The Sheridan Corp. v. DHF Associates, LLC

• Court: Superior Court of Maine
• Decided: March 9, 2020
• Docket: CUMbcd-cv-19-39
• Status: Unpublished

Opinion

STATE OF MAINE BUSINESS & CONSUMER DOCKET CUMBERLAND, ss. LOCATION: PORTLAND DOCKET NO. BCD-CV-2019-39

THE SHERIDAN CORP., ) ) ) Plaintiff ) ) v. )  !      ! .’ ) UNOPPPOSED MOTION FOR DEFAULT DHF ASSOCIATES, LLC, ) JUDGMENT, and DEFAULT JUDGEMENT ) ) Defendant )

n ov. 18, 2018, laintiff he heridan orp. (“heridan”) brought a

Complaint seeking $314,658 in damages against Defendant DHF Associates, LLC

(“ ”) in connection with a construction dispute. heridan now moves for default

judgment against  based on  ’s failure to defend. or the reasons discussed

below, Sheridan’s motion is granted.

BACKGROUND

For a period of time, DHF was actively engaged in this case. DHF answered the

complaint, filed counterclaims, served discovery, and engaged in motion practice.

However, on November 7, 2019, counsel for DHF filed a Motion to Withdraw,

explaining that  ’s president had instructed counsel to withdraw. n that same

day, the Court granted the Motion to Withdraw, and gave DHF twenty days to secure

new representation and notify the Court. On November 18, 2019, the Court received

1 a letter from DHF, announcing that DHF had released its counsel and would be

representing itself. On November 21, 2019, Sheridan filed an objection, on the

grounds that as a corporation, DHF was not entitled to represent itself in the litigation.

DHF did not reply, and the Court did not hear again from DHF. New counsel for DHF

never entered an appearance.

In the meantime, on November 20, 2019, DHF and other properly served

parties failed to appear as subpoenaed for duly noticed depositions. DHF also failed

to produce documents or assert objections in response to heridan’s duly served

requests for production of documents. DHF has ceased all communications with

Sheridan, has not rescheduled missed depositions, has not produced documents, has

not retained new counsel, has not taken any other action that would indicate an intent

to participate in the litigation, and has not opposed or otherwise responded to

heridan’s otion for efault udgment.

ANALYSIS

A party may obtain judgment by default as a sanction when an opposing party

fails to appear for a duly noticed deposition or fails to comply with properly served

requests for production of documents. M.R. Civ. P. 37(b)(2)(C), (d)(1); cf. Harris v.

Soley, 2000 ME 150, ¶¶ 8-18, 756 A.2d 499. In this case, DHF failed to appear for a

deposition; failed to produce documents; failed to appoint new counsel; failed to

communicate with opposing counsel or the Court; and appears to have quit defending

or prosecuting the case. !dditionally,  failed to oppose heridan’s otion for

2 Default Judgment.1 The Court has considered the facts at issue, has weighed the

factors applicable to imposing sanctions, and has considered the purposes to be

serviced by imposing sanctions. Id. at ¶ 10. For all the foregoing reasons, the Court

grants heridan’s otion.

According to M.R. Civ. P. 55(b)(2), the Court may, but is not required to, hold a

hearing to determine the amount of damages or the truth of any averments. Here, the

omplaint seeks a sum certain, and in light of  ’s failure to oppose the otion,

there is no need to investigate the truth of heridan’s averments. he ourt grants

final judgment of default in the amount of $314,658 in favor of Sheridan on its

complaint, and grants final judgment of default in favor of heridan on  ’s

counterclaims.

So Ordered.

Pursuant to M.R. Civ. P. 79(a), the Clerk is instructed to incorporate this Order

and Final Judgment of Default by reference on the docket for this case.

March 9, 2020.

_______/S______________ Michael A. Duddy Judge, Business and Consumer Docket

1 he ourt previously defaulted Wells argo, .!. (“Wells argo”), for failure to timely respond to the Summons to Trustee served on it by Sheridan. See rder enying Wells argo, .!.’s otion to Lift Default, November 26, 2019. Wells Fargo now opposes heridan’s motion to default  . However, Wells Fargo is not a party to the action between Sheridan and DHF, and has no standing to oppose heridan’s motion for default judgment against  .

