court's sua sponte order dismissing the case for failure to prosecute. I applied the criteria governing relief under Rule 60(b) and concluded that plaintiff's motion fails to satisfy them.
Plaintiff could have based his motion upon Rule 41(b), which governs the "involuntary dismissal" of an action, and refers specifically to an order dismissing an action "[f]or failure of the plaintiff to prosecute." Plaintiff's argument under Rule 41(b) would have been that the Court's order dismissing his action constituted an abuse of discretion. See Drake, 375 F.3d at 250-254 ("We do not doubt a district court's authority to dismiss actions based on a plaintiff's failure to prosecute. . . . We review a dismissal for failure to prosecute under the abuse of discretion standard.") (citations omitted).
Id. at 254 (citations omitted). The plaintiff at bar did not rely on Rule 41(b), and did not contend in his motion for restoration that the Court's order of dismissal was an abuse of discretion. Consequently plaintiff waived that argument.
In any event, application of the Rule 41(b) factors would not change the result. The notice factor would cut against dismissal, since the Court, while cognizant of the lengthy delay in the litigation and asking plaintiff's counsel for a status report, did not give an explicit notice that further delay would result in dismissal. But other Rule 41(b) factors, which mirror those applied in Rule 60(b) analysis and discussed in Part III. B. of this opinion, demonstrate that dismissal was a sound exercise of discretion. Plaintiff's failure to prosecute caused a delay that was of significant duration by any standard. See Drake, 375 F.3d at 255 ("We also agree that plaintiff's 17-month delay was significant. Indeed, this length of time is comparable to, if not longer than, delays that have supported dismissals in other cases.") (citations omitted). That delay would greatly prejudice the government if the case was allowed to proceed, to the extent that no sanction lesser than dismissal would be sufficient.
After considering all the factors, the Court finds that plaintiff has not provided "highly convincing evidence" of excusable neglect nor shown "good cause for his failure to act sooner."
The Court recognizes that "dismissal is a harsh remedy to be utilized in only extreme circumstances" Lucas v. Miles, 84 F.3d 532, 535 (2d Cir.1996). However, because plaintiff has shown little interest in pursuing this matter and counsel likewise made no diligent effort to prosecute this action, the Court believes a sanction less than dismissalis unwarranted in this case.
For the foregoing reasons, plaintiff's motion to restore the case to the calender pursuant to Rule 60(b)(1) [doc. # 4] is DENIED. Plaintiff's motion to seal exhibits [doc. # 3] it is DENIED, as moot.
It is SO ORDERED.
Not Reported in F.Supp.2d, 2008 WL 818696
West KeySummary
JAMES C. FRANCIS IV, United States Magistrate Judge.
On January 20, 2006, Advanced Cardiovascular Imaging performed medical testing on the decedent, Michael H. Levy, at its office in Manhattan. (Complaint, ¶ 9; Answer, ¶ 5). The Complaint alleges that the defendant negligently performed these tests, causing physical, psychological, and emotional injuries to Mr. Levy; pecuniary and economic loss to his estate and dependents; and psychological and emotional injury, including loss of consortium, to his wife, Helen I. Green. (Complaint, ¶¶ 12, 15, 18). When Mr. Levy passed away, Ms. Green was appointed Executrix of his estate.
Ms. Green filed this suit on April 19, 2007. A pretrial conference was held on March 3, 2008, at which discovery was scheduled to be completed by May 30, 2008 and the pretrial order deadline was set for June 30, 2008. Counsel for the defendant requested, and I granted, an extension of the discovery schedule. Fact discovery was then scheduled to be completed by September 15, 2008, expert reports exchanged by October 15, 2008, and expert discovery finalized by November 14, 2008. The pretrial order deadline was extended to December 15, 2008.
On February 4, 2009, having not received the joint pretrial order, I ordered the plaintiff to show cause by February 20, 2009 why the case should not be dismissed for failure to prosecute under Rule 41(b) of the Federal Rules of Civil Procedure. When the plaintiff failed to respond, I dismissed the case sua sponte on March 10, 2009. On May 27, 2009, the plaintiff filed the instant motion to vacate the order of dismissal pursuant to Rule 60(b)(1) of the Federal Rules of Civil Procedure on grounds of excusable neglect.
Between the time the complaint was filed and the date the case was dismissed, Ira C. Podlofsky, counsel for the plaintiff, experienced both personal and professional upheaval, causing him to neglect Ms. Green's case for much of that period. First, Mr. Podlofsky and his wife, Jan Orange, began divorce proceedings. (Declaration of Ira C. Podlofsky dated May 27, 2009 ("Podlofsky Decl."), ¶ 4). Ms. Orange was also Mr. Podlofsky's law partner. (Podlofsky Decl., ¶ 4). As a result of the financial disruptions caused by his separation from Ms. Orange, Mr. Podlofsky was forced to lay off two attorneys and the administrative manager from his law practice, leaving him as the sole attorney handling the practice. (Affirmation of Ira C. Podlofsky dated July 31, 2009 ("Podlofsky Reply Aff."), ¶ 9; Podlofsky Decl., ¶ 5). Because Ms. Orange is not now employed, and has not been for some time, Mr. Podlofsky is providing the financial support for their separate households and their two daughters. (Podlofsky Aff., ¶¶ 9-10). Mr. Podlofsky has indicated that he has withdrawn from Ms. Green's case and that the firm of Collopy & Carlucci will handle the matter going forward if it is reopened. (Letter of Ira C. Podlofsky dated July 10, 2009).
Fed.R.Civ.P. 60(b).
"`A motion for relief under Rule 60(b) is addressed to the sound discretion of the court.'" Williams v. New York City Department of Corrections, 219 F.R.D. 78, 83 (S.D.N.Y.2003) (quoting Velez v. Vassallo, 203 F.Supp.2d 312, 333 (S.D.N.Y.2002). In deciding whether to grant relief, a court must balance the interest in finality against the litigants' interest in having their claims decided on the merits. Kotlicky v. United States Fidelity & Guaranty Co., 817 F.2d 6, 9 (2d Cir.1987) (citing 11 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2857 (1st ed.1973)). Though final judgments should not be "lightly reopened," Rule 60(b) should nonetheless be "broadly construed" in order to serve the interests of justice. Canini v. United States Department of Justice Federal Bureau of Prisons, No. 04 Civ. 9049, 2008 WL 818696, at *2 (S.D.N.Y. March 26, 2008).
The burden of demonstrating that a judgment should be vacated rests with the moving party. Williams, 219 F.R.D. at 84 (citing State Street Bank & Trust Co. v. Inversiones Errazuriz Limitada, 246 F.Supp.2d 231, 248 (S.D.N.Y.2002)). In order to meet this burden, the Second Circuit generally requires that a movant: (1) support its motion with highly convincing evidence; (2) show good cause for its failure to act sooner; and (3) prove that granting the motion will not impose any undue hardship on the other parties. Canini, 2008 WL 818696, at *2 (citing Kotlicky, 817 F.2d at 9). Because the latter two requirements overlap with the considerations for evaluating whether a movant has demonstrated excusable neglect under 60(b)(1), I will first analyze the excusable neglect factors.
As noted above, Rule 60(b)(1) provides that relief may be justified on the basis of "mistake, inadvertence, surprise, or excusable neglect." Fed.R.Civ.P. 60(b)(1). To determine whether to grant relief for excusable neglect, courts must "tak[e] account of all relevant circumstances surrounding the party's omission." Pioneer Investment Services Co. v. Brunswick Associates, L.P., 507 U.S. 380, 395, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993). Although Pioneer was a bankruptcy case dealing with courts' powers to enlarge filing deadlines under the Federal Rules of Bankruptcy Procedure, the Second Circuit has applied Pioneer's excusable neglect test to motions made under Rule 60(b) of the Federal Rules of Civil Procedure. Canfield v. Van Atta Buick/GMC Truck, Inc., 127 F.3d 248, 249-50 (2d Cir.1997) (citing United States v. Hooper, 9 F.3d 257, 259 (2d Cir.1993)). Pioneer instructs courts to consider the following factors: (1) the danger of prejudice to the non-moving party; (2) the length of delay and its potential impact on judicial proceedings; (3) the reason for the delay, including whether it was in the reasonable control of the movant; and (4) whether the movant acted in good faith. Pioneer, 507 U.S. at 395; Canini, 2008 WL 818696, at *3.
*3 The plaintiff has met her burden of showing that there will be little danger of prejudice to the defendant if this case is reopened. The risk of prejudice to the nonmoving party is greatest where the moving party has allowed so much time to elapse that it would be difficult to conduct discovery or otherwise proceed with the case. See Canini, 2008 WL 818696, at *4 (finding prejudice where the incident at issue occurred over four years earlier and no discovery had taken place); Williams, 219 F.R.D. at 86 (reopening case arising out of six year old events would prejudice nonmoving party because no discovery had yet occurred). Short delays generally do not prejudice the nonmoving party. For instance, the Second Circuit has observed that "it is difficult to imagine what possible undue prejudice might arise from a six-month delay . . . in comparison to the substantial injustice that the plaintiffs suffer through dismissal." Foley v. United States, 645 F.2d 155, 157 (2d Cir.1981).
Here, Ms. Green filed her motion to vacate the dismissal order less than three months after the order was issued. Advanced Cardiovascular Imaging, unlike the defendants in Canini and Williams, is not facing a delay that would impact its ability to conduct discovery. Discovery is well under way, and the plaintiff has represented that it is near completion. (Podlofsky Reply Aff., ¶ 13). Furthermore, the defendant has identified no specific prejudice it would suffer if the case is reopened.
Because the length of delay at issue is slight, there is unlikely to be any significant impact on judicial proceedings. See Foley, 645 F.2d at 157 (six-month delay would not interfere with the judicial process); cf. Canini, 2008 WL 818696, at *4 (deeming a sixteen-month delay before dismissal followed by a one-year delay after dismissal unreasonable). As noted above, less than three months elapsed from the date of the dismissal order before the plaintiff moved to vacate it, and the order itself was issued less than three months after the pretrial order should have been filed.
The Supreme Court in Pioneer recognized that there exists "a range of possible explanations for a party's failure to comply with a court-ordered filing deadline," from acts of God at one end to conscious disregard at the other. Pioneer, 507 U.S. at 387-88. Pioneer's central holding was that the term "excusable neglect" encompasses not only those circumstances beyond a party's control, but is an "elastic concept" that includes also omissions due to carelessness. Id. at 388-90.
When a party's negligence approaches willfulness, it is unlikely to be excused. See Kuntz v. Pardo, 160 B.R. 35, 39-40 (S.D.N.Y.1993) (pro se plaintiff's repeated failure to comply with court rules, procedures, and deadlines resulted from "conscious disregard" and was therefore inexcusable). In Canfield, the court found plaintiff's counsel's participation in his own bid for political office insufficient to justify his neglect of a clear court rule, which was made known to him in writing by opposing counsel. 127 F.3d at 249-51. And in Canini, counsel's failure to delegate his cases to other associates while he participated in a trial constituted inexcusable neglect. 2008 WL 818696, at *5. Conversely, when a deadline is missed for reasons out of counsel's control, courts will find the neglect excusable. See Kotlicky, 817 F.2d at 9 (counsel's proof that he did not receive notice of a deposition was sufficient to excuse his absence); Foley, 645 F.2d at 157 (neglect due to the mistakes of others as well as "logistical difficulties" was excusable). Thus, courts in this circuit draw a line between excusable and inexcusable neglect based in part on the ability of the plaintiff or her counsel to control the circumstances that led to the breakdown.
