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Mid-Century Insurance Co. v. Thompson

United States District Court, E.D. Virginia, Norfolk Division

August 8, 2019

MID-CENTURY INSURANCE COMPANY, as Subrogee of Dwight Mills, Plaintiff,


          Mark S. Davis Chief United States District Judge

         This matter is before the court on a motion to set aside default judgment pursuant to Federal Rules of Civil Procedure 55(c) and 60(b) (1), (4), and (6) filed by defendant Stacey Earl Thompson[1]("Defendant"). Def.'s Mot., ECF No. 14. For the reasons stated below, the Court TAKES UNDER ADVISEMENT Defendant's motion.

         I. BACKGROUND

         On March 22, 2019, this Court granted an unopposed motion for default judgment that had been filed by plaintiff Mid-Century Insurance Company, as subrogee of Dwight Mills ("Plaintiff"). Order, ECF No. 14. In granting the motion for default judgment, the Court found that Plaintiff adequately alleged that Defendant negligently started a fire with a cigarette in Dwight Mills's ("Mr. Mills") home. Order 5. Because Plaintiff, as Mr. Mill's property-insurer, paid Mr. Mills for the damage caused by the fire, the Court ordered Defendant to pay Plaintiff $176, 564.81, the amount that Plaintiff paid for the fire damage. Order 6.

         On May 17, 2019, Defendant filed a motion to set aside default judgment, Def.'s Mot., ECF No. 14, and a memorandum in support, Def.'s Memo., ECF No. 15, arguing that Plaintiff improperly served Defendant, who claims he is incompetent for service because he suffers from dementia (or other cognitive disorder) and poor eyesight and who, before the fire, had signed a power of attorney in favor of his daughter, who happens to be Mr. Mills's wife ("Mrs. Mills"). Plaintiff responded in opposition on May 31, 2019. ECF No. 16. Defendant replied on June 5, 2019. ECF No. 17. Having been fully briefed, this matter is now ripe for review.

         II. STANDARD

         Federal Rule of Civil Procedure 60(b) permits a party to seek relief "from a final judgment, order, or proceeding." Fed.R.Civ.P. 60(b). A court's analysis of a Rule 60(b) motion proceeds in two stages. First, a court considers whether the movant has met three threshold conditions:wxa moving party must show that his motion is timely, that he has a meritorious defense to the action, and that the opposing party would not be unfairly prejudiced by having the judgment set aside.'" Nat'l Credit Union Admin. Bd. v. Gray, 1 F.3d 262, 264 (4th Cir. 1993) (quoting Park Corp. v. Lexington Ins. Co., 812 F.2d 894, 896 (4th Cir. 1987)); see also Aikens v. Ingram, 652 F.3d 496, 501 (4th Cir. 2011) (citing Nat'l Credit Union, 1 F.3d at 264).[2] Once a movant has demonstrated the three threshold requirements, Federal Rule of Civil Procedure 60(b) lists the grounds under which a court may grant relief from a final judgment. Nat'l Credit Union, 1 F.3d at 266. These grounds are:

(1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party; (4) the judgment is void; (5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or (6) any other reason that justifies relief.

Fed. R. Civ. P. 60(b) (emphasis added). The party seeking relief under Rule 60(b) "must clearly establish the grounds therefor to the satisfaction of the district court . . . and such grounds must be clearly substantiated by adequate proof." In re Burnley, 988 F.2d 1, 3 (4th Cir. 1992) (internal citations omitted). Relief under Rule 60(b) is an "extraordinary remedy" that is to be used only in "exceptional circumstances." Compton v. Alton S.S. Co., 608 F.2d 96, 102 (4th Cir. 1979); see also Ebersole v. Kline-Perry, 292 F.R.D. 316, 320 (E.D. Va. 2013) (quoting Compton, 608 F.2d at 102) . To determine whether such exceptional relief is appropriate, the court "must engage in the delicate balancing ofxthe sanctity of final judgments, expressed in the doctrine of res judicata, and the incessant command of the court's conscience that justice be done in light of [a] 11 the facts. "' Compton, 608 F.2d at 102 (alteration in original) (quoting Bankers Mortg. Co. v. United States, 423 F.2d 73, 77 (5th Cir. 1970), cert, denied, 399 U.S. 927 (1970)).[3]

