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Crossroads Equity Partners, LLC v. Dogmatic Products, Inc.

United States District Court, Western District of Virginia, Charlottesville Division

February 19, 2014

CROSSROADS EQUITY PARTNERS, LLC, a Virginia Limited Liability Company, Plaintiff,
v.
DOGMATIC PRODUCTS, INC., et al., Defendants.

MEMORANDUM OPINION

Hon. Glen E. Conrad Chief United States District Judge

This case is presently before the court on the defendants’ motion for relief from judgment under Rule 60(b) of the Federal Rules of Civil Procedure. For the reasons set forth below, the motion will be denied.

Background

Crossroads Equity Partners, LLC (“Crossroads”) is a private equity investment firm based in Charlottesville, Virginia. Crossroads is owned and managed by its sole member, Charles Lunsford.

Dogmatic Products, Inc. (“Dogmatic”) is a Massachusetts corporation based in New York. Dogmatic is engaged in the business of wholesale pet supplies. Dogmatic’s president and chief executive officer is Reynolds E. Moulton, III. Mr. Moulton and his wife, Maura Woodward Moulton, reside in New York.

On December 13, 2010, Crossroads loaned Dogmatic $150,000.00. The loan is evidenced by a promissory note, and secured by an unconditional guaranty provided by Mr. and Mrs. Moulton, pursuant to which they jointly and severally guaranteed the full payment of the note and the timely performance of all of the borrower’s obligations thereunder. The note required Dogmatic to make quarterly interest payments beginning on March 31, 2011, and continuing until the note’s maturity on June 30, 2012, at which time all principal, accrued interest, late fees, and past due charges would be due and payable.

On October 21, 2011, after Dogmatic failed to make quarterly interest payments as required under the note, Crossroads filed suit against Dogmatic and Mr. and Mrs. Moulton for breach of the note and guaranty. On November 17, 2011, Mr. Moulton filed a pro se answer and counterclaim on behalf of all three defendants. Because Mr. Moulton is not a licensed attorney, Crossroads moved to strike the answer and counterclaim, to the extent they were filed on behalf of Dogmatic and Mrs. Moulton. By order entered December 16, 2011, the court granted the motion to strike, and advised the defendants that Dogmatic’s responsive pleading would have to be filed by counsel. See Pritchard v. Lubman, 20 F. App’x 133, 133-34 (4th Cir. 2001) (explaining that “a corporation must be represented by an attorney in federal court”).

The defendants subsequently retained counsel to represent them in connection with the claims brought by Crossroads. On January 31, 2012, counsel filed an answer to the complaint on behalf Dogmatic and Mrs. Moulton. That same day, counsel moved for leave to file an amended answer on behalf of Mr. Moulton. The motion indicated that Mr. Moulton wished to remove his counterclaim and have his answer conform to the answer filed on behalf of his co-defendants. The court granted the motion, and Mr. Moulton filed his amended answer on February 10, 2012. He subsequently obtained leave to file a second amended answer, and the second amended answer was filed on February 29, 2012.

In their answers, the defendants admitted that Dogmatic had not made any quarterly interest payments as required by the note; that Crossroads had demanded payment of all sums under the note and that Dogmatic had not paid such sums; and that a substantial sum was due under the note and guaranty.

Relying on the defendants’ admissions and a declaration from Charles Lunsford, Crossroads moved for summary judgment on March 14, 2012. While the summary judgment motion was pending, the parties entered into settlement discussions, and Crossroads agreed to extend the deadline for the defendants’ brief in opposition to April 12, 2012. By order entered April 2, 2012, the court granted the requested extension.

The parties’ settlement negotiations ultimately failed. On April 26, 2012, having received no brief in opposition from the defendants and no further requests for an extension, Crossroads filed a request for entry of summary judgment in its favor. The court entered a final order granting Crossroads’ motion for summary judgment on May 8, 2012.

Exactly one year later, the defendants, after retaining new counsel, filed the instant motion for relief from the final order, pursuant to Rule 60(b) of the Federal Rules of Civil Procedure. In the motion, the defendants claim that counsel failed to advise them that they could or should oppose the motion for summary judgment; that counsel unilaterally decided not to oppose the motion for summary judgment; and that counsel erred in failing to assert affirmative defenses and counterclaims.

The court held a hearing on the Rule 60(b) motion on November 4, 2013. By order entered November 6, 2013, the court gave the defendants ten days to submit affidavits or other evidence to support their motion. The defendants filed a sworn declaration from Mr. Moulton on November 11, 2013. Crossroads subsequently requested and obtained leave to depose Mr. and Mrs. Moulton. Following the conduct of Mr. Moulton’s deposition, Crossroads filed a ...


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