Beach Side Apts, LLC v. Neue Urban LLC

CourtDistrict Court, S.D. Florida
DecidedFebruary 6, 2024
Docket1:22-cv-23694
StatusUnknown

This text of Beach Side Apts, LLC v. Neue Urban LLC (Beach Side Apts, LLC v. Neue Urban LLC) is published on Counsel Stack Legal Research, covering District Court, S.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Beach Side Apts, LLC v. Neue Urban LLC, (S.D. Fla. 2024).

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

CASE NO. 22-CV-23694-WILLIAMS/REID

BEACH SIDE APTS, LLC,

Plaintiff,

v.

NEUE URBAN LLC, et al.,

Defendants. /

ORDER ON MOTION TO VACATE CLERK’S DEFAULT

This cause is before the Court on Plaintiff/Counter-Defendant, Beach Side Apts, LLC’s (“Beach Side”) Motion to Vacate the Clerk’s Default entered against it on the counterclaim filed by Defendant/Counter-Plaintiff Neue Urban LLC (“Neue Urban”). [ECF No. 57]. The Motion was referred to the Undersigned by the Honorable Kathleen M. Williams to take any appropriate action required by law. [ECF No. 70]. The Court has considered the Motion, Neue Urban’s Opposition [ECF No. 59], Beach Side’s Reply [ECF No. 62], the parties’ supplemental briefs [ECF Nos. 80 and 81], and the evidence presented at the evidentiary hearings that took place before the Honorable Judge Roy K. Altman on October 20, 2023, and before the Undersigned on November 7, 2023. [ECF Nos. 66, 71, 74, 77, 78]. For the reasons addressed below it is ORDERED that the Motion is GRANTED. BACKGROUND This is an action for breach of contract and breach of fiduciary duty in connection with a contract to purchase commercial property. [ECF No. 50 at 2]. When the sale did not close, Beach Side (seller) sued Neue Urban (buyer) in Florida state court on August 24, 2022, seeking payment of an escrow deposit of $75,000. [ECF No. 1-1 at 2]. Neue Urban then filed a counterclaim for specific performance, breach of contract, and breach of covenant of good faith and fair dealing. [ECF No. 1-6].1 Beach Side moved to dismiss Neue Urban’s counterclaim in state court. [ECF No. 1-7]. Neue Urban filed an amended counterclaim. [ECF No. 1-6]. Although the parties began the litigation in state court, on November 10, 2022, Neue

Urban, a New York company, filed a Notice of Removal to federal court. [ECF No. 1]. Plaintiff’s case was later dismissed when Plaintiff failed to comply with a district court order and only Defendant’s Amended Counterclaim remained pending. [ECF Nos. 33, 35–37]. Neue Urban moved for the Clerk’s Entry of Default against Beach Side on the Amended Counterclaim, which was entered on March 23, 2023. [ECF Nos. 38, 39]. Neue Urban thereafter filed its Motion for Default Judgment, and the Undersigned entered an R&R granting that motion, in part, on September 13, 2023. [ECF Nos. 50, 52]. On October 10, 2023 (approximately three weeks later), Beach Side moved to vacate the Clerk’s Default. [ECF No. 57]. The instant Motion centers on the competing testimony of two witnesses: Marco Rodriguez

(corporate representative of Beach Side) and Attorney Harvey Rogers, Esq. (Beach Side’s former attorney). Each witness testified in Court as to their knowledge—or lack thereof—of the status of the federal case and Beach Side’s default. LEGAL STANDARD According to Rule 55 of the Federal Rules of Civil Procedure, a district court may set aside a clerk’s entry of default for “good cause.” Fed. R. Civ. P. 55(c). The “good cause” standard is flexible and encompasses a variety of factors depending on the circumstances, including “whether

1 The factual background that gave rise to this case is discussed at length in the Court’s Report and Recommendation granting in part Neue Urban’s Amended Motion for Default Judgment. [ECF No. 52 at 1–3]. the default was culpable or willful, whether setting it aside would prejudice the adversary, and whether the defaulting party presents a meritorious defense.” Compania Interamericana Exp.- Imp., S.A. v. Compania Dominicana de Aviacion, 88 F.3d 948, 951 (11th Cir. 1996). However, these factors are not “talismanic,” and courts have utilized other factors such as “whether the public interest was implicated, whether there was significant financial loss to the defaulting party, and

whether the defaulting party acted promptly to correct the default.” Id. But “if a party willfully defaults by displaying either an intentional or reckless disregard for the judicial proceedings, the court need make no other findings in denying relief.” Id. at 951–52 (quoting Shepard Claims Service, Inc. v. William Darrah & Associates, 796 F.2d 190, 194–95 (6th Cir.1986)). Importantly, “‘[g]ood cause’” is a liberal standard—more forgiving than the ‘excusable neglect’ standard for setting aside a default judgment under Rule 60(b)—‘but not so elastic as to be devoid of substance.’” Alonso v. Alonso, 22-10607, 2023 WL 309588, at *3 (11th Cir. Jan. 19, 2023) (quoting Compania Interamericana Exp.-Imp., S.A., 88 F.3d at 951; EEOC v. Mike Smith Pontiac GMC, Inc., 896 F.2d 524, 528 (11th Cir. 1990)).

DISCUSSION I. THE PARTIES’ ARGUMENTS A. The Motion, Opposition, And Reply In summary, Beach Side contends that Attorney Rogers, its former attorney, abandoned his duties in this case by knowingly failing to comply with an order to show cause and by failing to respond to the amended counterclaim filed against his client. [ECF No. 57 at 1–2]. Beach Side alleges that Attorney Rogers did not inform Beach Side’s corporate representative, Mr. Rodriguez, of the default until September 26, 2023. [Id. at 2]. Attorney Rogers denies the allegation, however, and points to a letter he wrote to Mr. Rodriguez confirming a prior discussion with Mr. Rodriguez in which they had discussed the decision that he stop defending the lawsuit. [Id.; ECF No. 78-4]. In its Motion, Beach Side argues that it has established the requisite good cause to set aside an entry of default. [ECF No. 57 at 6]; Compania Interamericana Exp.-Imp., S.A., 88 F.3d at 951. First, it argues that the default was not a product of willful actions but resulted from “Mr. Rogers’

abdication and dereliction of his duties as counsel of record for Beach Side.” [Id. at 6]. Second, Beach Side believes that a delay would not result in the loss of evidence, heightened opportunities for fraud, or discovery issues. [Id.]. Third, it argues that it has a meritorious defense, summarizing its dismissed breach of contract claim against Neue Urban. [Id. at 6–7; ECF No. 35]. Fourth, the strong policy in favor of resolving cases on the merits, Beach Side believes, warrants setting aside the default. [ECF No. 57 at 7] Fifth, significant harm to Beach Side would result from the default, as Beach Side is “a small company.” [Id.]. Finally, Beach Side claims it acted promptly, having attempted to contact Attorney Rogers immediately upon finding that a default had been entered. [Id.].

Conversely, Neue Urban claims that Beach Side “simply chose to strategically deprive Neue [Urban] and this Court of the property that was subject to this case and ignor[ed] this matter since January of 2023.” [ECF No. 59 at 3]. Neue Urban argues that the default was culpable or willful, citing e-mails sent to Attorney Rogers (and thus, his client Beach Side) in February, March, April, August, September, and October regarding objections to the motion for attorneys’ fees and objections to the R&R on final default judgment. [ECF No. 59 at 6–7]. Neue Urban did not indicate whether it received responses from Attorney Rogers.

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