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Huntington Copper Moody & McGuire, Inc. v. Cypert

January 10, 2007

HUNTINGTON COPPER MOODY & MCGUIRE, INC., PLAINTIFF,
v.
CHARLES CYPERT, ET AL., DEFENDANTS.



The opinion of the court was delivered by: S. Arthur Spiegel United States Senior District Judge

OPINION AND ORDER

This matter is before the Court on Defendant Edward Hartley's Rule 55(c) Motion to Set Aside Default Judgment and Rule 60 Motion for Relief from Default Judgment (doc. 32), Plaintiff's Response in Opposition (doc. 33), and Defendant's Reply in Support (doc. 34). For the reasons stated herein, the Court DENIES Defendant's Motion.

I. Background

Plaintiff initiated this action on September 17, 2004 in the Hamilton County Court of Common Pleas, alleging claims for breach of contract, breach of fiduciary duty, conversion, tortious interference with contractual, business and employment relations, and for violations of Ohio's Uniform Trade Secret Act (doc. 1). Thereafter, the case was removed to this Court on November 1, 2004. On November 8, 2004, Defendant filed a motion to dismiss for lack of personal jurisdiction (doc. 2) and on November 30, 2004, Plaintiff filed a motion for remand (doc. 4), both of which the Court denied on September 20, 2005 (doc. 16). Defendant's attorneys at no time filed an Answer on his behalf (doc. 32). However, Defendant's attorneys filed a motion to withdraw as counsel on December 12, 2005 (doc. 18). In response to this motion, the Court scheduled a show cause hearing for January 26, 2006, and ordered Defendant or Defendant's new counsel to appear before the Court during that hearing (doc. 19). Defendant did not appear at the January 26th hearing, and the Court permitted Defendant's counsel to withdraw (doc. 31). At that time, the Court also granted Defendant thirty days to find substitute counsel, and continued the matter until March 23, 2006, stating that default judgment would be entered if Defendant or his counsel did not appear (Id.). Defendant failed to appear at the March 23rd hearing, but did proffer a letter to the Court in lieu of personal appearance (doc. 23). This Court entered default judgment against Defendant on March 23, 2006, and requested the Magistrate Judge conduct a hearing to determine the attorneys' fees and damages, if any, to be awarded (doc. 25). The Magistrate Judge held this hearing on April 27, 2006 (doc. 27). Defendant did not appear, but the Magistrate Judge considered his previous correspondence (doc. 29). Subsequent to the hearing, the Magistrate Judge issued a Report and Recommendation awarding Plaintiff attorney's fees and damages (doc. 29). Defendant did not file an objection to the Report and Recommendation and this Court affirmed the Magistrate Judge on July 17, 2006 (docs. 30). Defendant now seeks an Order from this Court pursuant to Rule 55(c) and Rule 60 of the Federal Rules of Civil Procedure setting aside the default judgment and damage award (doc. 32).

II. Analysis

A. Legal Standard

"A party against whom a default judgment has been entered may petition the court to set aside the default judgment under Rules 55(c) and 60(b) for good cause, and upon a showing of mistake, or any other just reason." Weiss v. St. Paul Fire & Marine Ins. Co. (6th Cir. 2002), 283 F.3d 790, 794. Rule 55(c) provides:

(c) Setting Aside Default. For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).

Fed. R. Civ. P. 55(c). In relevant part, Rule 60 states:

(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud, etc. On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect;...(6) any other reason justifying relief from the operation of the judgment.

Fed. R. Civ. P. 60(b). In Waifersong, Inc. v. Classic Music Vending, 976 F.2d 290 (6th Cir. 1992), the Sixth Circuit articulated Rule 60.

Relief from Judgment or Order

the standard by which courts are to consider a motion to set aside a default judgment. In either a motion to set aside a default entry or default judgment, to determine "good cause" the Court considers the following factors:(1) Whether culpable conduct of the defendant led to the default, (2) Whether the defendant has a meritorious defense, and (3) Whether the plaintiff will be prejudiced. Id. at 292 (citing United Coin Meter Co. v. Seaboard Coastline R.R., 705 F.2d 839, 845 (6th Cir. 1983); 10 Charles A. Wright et al., Federal Practice and Procedure §§ 2692, 2694 (1983)). However, "[w]hen it is a judgment the defendant is seeking to avoid, the specific requirements of Rule 60(b) narrow the scope of the court's equitable inquiry." Id. This is a stricter standard than that to set aside an entry of default because "once the court has determined damages and a judgment has been entered, the district court's discretion to vacate the judgment is circumscribed by public policy favoring finality of judgments and termination of litigation." Id.

When relief from default judgment is sought under Rule 60(b), the first factor, the defendant's culpability, is framed in terms of the specific subsection of Rule 60(b). Id. This is because under Rule 60(b) a defendant can only be relieved of judgment if he has demonstrated that his relief is justified under one of the enumerated subsections. Id. "It is only when the defendant can carry this burden that he will be permitted to demonstrate that he also can satisfy the other two factors: ...


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