3 BCD-CV-2019-39

The Sheridan Corporation

v.

DHF Associates, LLC

Counsel: John Lambert, Esq. PO Box 15215 One Canal Plaza, Suite 400 Portland, Me 04112

Counsel: Peter Cyr, Esq. 85 Brackett Street Portland, ME 04102

Wells Fargo Bank, N. A. (Defaulted Trustee)

Counsel: Morgan T. Nickerson, Esq. State Street Financial Center, One Lincoln Street Boston , MA 021111 STATE OF MAINE BUSINESS & CONSUMER DOCKET CUMBERLAND, ss. LOCATION: PORTLAND DOCKET NO. BCD-CV-2019-39

THE SHERIDAN CORP, ) ) ) Plaintiff ) ) v. ) ORDER DENYING WELLS FARGO, N;A;’S ) MOTION TO LIFT DEFAULT DHF ASSOCIATES, LLC, ) ) Defendant )

Wells Fargo Bank, N;A; (“Wells Fargo”) seeks to lift the default entered against

it for failure to answer the Summons To Trustee served on it by Plaintiff, The Sheridan

Corporation (“Sheridan”); For the reasons discussed below, Wells Fargo’s Motion to

Lift Default is denied.

On September 10, 2019, Sheridan served a Summons to Trustee (Form CV­

033, Rev. 06/14) on Wells Fargo. The Summons demanded that Wells Fargo indicate

what property it has in its possession or control, if any, belonging to Defendant DHF

Associates, LLC (“DHF”), to the value of $300,000. In response, Wells Fargo conducted

an internal review of its accounts, and on September 13, 2019, determined that it did

not possess or control any property of DHF. However, Wells Fargo failed to answer

the Summons. Twenty one days later, on October 1, 2019, Sheridan filed an Affidavit

and Request for Default against Wells Fargo, due to its failure to timely respond. On

1 October 7, 2019, the Clerk entered default against Wells Fargo. On October 21, 2019,

Wells Fargo filed this Motion to Lift Default.

A trustee summons may be procured in blank from the clerk and filled out by

the plaintiff’s attorney with all the required information; M;R; Civ; P; 4B(b) & (c); “The

Plaintiff’s attorney shall deliver to the officer making service the original trustee

summons upon which to make return of service and a copy thereof for service upon

the trustee.” M;R; Civ; P; 4B(c); A trustee is required to serve the trustee’s disclosures

under oath within twenty days after the service of the trustee summons. M.R. Civ. P.

4B(e). When a person summoned as trustee neglects to answer, “the trustee must be

defaulted ; ; ; ;” 14 M;R;S; § 2614; The Court may later set aside the default “[f\or good

cause shown;” M;R; Civ; P; 55(c); see also 14 M;R;S; § 2701 (“reasonable excuse”).

Wells Fargo first argues the default should be lifted, because Wells Fargo does

not possess or control any property of DHF. Wells Fargo points out that although

Section 2614 requires a trustee who does not answer to be defaulted, the defaulting

party can only be “adjudged trustee to the extent that such a person holds goods,

effects or credits of the principal defendant otherwise available to satisfy the

unsatisfied portion of final judgment;” 14 M;R;S; § 2614; Wells Fargo argues that

because it does not hold any property of DHF, it cannot be adjudged trustee to any

extent, and by extension cannot be defaulted.

Wells Fargo misreads Section 2614. The fact that a trustee does not possess

or control any property of a defendant does not mean the trustee cannot or should

not be defaulted. The question of default, on the one hand, and the amount for which

2 a person can be adjudged trustee, on the other hand, are two separate inquiries. 1 Even

if Wells Fargo does not hold any property of DHF, a default may nevertheless carry

significance. “Nothing in this section limits the additional remedies available under

this chapter for the trustee’s failure to disclose, including the assessment of costs

under section 2701 or, in a proper case, contempt;” 14 M.R.S. § 2614. In other words,

the default penalty of Section 2614 incentivizes trustees to answer, even if they don’t

hold any of the sought-after property belonging to a defendant.

