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Coyote Logistics, LLC v. AMC Cargo Inc.

United States District Court, N.D. Illinois, Eastern Division

May 9, 2017

COYOTE LOGISTICS, LLC, Plaintiff,
v.
AMC CARGO INC., Defendant.

          MEMORANDUM OPINION

          Charles P. Kocoras United States District Judge

         Before the Court is Defendant AMC Cargo Inc.'s (“AMC”) motion to vacate Plaintiff Coyote Logistics, LLC's (“Coyote”) default judgment entered on September 19, 2016. For the following reasons, the Court grants AMC's motion.

         BACKGROUND

         This lawsuit derives from AMC's alleged failure to deliver a shipment of beer to the consignee. Coyote is a licensed property broker by United States Department of Transportation, Federal Motor Carrier Safety Administration (“FMCSA”). According to Coyote, on or about May 29, 2015, in its capacity as a broker, it entered into a contract with AMC by which AMC would transport a freight of Heineken beer (“the shipment”) from New Jersey to Illinois. Coyote further alleges that when it tendered the shipment to AMC for delivery it was in good order, good condition, and correct quantity. Coyote maintains that AMC never delivered the shipment to the consignee. On June 20, 2016, Coyote filed this lawsuit pursuant to the Carmack Amendment - a law governing interstate shipment and cargo loss. 49 U.S.C. § 14706. Coyote seeks to recover $27, 457.04.

         Coyote served AMC's Registered Agent, Marek Tomczyk (“Tomczyk”), on June 22, 2016, with a copy of the Complaint. AMC was required to file an appearance and an answer by July 13, 2016. It failed to do either. Therefore, on August 18, 2016, this Court granted Coyote's motion for an order of default. With no appearance or answer from AMC, on September 19, 2016, this Court granted default judgment in favor of Coyote. On November 4, 2016, AMC made an appearance on the record and moved to vacate the default judgment.

         AMC contends that it did not receive notice of the lawsuit until September 21, 2016. According to Arek Cyran (“Cyran”), the principal of AMC, he received an email from Coverall Agency Inc. (“Coverall”), notifying AMC of the motion for default judgment. AMC alleges that, immediately after receiving the email, Cyran attempted to retain legal counsel, a feat made more difficult because he only speaks Polish. The first two Polish-speaking lawyers that AMC contacted were unable to represent it based on conflicts of interest with Coyote. On October 28, 2016, AMC secured the assistance of counsel, and on November 4, 2016, filed the present motion to vacate default judgment, which we grant.

         LEGAL STANDARD

         Fed. R. Civ. P. 55(c) and 60(b) govern motions to vacate default judgments. Pretzel & Stouffer, Chartered v. Imperial Adjusters, Inc., 28 F.3d 42, 44-45 (7th Cir. 1994). The standards for evaluating a motion to vacate under Rules 55(c) and 60(b) are the same for all practical purposes, Davis v. Hutchins, 321 F.3d 641, 646 (7th Cir. 2003), although they are applied more stringently when a party wishes to vacate a judgment rather than a mere order. Jones v. Phipps, 39 F.3d 158, 162 (7th Cir. 1994). Rule 60(b)(1) permits relief from judgment on grounds of “mistake, inadvertence, surprise, or excusable neglect.” Easley v. Kirmsee, 382 F.3d 693, 697 (7th Cir. 2004).

         Relief from a judgment under Rule 60(b)(1) is “an extraordinary remedy and is granted only in exceptional circumstances.” C.K.S. Engineers, Inc. v. White Mountain Gypsum Co., 726 F.2d 1202, 1204-05 (7th Cir. 1984). To receive relief from a default judgment, AMC bears the burden of establishing: “(1) good cause for the default; (2) quick action to correct it; and (3) a meritorious defense to the complaint.” Wehrs v. Wells, 688 F.3d 886, 890 (7th Cir. 2012) (citing Sun v. Bd. of Trs. of Univ. of Ill., 473 F.3d 799, 810 (7th Cir. 2007)). A decision related to default judgment should consider the well-established principal that favors a trial on the merits above a default judgment. Cracco v. Vitran Exp., Inc., 559 F.3d 625, 631 (7th Cir. 2009); Sun, 473 F.3d at 811.

         DISCUSSION

         I. Good Cause

         Under Rule 60(b)(1), good cause can include “excusable neglect, ” which encompasses “both simple, faultless omissions to act and, more commonly, omissions caused by carelessness.” Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 388 (1993). The Seventh Circuit uses a “limited and stringent” definition of “excusable neglect” under Rule 60(b)(1), which “requires something more compelling than ordinary lapses of diligence or simple neglect to justify disturbing” the judgment. Jones, 39 F.3d at 162.

         AMC does not allege that Coyote erred in service; instead, it claims that its registered agent, Tomczyk, never informed AMC of this litigation. Coyote argues that because it properly served Tomczyk, any failing on his part to forward the complaint or the summons to AMC is “legally insufficient to support a motion to vacate.” (citing J & J Sports Productions, Inc. v. Weiner, 2014 WL 1096171 (E.D. PA. Mar. 20, 2014)).

         However, J & J Sports Productions is non-binding and distinguishable. In that case, the court denied a motion to vacate default judgment under Rule 60(b)(1) because the defendant did not “set forth any legal argument” in support of its motion and because it did not address the two additional factors beyond good cause. Id. at *3. Here, AMC provides a legal argument supporting good cause for ...


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