Finally, there is no evidence that Mr. Podlofsky acted maliciously. An attorney who makes no effort whatsoever to prosecute a case displays bad faith. See Canini, 2008 WL 818696, at *5-5. So too does counsel who misses multiple deadlines and who files meritless appeals but fails to prosecute them. Kuntz, 160 B.R. at 39-40. Here, Mr. Podlofsky did not neglect this case altogether, nor did he engage in sharp practices. Rather, his conduct, while negligent, does not evince bad faith.
After consideration of each of the relevant factors, I find that the plaintiff has met her burden of producing highly convincing evidence of excusable neglect. Accordingly, her motion to vacate the order of dismissal is granted. New counsel for the plaintiff shall file a notice of appearance by October 15, 2009. All fact discovery shall be completed by November 30, 2009, expert reports shall be exchanged by December 15, 2009, and expert discovery completed by January 29, 2010. The pretrial order shall be submitted by February 26, 2010.
SO ORDERED.
Not Reported in F.Supp.2d, 2009 WL 3154317
West KeySummary
McMAHON, District Judge.
Also before the Court is a motion by counsel for G & M and Riser, seeking to be relieved because it has not been paid.
G & M and Riser seek vacatur of the orders and judgments pursuant to Federal Rule of Civil Procedure 60(b), but fail to specify in their initial moving papers the subsection of the Rule on which they rely. Because of this omission, Plaintiffs urge the Court to analyze the motion pursuant to the default subsection, Rule 60(b) (6). However, the Court is actually required to analyze Movants' arguments to see whether they fall within one of the first five subsections of Rule 60(b), before relying on the catch-all provision of Rule 60(b)(6). See Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 863-64, 108 S.Ct. 2194, 100 L.Ed.2d 855 (1988).
In their reply papers, G & M and Riser contend that both orders and the May 26, 2009 judgment should be vacated pursuant to Rule 60(b) (3), which provides for vacatur of a judgment procured by fraud, misrepresentation or other misconduct by an adverse party, and that both orders and both judgments should be vacated pursuant to Rule 60(b) (4), which provides for vacatur of a judgment that is void. I will, therefore, analyze the evidence pursuant to those subsections before considering Rule 60(b)(6).
For the reasons set forth below, the Court concludes that the February 10, 2009 contempt order and the May 26, 2009 judgment should be vacated as against Riser because he was not served with the contempt motion papers as required by Local Civil Rule 83.9. G & M was properly served and there is no basis to vacate the finding of contempt as against it, but the monetary sanctions previously imposed against G & M must be vacated. The motion to vacate the underlying default judgment is denied. Counsel for G & M and Riser is hereby relieved of its representation.
This action was brought to confirm an arbitration award dated January 9, 2007. G & M did not show up for the hearing held by the impartial arbitrator. The arbitrator found that G & M had failed to comply with the terms of its collective bargaining agreement (the "CBA") with the District Council of New York City and Vicinity of the United Brotherhood of Carpenters and Joiners of America (the "Union"), which requires G & M to pay fringe benefits to the plaintiff Funds-numerous Union-sponsored health and welfare funds. The arbitrator directed G & M to furnish Plaintiffs with corporate books and records for the period May 31, 2006 through the date of the award, for purpose of an audit. The arbitrator also awarded the Funds $2,350, representing costs incurred in connection with the arbitration, plus interest accruing at the rate of 10% per annum from the date of the award. G & M does not dispute that it is a signatory to the CBA that requires contribution to the Funds, or that the arbitration award requires it to provide books and records for the disputed six-month period of May 31, 2006 through January 9, 2007.
So on March 7, 2007, Plaintiffs commenced the instant action to confirm the arbitration award. G & M, the only named defendant, was served by delivering the Summons and Complaint to the 1734 Carlton Avenue address. The affidavit of service shows that service was effected on June 8, 2007 (see Aff. of John Riser, Sept. 8, 2009 ("Riser Aff"), Ex. 20)—three months after the Complaint was filed, but within the 120 days provided for service under Federal Rule of Civil Procedure 4. According to the record before the Court, in June 2007, the Carlton Avenue address was the only address on file for G & M (1) with the New York Secretary of State; (2) with the plaintiff Funds; and (3) with the Union.
The affidavit of service indicates that a white male ("John Doe") who refused to give his name to the process server accepted the papers, claiming to be the "Co-Tenant/ Managing Agent" and to be authorized to accept legal papers for the corporation. (Riser Aff. Ex. 20.) The man is described as being approximately fifty-five years of age, weighing 165 pounds and being about 5#6# tall with "Blk/Wh" hair. (Id.)
G & M neither answered the Complaint nor appeared at a Rule 16 conference scheduled for June 21, 2007.
On July 31, 2007, Plaintiffs (through attorney Andrew GraBois of the O'Dwyer firm) moved to confirm the arbitration award on default. In accordance with this Court's special rules pertaining to default judgments, the notice of motion had to be served as a summons and complaint would be served. In this case, service was accomplished on August 9, 2007 by personally delivering the default motion to a white male at the Carlton Avenue address who again would not give his name. (See id. Ex. 21.) Again, the process server swore that the person served identified himself as the "Managing Agent" for the corporation and indicated that he was authorized to accept legal papers on the corporation's behalf. (Id.) This time, the man who took the papers is described as being closer to sixty, 5#7# instead of 5#6# and 170 pounds instead of 165 pounds. (Id.) His hair is described as Gr/Blk (which I assume means "gray/black" or "salt and pepper"). I do not find this out of line with the description of the individual who accepted service of the Summons and Complaint, and 1 conclude that the same individual received both sets of papers. The return date on the motion was specified as September 10, 2007. (Id.)
For reasons unknown to the Court, the judgment was not served on anyone until April 29, 2008. At that time, it was sent to G & M at the 1734 Carlton Avenue address via first-class mail, return receipt requested. The return receipt filed with the Court reflects that the judgment was received and signed for by an agent of G & M at the stated address on April 30, 2008 (the signed name is the same "Scott" and what appears to be "Fitzgerald") (Silverman Decl. Ex. E.)
G & M failed either to contact Plaintiffs or to produce the records sought.
Movants have presented no evidence to suggest that at the time the judgment was served, the corporation's address on file with both the Secretary of State and the Funds was anything other than 1734 Carlton Avenue, Staten Island. As will be seen below, there is evidence that the Union had both this address and another address on file by April 2008. There is, however, no evidence that Riser ever formally notified the Funds of any change of address.
Plaintiffs moved by order to show cause on June 19, 2008, asking for an order holding G & M and Riser in contempt for failing to comply with the Court's September 14, 2007 judgment and order. The attorney who submitted the order to show cause was Gary Silverman of the O'Dwyer firm. (See Docket Nos. 9-10.)
Plaintiffs served a copy of the order to show cause and their supporting papers on G & M and Riser by sending them certified mail, return receipt requested, to the same Carlton Avenue address where documents had previously been served or sent. (See Docket No. 10.) The return date on the order to show cause was July 24, 2008. Neither G & M nor Riser entered an appearance or submitted any papers in response thereto. The Court adjourned the matter until July 30, 2008, but neither G & M nor an attorney representing it appeared at the conference on July 30
On September 10, 2008, the Court entered an order (1) directing Defendant and Riser to comply with the Court's judgment and order of September 14, 2007 by producing certain specified records so that the audit ordered by the arbitrator could take place, and by paying the sum of $3,721; and (2) providing that G & M and Riser were jointly liable for the costs and fees reasonably incurred by the Funds in connection with this action. (Docket No. 13.) The order provided that G & M and Riser must comply with its terms:
(Id.)
Contrary to the assertion of G & M and Riser, the September 10, 2008 order neither held anyone in contempt nor imposed any monetary sanction. It simply ordered G & M and Riser to comply with the Court's September 14, 2007 judgment and threatened to impose sanctions in the amount of $250 per day if they did not do so within thirty days. The text of the order makes it perfectly clear that the imposition of any monetary sanction would require some additional action by the Court.
Needless to say, G & M and Riser failed to comply with the Court's order within thirty days. However, on October 13, 2008—very shortly after the expiration of the thirtyday period set for compliance—Riser finally contacted Plaintiffs, by leaving a voicemail message. Rather than come to the Court seeking the immediate imposition of sanctions, Plaintiffs' attorneys placed return calls to G & M and Riser on October 14, October 15, November 4, November 21, December 21 and December 31, 2008. (Pls.' Mem. in Opp. to Def.'s Mot. to Vacate, Oct. 19, 2009 ("Pls.' Opp."), at 5.) No one responded to these repeated telephone calls. Movants offer no excuse for not contacting Plaintiffs' counsel after leaving the October 13 voicemail message.
On January 9, 2009, Plaintiffs moved by order to show cause for an order holding G & M and Riser in contempt. The moving affidavit was submitted by attorney David P. Ofenloch of the O'Dwyer firm. The Court signed the order to show cause, making it returnable on January 15, 2009. (Riser Aff. Ex. 18.) Plaintiffs served the order to show cause, together with the supporting declaration and exhibits, on G & M and Riser by certified mail, return receipt requested. (Pls.' Opp. Ex. B.) The papers were sent to the usual address—1734 Carlton Avenue in Staten Island. (Id.) The return receipt provided to the Court in connection with the instant motion shows that the documents were received and signed for by someone at that address on January 13-prior to the return date of January 15. (Id.) However, the person was not named John Riser; instead, the papers were signed for by the same Scott "Fitzgerald" who had signed for the Complaint and then the default motion in the summer of 2007. (See id.) These motion papers were also served by personal delivery to the New York Secretary of State in Albany, (Id.)
No one representing G & M or Riser showed up in court on January 15, 2009. The Court was concerned about whether they knew about the court date, given the short amount of time between service and the return date. So at the Court's request, on that same day, Plaintiffs' counsel sent yet another letter to G & M and Riser, at the same Carlton Avenue address, advising them of the contempt proceedings and soliciting some sort of contact. (See id. Ex, C.) The letter was sent via certified and first-class mail, return receipt requested. (Id.) The return receipt provided to the Court reflects that the letter was not received. (See id.) Since the letter that was mailed (according to Exhibit C) did not include information about the new return date, it hardly seemed worth sending—and the fact that it appears not to have reached anyone is of no moment.
On January 28, 2009, undoubtedly after receiving the return receipt that indicated nondelivery of the January 15 letter that had been mailed, Plaintiffs' attorneys contacted Local 157 of the Union in order to ensure that they were still using the correct address—the Carlton Avenue address being the only address that has ever been on file with the Funds (Aff of Daniel Ryan IV, May 4, 2010, ¶ 4). In their letter to Local 157, Plaintiffs' counsel requested Riser's "corporate and personal mailing addresses maintained in your files." (Pls.' Opp. Ex. D.) The Union responded that same day (via fax) by providing the 1734 Carlton Avenue address and no other addresses, thereby plainly indicating that the Carlton Avenue address was the only address it had on file. (See id.) This, it turns out, may be (but probably is not) incorrect.
Neither G & M nor Riser responded to Plaintiffs' January 15 letter. However, at the February 6, 2009 contempt hearing, an attorney (Paul Cooper) appeared, representing G & M and Riser. This, it should be noted, was Movants' first appearance at any hearing or conference in connection with this matter, which Plaintiffs had commenced some two years earlier, in March 2007.