Wells Fargo next argues that service of the Summons to Trustee was

defective under M.R. Civ. P. 4B(c), because the Summons was not accompanied by a

copy of the complaint.2 For this argument, Wells Fargo relies on a sentence from Rule

4B(c) which provides as follows: “The trustee summons shall be served in like

manner and with the same effect as other process;” Wells Fargo argues that the

phrase “other process” refers to M.R. Civ. P. 4, which requires service a complaint

along with a summons.

Read as whole, however, M.R. Civ. P. 4B does not require service of a complaint

along with a Summons to Trustee. Rule 4B(b) sets forth the information that needs

to be included for a trustee summons to be effective. Rule 4B(b) does not mention

nor require a copy of the complaint. As to the substantive requirements for effective

service, Rule 4B(c) refers back to Rule 4B(b). Rule 4B(c) further instructs the

plaintiff’s attorney to deliver to the officer making service the original and a copy of

1 Sheridan has not yet initiated a proceeding to determine to what amount, if any, Wells Fargo should be adjudged trustee. 2 The proof of service form signed by the Deputy Sheriff suggests a copy of the Complaint was served on Wells Fargo, along with the Summons to Trustee. Sheridan, however, does not dispute Wells Fargo’s assertion that a copy of the Complaint was not appended to the Summons to Trustee;

3 the trustee summons, for service upon the trustee. The rule does not mention

including a copy of the complaint. 3 In this context, the language from Rule 4B(c)

requiring service of the trustee summons “in like manner and with the same effect as

other process,” refers simply to the manner in which service upon a trustee can be

effectuated, such as through personal service, first-class mail, publication, etc. See

M.R. Civ. P. 4(c)-(g).

Wells Fargo’s third argument is that it has good cause to set aside the default;

According to the affidavit of Wells Fargo’s Operations Manager, “a systematic failure

impaired Wells Fargo’s ability to automatically generate a response indicating the

results of Wells Fargo’s search of its records in a timely fashion;” No further details

or explanations are provided.

In order to show good cause, the party seeking relief must at a minimum

provide a good excuse, based on a reasonable explanation of what happened. Levine

v. KeyBank Nat’l Ass’n, 2004 ME 131, ¶ 21, 861 A.2d 678. Wells Fargo’s proffered

explanation falls well short of establishing good cause, because it fails to provide a

reasonable explanation of what happened. Lacking any further details, the Court

cannot determine the extent, nature, cause, or responsibility for the so called

“systematic failure;” The Court cannot even determine what failed; Computer

hardware? Software? Data management systems? Human management systems?

Personnel? The Court cannot determine if the failure could have been avoided, or

3 In the context of trustee process, as Sheridan argues, requiring service of a complaint alongside the summons is unnecessary, because the complaint makes allegations against the defendant, not the trustee, and all the information necessary for the trustee to answer the summons is provided in the trustee summons.

4 whether there is a good excuse for not answering the summons. The Court cannot

determine if Wells Fargo was unable to timely comply with the summons, despite best

and reasonable efforts; Wells Fargo’s inscrutable “systematic failure” is therefore too

vague to qualify as good cause.

Wells Fargo’s final argument (raised in its Reply brief) is that its failure to

answer the trustee summons should be excused, because Sheridan failed to serve on

Wells Fargo a copy of Plaintiff’s Opposition to Wells Fargo’s Motion to Set Aside Entry

of Default.4 In essence, Wells Fargo argues that the infractions should offset. The

infractions, however, occurred during different phases of the proceeding, are each

subject to separate relief, and are not equivalent. Moreover, the offsetting penalties

approach finds no support in the trustee process statute, 14 M.R.S. §§ 2601-2804; or

the trustee process and default rules, M.R. Civ. P. 4B & 55.

For all of these reasons, Wells Fargo’s Motion to Lift Default is DENIED;

Pursuant to M.R. Civ. P. 79(a), the Clerk is instructed to incorporate this Order

by reference on the docket for this case.

November 26, 2019.

_____/s_________________________ Michael A. Duddy Judge, Business and Consumer Docket

4 Plaintiff’s Opposition was timely filed with the Court, but Wells Fargo contends Sheridan failed to serve the Opposition on Wells Fargo. According to Wells Fargo, Wells Fargo only learned that an Opposition had been filed by calling the Clerk’s office.