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Hal Commodity Cycles Management Co. v. Kirsh

decided: July 29, 1987.

HAL COMMODITY CYCLES MANAGEMENT CO., AN ARIZONA CORPORATION, PLAINTIFF-APPELLEE,
v.
RIVA KIRSH, DEFENDANT-APPELLANT



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 82 C 4382, John A. Nordberg, Judge.

Wood, Jr., Ripple, and Manion, Circuit Judges.

Author: Manion

MANION, Circuit Judge.

In 1982, plaintiff, Hal Commodity Cycles Management Co. ("Halco"), an Arizona corporation, brought an action against defendant, Riva Kirsh, a citizen of Toronto, Canada. The complaint alleged that Kirsh had fraudulently induced Halco*fn1 to permit her to open, withdraw funds from, and trade on, a commodity futures trading account. Three years later, when Kirsh failed to appear at the final pretrial conference, the district judge ordered entry of a default judgment against her. Kirsh filed a motion to vacate the judgment pursuant to Fed. R. Civ. P. 60(b)(1). The district court denied the motion. Kirsh appeals.

I. Proceedings Below

Throughout the course of this litigation, Kirsh has strained the patience of her opponents, her attorneys, and the district court. Halco filed this action on July 9, 1982 and attempted to serve Kirsh twice during the following year. Kirsh was successful in resisting service on both occasions. All good things must come to an end, however. Finding that Kirsh was evading service, the district court ordered that Kirsh be served by mail. Based on our review of the record, we do not think the district judge guilty of exaggeration when he later stated: "I've been a trial judge now for a number of years . . . and I've never seen anyone seek to evade and avoid court process as this defendant has."

Unfortunately for the district court, Kirsh's conduct in avoiding service was a mere preview of things to come. Without going into painful detail, the record is replete with instances of dilatory conduct on Kirsh's part as well as a complete lack of respect for the orderly process of the court. Kirsh continually failed to honor court deadlines, respond to discovery requests, respond to motions, and attend scheduled conferences. Further exacerbating the delays in the litigation was her inability to cooperate with her own counsel. Prior to the entry of the default judgment against her, two different attorneys withdrew their representation of Kirsh.

The events leading up to entry of the default judgment were set in motion in April of 1985. On April 17, with the final pretrial order due on May 1, Halco moved to set a status hearing and compel Kirsh's attendance. Halco stated that she had failed to respond to motions, appear at status conferences, or participate in the preparation of the pretrial order. The court set a hearing for May 9 and ordered Kirsh to attend or suffer sanctions. On that date, her second attorney filed an appearance; the court held the hearing and ordered the final pretrial order to be submitted on June 5.

On June 4, 1985, three years after Halco filed its complaint, and the day before the final pretrial order was due, Kirsh's second attorney filed a motion to withdraw as counsel. He stated that Kirsh had failed to respond to his attempts to contact her by telephone and mail. The court granted the motion and issued an order directing Kirsh to appear, either in person or by counsel, at a final pretrial conference at 4:30 p.m. on June 25, 1985. The order warned Kirsh that if she did not do so a default judgment would be entered against her. A copy of the minute order was mailed to Kirsh. On June 25, she failed to appear. On plaintiff's motion, the court entered judgment against Kirsh in the amount of $34,987.90 plus costs.

On July 18, 1985, Kirsh filed a motion to vacate the default judgment pursuant to Fed. R. Civ. P. 60(b)(1) on the ground that her default was the product of excusable neglect. In support of her motion, Kirsh attached the affidavit of her doctor, stating that he had treated her for Menier's disease (a disease which apparently causes dizziness) on June 17. According to the affidavit, he had told Kirsh to stay in bed and not travel for the next two weeks.

The district court held a hearing on the motion to vacate the default judgment. At the hearing, Kirsh testified that: 1) she had never received notice that a default judgment would be entered against her if she did not appear at the June 25 conference; 2) although she had made airline reservations in the hope that she would be able to appear in person, she was unable to do so because she was bedridden; 3) she contacted four attorneys between June 4 and June 25 seeking representation; and 4) one of them, a Chicago attorney, had assured her by telephone that he would represent her at the conference.

After considering all the evidence presented at the hearing and the inferences to be drawn from that evidence, the district court denied Kirsh's motion to vacate the default judgment. The district court concluded that Kirsh's default was willful, that she had no meritorious defense, and that granting the motion would result in prejudice to the plaintiff. In reaching these conclusions the district court noted that Kirsh "was vague and evasive in answering questions, failing to recall matters that would be expected to be recalled by her" and found that "much of [Kirsh's] testimony [was] not believable on a number of important points."

Of particular relevance to this appeal is the district court's finding that Kirsh's failure to appear at the June 25 hearing was willful. The court found that Kirsh deliberately chose not to appear in court and that this was a continuation of her prior litigation tactics. In so finding, it rejected virtually all of her testimony concerning her failure to appear.

The district court disbelieved Kirsh's testimony that she did not receive notice from the court informing her that a default judgment would be entered against her if either she or counsel acting on her behalf did not attend the hearing on June 25. Rather, it credited the testimony of four other witnesses indicating that Kirsh had such notice. In addition, the court did not believe Kirsh's testimony that she was too ill to either obtain counsel or attend the pretrial hearing on June 25, 1985. The district court also rejected Kirsh's testimony that she had been told by an attorney that he would represent her at the June 25 hearing. Kirsh claimed that, in fact, she could prove the attorney had promised to represent her because she had taped their conversation. The attorney testified that he had not promised to represent Kirsh. When the district court ordered her to produce the tape, she was unable to do so; she claimed that the tape was ...


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