At the February 6 hearing, Mr. Cooper represented that Riser had moved from 1734 Carlton Avenue, and gave his client's new address as 686 Correll Avenue, Staten Island. (Id. Ex. E (Contempt Hr'g Tr., Feb. 6, 2009), 16:9-12, 17:8-12.) Mr. Cooper did not advise the Court when that move took place—a deficiency that has yet to be rectified.
Mr. Cooper also did not tell the Court—and may or may not have known—that 1734 Carlton Avenue is the address of another John Riser—John E. Riser, the father of the President of G & M. The Court first learned this fact in April 2010 (about a month ago), when the younger Riser—John J. Riser—stated it in his papers opposing his counsel's motion to withdraw.
Mr. Cooper also represented at the February 6 hearing that he was preparing to move to vacate the default. (Id. at 10:1-10.) He claimed that Riser could not produce corporate books and records for the Funds to audit because "he has [them] scattered in different residences and automobiles." (Id. at 15:19-21.) After a short recess, during which Mr. Cooper contacted his client, Mr. Cooper represented that Riser had told him "that he had walked over to the attorney's office and had given him the records of the corporation." (Id. at 16:13-15.) Counsel for the Funds replied, "Your Honor, I am unaware of that occurring at any time." (Id. at 16:16-17.)
On February 9, 2009, G & M and Riser appeared by a different attorney, Robert S. Lewis. Riser was present and testified. The person who testified stated that he was thirty years old (Pls.' Opp. Ex. G (Contempt Hr'g Tr., Feb. 9, 2009), 6:17-18)—not fifty-five or sixty, as indicated on the affidavit of service for the January 15, 2009 letter. Riser was not asked, and did not volunteer, that there was a second John Riser—his father—who still lived at 1734 Carlton Avenue.
Riser indicated that he could not comply with the order to produce the corporate documents because he had already turned the responsive books and records over to the attorneys, about two years earlier. (Id. at 8:12-17:1.) Riser originally insisted that the law firm that had received these documents was O'Dwyer & Bernstein, but he recalled that he had taken the books and records to a building directly across the street from Battery Park, "right before the turn before the Battery Tunnel." (See id. at 8:12-25, 9:23-10:8.) Riser then retreated from his claim about the name of the law firm, stating, "I left it at the law office. I don't know exactly if it was O'Dwyer and Bernstein—that's the only one that I know, O'Dwyer and Bernstein." (Id. at 11:18-20.)
Plaintiffs' attorney Andrew GraBois took the stand and testified that the O'Dwyer firm was located at 52 Duane Street—not on a street across from Battery Park. (Id. at 23:20-23.) He also testified that he had never received any records from Riser. (Id. at 24:16-17.) Mr. GraBois further testified that the Funds' auditor assigned to G & M during the period in question is located in Hauppauge, Long Island, not in Lower Manhattan. (Id. at 27:19-28:8.)
The Court found Riser's testimony inherently incredible, both because the O'Dwyer firm is not located in the place where Riser said he had gone, and because he testified that he had not passed through any building security in the Lower Manhattan office building where he dropped off the records—an assertion that was impossible to believe. (Id. at 30:9-25.) However, the Court concluded that no purpose would be served by jailing Riser until such time as he produced his books and records, because I was convinced that, as of February 9, 2009, Riser had no books and records in his possession. (Id. at 31:5-9.)
I did, however, orally find both Riser and G & M to be in contempt of the Court's orders. (See id. at 31:14-32:8.) Pursuant to that finding, I entered a written order on February 10, 2009, again directing that G & M and Riser turn over the documentation needed to enable the audit, and specifically directed that they take steps to obtain copies of any missing papers from banks and public agencies. (Docket No. 15.) The order directed G & M and Riser to pay Plaintiffs the sum of $4,218.69, representing the original judgment entered on September 14, 2007 plus accrued interest at 9%. (Id.) I also imposed a contempt sanction in the amount of $28,500, which amount equaled a $250 fine per day during the period October 11, 2008 to February 6, 2009, together with attorneys' fees in the amount of $45,000. (Id.)
Three days after the hearing, on February 12, 2009, Plaintiffs' attorney delivered a letter to the Court, informing me that counsel had obtained "new information" about G & M and Riser since the February 9 hearing. (See Riser Aff. Ex. 12.) The letter read in pertinent part as follows:
(Id.) The letter included an inventory of the documents that had been delivered to O'Dwyer & Bernstein on February 10. (Id.) The inventory revealed that the records delivered to Mr. Callahan covered portions of the year 2006 (with different time periods for different types of records). (Id.) The records produced did not cover the entire time period that was the subject of the arbitration and this Court's orders (May 31, 2006 through January 9, 2007), and did not include all of the records that Defendant had been ordered to turn over so that the audit could proceed.
On May 26, 2009, the Court entered a judgment in Plaintiffs' favor in a form that was submitted by Plaintiffs' counsel. (See Docket No. 17.) Its terms were in accordance with the February 10 order.
On July 24, 2009, attorney David Etkind sent the Court a letter requesting vacatur of the September 10, 2008 and February 10, 2009 orders and the judgments of May 26, 2009 and September 14, 2007. (Docket No. 23.) The letter was rejected as not being in proper motion form.
On September 8, 2009, G & M and Riser filed the instant motion to vacate the Court's prior orders of contempt and the two judgments. (Docket No. 24.) As the Court understands matters, the parties have dismissed an appeal from the contempt judgment without prejudice to its reinstatement pending the Court's determination of the instant Rule 60(b) motion. (See Docket No. 41.)
Movants contend that the contempt judgment and orders should be vacated because they were obtained by fraud, misrepresentation or misconduct by an opposing party. They rely on two purported misrepresentations:
Riser and G & M also argue that the two orders and the May 26, 2009 judgment must be vacated on the ground that Plaintiffs' contempt papers were not properly served in accordance with the Court's Local Rules and were otherwise defective.
A motion for relief from a judgment is generally not favored. While Rule 60(b) "should be broadly construed to do substantial justice, . . . final judgments should not be lightly reopened." Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir.1986) (internal citation and quotations omitted).
For the reasons stated below, the motion is granted insofar as it is directed to the February 10, 2009 order and the judgment entered thereon on May 26, 2009. The motion is denied insofar as it seeks to set aside the default judgment entered on September 14, 2007. Since the September 10, 2008 order neither held anyone in contempt nor imposed any sanction (as discussed above), it is not necessary to vacate that order.
Under Rule 60(b)(3), a district court may relieve a party from a final judgment for "fraud" by an opposing party. Fed.R.Civ.P. 60(b)(3). "[A] Rule 60(b)(3) motion cannot be granted absent clear and convincing evidence of material misrepresentations, and to prevail a movant must show that the conduct complained of prevented the moving party from fully and fairly presenting his case." Entral Group Intl, LLC v. 7 Day Cafe and Bar, 298 F. App'x 43, 44 (2d Cir.2008). In this case, there is no basis to reopen the May 26, 2009 judgment or to vacate the February 10, 2009 contempt order for fraud or misrepresentation under Rule 60(b)(3).
Movants argue that Plaintiffs and their counsel brought on the motions to have G & M and its President, Riser, held in contempt for failing to produce documents as ordered by this Court, but failed to disclose that (1) Riser did not have the responsive documents in his possession, because they had been turned over to a court-appointed Independent Investigator in another proceeding in the Southern District of New York captioned United States v. District Council of New York City and Vicinity of the United Brotherhood of Carpenters and Joiners of America, No. 90 Civ. 5722(CSH) (the "Union case"); and (2) the Independent Investigator's office was located at the Battery Park address where Riser testified he had left the documents several years prior to the contempt applications.
Because G & M and Riser failed to specify in their initial papers which subsection of Rule 60(b) they were moving under, Plaintiffs' papers are not directly responsive to the charge of fraud or misconduct by the Funds and/or their attorneys. However, it is possible to address—and reject —Movants' argument on the papers submitted. Because of the gravity of a charge of fraud or misrepresentation, especially when leveled at attorneys, I feel it incumbent to address these allegations—even though I am disposing of the motion on other grounds.
It now appears that some (though clearly not all) of the documents that should have been turned over to Plaintiffs pursuant to the Court's orders were given by Riser to Independent Investigator Callahan pursuant to a subpoena served in March 2007. (See Riser Aff. Ex. 6.) No one disputes this.
It further appears that the lawyer who brought on the first of the contempt orders to show cause was in a position to know that Riser had received a subpoena to turn over documents to Independent Investigator Callahan. Gary Silverman, a partner at O'Dwyer, has represented the Union (not the Funds) in connection with the administration of the consent decree entered in the Union case. (See Aff. of Gary Silverman, May 7, 2010 ("Silverman Aff."), ¶¶ 1-3.) In response to an inquiry from this Court, Mr. Silverman disclosed that he may have been told by Investigator Callahan that a subpoena had issued to G & M at or about the time it was served in 2007, although he is not sure. (Id. ¶ 3.)
Of course, Mr. Silverman's status as a partner means that his personal knowledge would be imputed to his firm. However, a person cannot commit a fraud without being consciously aware that he is making a misrepresentation. Mr. Silverman avers that it is not his practice to report to other attorneys on the work of the Independent Investigator. (Id.) Mr. GraBois, who procured the original default judgment confirming the arbitration award and directing Defendant to produce documents, has specifically averred that he was unaware of the subpoena. (See Aff. of Andrew GraBois, May 5, 2010, ¶ 1.) I credit their testimony. There is, therefore, no evidence that any lawyer at O'Dwyer who worked on this matter except Mr. Silverman actually knew about the Callahan subpoena to G & M. Ergo, Messrs. GraBois and Ofenloch were incapable of misrepresenting anything about the subpoena or Riser's compliance therewith to the Court.
I also conclude that Mr. Silverman did not knowingly make any misrepresentation to the Court—even if I assume (which I do, for purposes of this motion) that he was told about Investigator Callahan's March 2007 subpoena to Riser. I reach this conclusion for two reasons.
First, the assertion that Mr. Silverman misrepresented Riser's ability to comply with the turnover order is more than an assertion that Mr. Silverman was aware of the subpoena. Nothing about the service of the subpoena, or even Riser's compliance therewith, necessarily precluded Riser from complying with this Court's order. Riser avers in his moving papers that he could not comply with the Court's order because he did not keep copies of the business records he turned over to Investigator Callahan —ostensibly because G & M was out of business. (Riser Aff. ¶ 16.) There is no evidence suggesting that Mr. Silverman had any idea that Riser had given his only copy of the subpoenaed documents to Callahan.
Second, Mr. Silverman could not have misrepresented that compliance with the Court's orders was "impossible," because Riser could, in fact, have complied with the judgment and orders, even though he had given certain documents to the Independent Investigator. All Riser needed to do when confronted with the arbitration award, or with this Court's order enforcing that award, was what he finally did when he was confronted with the possibility of going to jail for contempt—(1) go to Investigator Callahan's office and retrieve the records he had deposited there in mid-2007 (and never bothered to get back), and (2) contact his bank and various government agencies and obtain copies of his bank records and tax returns and other filings that he never turned over to Callahan. Riser was able to retrieve his records from Callahan and get them over to the O'Dwyer office within hours after being held in contempt of Court at the February 9, 2009 hearing— which strongly suggests that he just needed a powerfully persuasive reason to do what he should have done months or years earlier. As for the documents that were not turned over to Callahan in the first place, an attorney like Mr. Silverman would have known that Riser (and no one else) could obtain copies of such documents from banks and public records. He therefore would not have assumed that compliance with the Court's orders was impossible by virtue of Riser's having responded to the subpoena, and so could not have made any misrepresentation.
