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Caribbean Industrial Products, LLC v. Allen Filtration, LLC

United States District Court, D. South Carolina, Greenville Division

January 12, 2018





         This is a declaratory judgment action in which Plaintiff asks this Court to declare there is no valid contract concerning Defendant building an oil processing plant for Plaintiff. The matter is before the Court on the motion of Defendant Allen Filtration, LLC (Defendant) to set aside the default judgment entered in favor of Plaintiffs Caribbean Industrial Products, LLC (CIP) and Stone Harper (Harper) (collectively, Plaintiffs) pursuant to Rule 60(b)(1) of the Federal Rules of Civil Procedure. The Court has jurisdiction over the matter under 28 U.S.C. § 1332. Having carefully considered the motion, the response, the reply, the record, and the applicable law, the Court will grant Defendant's motion.


         The procedural facts set forth here are uncontested. Plaintiffs filed this action on October 19, 2016. Prior to the commencement of this matter, on August 19, 2016, Jerry Nichols (Nichols), President of Defendant, suffered a stroke. Consequently, from August 2016 until February 2017, Nichols was unable to drive and required assistance with reading documents. Additionally, the stroke affected Nichols' memory and speech, and he was unable to keep up with his workload. Subsequent to Nichols' stroke, Defendant sent letters to Plaintiffs threatening suit for an alleged breach of contract.

         After Plaintiffs filed the Complaint in this case, but before they served it, Plaintiffs' counsel spoke via telephone with John Hammons (Hammons), counsel for Defendant in Missouri. During that conversation, Hammons advised he knew the Complaint had been filed in this Court. Plaintiffs' counsel, however, does not recall Hammons offering to accept service or that ever being discussed.

         On December 21, 2016, Plaintiffs served Roy Chung (Chung), Vice-President of Defendant, with the Summons and Complaint. Plaintiffs filed an Affidavit of Service, attesting they served Chung on that day. Chung states he is unable to recall being served or signing for the Summons and Complaint, but avers if he did receive them, he would have put them unread on Nichols' desk. On December 22, 2016, Defendant closed for the holidays and reopened on January 3, 2017. Defendant's deadline to respond to the Complaint was January 11, 2017.

         On January 17, 2017, this Court ordered Plaintiffs to file a status report addressing Defendant's failure to respond to the Complaint by the January 11, 2017, deadline. Plaintiffs responded by advising the Court they had failed to receive an answer or a request for extension and would file a request for entry of default. Plaintiffs filed their request for entry of default on January 30, 2017, and the Clerk of Court entered default on January 31, 2017.

         Plaintiffs filed their request for entry of a default judgment on April 18, 2017, and the Court entered default judgment on April 20, 2017, at which time the Clerk of Court mailed a copy of the default judgment to Defendant's registered agent. Defendant then filed its motion to set aside the default judgment on May 31, 2017, to which Plaintiffs filed a response and Defendant filed a reply. The Court, having been fully briefed on the relevant issues, is now prepared to discuss the merits of the motion.


         In Defendant's motion, it claims its motion is timely in that it filed the motion on May 31, 2017, well within the one-year time limit established by Rule 60. Defendant also contends it has a meritorious defense of breach of contract against CIP and a meritorious defense of quantum meruit against Harper. Further, given the early stage of this lawsuit, Defendant urges Plaintiffs will suffer no prejudice if the declaratory judgment is set aside. Finally, Defendant maintains excusable neglect constitutes a ground for relief in this case. Defendant points to Nichols' stroke and his inability to conduct his normal office activities in support of this position and also notes the office closing for the holidays as an additional ground for excusable neglect. Defendant argues it bears no responsibility for its default due to circumstances purportedly beyond its control.

         Plaintiffs maintains the Court should not grant Defendant's motion.


         “[T]o obtain relief from a judgment under Rule 60(b), a moving party must show that his motion is timely, that he has a meritorious defense to the action, and that the opposing party would not be unfairly prejudiced by having the judgment set aside.” Park Corp. v. Lexington Ins. Co., 812 F.2d 894, 896 (4th Cir. 1987). “If the moving party makes such a showing, he must then satisfy one or more ...

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