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Sullivan v. General Plumbing

March 31, 2007

JAMES T. SULLIVAN, ETC., ET AL., PLAINTIFFS,
v.
GENERAL PLUMBING, INC., AN ILLINOIS CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Hon. David Coar

MEMORANDUM OPINION AND ORDER

This case comes before the Court on Defendant General Plumbing's Motion to Vacate the Default Judgment [Doc. No. 16] entered against it on June 17, 2006. This motion seeks relief under Rule 60(b)(1) of the Federal Rules of Civil Procedure. For the reasons set forth below, Defendant's Motion is denied.

BACKGROUND

Plaintiffs James T. Sullivan, Plumbers' Pension Fund, Local 130, U.A., Plumbers' Welfare Fund for Apprentice and Journeymen Education and Training, Local 130, U.A., Group Legal Services Plan Fund (collectively "Funds") and The Plumbing Council of Chicagoland ("PCC"), filed suit in this Court on May 3, 2006. Funds and PCC allege that defendant General Plumbing was liable under the Employee Retirement Income Security Act of 1974 ("ERISA") 29 U.S.C. § 1001, et. seq.

Prior to the filing of this lawsuit, Plaintiffs and the Defendant had engaged in settlement discussions concerning an arbitration Award. On April 14, 2005, the Joint Arbitration Board directed General Plumbing to pay an amount of money to the Funds. The Award was made upon a finding that Defendant violated the Collective Bargaining Agreement by allowing non-union employees to perform plumbing work from November 1, 1999 through December 31, 2002. (Complaint ¶¶1-12).

The settlement discussions occurred between the same counsel who are currently representing the parties. The parties had agreed to refrain from further action on the Award during settlement discussions. Defendant, upon agreement of Plaintiffs, was given until July 25, 2005 to challenge the Award. Similarly, Plaintiffs, upon agreement with Defendant, voluntarily refrained from filing this lawsuit until August 31, 2005. Eventually, settlement discussions came to an end in March of 2006 with no resolution. During these settlement negotiations, the sole shareholder of the Defendant, Patrick Heneghan, died on September 26, 2005. (Heneghan Aff. ¶ 7). Before filing the lawsuit, Plaintiffs' counsel was aware that General Plumbing was no longer in operation, was without assets and that General Plumbing's sole shareholder, Patrick Heneghan, had died. (Pl.'s Resp., Att. #7). The last contact between the attorneys during settlement discussions occurred on March 27, 2006, when Plaintiffs' counsel left a voice-mail message with Defendant's counsel about the possibility of an agreed judgment. (Lindsay Aff. ¶ 16).

Around two months after the last settlement contact, on May 3, 2006, Plaintiffs' Complaint was filed. Although the death of the sole shareholder of General Plumbing occurred before this lawsuit was filed, no new registered agent or new address for the company was ever listed with the Illinois Secretary of State. Plaintiffs sent a copy of the Complaint and summons to the last registered agent or officer of the corporation in compliance with state law. See 805 ILCS 5/5.25. Defendant does not contend that service of the Complaint was defective.

The Motion for Default followed and was filed with a presentment date of June 15, 2006. The Motion was sent to the Illinois Secretary of State and the Defendant's registered office. Plaintiffs did not contact General Plumbing's last known attorney about the Complaint or Motion for Default. The default judgment was entered by the court on June 17, 2006 in the amount of $163,486.90.

General Plumbing never filed an answer and did not appear at the motion presentment date for the default request. General Plumbing claims that it did not receive notice of the lawsuit until June 24, 2006. Although General Plumbing does not argue that service of the Complaint was defective, they do argue a number of factors existed which it believes contributed to the lack of timely actual notice. Primarily, the service of the complaint and default were sent to General Plumbing's building address, which did not exist at the time of service.

In support, Defendant offers an affidavit and declarations of family members of Patrick Heneghan.*fn1 First, around January 1, 2005, Patrick Heneghan decided to close down General Plumbing and demolished the building which housed General Plumbing. (Heneghan Aff. ¶ 4). Although the business was closed down as early as January of 2005, there is no indication in the record that the business was formally dissolved. Even before the business closed, Patrick Heneghan began construction of housing units at the former building site. (Heneghan Aff. ¶ 6). The housing units were destroyed in a fire around December of 2005 and were subsequently under construction again. (Heneghan Aff. ¶ 7 ). Ann Heneghan attested that mail for General Plumbing was to be forwarded to a P.O. Box in Lombard after the closure of the business. (Heneghan Aff. ¶ 5). Ms. Heneghan also stated that mail for General Plumbing was sometimes delivered by the Post Office to the former site of General Plumbing, which was a construction site for the housing units. (Heneghan Aff. ¶ 8). Ms. Heneghan attested that she was asked to check the mail at the former General Plumbing site and found the notice from the court of the default judgment on June 24, 2006. Upon finding the notice, she contacted counsel for General Plumbing, Mr. Kramer. (Heneghan Aff. ¶ 11). The present motion to vacate was filed on July 17, 2006.

LEGAL STANDARD

Defendant moves to vacate the default judgment under Fed.R.Civ.P. 60(b)(1). Rule 60(b)(1) permits relief for judgment on grounds of mistake, inadvertence, surprise, or excusable neglect. Easley v. Kirmsee, 382 F.3d 693, 697 (7th Cir. 2004). General Plumbing sole basis for seeking to vacate the default judgment is on the ground of excusable neglect under Rule 60(b)(1). The standard for evaluating a motion to vacate under Rule 60(b) is applied more stringently when some party wishes to vacate a judgment rather than a mere order. Jones v. Phipps, 39 F.3d 158, 162 (7th Cir. 1994); Sims v. EGA Prods., Inc., 475 F.3d 865, 868 (7th Cir. 2007).

DISCUSSION

"Rule 60(b) relief is an extraordinary remedy and is granted only in exceptional circumstances." Karraker v. Rent-A-Center, Inc., 411 F.3d 831, 837 (7th Cir. 2005) (internal quotation omitted). General Plumbing bears the burden of showing: (1) good cause for the default; (2) quick action to correct the default; and (3) the existence of a meritorious defense. See Pretzel ...


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