         The Fourth Circuit has held that a motion under Rule 60(b) is addressed to the sound discretion of the trial judge and will not be disturbed on appeal save for a showing of abuse. See Aikens, 652 F.3d at 501. "However, where default judgments are at issue, over the years [the Fourth Circuit] has taken an increasingly liberal view of Rule 60(b) . . . ." Augusta Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d 808, 811 (4th Cir. 1988); see also Charles Alan Wright & Arthur R. Miller, 11 Federal Practice & Procedure § 2857 (3d ed. 2012) (noting that" [t] he cases calling for great liberality in granting Rule 60(b) motions, for the most part, have involved default judgments. There is much more reason for liberality in reopening a judgment when the merits of the case never have been considered than there is when the judgment comes after a full trial on the merits."). This is so because "default judgments pit the court's strong preference for deciding cases on the merits against countervailing interests in finality and in preserving the court's ability to control its docket." Heyman v. M.L. Mktg. Co., 116 F.3d 91, 94 (4th Cir. 1997) (citing Augusta, 843 F.2d at 811) . Nonetheless, in considering a Rule 60(b) motion to set aside a default judgment, tt'[w]hen the party is at fault, the [court's interest in finality and efficiency] dominate[s] and the party must adequately defend its conduct in order to show excusable neglect.7" Id. (alterations in original) (quoting Augusta, 843 F.2d at 811) .


         A. Rule 60(b)(4) [4]

         Rule 60(b)(4) provides that the Court mayw [o]n motion and just terms, . . . relieve a party . . . from a final judgment . . . for the following reason[]: the judgment is void." Fed.R.Civ.P. 60(b)(4). Although Rule 60 is phrased in permissive terms, a court does not have discretion to refuse to vacate a void judgment. See, e.g., Philos Techs., Inc. v. Philos & D, Inc., 645 F.3d 851, 855 (7th Cir. 2011); see also 11 Charles Alan Wright & Arthur R. Miller, 11 Federal Practice & Procedure § 2682 (3d ed. 2012) . Moreover, unlike other motions under Rule 60(b), a party may seek to set aside a void judgment even years after the court has entered such judgment. See, e.g., Philos, 645 F.3d at 857 (citations omitted) (stating that a "collateral challenge to jurisdiction can be brought at any time") . Similarly, to prevail on a Rule 60(b) (4) motion, the movant need not establish the existence of a meritorious defense. Bludworth Bond Shipyard Inc. v. M/V Caribbean Wind, 841 F.2d 646, 649 (5th Cir. 1988) (noting that a court must set aside a void judgment under Rule 60(b)(4) regardless whether the movant has a meritorious defense); 12 James Wm. Moore et al., Moored Federal Practice, § 60.44 [5] [b]; 11 Wright & Miller, supra, § 2862.

         For the purposes of Rule 60(b)(4), a judgment is void "only if the court rendering the decision lacked personal or subject matter jurisdiction or acted in a manner inconsistent with due process of law." Wendt v. Leonard, 431 F.3d 410, 412 (4th Cir. 2005) (citing Eberhart v. Integrated Design & Constr., Inc., 167 F.3d 861, 871 (4th Cir. 1999)) . However, courts "narrowly construe the concept of axvoid' order under Rule 60(b) (4) precisely because of the threat to finality of judgments and the risk that litigants . . . will use Rule 60(b)(4) to circumvent an appeal process they elected not to follow." Id. at 412-13 (citations omitted). Nonetheless, a judgment is void when a court enters it without personal jurisdiction over a defendant because such defendant was not validly served with process. Armco v. Penrod-Stauffer Bldg. ...

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