Therefore, no one representing the Funds, including Mr. Silverman, made any knowing misrepresentation to the Court concerning the impossibility of compliance.
G & M and Riser also allege that the O'Dwyer attorneys misrepresented to the Court that they had actually served process on G & M, because they knew, when they mailed various documents to the 1734 Carlton Avenue address, that G & M (and Riser) were no longer located there. (See Riser Aff. ¶¶ 34-37.) Again, the evidence does not support this allegation.
As set forth above, the arbitration hearing was held in January 2007. The arbitrator's award was handed down on January 9, 2007. (Compl.Ex.A.) There is nothing in the record to suggest that Riser had moved from Carlton Avenue during the period when the arbitration was taking place.
Plainly, the man who accepted service was not Riser— he is twenty-five to thirty years too old—but that does not mean that service was not effected on G & M, the corporation. According to the affidavit of service, the unnamed man who took the papers said he was the managing agent for G & M-and a corporation may be served by delivering process to a managing agent, Fed.R.Civ.P. 4(h)(1) (B); N.Y. C.P.L.R. § 311(a)(1)). Riser has offered no evidence to contradict the affidavit of service in this respect; for example, he did not call his father to testify that he never made any such statement. Therefore, I accept, for purposes of this motion, that the individual who took the papers represented that he had authority to accept them on behalf of the corporation. Therefore, the corporation was validly served, and this Court obtained jurisdiction over G & M. As the New York Court of Appeals has held, "if service is made in a manner which, objectively viewed, is calculated to give the corporation fair notice, the service should be sustained." Fashion Page, Ltd. v. Zurich Ins. Co., 50 N.Y.2d 265, 428
N.Y.S.2d 890, 406 N.E.2d 747, 751 (1980).
In DCH Auto Group (USA), Inc. v. Fit You Best Automobile, Inc., No. 05 Civ. 2973, 2007 U.S. Dist. LEXIS 67543, at *7-11, 2007 WL 2693848 (E.D .N.Y. Sept. 12, 2007), the corporate defendant, like G & M here, sought to vacate a default judgment pursuant to Rule 60(b)(4) on the ground that the person who had accepted process on its behalf was not, in fact, authorized to do so. The process server had gone to the place of business for the corporation, and personally delivered the summons and complaint to a man who represented that he was an employee of the corporation. Id. In moving to vacate, the corporate defendant argued that the man was not an officer or agent authorized to accept process, and was not even an employee, id.—much the way John Riser has sworn that he has no idea who the "John Doe" is who accepted service of process on behalf of G & M (see Riser Aff. ¶¶ 74-75.) The court in DCH Auto Group found that "[plaintiff] reasonably believed that its service of process provided [defendant] with notice of th[e] action," and held that the service that had occurred was sufficient to obtain personal jurisdiction over the corporation. Id.; cf. OR.EN. Orobia Eng'g S .R.L. v. Nacht, No. 97 Civ. 4912, 1998 U.S. Dist. LEXIS 16319, at *14-15, 1998 WL 730562 (S.D.N.Y. Oct. 19, 1998) (noting that courts have construed New York Civil Practice Law and Rules ("CPLR") § 311 "very liberally" and upheld service by means "reasonably calculated to give notice" to the corporation) (internal quotations and citation omitted). As in DCH Auto Group, the service that occurred here was sufficient to obtain jurisdiction over G & M.
The first time that Riser admits notifying anyone of a change of address is at a Union disciplinary hearing involving other matters. (See id. Ex. 13.) The hearing was held in September 2007. Id. It is fair to infer that notice of that hearing was sent to G & M at the Carlton Avenue address, and that Riser obviously received it because he attended the hearing. (See id.) In a letter dated November 15, 2007, which Riser claims he sent to the Union (id. ¶ 34), Riser states that he told the arbitrator at the September 2007 disciplinary hearing that his address had changed to 686 Correll Avenue. (Id. Ex. 13.) The letter is unsigned, and it was not mentioned by either of Riser's attorneys or by Riser at the February 6 or February 9 hearing. Plaintiffs claim that the letter is "fictitious" (Pls.' Opp. at 16), and there is some evidence to support their claim, since the Union told Mr. Ofenloch in January 2009 that the only address on file for G & M and Riser was 1734 Carlton Avenue. However, the fact that Riser began receiving correspondence at his new address after November 2007 certainly suggests that the Union somehow received notice of Riser's change of address. But it is not necessary to resolve that question definitively because even if one credits Riser's letter, it does not establish that Riser and his corporation were not in residence at 1734 Carlton Avenue during the summer of 2007.
In view of the foregoing, I have no reason to conclude that anyone made any misrepresentation to the Court concerning service of process or service of the motion for a default confirmation of the award.
And so we turn to service of the motion papers and orders that resulted in Riser and G & M being held in contempt.
By the time the judgment confirming the arbitration award was entered (on September 14, 2007), it appears that Riser may have moved from Carlton Avenue. I conclude that neither the plaintiff Funds nor the attorneys from O'Dwyer & Bernstein knew that Riser and/or G & M had moved. There is no evidence that any O'Dwyer lawyer knew about or was involved in the Union hearings involving Riser that were taking place in the autumn of 2007 (see Silverman Aff. ¶ 6)—and it was at one of those hearings that Riser may have first told the investigator that his address had changed (see Riser Aff. Ex. 13). Nor is there any evidence that any O'Dwyer lawyer ever saw the November 15, 2007 letter in which Riser notified the Union (not the Funds) of his change of address in writing.
Plaintiffs sent numerous documents via first-class mail, return receipt requested, to Riser at the Carlton Avenue address between the spring of 2008 and the winter of 2009, notifying him that the Funds were seeking to hold him and G & M in contempt for failing to comply with the order confirming the arbitration award. Almost every time, the United States Postal Service ("USPS") provided the O'Dwyer firm with a green card showing that the documents had been received and signed for at 1734 Carlton Avenue. (See, e.g., Pls.' Opp. Ex. B; Silverman Decl. Ex. E.) Since Riser—if he is to be believed—was no longer residing at Carlton Avenue, I cannot explain how the return receipts for those letters came to be signed. I do know that this cannot be the fault of so-called "sewer service," which has been much in the news lately. Return receipts remain in the custody of the USPS from the time a document is mailed until the familiar green card is transmitted back to the sender of the document. A federal employee, the postal delivery person—not some privately hired process server—obtains a signature on the return receipt. For that reason, this Court has always felt comfortable relying on return receipt cards to prove that important documents were received by an addressee. The attorneys at O'Dwyer were equally justified in drawing the same conclusion when the receipt cards were repeatedly returned to their office indicating receipt. As a result, I conclude that they made no misrepresentation when they asserted that the various contempt applications had been sent to the correct address and were received by the intended recipient.
According to the affidavit of service for the copy of the January 15, 2009 letter that was personally delivered to 1734 Carlton Avenue—the letter that expressly alerted Riser that a contempt hearing would be held on February 6—someone named John Riser signed for the letter at 1734 Carlton Avenue. (See Pls.' Opp. Ex. C.) This fact strongly supports the Court's conclusion that Riser maintained some connection to the Carlton Avenue address through January 2009. (There was no discussion of this letter, or who received it, at the February hearings, so the affidavit of service stands unrebutted). Indeed, he may even have signed for this and other letters himself; I note that in Riser's carefully worded affidavit, he does not specifically deny that it was he who signed for those documents at 1734 Carlton Avenue. I am, of course, curious about who signed for the order to show cause, which was sent by certified mail and was signed for by a rather large man whose signature appears to read "Scott Fitzgerald." But since there are other grounds for vacating the February 10 contempt order (albeit not the underlying default judgment), the Court need not explore this issue, either— at least, not at this time.
In fact, if anyone has knowingly misled the Court, it is Riser, who swore that he could not comply with the Court's order to produce documents. Everything that has transpired since February 9, 2009 proves that he could have complied if he had chosen to do so. And I am not convinced that he has told the Court everything I need to know in order to make certain of his statements about service not misleading,
The preceding discussion concerning service makes it clear that there is no basis for the Court to vacate the September 2007 judgment confirming and enforcing the arbitration award. The Court concludes that G & M's legal address on and prior to that date was 1734 Carlton Avenue, and that the individual who took both the original papers and the motion for a default judgment at that address indicated that he was a managing agent authorized to accept service on behalf of his "Co-Tenant" the corporation. In light of the case law discussed above, see supra Discussion I.B., that qualified as valid service on the corporation, and the Court acquired jurisdiction over G & M when this action was commenced. The default judgment entered on September 14, 2007 will not be vacated.
Pursuant to that judgment, G & M is required to pay the Funds the amount adjudicated by the arbitrator—$2,350, plus interest at 10% per annum, as well as the $1,371 in costs and fees incurred by the Funds to obtain the September 2007 judgment.
Local Rule 83.9(a) of this Court requires that any application to hold in contempt a person who has not yet appeared in an action by an attorney must be served on the alleged contemnor "personally, in the manner provided for by the Federal Rules of Civil Procedure for the service of a summons." Local Civ. R. 83.9(a).
Riser is not a party defendant in this action. He was not originally served with process—the corporation was —and he had not appeared, by an attorney or otherwise, prior to February 2009. Therefore, he had to be served with the contempt application as though he were being served with a summons and complaint. He was not. He was served with the January 9, 2009 application seeking to hold him in contempt by certified mail, return receipt requested, as shown by the return receipt submitted to the Court. (See Pls.' Opp. Ex, B.) Therefore, Riser was not served in a manner consistent with Federal Rule of Civil Procedure 4 or the CPLR—neither of which provides for personal service of a summons and complaint merely by certified mail, return receipt requested. While the Court indicated on the order to show cause that service on the Secretary of State "pursuant to Section 306 of the Business Corporation Law" would be good and valid service (see Riser Aff. Ex. 18), it is axiomatic that an individual cannot be served pursuant to Business Corporation Law ("BCL") § 306-only a corporation can be so served. The Court's January 9, 2009 order to show cause did not provide for any alternative form of service on Riser as an individual; it certainly did not provide that service could be effected by certified mail, return receipt requested.
Therefore, the contempt order of February 10, 2009, and the ensuing judgment dated May 26, 2009, are hereby VACATED as to John J. Riser, pursuant to Rule 60(b) (4). This includes vacatur of any and all orders that hold Riser responsible for any money judgment—including the money judgment entered by default against G & M on September 14, 2007.
Unlike Riser, G & M was validly served with the January 2009 papers seeking to hold it in contempt, as required by Local Rule 83.9.
Rule 4 authorizes service of a summons and complaint in any manner prescribed by state law. See Fed.R.Civ.P. 4(e)(1). CPLR § 311 authorizes service on a business corporation pursuant to BCL § 306; and BCL § 306 authorizes service on a domestic corporation by serving the Secretary of State. G & M is a corporation incorporated in the State of New York. (See Pls.' Opp. Ex. A.) By operation of law, every New York corporation is deemed to have authorized the Secretary of State to receive service on its behalf. BCL § 304(a). According to the affidavit of service submitted to the Court, the Secretary of State was so served with the January 9, 2009 contempt motion papers. (Pls.' Opp. Ex. B.)
Thus, G & M was validly served with process—service on G & M was complete when the Secretary of State received the documents in Albany on January 12, 2009. See BCL § 306(b)(1). It was, therefore, lawful for the Court to conclude that G & M was in contempt of the Court's judgment of September 14, 2007—but only to the extent that the judgment directed G & M to turn over its corporate records.
