In re Earle Industries, Inc., Bankruptcy No. 86-00869G
| Decision Date | 08 December 1986 |
| Docket Number | Bankruptcy No. 86-00869G,Adv. No. 86-0397G. |
| Citation | 67 BR 822 |
| Parties | In re EARLE INDUSTRIES, INC., Debtor. EARLE INDUSTRIES, INC., Plaintiff, v. C-WAY ENTERPRISES, INC. and CNA Continental Assurance Company, Defendants. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
Peter D. Bludman, Hepburn, Willcox, Hamilton & Putnam, Philadelphia, Pa., for debtor/plaintiff, Earle Industries, Inc.
Joseph L. Burns, Treasurer, Ferrysburg, Mich., for defendant, C-Way Enterprises, Inc.
Linda Beyer, Harry R. Blackburn, Hunt & Fineman, Philadelphia, Pa., for defendants, C-Way Enterprises, Inc. and CNA Continental Assur. Co.
Jon C. Sirlin, Philadelphia, Pa., for Provident Nat. Bank, Garnishee.
The issue for consideration is whether we should grant the motions of C-Way Enterprises, Inc. ("C-Way") and CNA Continental Assurance Co., Inc. ("CNA"), to set aside default judgments entered against them on June 20, 1986. For the reasons set forth below, we conclude that the motions should be denied.
The facts of this case are as follows:1 On May 2, 1986, plaintiff Earle Industries, Inc., ("Earle"), a chapter 11 debtor, instituted a turnover proceeding pursuant to 11 U.S.C. § 542 of the Bankruptcy Code ("the Code") against defendants C-Way and CNA. Plaintiff alleged that C-Way contracted with Earle to purchase certain goods and services for the construction of a bridge in Sarasota County, Florida, and that C-Way had furnished a payment bond executed by defendant, CNA, to protect Earle's interest. Plaintiff claimed that it never received payment for the goods and services provided to C-Way and, accordingly, brought the instant action to collect its accounts receivable from C-Way and CNA.
As stated above, Earle instituted this adversary proceeding on May 2, 1986. Copies of the complaint were sent that same day to both defendants by certified mail, return receipt requested. On or about May 5, 1986, the court issued a summons and notice of trial, requiring defendants to file their answers by June 6, 1986, and notifying them that the case would be tried on June 18, 1986. On May 12, 1986, plaintiff's counsel mailed copies of the summons to both defendants pursuant to Bankruptcy Rule 7004(b)(3), and filed an affidavit of service to that effect.
On June 6, 1986, C-Way filed its answer to plaintiff's complaint, which included certain affirmative defenses, a counterclaim and a demand for a jury trial. C-Way then failed to appear for trial on June 18, 1986, and, accordingly, the court entered a default judgment for failure to appear.
The other defendant, CNA, never filed an answer to the plaintiff's complaint nor did it appear for trial. Accordingly, a default judgment was entered against CNA for failure to appear or respond to plaintiff's complaint.
Since the case at bench involves two separate motions, we will address each motion individually. First, with respect to C-Ways' motion to set aside the default judgment entered on June 20, 1986, we find it unnecessary to consider the arguments raised by defendant in its brief. We conclude that defendant's motion should be denied without prejudice because it was not properly filed by an attorney. This court is bound by the holding of the Court of Appeals in the Third Circuit in Simbraw, Inc. v. United States, 367 F.2d 373 (3d Cir. 1966). In that case, the court held that a corporation seeking to have its rights litigated in a court of law would not be permitted to represent itself by its president, but would be required to employ an attorney at law to represent it. Id. at 374-75. This approach has been widely followed in other jurisdictions. See, e.g., Donovan v. Road Rangers Country Junction, Inc., 736 F.2d 1004, 1005 (5th Cir.1984) cert. denied, Gordon v. Donovan, 469 U.S. 1217, 105 S.Ct. 1198, 84 L.Ed.2d 342 (1985) (); Southwest Express Co., Inc. v. I.C.C., 670 F.2d 53, 56 (5th Cir.1982) (); In re Victor Publishers, Inc., 545 F.2d 285, 286 (1st Cir.1976) (); Matter of Plunkett, 47 B.R. 172, 176 (Bankr.D.Wis.1985) ().
In the case at bench, C-Way's motion to set aside the default judgment was not filed by a licensed attorney. Instead, the motion was filed by the corporation's treasurer, Joseph L. Burns, and there is no indication that Mr. Burns is an attorney at law. As such, this case falls squarely within the holding of Simbraw, and, accordingly, we will deny C-Way's motion to set aside the default judgment without prejudice.
With respect to the defendant CNA's motion to set aside the default judgment, we conclude that the motion should be denied.
Rule 60(b) of the Federal Rules of Civil Procedure, applicable to this proceeding through Bankruptcy Rule 9024, sets forth the standard for setting aside a default judgment. Rule 60(b) provides:
On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable...
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