Gary Hall, etc. v. T.J. Cinnamon's ( 1997 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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Nos. 96-2847/3587
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Gary Hall, doing business as Hall's *
Food Marts, *
*
Appellee, *
* Appeal from the United States District
v. * Court for the Western District of
* Missouri.
T.J. Cinnamon's, Inc., *
*
Appellant. *
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Submitted: May 21, 1997
Filed: August 14, 1997
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Before BEAM, FRIEDMAN,1 and LOKEN, Circuit Judges.
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BEAM, Circuit Judge.
T.J. Cinnamon's, Inc. (TJC) appeals from the district court's2 orders entering
default judgment against it and denying it Rule 60(b) relief. We affirm.
1
The Honorable Daniel M. Friedman, United States Circuit Judge for the Federal
Circuit, sitting by designation.
2
The Honorable Joseph E. Stevens, Jr., United States District Judge for the
Western District of Missouri.
I. BACKGROUND
Gary Hall is a citizen and resident of Missouri. TJC is a Delaware corporation,
with its principal place of business in New Jersey. In June 1986, Hall and TJC entered
into a franchise agreement. In 1994, disputes arose between the two concerning their
respective obligations under the agreement. Both parties claimed the other had
breached the franchise agreement: Hall claimed TJC breached the agreement by failing
to remit funds due him from Sam's Club;3 TJC claimed Hall breached the agreement by
failing to operate a retail outlet. In August 1995, Hall commenced this action against
TJC alleging that it had: (1) breached the franchise agreement by failing to remit the
Sam's Club funds; (2) wrongfully terminated the franchise agreement; and (3) failed to
honor Hall's exclusive franchise rights to the Springfield, Missouri territory. Hall also
requested an accounting of the Sam's Club funds. In early October, TJC was served
with the summons and complaint.
TJC failed to answer the complaint. In December 1995, Hall moved for entry
of default, and later, for entry of default judgment against TJC. The district court
entered an order requiring TJC to show cause why a default judgment should not be
entered against it. TJC again failed to respond. The district court then scheduled a
hearing on the default judgment.
Before the default judgment hearing, TJC's New York counsel wrote a letter to
the Missouri district court explaining that TJC would not retain local counsel because
of its poor financial condition. The letter further explained that TJC did not intend to
enter an appearance in the litigation. The default judgment hearing was held on May
3
As part of the franchise agreement, Hall made and delivered baked goods to a
local Sam's Club food wholesaler. Sam's Club would then pay TJC for the goods, and
in turn, TJC would pay Hall.
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15, 1996. Although TJC did not appear at the hearing or enter an appearance, Hall
testified and submitted documents in support of his claims. The district court
subsequently entered default judgment for Hall on all claims.4
Following the entry of default judgment on May 31, TJC retained local counsel
and, on June 28, appealed the entry of the default judgment. On that date, TJC also
filed a motion to set aside the default judgment under Federal Rules of Civil Procedure
55(c) and 60(b). After the district court denied TJC's request for Rule 60(b) relief, TJC
filed another notice of appeal, challenging that denial.
II. DISCUSSION
TJC attempts to characterize its default as technical and not willful. The record,
however, supports the district court's conclusion that TJC chose to ignore this litigation.
We review the district court's entrance of default judgment for an abuse of discretion.
Comiskey v. JFTJ Corp., 989 F.2d 1007, 1009 (8th Cir. 1993). We find no abuse.
When served with the complaint, TJC was warned that failure to answer within
the allotted time would result in default judgment being entered against it. Despite its
knowledge of both the underlying lawsuit and the request for default judgment, TJC
watched the litigation from afar for over seven months, apparently without any intention
of entering an appearance or defending the action in a legally cognizable manner.
Furthermore, TJC's alleged inability to retain local counsel is belied by its own actions
as it promptly hired local counsel following the entry of default judgment. Faced with
TJC's refusal to respond to the litigation, the district court entered default judgment and
4
The district court awarded Hall the following sums: (1) $10,123.69 plus interest
and $5,348.44 for attorney's fees on the claim for past-due Sam's Club funds; (2)
$50,000 on the wrongful termination of franchise agreement claim; and (3) $20,000 on
the territorial rights claim. The court dismissed as moot Hall's request for an
accounting of the Sam's Club funds, in light of its award of damages on that claim.
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awarded Hall the damages he established with sufficient certainty. In refusing to
sanction TJC's inaction, the district court committed no abuse of discretion.
We next address the appeal from the denial of Rule 60(b) relief. On the same
day TJC appealed the district court's default judgment to this court, it asked the district
court to set aside that same decision. The filing of this Rule 60(b) motion more than
ten days after the entry of default judgment failed to stay the finality of the appealed
order. See Fed. R. App. P. 4(a)(4)(F). Thus, the notice of appeal was timely and
vested jurisdiction over the issue of the validity of the default judgment in this court.
Since it is generally understood that a federal district court and a federal court of
appeals should not attempt to assert jurisdiction over a case simultaneously, Griggs v.
Provident Consumer Discount Co., 459 U.S. 56, 58 (1982), it is possible, if not likely,
that the district court had no jurisdiction to consider the soundness of the default
judgment as requested by the Rule 60(b) motion. However, assuming, arguendo, that
the district court order denying the Rule 60(b) motion is now properly before us, we
note that on these facts, TJC has not shown mistake, excusable neglect or any other
grounds warranting relief from judgment. Consequently, we find that the refusal to set
aside the default judgment was well within the district court's discretion. See Canal
Ins. Co. v. Ashmore, 61 F.3d 15, 17 (8th Cir. 1995). We have considered the
remainder of TJC's arguments and find them to be without merit.
III. CONCLUSION
Finding no abuse of discretion in the district court's entry of default judgment for
Hall, we affirm as to that appeal. We also affirm the denial of the Rule 60(b) motion.
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A true copy.
ATTEST:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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