G & M cannot avoid the finding of contempt by arguing that it was not able to comply with the Court's turnover orders. While a party cannot be held in contempt if it is impossible for it to comply with the court's order, contempt is excused only if compliance is "literally impossible." Badgley v. Santacroce, 800 F.2d 33, 37 (2d Cir.1986). Here, it was not literally impossible for G & M to comply with the arbitrator's and the Court's directives that it turn over records in order to enable the audit. A party seeking to avoid contempt on the ground that it is unable to comply with the court's order must show that it has been "reasonably diligent and energetic in attempting to accomplish what was ordered." See Aspira of N.Y., Inc., v. Bd. of Ed. of City of N.Y., 423 F.Supp. 647. 654 (S.D .N.Y.1976). G & M's conduct is similar to the conduct of the defendants in ACLI Government Securities, Inc. v. Rhoades, 989 F.Supp. 462, 465-67 (S.D.N.Y.1997). In that case, as in this one, the defendants did not respond to any of plaintiffs' demands for documents until plaintiffs sought to have them held in contempt. Id. at 467. Although the defendants opposed the contempt motion, they failed to establish that they had made any effort to locate the documents or otherwise to comply with the order. Id. The court held them in contempt. (Id.)
Because G & M has been validly found to be in contempt, sanctions may well be appropriate. Nonetheless, the Court, pursuant to Rule 60(b)(6), vacates both of the monetary sanctions that it previously awarded: (1) the $45,000 for legal fees allegedly incurred by the O'Dwyer firm; and (2) the $28,500 in daily fines for the period October 11, 2008 until February 6, 2009. The attorneys' fees sanction was awarded without any sworn submission by the O'Dwyer firm on the amount of fees it had incurred in connection with its efforts to enforce the arbitration award. Furthermore, both the attorneys' fees and the $250 per day sanction starting October 11, 2008 were awarded without consideration of the contemnor G & M's ability to pay, as required by the law of this Circuit. See Dole Fresh Fruit Co. v. United Banana Co., Inc., 821 F.2d 106, 110 (2d Cir.1987). The Court did not take proper care before imposing these monetary sanctions, for which I apologize to Mr. Riser and G & M. Both monetary sanctions are hereby VACATED.
The question then becomes what to do next, as what should have been a simple arbitration award confirmation has spawned this monster.
Since I have not vacated the order holding G & M in contempt for failing to produce its records—only the sanction imposed to remedy that contempt—the Funds may apply to the Court for the imposition of a sanction. If the corporation's records have been made available, and the audit concluded, that would probably be a waste of time—at least if the corporation is judgment proof, as is no doubt the case. The only remaining money judgment runs against G & M pursuant to the original arbitration award as reduced to judgment—$2,350, plus interest accruing at 10% per annum since the date of the award, as well as the $1,371 in costs and fees. If the Funds wish to go against the corporation to collect the judgment of September 14, 2007, they are free to do so, using timehonored methods—which do not include applying for contempt orders. Movants are correct that contempt is not the proper method for enforcing an ordinary money judgment. See Cordius Trust v. Kummerfeld, No. 99 Civ. 3200, 2009 U.S. Dist. LEXIS 98889, at *20, 2009 WL 3416235 n. 8 (S.D.N.Y. Oct.23, 2009) (noting "general rule that money judgments are enforced by means of writs of execution rather than by resort to the contempt powers of the courts" (quoting Aetna Cas. & Surety Co. v. Markarian, 114 F.3d 346, 349 n. 4 (1st Cir.1997)).
If the corporation has not yet turned over all the requested records, then application may be made to hold Riser, as President of the corporation, personally in contempt, provided service is properly made. But as Riser was not personally a party defendant in this action, the remaining money judgment, the one awarded by the arbitrator, does not run against him. Riser was only made liable for this amount pursuant to the orders and the judgment that have now been vacated. He should not have been made personally liable for those amounts without some showing that the corporate veil could be pierced—a showing that the Funds never even attempted to make. It was a mistake for the Court to sign an order that made Riser personally liable for the corporation's debt.
I do not mean by anything in this opinion to excuse the behavior of Mr. Riser. I believe him to have been on notice of this action for almost two years before he bothered to come forward—and he came forward only after being threatened with contempt sanctions, including the possibility of jail. He ignored the Funds' demands, failed to appear at a duly noticed arbitration, and repeatedly failed to respond to orders to show cause issued by this Court of which (I personally believe) he was aware. I am not convinced he has told the whole truth about who signed for various papers that were served on him at G & M's corporate address. He has behaved badly and he has cost the Funds some quantum of money.
I have met John Riser and I appreciate that he may well be a "simple carpenter," as one of his attorneys has described him. (Pls.' Opp. Ex. E at 11:25.) But that does not excuse his failure to show up at arbitration hearings, or in court, or his failure to return phone calls or respond to letters. It does not excuse his failure to advise the Funds that he had moved. It was Riser's duty to clear up any misapprehension, whether on his part or on the part of the Funds and their counsel. He could have approached the Court at any time with his explanation of where his corporate records were. The situation did not need to play itself out as it did.
Anticipating that matters are at an end, I am directing the Clerk to close the file in this case. If anyone wants to do anything else relating to the enforcement of the arbitration award, that party will have to move for leave to reopen the case.
The firm of Echtman & Etkind, LLP has moved to be permitted to withdraw from its representation of G & M and Riser because it has not been paid. The firm also identifies several differences of opinion with its client that have poisoned their relationship.
Riser has filed an opposition to the motion, the gist of which is that the Union has done him wrong, and that the lawyers he has hired—and this Court—ought to get to the bottom of that matter. Riser discusses at great length his conspiracy theory and urges the Court to open its own investigation into Union corruption. This, as the Court has already noted, is not the Court's business— and it appears that the Echtman firm has been pressured by Riser to, as the firm puts it, "take positions in the matter before Your Honor that we do not believe are appropriate." (Mem. in Supp. of Mot. to Withdraw, Apr. 13, 2010, at 4.)
The motion for leave to withdraw is granted, see United States v. Up to $6,100,000 on Deposit in Account No. 15.5876 at Bank Julius Baer Co. Ltd., No. 07 Civ. 4430, 2009 WL 1809992, at *5-6 (S.D.N. Y. June 24, 2009), and cases cited therein. The Court tenders its thanks to the firm for work performed in connection with the motion to vacate. Mr. Riser should be grateful to the Echtman firm for the excellent result it has achieved on behalf of him and his corporation.
The Clerk of the Court is directed to do the following:
VACATE the judgment of May 26, 2009 as against Riser;
VACATE the contempt sanctions in the judgment of May 26, 2009 as against G & M;
VACATE the order of February 10, 2009 insofar as it held Riser in contempt and imposed contempt sanctions on G & M;
VACATE so much of the order of September 10, 2008 as made Riser individually liable for the judgment against G & M that was entered on September 14, 2007;
GRANT the motion of Echtman & Etkind, LLP for leave to withdraw as counsel; and
CLOSE the file in this matter.
Not Reported in F.Supp.2d, 2010 WL 2291490
Justin Stedman Clark, Levine & Blit, PLLC, New York, NY, for Plaintiff.
Andrew Michael Wong, Law Office of Andrew M. Wong, New York, NY, for Defendant.
J. PAUL OETKEN, District Judge
On January 6, 2016, Polit moved to reopen the case and moved for sanctions. (Dkt. No. 30.) Polit alleges that he initiated an arbitration proceeding on or about April 29, 2015, nine days after this Court's opinion compelling arbitration, with the American Arbitration Association ("AAA"). (Dkt. No. 31 ¶ 7.) As the hearing date approached, the AAA notified the parties that Global Foods had not paid its share of the filing fee or the arbitrator's compensation. (Id. ¶ 8; see id. Ex. B.) The AAA notified the parties that Global Foods owed about $20,000 in arbitrator fees and asked for payment from Global Foods or Polit, if Polit was willing. (Id. tt 9-12; see id. Exs. B-C.) Global Foods did not respond and Polit said he was unable to pay, so on November 10, 2015, the AAA cancelled the arbitration hearing. (Id. ¶ 12, ex. C.) On January 6, 2016, having heard from neither party, the AAA "assume[d] th [e] matter [was] settled," terminated the arbitration proceeding, and closed the file. (Id. Ex. D.) The same day, Polit moved to reopen the action in this Court. Global Foods has not responded to the motion within the required time.
Polit moves under Rule 60(b) of the Federal Rules of Civil Procedure. That Rule permits a Court to "relieve a party . . . from a final judgment, order, or proceeding" for certain enumerated reasons, Fed. R. Civ. P. 60(b)(1)(5), or for "any other reason that justifies relief." Fed. R. Civ. P. 60(b)(6). The decision to grant a 60(b) motion is within the "sound discretion of the district court," and Rule 60(b)(6) is a "grand reservoir of equitable power to do justice in a particular case." Stevens v. Miller, 676 F.3d 62, 67 (2d Cir. 2012) (citations and internal quotation marks omitted); see ISC Holding AG v. Nobel Biocare Finance AG, 688 F.3d 98, 109 & n.19 (2d Cir. 2012). Nonetheless, relief under Rule 60(b)(6) is available only if the other subsections of Rule 60(b) do not apply, and if "extraordinary circumstances are present or the failure to grant relief would work an extreme hardship on the movant." ISC Holding, 688 F.3d at 109. A Rule 60(b)(6) motion must also be made within a reasonable time, as this one was. Fed. R. Civ. P. 60(c)(1).
Relief under Rule 60(b)(6) is warranted here. First, none of the other sections of Rule 60(b) apply. Polit seeks relief alternatively under Rule 60(b)(3), which permits relief in the event of "misconduct by an opposing party." Fed. R. Civ. P. 60(b)(3). He argues that Global Foods sought arbitration "solely to cause delay." (Dkt. No. 33 at 2.) But Polit offers no evidence of misconduct, only evidence of default by Global Foods. See Koch v. Pechota, No. 15-153-cv, ___ F. App'x ___, 2016 WL 319638, at *2 (2d Cir. Jan. 27, 2016) ("A movant seeking Rule 60(b)(3) relief must produce `clear and convincing evidence' of the alleged fraud or misconduct." (quoting Fleming v. N.Y. Univ., 865 F.2d 478, 484 (2d Cir. 1989))).
Reopening the case is also appropriate under the Federal Arbitration Act. The Act "directs a district court to enter a `stay of proceedings' in cases where the claims are `referable to arbitration.' +" Polit v. Global Foods, No. 14-CV-7360, 2015 WL 1780161, at *5 (S.D.N.Y. Apr. 20, 2015) (quoting 9 U.S.C. § 3). Such a stay, however, lasts "until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration." 9 U.S.C. § 3.
In this case, the Court dismissed the case without prejudice because all the claims were arbitrable. Arbitration has now been "had" in accordance with the agreement. The agreement requires that claims "be settled by arbitration in accordance with the rules of the American Arbitration Association." (Dkt. No. 31 Ex. A at ¶ 15.) And the AAA, pursuant to its rules, has terminated the arbitration, "removing the § 3 requirement for the district court to stay the proceedings." See Pre-PaidLegal Servs. v. Cahill, 786 F.3d 1287, 1293-94 (10th Cir. 2015) (explaining that § 3 was satisfied when the AAA terminated an arbitration due to Defendant's refusal to pay fees). In any event, reinstatement is appropriate, since Global Foods was in default in the arbitration proceeding. See id. at 1294 ("Failure to pay arbitration fees constitutes a `default' under § 3."); Sink v. Aden Enters., Inc., 352 F.3d 1197, 1200 (9th Cir. 2003).
