Zuelzke Tool & Engineering Co., Inc. v. Anderson Die Castings, Inc.

925 F.2d 226, 18 Fed. R. Serv. 3d 1127, 1991 U.S. App. LEXIS 2755, 1991 WL 19772
CourtCourt of Appeals for the Seventh Circuit
DecidedFebruary 22, 1991
Docket90-1691
StatusPublished
Cited by64 cases

This text of 925 F.2d 226 (Zuelzke Tool & Engineering Co., Inc. v. Anderson Die Castings, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Zuelzke Tool & Engineering Co., Inc. v. Anderson Die Castings, Inc., 925 F.2d 226, 18 Fed. R. Serv. 3d 1127, 1991 U.S. App. LEXIS 2755, 1991 WL 19772 (7th Cir. 1991).

Opinion

KANNE, Circuit Judge.

In this case we determine that the district court, 129 F.R.D. 532, correctly declined to vacate a default judgment under Federal Rule of Civil Procedure 60(b).

I. FACTS

The underlying facts concern a dispute over the amount owed to Zuelzke Tool & Engineering Co., Inc., a Wisconsin corporation, for services rendered to Anderson Die Castings, Inc., an Illinois corporation, for the design and installation of die casting equipment in 1987. Correspondence regarding the contractual dispute was carried on between counsel for Zuelzke and the president of Anderson Die Castings, Inc. during November of 1988.

In March of 1989 a series of unexplained corporate maneuvers took place. First, on March 24, 1989, a company called Anderson Continuation Corporation was incorporated. Then, seven days later, on March 31, 1989, Anderson Die Castings, Inc., amended its articles of incorporation and changed its name to First Wheeling, Inc. Finally, on the same date, Anderson Continuation Cor *228 poration amended its articles of incorporation and changed its name to Anderson Die Castings, Inc. Thus, Anderson Die Castings, Inc. became First Wheeling, Inc., and Anderson Continuation Corporation became Anderson Die Castings, Inc.

On April 28, 1989, Zuelzke brought suit against Anderson Die Castings, Inc. alleging that it owed Zuelzke $106,402.60 plus interest for the work done in 1987. The action was filed in the Eastern District of Wisconsin under diversity jurisdiction. Service of the summons and complaint was made on May 5, 1989, by delivery to Kate Anderson, 1 then an employee of the reconstituted Anderson Die Castings, Inc.

Neither Anderson nor anyone on its behalf filed an answer or other responsive pleading in the case pending in the Eastern District of Wisconsin. On May 31, 1989, Zuelzke submitted a request to the court for an entry of default against Anderson. On the same date the clerk entered the requested default.

On June 23, 1989, the district court found that the complaint and summons had been served on Anderson and no answer or responsive pleading had been filed within the time required by the Federal Rules of Civil Procedure. The court directed that a default judgment be entered in favor of Zuelzke and against Anderson in the sum of $113,964.74. That judgment was entered on July 5, 1989.

More than four months later, on November 29, 1989, Anderson filed a motion to vacate the default judgment pursuant to Rule 60(b) and a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Also on that date, First Wheeling, Inc. sought leave to intervene and file an answer to Zuelzke’s complaint. Both Anderson and First Wheeling, Inc. contended that Wheeling, not Anderson, was responsible for any amount due Zuelzke for the work done in 1987. The gist of its argument was that “old” Anderson Die Castings, Inc. sold its name and approximately sixty percent of its assets to Anderson Continuation Corporation, Inc., and that the Continuation Corporation, then reconstituted as Anderson Die Castings, Inc., did not assume any outstanding liabilities of the “old” Anderson Die Castings, Inc. Rather, First Wheeling, Inc. became the successor to the business interests of “old” Anderson Die Castings, Inc., retaining approximately forty percent of its predecessor’s corporate assets and assuming any liability incurred prior to the sale.

In September of 1989, while the Anderson and Wheeling motions were pending in district court, Zuelzke sought to register its federal judgment with the Circuit Court of Cook County, Illinois. Seeking to avoid execution of the judgment, Anderson and Wheeling filed a motion in state court to set aside the registration of the federal judgment. On January 26, 1990, Wheeling offered and the Cook County Circuit Court accepted a pledge of collateral consisting of $50,000 cash and $500,-000 equity in real estate. Execution was stayed pending disposition of Anderson’s motion in federal district court to vacate the default judgment.

On February 23, 1990, the district court in a memorandum of decision and order denied Anderson’s motion for relief from the default judgment. 2 Anderson sought reconsideration which likewise was rejected on April 3, 1990, because Anderson divested the district court of jurisdiction by filing a simultaneous notice of appeal.

II. ANALYSIS

The district courts are given wide latitude in deciding motions under Rule *229 60(b), and the denial of a Rule 60(b) motion to vacate a judgment is reviewed by this court under an abuse of discretion standard. Williams v. Hatcher, 890 F.2d 993, 995 (7th Cir.1989). Parties seeking to set aside default judgments face a formidable task as recent cases disclose. See, e.g., In re State Exchange Finance Co., 896 F.2d 1104 (7th Cir.1990); North Cent. Illinois Laborer's Dist. Council v. S.J. Groves & Sons Co., 842 F.2d 164 (7th Cir.1988); Hal Commodities Cycles Management Co. v. Kirsh, 825 F.2d 1136 (7th Cir.1987); Dimmitt & Owens Financial, Inc. v. United States, 787 F.2d 1186, 1192 (7th Cir.1986).

The entry of a default judgment can be vacated under Rule 60(b) if a party shows (1) good cause for its default; (2) quick action to correct it; and (3) a meritorious defense. United States v. Di Mucci, 879 F.2d 1488, 1495 (7th Cir.1989).

In asking us to vacate the district court's denial of relief from the default judgment, Anderson raises a number of issues. Primarily, however, it argues that its failure to respond to Zuelzke's complaint constituted excusable neglect. Anderson also contends that it was entitled to notice of the motion for default judgment because it had made a de facto appearance in the case- and thus the entry of default judgment without notice was improper.

EXCUSABLE NEGLECT UNDER RULE 60(b)

1. Good Cause

Anderson concedes that it received the summons and complaint filed by Zuelzke. However, it contends that it notified an unidentified official of First Wheeling, Inc. of the pending litigation and was advised to take no further action because "efforts were being made to have First Wheeling, Inc.

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925 F.2d 226, 18 Fed. R. Serv. 3d 1127, 1991 U.S. App. LEXIS 2755, 1991 WL 19772, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zuelzke-tool-engineering-co-inc-v-anderson-die-castings-inc-ca7-1991.