United Coin Meter Co., Inc. v. Seaboard Coastline R.R.

• Decision Date: 21 April 1983
• Docket Number: No. 81-1681,81-1681
• Parties: UNITED COIN METER COMPANY, INC., a Michigan corporation, Plaintiff-Appellee, v. SEABOARD COASTLINE RAILROAD, a Virginia corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 839

705 F.2d 839

UNITED COIN METER COMPANY, INC., a Michigan corporation Plaintiff-Appellee, v. SEABOARD COASTLINE RAILROAD, a Virginia corporation Defendant-Appellant.

No. 81-1681.

United States Court of Appeals Sixth Circuit.

Argued Jan. 27, 1983.

Decided April 21, 1983.

George E. Bushnell (argued), Noel A. Gage, John K. Parker, Southfield, Mich., for defendant-appellant.

Stephen M. Landau (argued), Southfield, Mich., for plaintiff-appellee.

Before LIVELY and MARTIN, Circuit Judges, and CELEBREZZE, Senior Circuit Judge.

LIVELY, Circuit Judge.

The defendant, Seaboard Coastline Railroad (Seaboard), appeals from the district court's denial of its motion to set aside or strike a default judgment entered in favor of the plaintiff, United Coin Meter Company, Inc. (United), in this action. In its complaint United sought damages from the railroad for injury to personal property transported by Seaboard from New York to Florida. Jurisdiction of the district court was based on diversity of citizenship.

I.

The complaint was filed on December 12, 1980 and the marshal's return of service showed that summons and a copy of the complaint were served on an agent of the railroad on December 29, 1980. Seaboard filed a motion to dismiss on February 17, 1981. There had been discussions between counsel, and United does not contend that Seaboard was in default at this time. The motion to dismiss was accompanied by a notice of hearing and a brief in support of dismissal. In its motion to dismiss the defendant relied on Rule 12(b)(1), (2) and (6), Federal Rules of Civil Procedure. It denied that the jurisdictional amount of $10,000 was involved in the claim, denied that there had been proper service and denied that the property of the plaintiff had been injured by the defendant or any agent of the defendant. It also claimed that the plaintiff was precluded from recovering by reason of the terms of the bill of lading under which the personal property was shipped. In its accompanying brief Seaboard stated that the property of the plaintiff was transported in an undamaged condition to its destination in Ft. Lauderdale, Florida and that it was damaged when a driver employed by a third party unrelated to the railroad, acting on a request from United, attempted to move the piggyback trailer from the location where it had originally been delivered in Ft. Lauderdale to a different location in that city. Seaboard also stated in its brief that it was assembling affidavits in support of its contention that it was not liable to the plaintiff for the injury to its property. United responded to the motion to dismiss, denying that it had requested a third party to move the piggyback trailer and contending that its only contacts had been with Seaboard which was responsible for the movement of the trailer.

The hearing on the motion to dismiss was adjourned to April 7, April 21, and May 5, 1981 by docket entries on March 24, April 7 and April 21, 1981. A docket entry on May 5, 1981 states, "Motion to dismiss, withdrawn. Joiner, J. dd 5/11/81." No written motion to withdraw the motion to dismiss was filed and no stipulation withdrawing it or order permitting it to be withdrawn was ever entered. The next two docket entries are notices of a status conference set for two different times on June 24, 1981. On May 19 United filed a request for entry of default with an affidavit in support. On the same day the clerk entered default. On May 26 United filed a motion for entry of default judgment with brief and proof of service. The court set the motion for entry of default judgment for hearing on June 30, 1981 and on that date the defendant filed its opposition to the motion for entry of default with brief and attachment. In an affidavit accompanying the motion for default entry by the clerk of the district court the attorney for United stated, "Defendant has failed and neglected to file an Answer or take any other affirmative action as prescribed by law."