It is of no moment that this case was dismissed rather than stayed pending arbitration. The Court granted dismissal without prejudice in its discretion because "all of the issues raised in this action must be arbitrated." Polit, 2015 WL 1780161, at *5 (citing 9 U.S.C. § 3). Now that Polit's claims may proceed in federal court, reopening is appropriate.
For the foregoing reasons, Polit's motion to reopen is GRANTED. The motion for sanctions is DENIED. The Clerk of Court is directed to close the motion at Docket Number 30.
SO ORDERED.
Not Reported in F.Supp.3d, 2016 WL 632251
Jasbrinder Sahni, Legal Services of the Hudson Valley, White Plains, NY, for Plaintiff.
Jeremy Edward Meyer, Cleary, Josem & Trigiani, LLP, Philadelphia, PA, for Defendants.
NELSON S. ROMAN, United States District Judge
Currently before the Court is Plaintiff's post-judgment motion to amend his complaint. (Pl.'s Mot. Am. Compl., ECF No. 65.) The Court notes that pursuant to the stipulation submitted by Plaintiff and LSHV on April 11, 2017, all claims against LSHV have been dismissed from this action, with prejudice. (ECF No. 72.) Accordingly, the Court considers the instant motion only as it relates to Plaintiffs claims against the Union.
The Court assumes the parties' familiarity with the underlying facts and prior proceedings in this case, as outlined in this Court's previous opinions. To briefly summarize, Plaintiff is a former employee of LSHV and member of the Union. Sahni I, 2016 WL 1241524, at *2. During the course of his employment with LSHV—in December of 2011—Plaintiff was involuntarily transferred from the organization's White Plains office to the Mount Vernon office. Id. The Union grieved Plaintiff's involuntary transfer on his behalf, but the grievance was ultimately denied. Id. The Union subsequently sought arbitration of Plaintiff's involuntary transfer grievance Id.
Plaintiff alleges that between June 2012 and February 2013, the Union repeatedly represented that it was actively pursuing arbitration of both the involuntary transfer and suspension grievances. Id. However, despite numerous requests from Plaintiff, the Union failed to provide him with the notice of arbitration until February 2013. Id.
On September 24, 2014, while the arbitration of Plaintiff's transfer and suspension claims was pending, LSHV terminated Plaintiff's employment. Id. Plaintiff once more requested that the Union grieve his claim. The Union denied Plaintiff's request and, without providing any justification for its decision, elected to not grieve Plaintiff's termination. Id. Plaintiff further claims that the Union failed to inform him of its decision to not grieve his termination until after the allotted 45-day period to file a grievance had lapsed. Id.
Plaintiff initiated the instant action on December 15, 2014, alleging, inter alia, that the Union breached its duty of fair representation by improperly pursuing his involuntary transfer and suspension grievances and by failing to grieve his termination. (Compl., ECF No. 1.) In addition, Plaintiff asserted claims against his former employer, LSHV, for common law fraud, frivolous conduct, breach of contract, and breach of the implied covenant of good faith and fair dealing. (Compl. ¶¶ 41-43.)
Both Defendants filed motions to dismiss Plaintiff's claims on April 22, 2015. (ECF No. 15). In an initial opinion issued on March 23, 2016, this Court dismissed many— but not all—of Plaintiff's claims. (ECF No. 35.) Following a motion for reconsideration filed by LSHV and the Union, this Court dismissed all remaining claims against both Defendants on May 13, 2016. (ECF No. 54.)
While Defendants' motions to dismiss were pending before this Court, Plaintiff's transfer and suspension grievances were arbitrated. (Pl.'s Mot. for Leave to Am. Compl. ("Pl,'s Mot."). Ex. A, Proposed Amended Complaint ("PAC") ¶ 62, ECF No. 65.) On March 31, 2016—roughly one week after this Court issued its initial opinion—the arbitrator issued a decision denying both of Plaintiff's grievances. (Def.'s Opp. to Pl.'s Mot. for Leave to Am. Compl. ("Def.'s Opp."), Ex. C., ECF No. 67.)
Following the unfavorable arbitration decision, Plaintiff sought leave from this Court to file a motion to amend his complaint and incorporate factual allegations and claims relating to the arbitration process. (ECF No. 48.) This Court granted Plaintiff's request, and Plaintiff filed the instant Rule 15 motion to amend on September 06, 2016. (ECF No. 65.)
After Plaintiff's Rule 15 moving papers had been served on opposing counsel but before his reply was due, Plaintiff sought leave to file a Rule 60(b) motion for relief from this Court's May 13
After the instant motion was fully submitted, LSHV and Plaintiff filed a stipulation, dismissing all claims against LSHV from this action, with prejudice. (Stip. of Partial Dismissal, ECF No. 72.) Accordingly, the Court now addresses Plaintiff's proposed amendments to his Complaint as they relate to the only remaining Defendant —the Union.
Plaintiff currently seeks leave to amend his complaint pursuant to Rule 15 of the Federal Rules of Civil Procedure, citing both relevant developments since the original complaint was filed and newly discovered evidence. Plaintiff's motion, however, was filed after this Court had already dismissed the entirety of his claims and, by extension, this action. As the Second Circuit has recognized:
Williams v. Citigroup Inc., 659 F.3d 208, 212-13 (2d Cir. 2011) (internal quotation marks and citations omitted); see also Natl Petrochem. Co. of Iran v. M/T Stolt Sheaf, 930 F.2d 240, 245 (2d Cir. 1991) ("Unless there is a valid basis to vacate the previously entered judgment, it would be contradictory to entertain a motion to amend the complaint.").
Where, as here, a plaintiff moves to amend the complaint after an action has been dismissed without first seeking relief from the judgment, courts may construe the Rule 15 motion as a motion under Rule 60(b). See, e.g., Prince of Peace Enterprises, Inc. v. Top Quality FoodMkt, LLC, No. 07-CV-0349 (LAP), 2012 WL 4471267, at *4 (S.D.N.Y. Sept. 21, 2012) ("The Court construes Plaintiff's request to reopen the case and for leave to amend the complaint against [defendant] in essence, a request to vacate the Court's [] final judgment of dismissal, as a Rule 60(b) motion."); see also In re Lawrence, 293 F.3d 615, 622-23 (2d Cir. 2002) (describing a "district court's decision on whether or not to recharacterize a claim as a Rule 60(b) motion" as an exercise of that court's discretion); Ahmed v. Dragovich, 297 F.3d 201, 208-209 (3d Cir. 2002) ("One of the principal commentators on federal procedure has noted that `[m]otions seeking to amend a complaint that are made after a judgment of dismissal have been entered have been construed as Rule 60(b) motion.'" (quoting James W. Moore, Moore's Federal Practice § 60.64, at 60-196 (3d ed. 2002))).
Unlike the liberal standard under Rule 15, Rule 60(b) standards are more stringent and place "significant emphasis on the value of finality and repose." Williams, 659 F.3d at 213 (internal quotation marks omitted). However, "considerations of finality do not always foreclose the possibility of amendment, even when leave to replead is not sought until after the entry of judgment." Id. Rather, "postjudgment motions for leave to replead must be evaluated with due regard to both the value of finality and the policies embodied in Rule 15." Id. Thus, in such circumstances, courts may consider "the nature of the proposed amendment in deciding whether to vacate the previously entered judgment," Id. Where, however, the amended proposed amended complaint will not address the deficiencies of the original pleading, the motion to reopen the case should be denied. See Ahmed, 297 F.3d at 209 ("[T]he fact that the amended pleading offered by the movant will not cure the defects in the original pleading that resulted in the judgment of dismissal may be a valid reason both for denying a motion to amend under Rule 15(a) and for refusing to reopen the judgment under Rule 60(b)" (internal quotation marks omitted)).
Rule 60(b)(2), on the other hand, "provides relief when the movant presents newly discovered evidence that could not have been discovered earlier and that is relevant to the merits of the litigation." Victorinox AG v. B&F Sys., Inc., No. 15-CV-4032, 2017 WL 4149288, at *5 (2d Cir. Sept. 19, 2017) (summary order) (internal quotation marks omitted). In order to prevail on a Rule 60(b)(2) motion, the movant must demonstrate that:
United States v. Int'l Bhd. of Teamsters, 247 F.3d 370, 392 (2d Cir. 2001) (internal quotation marks omitted).
Finally, this Court notes that "[t]he Second Circuit has repeatedly recognized that relief under Rule 60(b) is extraordinary; it is generally not favored and is appropriate only where exceptional circumstances exist." GMA Accessories, Inc. v. BOP LLC, No. 07-CV-3219 (LTS) (DCF), 2007 WL 4563433, at *2 (S.D.N.Y. Dec. 20, 2007) (citing Central Vermont Public Service Corp. v. Herbert, 341 F.3d 186 (2d Cir. 2003)).
Plaintiff presently requests relief from this Court's May 13, 2016 ruling dismissing all of his claims and additionally seeks leave to amend his Complaint. (Pl.'s Reply Mem. of Law in Supp. of Mot. to Amend Compl. ("Pl.'s Reply") at 3, ECF No. 66.) Though inartfully articulated in his moving papers, Plaintiff's arguments may be condensed to two primary propositions: (1) Plaintiff claims he is entitled to relief pursuant to Rule 60(b)(1) because this Court "mistakenly" applied the arbitration procedures of an expired collective bargaining agreement ("CBA") to his claims; and (2) even if the arbitration procedure is applicable to his claims, Plaintiff is entitled to relief pursuant to Rule 60(b)(2) because of "newly discovered evidence" establishing that his former employer repudiated that arbitration process. The Court now considers each of Plaintiff's arguments in turn.
This Court is unpersuaded by Plaintiff's arguments. Although "Rule 60(b)(1) is available for a district court to correct legal errors, such as when the judge has made a substantive mistake of law or fact," Rai v. WB Imico Lexington Fee, LLC, No. 09-CV-9586 (PGG), 2017 WL 4350567, at *2 (S.D.N.Y. June 28, 2017) (internal quotation marks and citations omitted), no such substantive mistake occurred in this action.
Assuming that Plaintiff is correct in noting that the 2013 CBA was expired at the time of his termination, there is nevertheless a CBA that was retroactively operative at that time. The 2014-2016 CBA, which contains a grievance procedure analogous to that of the 2013 CBA, was "effective as of and retroactive to January 1, 2014"— more than nine months before Plaintiff was terminated. (Def.'s Sur Reply in Opp. to Pl.'s Mot. for Leave to Amend Compl. ("Def.'s Sur-Reply") at 3, Ex. C, Collective Bargaining Agreement at 18-19, ECF No. 68.) The Court's exhaustion analysis, therefore, carries equal weight despite the expiry of the 2013 CBA, making any factual mistake in the Court's previous opinions far from substantive.
