Kyler Moje v. Federal Hockey League LLC , 792 F.3d 756 ( 2015 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No.  15-­‐‑1097
KYLER  MOJE,
Plaintiff-­‐‑Appellee,
v.
FEDERAL  HOCKEY  LEAGUE,  LLC,
Defendant-­‐‑Appellant.
____________________
Appeal  from  the  United  States  District  Court  for  the
Northern  District  of  Illinois,  Eastern  Division.
No.  14  C  500  —  Sara  L.  Ellis,  Judge.
____________________
ARGUED  MAY  29,  2015  —  DECIDED  JULY  7,  2015
____________________
Before  POSNER,  EASTERBROOK,  and  SYKES,  Circuit  Judges.
EASTERBROOK,   Circuit   Judge.   As   in   Choice   Hotels   Interna-­‐‑
tional,  Inc.  v.  Grover,  No.  14-­‐‑3294,  also  decided  today,  the  de-­‐‑
fendant’s   lawyer   failed   to   file   essential   documents,   leading
to  the  entry  of  a  default  judgment,  and  the  defendant  wants
another  shot  at  litigation.
Kyler  Moje,  playing  for  the  Danville  Dashers  of  the  Fed-­‐‑
eral  Hockey  League,  one  of  the  minor  leagues  in  professional
2   No.  15-­‐‑1097
hockey,   lost   an   eye   to   high-­‐‑sticking   during   a   game   against
the  Akwesasne  Warriors.  He  sued  Oakley,  Inc.,  which  made
the   visor   that   Moje   blames   for   offering   inadequate   protec-­‐‑
tion,   and   the   League   itself.   Instead   of   notifying   its   liability
insurer   and   letting   it   defend   the   tort   suit,   the   League   hired
John  A.  LoFaro,  of  Syracuse,  New  York.  LoFaro  promised  to
represent  the  League’s  interests  but  did  not  do  so.
The  League  learned  about  potential  trouble  a  month  after
the   suit   began,   when   Oakley’s   attorney   called   Dan   Kirnan,
the  League’s  President,  to  ask  why  it  had  not  filed  an  answer
to   the   complaint.   Kirnan   asked   LoFaro   what   was   up,   and
LoFaro   said   that   an   answer   had   been   filed.   He   sent   the
League  a  purported  copy.  The  court’s  docket  did  not  reflect
any  filing,  however,  and  Moje  asked  the  judge  to  enter  a  de-­‐‑
fault.  LoFaro  did  not  respond—nor  did  he  do  anything  after
the  district  court  entered  the  default  and  permitted   Moje  to
prove   up   his   damages.   On   June   11,   2014,   four   months   after
the  suit  began,  the  district  court  entered  a  final  judgment  of
$800,000   against   the   League.   Kirnan   maintains   that   he   first
learned   about   this   in   October   2014,   after   Moje   commenced
collection   proceedings.   At   last   Kirnan   notified   the   League’s
insurer,   which   undertook   to   defend   under   a   reservation   of
rights  (the  League’s  delay  in  notification,  and  the  entry  of  a
final  judgment,  had  an  obvious  potential  to  prejudice  the  in-­‐‑
surer).   In   December   2014   a   lawyer   hired   by   the   insurer   en-­‐‑
tered  an  appearance  for  the  League  and  filed  a  motion  under
Fed.  R.  Civ.  P.  60(b)(1)  to  set  aside  the  judgment.  The  district
court’s  denial  of  that  motion  led  to  this  appeal.
As  in  Choice  Hotels,  a  lawyer  failed  to  mount  a  defense  of
the   suit,   a   default   judgment   was   entered,   and   the   district
court  denied  a  Rule  60(b)  motion.  In  Choice  Hotels  the  motion
No.  15-­‐‑1097   3
was  filed  more  than  a  year  after  judgment  and  so  depended
on   Rule   60(b)(6),   the   catchall   section,   which   limits   relief   to
extraordinary   circumstances.   In   this   case,   by   contrast,   the
motion   was   filed   only   six   months   after   judgment   and   so
could  invoke  Rule  60(b)(1),  which  allows  relief  on  account  of
“mistake,   inadvertence,   surprise,   or   excusable   neglect”.   The
League  maintains  that  “excusable  neglect”  led  to  the  default
judgment.  The  district  court  saw  “neglect”  but  did  not  think
it   “excusable.”   LoFaro   has   never   offered   an   explanation   for
the  combination  of  inaction  and  deceit.  (To  be  more  precise,
LoFaro  has  never  been  called  on  to  explain  his  conduct.  We
are   reporting   the   League’s   allegations,   but   LoFaro   may   not
agree   with   its   description.   As   far   as   we   can   tell   the   League
has  not  filed  a  complaint  with  the  legal-­‐‑ethics  panel  in  New
York—but  LoFaro  is  not  in  good  standing  anyway,  as  he  has
failed  to  pay  his  dues.)
The  League  wants  us  to  bypass  the  question  whether  Lo-­‐‑
Faro’s   conduct   is   excusable   and   concentrate   on   its   own
knowledge  and  conduct.  Yet  the  Supreme  Court  held  in  Pio-­‐‑
neer   Investment   Services   Co.   v.   Brunswick   Associates   L.P.,   507
U.S.  380,  396–97  (1993),  the  leading  decision  on  the  meaning
of   “excusable   neglect”   in   federal   procedure,   that   a   lawyer’s
errors   are   imputed   to   the   client   for   the   purpose   of   this
phrase.  To  obtain  relief,  the  Court  held,  a  litigant  must  show
that  both  its  own  conduct  and  its  lawyer’s  fit  the  category  of
“excusable”  neglect.