In its opposition to United's motion for entry of default judgment Seaboard again set forth the grounds for its motion to dismiss and stated that, since it lacked appropriate supporting affidavits it had "dismissed said motion then rescheduled to be heard on Tuesday, May 5, 1981." Seaboard stated its position that at the time it dismissed the motion its counsel was granted by counsel for United a period of 20 days from the hearing date on the motion to dismiss within which to file a response to the complaint, but that United filed its notice of default and motion for entry of default judgment prior to the expiration of the agreed 20 days. In an accompanying affidavit the attorney for Seaboard stated that she received a telephone call from plaintiff's counsel on or about May 6, 1981 at which time a 20-day extension of time was granted by plaintiff and it was the affiant's understanding that this period was to commence from the date of the rescheduled hearing on defendant's pending motion to dismiss, May 5, 1981. Included with Seaboard's response in opposition to the motion for entry of default were exhibits which set forth its defense that United's property was injured while being moved by a third party after it had been delivered to the custody of the plaintiff rather than while it was under the control of the defendant. The brief in support of Seaboard's position argued that it could show "good cause" under Rule 55(c), F.R.Civ.P., and could also meet the requirements of "mistake," "inadvertence," or "excusable neglect" set forth in Rule 60(b), F.R.Civ.P., sufficient to establish good cause.

At a hearing before the district judge on June 30 and July 1 both of the attorneys who had been involved in the case made statements. Counsel for Seaboard stated that she was granted 20 days after withdrawal of her motion to dismiss and that she understood the 20 days was to run from May 5, 1981, the date on which the motion to dismiss had been rescheduled for hearing. Counsel for United stated that he had talked with the district judge's law clerk with respect to the date and had been told unequivocally, "It was granted as your Honor indicated to April 28th and that was the date for the 20 days." There appears to be no dispute that counsel for United did agree that Seaboard would have 20 days in which to plead. He said, "When 20 days were up, we filed default." Thus, the only matter in dispute between the parties is the time from which the 20 days was to run. The substance of the statements of counsel was contained in affidavits filed with the court. Counsel for Seaboard argued that if her calculation of the 20 days for answer was inadvertent or in error that would be sufficient good cause to require the default to be set aside. She also stated, in answer to an inquiry from the court, that she had not filed an answer because it was her understanding that until the default was set aside she could not file other pleadings. Both attorneys then argued the merits of the case, with counsel for United contending that there was no defense since all of the plaintiff's dealings were with the Seaboard Coastline Railroad and that it had no dealing with the third party who had attempted to move the piggyback trailer. Counsel for Seaboard again argued that delivery of the trailer loaded with United's property had been completed and that the property was damaged while the trailer was being moved by a third party.

In denying the motion to set aside the default the district court stated, "I don't find excusable neglect in this case. I really don't find that the affidavits establish any facts to a meritorious defense in the case." The court then heard proof. United called its corporate secretary who testified concerning the shipment of the personal property to Ft. Lauderdale by way of Seaboard Coastline Railroad and of the injury which occurred to the property while the piggyback trailer in which it was loaded was being moved. This witness claimed that United had no contacts with the third party who was moving the trailer at the time of the injury, but dealt only with Seaboard. The witness then identified exhibits establishing United's damages and the exhibits were admitted. The attorneys repeated their arguments following the close of testimony and counsel for defendant specifically noted that she had had no opportunity to call witnesses and requested a continuance to obtain testimony. After hearing arguments the district court reaffirmed its finding of no good cause to set aside the default and reaffirmed its ruling that there had been no adequate showing of a meritorious defense. A docket entry on July 1, 1981 shows that United's motion for entry of default judgment was granted and that the defendant's motion to set aside default was denied. This entry is based on the oral ruling, since no order or other document was filed at that time. On August 6 the defendant filed a motion for reconsideration and an answer to the complaint with affirmative defenses and attachments. One of the affirmative defenses relied upon by Seaboard was, "That the occurrence alleged in Plaintiff's complaint was caused by acts of commission of others over whom Defendant had no control." By an order entered on August 25 United was directed to respond to Seaboard's motion for reconsideration within 10 days, pursuant to Local Rule 17k(2). Oral argument on the motion for reconsideration was set for September 22. Meanwhile, on August 21, the district court entered a default judgment in favor of United for the full amount sought in the complaint.

At the September 22nd hearing Seaboard filed a motion to set aside or strike the default judgment. Following a brief hearing on September 22, the district court took the matter under advisement. On September 28 the district court entered an order denying defendant's motion for reconsideration. By an order entered October 16 the district court reaffirmed all of its previous holdings, refused to set...