The Court is equally unpersuaded by Plaintiff's contention that his termination claim is not subject to the CBA's grievance procedure. Article II of both CBAs allow for grievants to "avail themselves of any statutory or administrative machinery provided" for the resolution of discrimination claims "in addition to the grievance procedure specified in Article XIX [of the CBA]." (Pl.'s Reply, Ex. 3, Collective Bargaining Agreement at 27.) Article II, thus, allows grievants to seek judicial and administrative remedies for alleged discrimination outside of those provided by the controlling CBA. Indeed, Plaintiff took full advantage of this Article's protections and brought an entirely separate action for discrimination against his former employer, LSHV. See Sahni v. Legal Services of the Hudson Valley, No. 14-CV-01616 (S.D.N.Y. filed March 10, 2014). Article II's protections do not, however, entitle Plaintiff to bring claims for a violation of the CBA or for breach of the duty of fair representation without first exhausting the grievance procedure. Such claims arise out of the contractual agreement—the CBA—and require exhaustion of the contractual remedies. See DelCostello v. Int'l Bhd. of Teamsters, 462 U.S. 151, 163 (1983) ("It has long been established that an individual employee may bring suit against his employer for breach of a collective bargaining agreement. Ordinarily, however, an employee is required to attempt to exhaust any grievance or arbitration remedies provided in the collective bargaining agreement." (internal citations omitted)); Vaca v. Sipes, 386 U.S. 171, 184 (1967) (recognizing that when an "employee's claim is based upon breach of the collective bargaining agreement, he is bound by terms of that agreement which govern the manner in which contractual rights may be enforced. . . . [and] the employee must at least attempt to exhaust exclusive grievance and arbitration procedures established by the bargaining agreement").
This Court's exhaustion analysis from its previous opinions, therefore, constituted neither a mistake nor "exceptional circumstance" that would justify relief under Rule 60(b)(1).
Plaintiff next argues that he is entitled to relief from the judgment because of "newly discovered evidence" evincing that LSHV repudiated the arbitration process. (Pl.'s Reply at 17.) Specifically, Plaintiff claims he was recently made aware of two relevant memoranda of agreement ("MOAs") executed between LSHV and the Union during their negotiations for a new CBA in 2014. (Id. at 15-17.) The first MOA, which was signed on October 30, 2014, updated the CBA's grievance procedure, but omitted language referring to a terminated employee's right to pursue arbitration on his own accord —that is, without Union support. (Id.) A subsequent MOA, signed only a few days later on November 14, 2014, re-incorporated the language from the 2013 CBA allowing individual employees to seek arbitration of grievances in their own name. (Id.) By Plaintiff's account, LSHV and the Union intentionally fashioned the October MOA to prevent him from independently seeking arbitration of his termination grievance. (Id.) The October MOA, Plaintiff argues, thus constituted a repudiation of the arbitration procedure by his former employer, and LSHV should be estopped from enforcing it. (Id.)
This Court is unpersuaded by Plaintiff's contentions and finds that Plaintiff is not entitled to relief pursuant to Rule 60(b)(2) for a multitude of reasons. First, the October MOA in which LSHV allegedly repudiated the arbitration procedure is not "newly discovered evidence" within the meaning of the rule. Pursuant to Rule 60(b)(2), " [the] movant must have been justifiably ignorant of the evidence despite due diligence" to be entitled to relief from the judgment. Int'l Bhd. of Teamsters, 247 F.3d 370, 392 (2d Cir. 2001) (citing United States v. IBT, 179 F.R.D. 444, 447 (S.D.N.Y. 1988)). According to the record before the Court, however, Plaintiff was aware of the October MOA well before this Court dismissed his claims in May of 2016. In fact, more than a full year before this Court issued its ruling, Plaintiff filed a letter with the Court that referred to the October MOA. (ECF No. 32). Plaintiff even included correspondence from the Union that explained the terms of the MOA as an exhibit in his letter. (Pl.'s Aug, 30, 2015 Letter, Ex. 1 at 4.) Where, as here, the movant ostensibly had knowledge of the evidence before judgment was entered, relief under Rule 60(b)(2) is not warranted.
Secondly, even if the MOA constituted "newly discovered evidence," Plaintiff nonetheless fails to meet the standard for relief pursuant to Rule 60(b)(2). Newly discovered evidence justifies relief from a judgment only when the evidence is "of such importance that it probably would have changed the outcome" of the case. Int'l Bhd. of Teamsters, 247 F.3d at 392. The two MOA at the base of Plaintiff's motion, however, would not have affected the Court's previous decision to dismiss Plaintiff's claims.
Here, no part of LSHV's behavior suggests that the organization ever refused to go forward with the CBA's arbitration procedures. Indeed, Plaintiff concedes that LSHV participated in the arbitration of at least two of his grievances. (See generally Pl.'s Mot., Ex. A, PAC.) Where an employer actively participates in the arbitration of a grievant's claims, that employer cannot be said to have repudiated the CBA's grievance procedure.
Moreover, Plaintiff cannot claim that he was deterred from pursuing arbitration on his own behalf by the October MOA. Plaintiff, by his own admission, was unaware of the October MOA's specific provisions during the short period it was in effect. (Pl.'s Reply, Ex. 2, Aff. of Jasbrinder Sahni ¶¶ 17-23.) The subsequent November MOA, which was signed only fourteen days later, reiterated his right to seek arbitration without the Union. Because Plaintiff did not know of the terms of the October MOA during the relevant time period, he could not have been deterred from pursuing his own grievance after he was terminated on September 24, 2014. Without such deterrent effect, the October MOA cannot amount to a repudiation of the arbitration process. See Tran v. Tran, No. 91-CV-6818 (RPP), 1998 WL 19996, at *2 (S.D.N.Y. Jan. 21, 1998) (finding that an employer had not repudiated the arbitration process by bribing union officials where plaintiff was unaware of the bribe and thus, could "not [be] deterred from pursuing his grievance by knowledge of the bribery").
Therefore, Plaintiff was required to exhaust the CBA's remedies for his termination grievance before seeking judicial intervention. The "newly discovered" evidence proffered by Plaintiff in no way affects this Court's exhaustion analysis. Accordingly, this Court finds that Plaintiff is not entitled to relief under Rule 60(b)(2).
Even if Plaintiff had met the stringent Rule 60(b) standards for relief from this Court's previous judgment, Plaintiff would not be granted leave to amend his Complaint. Under the more liberal standards of Federal Rule of Civil Procedure 15, "[t]he court should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2). Nevertheless, leave to amend may be denied "on grounds of futility if the proposed amendment fails to state a legally cognizable claim or fails to raise triable issues of fact." AEP Energy Servs. Gas Holding Co. v. Bank of Am., N.A., 626 F.3d 699, 726 (2d Cir. 2010) (quoting Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110-11 (2d Cir. 2001)). A proposed amendment is futile if it "could not withstand a motion to dismiss pursuant to [Rule] 12(b)(6)." Lucente v. Int'l Bus. Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2002) (internal citation omitted). Thus, a court should deny a motion to amend if it does not contain enough factual allegations, accepted as true, to state a claim for relief that is "plausible on its face." Riverhead Park Corp. v. Cardinale, 881 F.Supp.2d 376, 379 (E.D.N.Y. 2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In determining whether a complaint states a plausible claim for relief, a district court must consider the context and "draw on its judicial experience and common sense." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
Plaintiff's first proposed claim against the Union has already been dismissed by this Court. As this Court noted in its May 13, 2016 opinion, where a duty of fair representation claim is leveled against a Union in conjunction with a Section 301 claim against an employer, "if the employer is not liable to the employee, neither is the union". Sahni II, 2016 WL 3766214, at *2 (citing Acosta v. Potter, 410 F.Supp.2d 298, 309). Plaintiff's PAC does not cure the deficiencies in his Section 301 claim against LSHV: Plaintiff cannot sue his employer for a violation of the CBA without first exhausting the agreement's grievance procedure. See supra Part II, Section B. Because Plaintiff's claim against LSHV fails on exhaustion grounds, the related duty of fair representation claim against the Union also must fail.
Plaintiff's manner of arbitration DFR claim is similarly unavailing. Generally, a union breaches the duty of fair representation where its conduct: (1) is "arbitrary, discriminatory or in bad faith," and (2) "seriously undermine[s] the arbitral process." Nicholls v. Brookdale Univ. Hosp. & Med. Ctr., 204 Fed.Appx. 40, 42 (2d Cir. 2006). Further, "[b]ecause federal policy gives unions wide latitude to act in their representative capacity, a plaintiff's obligation to plead sufficient conduct to state a claim for breach of the [duty of fair representation] imposes an enormous burden." Dillad v. SEIU Local 32BJ, No. 15-CV-4132 (CM), 2015 WL 6913944, at *4 (S.D.N.Y. Nov. 6, 2015) (internal quotation marks omitted); see also Guerrero v. Soft Drink & Brewery Workers Union, No. 15-CV-911 (GHW), 2016 WL 631296, at *3 (S.D.N.Y. Feb. 16, 2016) ("The bar for finding that a union has breached this duty is high."). Accordingly, judicial review of union conduct "`must be highly deferential.'" Gvozdenovic v. United Air Lines, Inc., 933 F.2d 1100, 1106 (2d Cir. 1991) (quoting Air Line Pilots Ass'n v. O'Neill, 499 U.S. 65, 66 (1991)).
While Plaintiff asserts his manner of arbitration DFR claim under the guise of alleging that the Union engaged in bad faith conduct, he does not provide sufficient factual allegations to support such a claim. Rather, Plaintiff merely lists evidence and arguments that the Union could have presented, but allegedly did not introduce, during the arbitration of his termination and suspension grievances. (Pl,'s Mot., Ex. A, PAC ¶¶ [56-73.) Stripped of the conclusory allegations of bad faith and collusion,
For the foregoing reasons, Plaintiff's motion for leave to amend the complaint, which has been construed by this Court as a motion for relief from the judgment, is DENIED. The Clerk of the Court is respectfully directed to terminate the motion at ECF No. 65 and close the case.
SO ORDERED.
Slip Copy, 2018 WL 654467
Norman W. Bernstein, N.W. Bernstein & Associates, LLC, Rye Brook, NY, Mary Elizabeth Desmond, Jones Day, New York, NY, for Plaintiff/Third-Party Defendant.
Matthew Gerard Parisi, Bleakley Platt & Schmidt, LLP, White Plains, NY, for Defendants/Third-Party Plaintiffs.
NELSON S. ROMAN, United States District Judge
This opinion assumes the reader's familiarity with the long procedural history of this case and summarizes only the portions relevant to deciding the instant motion.
Plaintiff, the Housing Authority, initiated this action in late 2013 against the Getty Defendants for the alleged contamination of the land underneath a public housing development located at 159 S. Lexington Ave. in White Plains, New York. (See Compl. ¶ 1, ECF No. 1.) The Defendants either owned or operated the adjacent Getty gas station located at 26 East Post Road, or operated treatment systems located on that property, at times relevant to the alleged migration of hazardous materials from the gas station to the parking lot located at the housing development. (Id. ¶¶ 11-12, 15, 18, 21, 24-25, 28.) At the time this suit was brought, 350 people, including children and elderly individuals, lived at the development. (Id. ¶ 27.)
On March 30, 2015, the Getty Defendants filed a third-party complaint against Marianina alleging that any damages the Housing Authority may have incurred "as a result of gasoline contamination in the soil and groundwater at Plaintiff's [159 S. Lexington Ave.] [p]roperty . . . were caused in whole or in part by discharges [of hazardous materials] occurring at and/or emanating from the 34 East Post Road [p]roperty" where Marianina owned and operated a different gas station. (Third Party Compl. ¶¶ 14-16, 39, ECF No. 67.) Subsequently on August 14, 2015, Plaintiff amended the complaint in the direct action to include Marianina as an additional Defendant. (See ECF No. 82.) Marianina did not respond to either complaint. The Court held a conference on October 21, 2015 where all parties were present except for Marianina who did not appear. (See Minute Entry of Oct. 21, 2015.)