Usually   this   concentrates   attention   on   counsel,   for   most
errors  will  be  chalked  up  to  counsel  alone.  There  is  one  po-­‐‑
tentially  important  exception  to  this  norm,  however.  As  the
Supreme  Court  discussed  in  Maples  v.  Thomas,  132  S.  Ct.  912,
922–23   (2012),   and   we   repeated   in   Choice   Hotels,   a   lawyer’s
4   No.  15-­‐‑1097
abandonment   of   the   client   ends   the   agency   relation.   Aban-­‐‑
donment   leaves   the   client   responsible   for   its   own   conduct,
but   not   for   the   lawyer’s—and   then   the   question   becomes
whether  the  litigant’s  conduct  constituted  excusable  neglect.
To   simplify   matters   we   shall   assume   that   LoFaro   prom-­‐‑
ised   to   represent   the   League   yet   abandoned   his   client.   That
leaves   the   question   whether   the   League   has   shown   its   own
excusable   neglect.   Pioneer   gives   an   expansive   definition   to
“neglect,”  a  word  that  it  held  to  include  negligence,  see  507
U.S.  at  387–95.  With  respect  to  “excusable,”  the  Court  wrote:
the   determination   is   at   bottom   an   equitable   one,   taking   account
of   all   relevant   circumstances   surrounding   the   party’s   omission.
These  include  …  the  danger  of  prejudice  to  the  debtor,  the  length
of  the  delay  and  its  potential  impact  on  judicial  proceedings,  the
reason  for  the  delay,  including  whether  it  was  within  the  reason-­‐‑
able   control   of   the   movant,   and   whether   the   movant   acted   in
good  faith.
Id.  at  395  (footnote  omitted).  The  open-­‐‑ended  nature  of  these
factors  means  that  appellate  review  is  deferential.  In  re  Cano-­‐‑
py  Financial,  Inc.,  708  F.3d  934,  936  (7th  Cir.  2013);  Milwaukee
Branch  of  the  N.A.A.C.P.  v.  Thompson,  116  F.3d  1194,  1197  (7th
Cir.  1997).
The  thin  record  that  the  League  built  in  the  district  court
does  not  compel  a  ruling  in  its  favor.  Two  things  dominate:
first,  the  League  failed  to  tender  the  defense  of  Moje’s  suit  to
its   insurer   when   it   received   the   complaint;   second,   the
League  failed  to  act  prudently  after  being  alerted  by  Oakley
that  there  was  a  problem.
Instead  of  turning  to  its  insurer,  which  any  sensible  busi-­‐‑
ness  should  have  done,  it  hired  LoFaro.  Why?  The  only  rea-­‐‑
son  the  League  has  given  is  that  he  had  provided  satisfacto-­‐‑
No.  15-­‐‑1097   5
ry  legal  services  to  Kirnan  (and  perhaps  the  League)  in  earli-­‐‑
er   years.   But   what   kind   of   legal   services?   LoFaro’s   web   site
describes   his   practice   as   “Personal   Injury   ~   Criminal   Law
DWI,   Speeding,   and   all   Traffic   Related   Matters”.   See
http://lofarolaw.com.   That   list   of   specialties   does   not   imply
aptitude  for  the  defense  of  a  million-­‐‑dollar  tort  suit  in  Chica-­‐‑
go.   LoFaro   practices   in   Syracuse,   New   York,   and   is   not   ad-­‐‑
mitted  to  the  bar  of  the  Northern  District  of  Illinois.
Even   if   he   were   a   wizard   of   tort   defense,   why   keep   the
insurer  in  the  dark?  The  League  has  never  offered  a  reason.
After   a   co-­‐‑defendant   told   the   League   that   no   answer   had
been   filed   on   its   behalf,   it   did   not   take   precautions   such   as
notifying  the  insurer,  engaging  counsel  in  Chicago,  or  check-­‐‑
ing  the  district  court’s  docket  (which  can  be  done  from  any
desktop   computer).   A   check   of   the   docket   would   have   re-­‐‑
vealed   that   LoFaro   did   not   file   an   appearance   as   the
League’s   attorney   and   did   nothing   to   protect   its   interests.
Because  LoFaro  had  not  filed  an  appearance,  Moje’s  lawyer
would  have  sent  all  filings,  such  as  the  request  for  a  default
judgment  and  his  proof  of  damages,  directly  to  the  League,
which  sat  on  its  hands.  The  League  cannot  escape  a  substan-­‐‑
tial  share  of  the  responsibility  for  the  outcome.
Abandoned   clients   who   take   reasonable   steps   to   protect
themselves   can   expect   to   have   judgments   reopened   under
Rule  60(b)(1),  but  the  League  is  not  in  that  category.  Its  rem-­‐‑
edy,   if   any,   is   against   LoFaro.   If   he   has   inadequate   (or   no)
malpractice   insurance,   and   cannot   satisfy   a   malpractice
judgment,  that  too  reflects  the  League’s  choice;  it  could  have
insisted   on   proof   of   adequate   coverage.   It   would   be   inap-­‐‑
propriate  to  send  Moje,  who  bears  no  responsibility,  back  to
square  one  of  his  tort  suit.
6   No.  15-­‐‑1097
AFFIRMED