Monday, August 13, 2007

11th Circuit Denies Foreign Defendant's Rule 60(b)(1) Motion Based on Lack of Excusable Neglect

Per Sloss Industries Corp. v. Eurisol, 488 F.3d 922, 20 Fla. L. Weekly Fed. C 694 (11th Cir.(Ala.) Jun 08, 2007) (NO. 05-15890):

The next issue is whether the district court erred in denying Eurisol's Rule 60(b)(1) motion to set aside the default judgment on the basis of excusable neglect. The determination of what constitutes excusable neglect is generally an equitable one, taking into account the totality of the circumstances surrounding the party's omission. See, e.g., Pioneer Inv. Services Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 389, 395, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993) (discussing excusable neglect under Bankruptcy Rule 9006(b)(1)). In order to have the default judgment set aside, Eurisol must show that it had a meritorious defense, that Sloss would not be prejudiced if the judgment were set aside, and that it had a "good reason" for failing to respond to Sloss' complaint. See In re Worldwide Web Systems, Inc. v. Feltman, 328 F.3d 1291, 1295 (11th Cir.2003). Although there is a "strong policy of determining cases on their merits," id., we review the district court's decision only for abuse of discretion, see, e.g., Gibbs v. Air Canada, 810 F.2d 1529, 1537 (11th Cir.1987), which means that the district court had a "range of choice" and that we cannot reverse just because we might have come to a different conclusion had it been our call to make. See United States v. Frazier, 387 F.3d 1244, 1259 (11th Cir.2004) ( en banc).

. . .

Eurisol, which does not have any in-house attorneys, was served with process through the Hague Convention on April 6, 2005. Three or four days later, Eurisol forwarded the complaint to Jean Bertrand, a French attorney who was representing Eurisol and Mr. Ferrarin as outside counsel.

Mr. Ferrarin and Mr. Bertrand discussed whether Eurisol should challenge the jurisdiction of the court in Alabama or file a counterclaim in the lawsuit. Although Mr. Bertrand doubted that Eurisol had to respond to the complaint-he believed that proper jurisdiction existed only in France, where the goods were delivered-"after a time of consideration" of unspecified length, Eurisol instructed him to hire an attorney to represent it (and Mr. Ferrarin) in Sloss' lawsuit. Mr. Bertrand said he began looking for an Alabama lawyer, but was unsuccessful, though he did not indicate when his search for counsel began. Despite his lack of success, he "did not feel a sense of urgency to respond" to Sloss' complaint because he still had doubts about whether Sloss could sue in Alabama and because the rules for responding to a complaint are different in France (so that, according to Mr. Bertrand, it takes from four months to a year (and sometimes more) for a responsive pleading to be filed). Eventually-it is unclear when-Mr. Bertrand contacted an attorney at Carlton Fields in Orlando, Florida, who agreed to help him find an attorney in Alabama. The problems in retaining counsel, however, still persisted. The first Alabama firm contacted, Maynard Cooper & Gale, had a conflict of interest. So did the second firm, Bradley, Arant, Rose, & White. Mr. Bertrand was finally able to retain Balch & Bingham, but by then the default judgment had already been entered. According to Mr. Bertrand, Eurisol did not know about the delay in obtaining Alabama counsel until after the default judgment had been entered.

One may wonder why there are no dates in the preceding paragraph. After all, time matters when one seeks to set aside a default, and in analyzing whether a defaulting defendant has shown good reason for failing to timely respond, it is important to know exactly when certain actions were taken, and what delays existed before or after those actions. The reason there are no dates is that the affidavits of Mr. Ferrarin and Mr. Bertrand are utterly devoid of chronological specificity. . . .

This lack of detail is, in our view, fatal to Eurisol's Rule 60(b)(1) motion. We recognize that Eurisol is a foreign defendant, but it moved to set aside the default judgment on July 28, 2005, over three and a half months after it was served with process, and over one month after the default judgment was entered. The longer a defendant-even a foreign defendant-delays in responding to a complaint, the more compelling the reason it must provide for its inaction when it seeks to set aside a default judgment. The affidavits Eurisol submitted, given the delay here, were simply insufficient. Cf. Worldwide Web Systems, 328 F.3d at 1297-98 (defendant who, after learning of default judgment, waited almost two months to move to set aside judgment, did not demonstrate "good reason" under Rule 60(b)(1)).

Our Rule 60(b)(1) cases have consistently held that where internal procedural safeguards are missing, a defendant does not have a "good reason" for failing to respond to a complaint. . . . We have extended this principle to situations where a defendant, knowing that an action has been filed against him, fails to act diligently in ensuring that his attorney is adequately protecting his interests. See Florida Physician's Ins. Co., Inc. v. Ehlers, 8 F.3d 780, 784 (11th Cir.1993) (per curiam).

Eurisol fares no better than the unsuccessful defendants in the cases cited above. First, as noted earlier, the affidavits of Mr. Ferrarin and Mr. Bertrand are not specific enough as to what happened during the three and a half months in question. Second, during this period of time, Eurisol failed to check with Mr. Bertrand to ensure that someone had been retained to respond to Sloss' lawsuit, and did not have any procedures in place to make sure that its interests were being protected. Under the circumstances, Eurisol cannot simply shift the blame to Mr. Bertrand, its French attorney, and thereby obtain relief from the default judgment.


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