The Clerk of the Court entered a certificate of default against Marianina on October 27, 2015. (ECF No. 98.) On October 28, 2015, the Court scheduled a hearing for December 1, 2015, for Marianina to show cause as to why a default judgment should not be entered against it for failing to appear or respond in any way to the complaints filed against it. (ECF No. 102.) Neither a representative nor counsel for Marianina appeared at the hearing. (See Minute Entry of Dec. 1, 2015.) Accordingly, the Court entered default judgment against Marianina on Plaintiff's claims. (ECF No. 119.)
More than nine months after the default judgment was entered and almost a year and a half since the third-party complaint against it was filed, Marianina surfaced for the first time—requesting that the default judgment entered against it be vacated. (See ECF Nos. 166 & 167.) The resulting motion to vacate was fully briefed on February 1, 2017 (ECF No. 192), though Plaintiff has supplemented its opposition by submission dated April 12, 2017. (ECF No. 209.)
Green, 420 F.3d at 104 (quoting Fed. R. Civ. P. 60(b)). Since "a default judgment is `the most severe sanction which the court may apply,'" when "ruling on a motion to vacate a default judgment, all doubts must be resolved in favor of the party seeking relief from the judgment in order to ensure that to the extent possible, disputes are resolved on their merits." Id. In weighing the relevant considerations, it is the Court's duty to "provide specific reasons for a denial of a motion to set aside a default" of either variety. See Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 97 (2d Cir. 1993).
"[T]he standard for setting aside the entry of a default pursuant to Rule 55(c) is less rigorous than the `excusable neglect' standard for setting aside a default judgment by motion pursuant to Rule 60(b)." Meehan v. Snow, 652 F.2d 274, 276 (2d Cir. 1981). The considerations, however, are the same under both rules: "whether the default was willful, whether setting it aside would prejudice the adversary, and whether a meritorious defense is presented." Id. at 277 (Rule 55(c)); see Green, 420 F.3d at 108 ("We have often emphasized that . . . the court's determination [of a Rule 60(b) motion] must be guided by three principal factors: `(1) whether the default was willful, (2) whether the defendant demonstrates the existence of a meritorious defense, and (3) whether, and to what extent, vacating the default will cause the nondefaulting party prejudice.'"). In egregious cases, "there is no practical difference" between applying Rule 55(c) or 60(b). See Bricklayers & Allied Craftworkers Local 2, Albany, N.Y. Pension Fund v. Moulton Masonry & Const., LLC, 779 F.3d 182, 186 n.1 (2d Cir. 2015).
With regard to default judgments specifically, "Rule 60(b) (1) [] permits courts to reopen judgments . . . only on motion made within one year of the judgment," while "Rule 60(b)(6) goes further [] and empowers the court to reopen a judgment even after one year has passed. . . ."
Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. Pship, 507 U.S. 380, 393 (1993). The provisions, however, are "mutually exclusive, and thus a party who failed to take timely action due to `excusable neglect' may not seek relief more than a year after the judgment by resorting to subsection (6)." Id. (citation omitted); see also Ungar v. Palestine Liberation Org., 599 F.3d 79, 85 (1st Cir. 2010) (a party may not "cloak a Rule 60(b)(1) motion in the raiment of Rule 60(b)(6)" to extend its time to make such a motion).
Default was properly entered against Marianina on October 27, 2015 and, after failing to appear or oppose Plaintiff's motion, default judgment was entered against Marianina a month later on December 1, 2015. Defaulting Defendant has made the current motion within the one year time limit applicable to a Rule 60(b)(1) motion. Therefore, in deciding Marianina's motion to vacate the judgment, the Court employs the more rigorous "excusable neglect" standard pursuant to Rule 60(b) as "guided by three principal factors: `(1) whether the default was willful, (2) whether the defendant demonstrates the existence of a meritorious defense, and (3) whether, and to what extent, vacating the default will cause the nondefaulting party prejudice.'" Green, 420 F.3d at 108. This intermediate standard, which is more rigorous than that applied on a motion to set aside a default under Rule 55(c), does not require that Marianina be faultless. State St. Bank, 374 F.3d at 177.
Generally, "courts should not set aside a default when it is found to be willful." Brien v. Kullman Indus., Inc., 71 F.3d 1073, 1078 (2d Cir. 1995). "[Wilfulness in the context of a judgment by default requires `something more than mere negligence,' such as `egregious or deliberate conduct,' although `the degree of negligence in precipitating a default is a relevant factor to be considered.'" Green, 420 F.3d at 108; Bricklayers, 779 F.3d at 187 ("`it is sufficient' to conclude `that the defendant defaulted deliberately'"). Thus, gross negligence may weigh against the party seeking to set aside a default judgment, but it does not necessarily precluding relief. See Am. All. Ins. Co., 92 F.3d at 61.
Marianina, through its owners,
Similarly, where a "party seeking to set aside [a] default judgment submit[s] affidavits showing that it had `regularly inquired about the status of the case and received assurances that its interests were being represented,'" such a misunderstanding, nurtured by intentionally misleading statements, can provide the basis for finding "excusable neglect" in this District. Belizaire v. RAV Investigative & Sec. Servs., Ltd., 310 F.R.D. 100, 105 (S.D.N.Y. 2015) (citation omitted); S.E.C. v. Breed, No. 01 Civ. 7798 (CSH), 2004 WL 1824358, at *11 (S.D.N.Y. Aug. 13, 2004) ("willfulness may not be imputed to a client who does monitor his case" where the client shows "that [its] former counsel made false assurances regarding the status of the lawsuit") (emphasis added). Only where a party—aware of the pending action—"makes no showing that he has made any attempt to monitor [the] handling of the lawsuit" will the neglect of the action be imputed to the defendant and foreclose relief. See McNulty, 137 F.3d at 740 (failure imputed to the defendant where there was no "indication that [he] had done anything whatsoever to prevent the default's occurrence"); see also Baez v. S.S. Kresge Co., 518 F.2d 349 (5th Cir. 1975) (defaulting party "possessed the papers in ample time to prevent its own injury" and could not simply shift the blame to negligent third-party: "minimal internal procedural safeguards could and should have been established which would have prevented th[e] loss").
Here, Marianina's conduct was certainly not laudatory. The company appeared relatively disinterested in the status of this case until it was nine months too late (i.e., after default judgment was entered). Marianina never independently investigated the status of the case, asked its company lawyer about the case, or responded at all until it "recently" learned of the default and began taking steps to vacate the judgment. (Codella Aff. ¶ 7 (Marianina was "surprised" to discover "that [its] brokers were mistaken").) Cf. Yeschick v. Mineta, 675 F.3d 622, 629-31 (6th Cir. 2012) (defaulting defendant's attorney's "neglect in not checking the docket was not excusable" but rather "a lack of the diligence required to make out a successful claim of excusable neglect"). The company was content to receive assurances from its insurance broker that the case was being handled. Months later, "near the end of 2015," it learned the alleged identity of the adjuster handling the case, but again was content to simply leave messages.
Marianina was aware of being implicated in this lawsuit as soon as the third-party complaint was filed in April 2015, and the company could have avoided this default by, for example, checking with the Court to see if counsel for its insurance company had entered a notice of appearance on its behalf, responded to any of the complaints, or taken any affirmative steps at all. This is especially true in light of the Housing Authority's efforts to contact Marianina, including nailing a notice of endangerment on one of the owners' doors and serving the order to show cause for the default judgment hearing on that same owner at her residence. (Pl. Mem. at 13-14); see Florida Physician's Ins. Co. v. Ehlers, 8 F.3d 780, 784 (11th Cir. 1993) (noting that plaintiff had "made extensive efforts to notify" the defaulting defendant). And Marianina, a company involved in litigation in the past and a holder of an environmental insurance policy, surely was aware of the importance of monitoring such an action. (Pl. Mem. at 17-18); see also Boston Post Rd. Med. Imaging, P.C. v. Allstate Ins. Co., 221 F.R.D. 410, 413 (S.D.N.Y. 2004) (court concluded it was "preposterous" that Allstate was "too confused" to respond to a complaint, noting the distinction between the multistate insurer and "the owner of a `Mom and Pop' neighborhood business").
Therefore, the Court finds that Marianina's default must be viewed as "excusable neglect" under Rule 60(b)(1) based on the sworn allegations that its insurance broker falsely assured it that the matter was being handled.
Although the Court has determined that Marianina's default was not willful as that term is limited by the Second Circuit, "[t]he existence of a meritorious defense is a key factor in the Rule 60(b) analysis." Green, 420 F.3d at 109. "[W]ithout a valid defense, there is `no point in setting aside the default judgment.'" New York v. Green, No. 01 Civ. 196A, 2004 WL 1375555, at *7 (W.D.N.Y. June 18, 2004), affd as modified, 420 F.3d 99 (2d Cir. 2005). In fact, "`the absence of such a defense [alone] is sufficient to support [a] district court's denial' of a Rule 60(b) motion." Id. (quoting State St. Bank, 374 F.3d at 174). "In order to make a sufficient showing of a meritorious defense . . . the defendant need not establish his defense conclusively, but he must present evidence of facts that, if proven at trial, would constitute a complete defense." McNulty, 137 F.3d at 740 (emphasis added).
Here, Marianina proffers two alleged facts: extensive prior remediation and, critically, absence of new spillage. (See Codella Aff. ¶ 9.) The Housing Authority contests these facts, referring to a site investigation report that it argues "confirms that the groundwater under the Marianina's gasoline station is heavily contaminated." (Pl. Supp. Letter & Ex., ECF No. 209.) Nevertheless, if Marianina's assertions are true, then they may have a complete defense, i.e., if the "state of the art spill detection systems and ground water monitoring systems [] show[] no evidence . . . of any ground water contamination on the Property" (Codella Aff. ¶ 5), then Marianina would not be a liable polluter.
In accordance with the Second Circuit's preference for a resolution of issues on their merits rather than by default, the Court will vacate the judgment. See Green, 420 F.3d at 104; cf. Peterson v. Term Taxi, Inc., 429 F.2d 888, 891 (2d Cir. 1970) ("a failure of good judgment" amounting to "an affront to the court" did not justify the "imposition of the most `drastic remedy' available"). Despite the real potential for prejudice, Marianina's default was not willful under the Circuit's lenient standard, and the company has, though just barely, presented the potential for a meritorious defense. Although the Court is setting aside the default judgment, it is notably unimpressed with Marianina and its counsel's conduct thus far.
The Court takes the opportunity to advise the company and its counsel that any further dilatory conduct may result in the imposition of sanctions against them to compensate the Housing Authority for the costs incurred in a) seeking the default judgment, b) opposing the motion to vacate the judgment, c) revising any analyses to account for the addition of Marianina as a party to the action, and d) addressing any continuing defaults in this action. See State St. Bank, 374 F.3d at 180; see also Flora v. JPS Elastomerics, No. 08 Civ. 0031, 2009 WL 1956495, at *5 (W.D. Va. July 7, 2009) (vacating default but awarding sanctions "to deter further dilatory action by this defendant and others").
For the foregoing reasons, Defendant Marianina's motion to set aside the default judgment against it is GRANTED. Defendant has until May 16, 2017 to file responsive pleadings. Failure to comply with the Court's orders may result in sanctions, including the reentry of default against Marianina. The parties are directed to inform Magistrate Judge McCarthy of this decision and to modify their case management plan accordingly.
The Clerk of the Court is respectfully directed to set aside the entry of default against Marianina and vacate the December 1, 2015 judgment at ECF No. 119. The Clerk is also directed to terminate the motion at ECF No. 192.
SO ORDERED.
Slip Copy, 2017 WL 1498041
