Allegheny International Credit Corp. v. Virginia Chain Distributors, Inc.

97 F.R.D. 17, 35 Fed. R. Serv. 2d 326, 1982 U.S. Dist. LEXIS 10027
CourtDistrict Court, W.D. Pennsylvania
DecidedNovember 10, 1982
DocketCiv. A. No. 82-1211
StatusPublished
Cited by1 cases

This text of 97 F.R.D. 17 (Allegheny International Credit Corp. v. Virginia Chain Distributors, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allegheny International Credit Corp. v. Virginia Chain Distributors, Inc., 97 F.R.D. 17, 35 Fed. R. Serv. 2d 326, 1982 U.S. Dist. LEXIS 10027 (W.D. Pa. 1982).

Opinion

MEMORANDUM OPINION

BLOCH, District Judge.

Plaintiff, Allegheny International Credit Corporation, a Pennsylvania corporation with its principal place of business in Pittsburgh, Pennsylvania, initiated this diversity action against defendant, Virginia Chain Distributors, Inc., a corporation believed to be incorporated in the State of Virginia with its principal place of business in Virginia, alleging default on a financing and security agreement and requesting judg[18]*18ment in the amount of $124,618.83 plus finance charges from June 15, 1982, attorney’s fees, and costs of suit. Allegedly, plaintiff and defendant entered into a financing and security agreement, pursuant to which plaintiff agreed to finance defendant’s purchase of certain equipment. The complaint alleges that the plaintiff did, in fact, loan defendant the principal amount of $109,725.08 for the purchase of the equipment. The plaintiff contends that defendant failed to make the scheduled payments and to pay the curtailment and finance charges when due. Accordingly, in the complaint, plaintiff requests judgment against the defendant for the principal amount of $109,725.08, plus finance charges through June 15, 1982, of $14,893.75, resulting in the $124,618.83 figure mentioned above. The record indicates that defendant was served with a summons and complaint, by certified mail, at its principal place of business in Radford, Virginia.1 The president of the defendant corporation signed a return receipt evidencing that service had been received at the Radford, Virginia, place of business on June 30, 1982. The defendant failed to plead or otherwise defend in the action, and plaintiff requested that default be entered on July 22, 1982.2 The clerk entered default in favor of the plaintiff and against the defendant, pursuant to Fed.R.Civ.P. 55(a), on the same date, July 22,1982. In addition to its request for the entry of default, plaintiff requested the entry of default judgment in the amount of $127,146.81. To support this request, the plaintiff filed an affidavit indicating that the requested figure was comprised of the principal amount of $109,725.08 plus finance charges, through July 22, 1982, of $17,-421.73. The clerk then entered default judgment in favor of the plaintiff and against the defendant, pursuant to Fed.R. Civ.P. 55(b)(1),3 in the amount of $127,-146.81. Shortly thereafter, on August 17, 1982, the defendant filed a motion for relief from the default judgment, requesting that the default judgment be vacated pursuant to Fed.R.Civ.P. 60(b).

In support of this motion, defendant has filed an affidavit of Sherril Van Dyke, president of defendant corporation. That affidavit states that, although the defendant corporation had been served with process in this case, the president of the defendant corporation believed that defendant’s counsel and registered agent, R. Keith Neely, Christianburg, Virginia, had been served with the same documents and would file an answer in this action. The affidavit further states that plaintiff had knowledge of, and had previously dealt with, defendant’s counsel and registered agent, but failed to serve said counsel and agent with process. The affiant claims that he was surprised by the fact that his counsel and registered agent had not been served with process and had not filed a response in this action, and upon learning that default and default judgment had been entered, the defendant’s president took prompt action by filing the motion to vacate. Plaintiff has filed an affidavit in opposition to the motion for relief from judgment. Plaintiff’s affiant is Dennis A. Burke, director of financial services for the plaintiff. Plaintiff’s affidavit states that plaintiff never agreed to deal exclusively with defendant’s counsel and registered agent in connection with the monies due and owing. Plaintiff’s affidavit further contends that plaintiff took every available step to settle this matter, but when settlement appeared fruitless, plaintiff properly filed this action and served [19]*19process upon the defendant at its place of business. Finally, plaintiff’s affidavit contends that defendant does not have a meritorious defense in support of its motion to vacate the default judgment.

As stated, defendant’s request for relief from default judgment in this action is filed pursuant to Rule 60. The general purpose of Rule 60 is to “strike a proper balance between the conflicting principles that litigation must be brought to an end and that justice must be done.” Boughner v. Secretary of Health, Education and Welfare, 572 F.2d 976, 977 (3d Cir.1978). The decision of whether to grant relief under Rule 60 is addressed to the sound discretion of the Court. Id. Defendant seeks relief pursuant to Rule 60(b)(1), which states that the Court may relieve a party from a final judgment on the basis of mistake, inadvertence, surprise, or excusable neglect. Specifically, defendant contends that default judgment was entered in this case because of mistake or excusable neglect. The Court does not agree with defendant’s contention. Defendant bases its contention on the fact that defendant’s president believed that defendant’s counsel and registered agent had taken the necessary steps to protect defendant’s interests in this matter. The Court believes that this assertion is a rather frivolous basis for asserting mistake or excusable neglect. Plaintiff properly served the defendant and had no obligation to serve the counsel and registered agent. See Fed. R.Civ.P. 4(e) and Pa.R.Civ.P. 2079(e)(3). Defendant’s president could have easily contacted the corporate counsel and registered agent, upon receipt of the summons and complaint, to obtain his opinion on the law suit and to request that he take the necessary action. The failure of defendant’s president, or any other corporate agent, to make such a contact is surely neglect, but not excusable neglect.

Please note, however, that the Court cannot rest its granting or denial of the motion for relief from a default judgment merely upon the consideration of whether or not an answer was timely filed. The Third Circuit has clearly mandated that two additional considerations are necessary. In Medunic v. Lederer, 533 F.2d 891 (3d Cir.1976), the Third Circuit stated that the Court must also consider whether the plaintiff will be prejudiced if the motion is granted and whether a meritorious defense is asserted by the defendant. In answering these questions, the Court must apply a liberal standard, and any doubt must be resolved in favor of vacating the judgment so that the case can be decided on its merits. Id. at 893-894. Therefore, the Court must review this case in light of these two additional considerations.

The plaintiff correctly states, in its brief, that defendant presents no evidence and makes no statement that indicates that the plaintiff will not be prejudiced by the setting aside of the default judgment. Thus, defendant has not satisfied the first consideration.

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97 F.R.D. 17, 35 Fed. R. Serv. 2d 326, 1982 U.S. Dist. LEXIS 10027, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allegheny-international-credit-corp-v-virginia-chain-distributors-inc-pawd-1982.