International Thomson Publishing, Inc. v. Softquad International, Inc.

190 F.R.D. 395, 40 Fed. R. Serv. 3d 1016, 1998 U.S. Dist. LEXIS 6445, 1998 WL 1110687
CourtDistrict Court, E.D. North Carolina
DecidedFebruary 19, 1998
DocketNo. 5:97-CV-245-BO(3)
StatusPublished

This text of 190 F.R.D. 395 (International Thomson Publishing, Inc. v. Softquad International, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
International Thomson Publishing, Inc. v. Softquad International, Inc., 190 F.R.D. 395, 40 Fed. R. Serv. 3d 1016, 1998 U.S. Dist. LEXIS 6445, 1998 WL 1110687 (E.D.N.C. 1998).

Opinion

ORDER

BOYLE, Chief Judge.

This matter is before the Court on Defendants’ Motion for Relief from a prior entry of default judgment and Plaintiffs Motion for default judgment and attorney fees. Upon review of the parties’ motions and arguments, the Court will deny Defendants’ motion for relief from the earlier-entered default judgment (on Plaintiffs first claim for relief), and will deny Plaintiffs motion for default judgment and attorney fees on Plaintiffs second claim for relief.

BACKGROUND

The underlying action was filed on April 16, 1997, by Plaintiff International Thomson Publishing, Inc., the successor in interest to Ventana Communications Group (hereinafter collectively “Ventana”), to recover on a contract between Ventana and Defendants Soft-quad International, Inc., and Softquad, Inc. (collectively “Softquad”), Canadian corporations. Ventana obtained service of process on June 10, 1997, pursuant to the Hague Convention for Service Abroad of Judicial or Extrajudicial Documents. Softquad’s time to respond to the Complaint expired on June [397]*39730, 1997; Softquad did not respond to the Complaint, request an extension to time to respond, or otherwise appear in the case.

Since August 1995, Ventana and Softquad had been parties to an agreement by which Ventana agreed to manufacture, market, promote, sell, and distribute certain Softquad software products. The contract was executed by Kip Frey (“Frey”), a Ventana executive, and David Gurney (“Gurney”), then the chief executive officer of Softquad. An amended agreement was circulated in February of 1996, and although it was never signed by Softquad, the parties apparently performed under the amended terms.

In 1996 and early 1997 disagreements arose as to the parties’ respective obligations under their agreement. During that period the parties apparently tried to resolve the dispute, but Ventana filed the Complaint initiating this action on April 16. After process was served on June 10,1997, Frey had several telephone discussions with Gurney regarding the amounts allegedly owed by Softquad to Ventana. Sandra Cowan (“Cowan”), Soft-quad’s corporate solicitor, was a party to some or all of these conversations. Softquad did not take any steps to retain local counsel or otherwise indicate that it intended to defend the lawsuit.

On August 12,1997, Frey wrote to Gurney, informing him of the basis for Ventana’s claims and notifying Softquad that Ventana still hoped to resolve the dispute amicably and had instructed its counsel not to seek a default judgment prior to September 1997. Ventana heard no reply from Softquad until Cowan left a voice-mail message for Frey during the last week of August 1997. Cowan informed Frey that Softquad’s internal management was undergoing a restructuring and that they wanted more time to respond to Ventana’s settlement proposal.

Frey unsuccessfully attempted to contact Cowan and Gurney about the matter, but could not reach Cowan and was informed that Gurney was no longer Softquad’s chief executive officer. Frey did leave a message for Gurney inquiring about who he should speak with regarding the Complaint. Meanwhile, Ventana’s attorneys made a motion for entry of default judgment on September 2, 1997. Default judgment was entered on Plaintiffs first claim for relief on September 15, and Cowan received a copy of the Default Judgment with a letter from Ventana’s attorneys on September 25, 1997. Cowan then advised Ventana’s attorneys of Softquad’s intent to contest the default judgment.

On October 15, 1997, Defendants retained local counsel in Raleigh, North Carolina. On that same day, Ventana filed its Motion for Default Judgment on its second claim for relief, based on Chapter 75 of the North Carolina General Statutes, and for Attorneys Fees. On October 22, Defendants filed a Motion to Extend Time to Reply to Venta-na’s motion for entry of a default judgment. At around the same time, International Thomson Publishing, the parent company of Ventana, announced that it would close the Ventana division in North Carolina. As of the beginning of this year, Ventana has no current employees still in North Carolina.

Softquad concurrently filed the instant motion for relief from the default judgment on Ventana’s first claim for relief, and a response to Ventana’s motion for default judgment on the second claim for relief on November 18, 1997. The parties have fully briefed the issues and these motions are ripe for disposition.

ANALYSIS

I. Relief from Default Judgment on Plaintiffs First Claim

Rule 55(c) of the Federal Rules of Civil Procedure allows the court, “[f]or good cause shown,” to “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).” The Fourth Circuit has elucidated the requirements to obtaining relief from a default judgment under Rule 60(b): “[I]n order to 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 party makes this showing, he must also satis[398]*398fy one of the six grounds for relief set forth in Rule 60(b), including, (1) mistake, inadvertence, surprise or excusable neglect, and (6) any other reason justifying relief from the operation of the judgment. Id.

Before examining whether Defendants’ motion for relief from the default judgment was timely, sets forth a meritorious defense, and would not prejudice Ventana, this Court will examine whether Softquad has satisfied any of the grounds for relief specified in Rule 60(b)(1) or (6). While Rule 60(b)(1) allows relief when the entry of default judgment for “mistake, inadvertence, surprise, or excusable neglect” by the movant, it does not decrease the importance of the underlying deadlines and rules themselves. Rule 60(b)(1) does not exist to immunize the inexcusable delay of a defendant to an action, nor does it contemplate a post facto remedy for the careless ignorance of legal process in the federal courts.

In deciding motions for relief from default judgments, courts must consider the “strong preference for deciding cases on the merits against countervailing interests in finality and in preserving the court’s ability to control its docket.” Heyman v. M.L. Marketing Co., 116 F.3d 91, 94 (4th Cir.1997). The Fourth Circuit has explained that there are two analytical approaches under Rule 60(b) in cases of default: “(1) those that involve a blameless party and a blameworthy attorney, and (2) those that involve a blameworthy party.” Id.

In the instant case, Defendants simply cannot offer a showing of why they were “justified in failing to avoid mistake or inadvertence.” Park Corp., 812 F.2d at 896 (quoting 11 C. Wright & A. Miller, Federal Practice & Procedure § 2858, at 170 (1973)).

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Park Corporation v. Lexington Insurance Company
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Heyman v. M.L. Marketing Company
116 F.3d 91 (Fourth Circuit, 1997)
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Bluebook (online)
190 F.R.D. 395, 40 Fed. R. Serv. 3d 1016, 1998 U.S. Dist. LEXIS 6445, 1998 WL 1110687, Counsel Stack Legal Research, https://law.counselstack.com/opinion/international-thomson-publishing-inc-v-softquad-international-inc-nced-1998.