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Newman v. Tessa Complete Health Care

July 13, 2006


The opinion of the court was delivered by: District Judge Susan J. Dlott


This matter comes before the Court on its Order Denying Plaintiff's Motion for Default Judgment Without Prejudice and Ordering Plaintiff to Show Cause Why This Case Should Not Be Dismissed for Lack of Jurisdiction (doc. #30) and Plaintiff Mark R. Newman's responsive Memorandum (doc. #31). In his Memorandum, Plaintiff renews his earlier-filed Motion for Default Judgment against Defendant Tessa Complete Health Care, Inc. ("Tessa"). (Doc. #31 at 1, 6; see also doc. # 27 (Plaintiff's Motion) and doc. #30 (denying Plaintiff's Motion without prejudice pending Court's consideration of Plaintiff's response to Show Cause Order).)

For the reasons below, the Court hereby GRANTS Newman's renewed Motion for Default Judgment (docs. ##s 27, 31) and accordingly ORDERS Tessa to pay Newman the sum of $5,212,467 pursuant to Newman's June 2004 arbitration award against Tessa.*fn1


For the past four years, Newman has been engaged in an employment contract dispute with Tessa, his former employer. In June 2004, an arbitrator found that Tessa owed Newman $16,000 in unpaid salary and liquidated damages, $4,300,000 for an unpaid signing bonus, $22,227 in attorney's fees, and $863,150 in prejudgment interest pursuant to that contract. (See doc. #26-3 (arbitrator's report and award) at 5.) The arbitrator also ordered Tessa to reimburse Newman $11,040 in arbitration costs Newman had advanced to the arbitrator and the arbitration association. (Id.) Newman now seeks a civil judgment enforcing or "confirming" the arbitrator's award against Tessa pursuant to both federal and Ohio law. (See docs. ##s 1, 26, 27.) Tessa did not appear at the June 2004 arbitration hearing*fn3 and has never entered an appearance in this action, which has been on the Court's docket for over two years.

In its prior Orders in this case, this Court has raised concerns as to whether it has either sufficient substantive authority or sufficient personal jurisdiction over Tessa to issue Newman's requested judgment. (See generally docs. ##s 16, 30.) Newman attempted to address the former concern by amending his complaint, in February 2006, to invoke the Court's authority under the the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. (See doc. #19 at 2 and doc. #26 at 5-6.) He has endeavored to address the latter concern through repeated efforts, further described below, to serve Tessa with notice of this action. (See generally docs. ##s 26, 27, 30, 31.)

In April 2006, two months after filing his second amended complaint, Newman moved for both an entry of default and default judgment against Tessa. (See docs. ##s 26, 27, 28.) The Clerk of Court promptly entered default against Tessa, but this Court declined to issue default judgment at that time in light of its lingering concerns as to whether Tessa had been properly served and made subject to this Court's jurisdiction. (Docs. ##s 29, 30.) Instead, the Court dismissed Newman's Motion for Default Judgment (doc. #27) without prejudice and ordered Newman to show cause why this action should not be dismissed for lack of jurisdiction. (Doc. #30.) In June 2006, Newman filed his pending Memorandum, in which he describes his ongoing efforts to perfect service on Tessa and renews his Motion for Default Judgment. (Doc. #31.)


Rule 55(b) of the Federal Rules of Civil Procedure provides, in relevant part: Judgment by default may be entered as follows:

(1) By the Clerk. When the plaintiff's claim against a defendant is for a sum certain or for a sum which can by computation be made certain, the clerk upon request of the plaintiff and upon affidavit of the amount due shall enter judgment for the amount and costs against that defendant, if the defendant has been defaulted for failure to appear . . .

(2) By the Court. In all other cases the party entitled to a judgment shall apply to the Court therefor. . . .

Fed. R. Civ. P. 55(b).

Grants of default judgment are generally committed to the trial court's discretion, but that discretion is not "unfettered." Shephard Claims Serv., Inc., v. William Darrah & Assocs., 796 F.2d 190, 193 (6th Cir. 1986). As the Court has previously noted, such judgments are presumptively void wherever a court lacks jurisdiction over the relevant parties or subject matter or where default would raise other due process concerns. See, e.g., Antoine v. Atlas Turner, 66 F.3d 105, 110 (6th Cir. 1995). Moreover, default judgments are generally reserved for those relatively "extreme cases" where a party's failure to appear more likely stems from "willful misconduct, carelessness, or negligence" than from some "honest mistake" as to the pendency of a proceeding. United Coin Meter Co. v. Seaboard Coastline R.R., 705 F.2d 839, 845-46 (6th Cir. 1983). In light of the history ...

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