Margolis Edelstein v. CFT Ambulance Service, Inc. ( 2014 )

IN THE COURT OF COMMON PLEAS FOR THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MARGOLIS EDELSTEIN, )
)
Plaintiff, )
)
v. ) C.A. No. CPU4-11-006501
)
CFT AMBULANCE SERVICE, INC., )
)
Defendant. )
Submitted: September 19, 2014
Decided: November 14, 2014
Herbert W. Mondros, Esq. Stephen B. Potter, Esq.
300 Delaware Ave., Suite 800 840 N. Union Street
Wilmington, Delaware 19801 Wilmington, DE 19805
Attorney for Plaintiff Attorney for Defendant
ORDER ON DEFENDANT’S MOTION TO VACATE DEFAULT
JUDGMENT AND PLAINTIFF’S MOTION TO COMPEL
PRODUCTION OF WITNESSES FOR DEPOSITION
This matter is before the Court on Defendant CFT Ambulance Service’s (“CFT”)
motion to vacate a default judgment entered by the Clerk of the Court of Common Pleas on
May 11, 2012, pursuant to Court of Common Pleas Civil Rule 55(b)(1). Additionally, before the
Court is Plaintiff Margolis Edelstein’s (“Edelstein”) motion to compel CFT to produce
witnesses for deposition pursuant to Court of Common Pleas Civil Rule 30(b)(6). This is the
Court’s decision on the pending motions.
FACTUAL AND PROCEDURAL BACKGROUND
On November 21, 2011, Edelstein filed a complaint against CFT alleging breach of
contract for CFT’s failure to pay legal fees; conversion of funds for services rendered; and
unjust enrichment. CFT did not file an answer. On May 11, 2012, Edelstein filed a Default
Judgment pursuant to Court of Common Pleas Civil Rule 55(b)(1). Attached to the motion
is an affidavit which seeks attorneys’ fees of $1,000.00 for past and future services. The
Clerk of Court entered judgment in the amount of $15,954.49, costs and attorney’s fees,
totaling $17,698.08.
On July 17, 2014, CFT filed the instant motion to vacate the default judgment
pursuant to Court of Common Pleas Civil Rule 60(b). CFT alleges Edelstein’s motion for
default judgment fails to meet the requirements of Civil Rule 55(b)(1). Specifically, CFT
argues that legal fees are not a sum certain and as such a motion under this rule is not
permitted. CFT further argues that the default should have been brought under Civil Rule
55(b)(2) which provides for an investigation by the court into the sum demanded. CFT also
argues that the engagement letter does not contain a contractual provision providing for the
recovery of fees for collection and enforcement of the retainer agreement.1 For these
reasons, CFT alleges that the entry of default is void.
On September 16, 2014, Edelstein filed a response. Edelstein contends that since the
entry of default judgment, CFT has paid $15,500.00 of the $17,698.08, leaving an
outstanding balance of $2,198.08. Further, Edelstein argues that more than two years has
passed since the entry of default judgment. Therefore Edelstein reasons that CFT may not
1
CFT specifically disputes $1,330.00 in attorney’s fees that have been awarded, and charges that
have been assessed since the entry of default, bringing the new total to $19,881.00 owed.
2
rely upon Rule 60(b)(6) for support because when analyzing the motion, and the Court must
take into consideration the action of the party and the length of the delay in filing the
motion. Finally, Edelstein asserts that CFT has not shown the existence of extraordinary
circumstances that rise to the level of excusable neglect. Edelstein points to the fact that
during the collection proceeding, CFT emailed its office with offers of payment on three
occasions to cancel pending Sherriff sales.
In response to CFT’s motion to vacate, Edelstein filed a notice of deposition alleging
that CFT, in its motion to vacate, raises allegations which “appear for the first time in the
history of the lawsuit, and references documents that are not attached.” Edelstein claimed
that in order to prepare a response to CFT’s motion, Edelstein needs to depose agents of
CFT. Edelstein also requested the documents relied on to support CFT’s allegations in
paragraphs 1-12 of the motion to vacate. The deposition was scheduled for, but did not
occur on September 2, 2014. On September 11, 2014, Edelstein filed the instant motion to
compel, alleging CFT did not produce the witnesses or requested documents, and did not
attempt to reschedule the deposition. On September 16, 2014, CFT filed a response to the
motion to compel. CFT argues that Court of Common Pleas Civil Rule 26(b)(1) states that
discovery is limited to the subject matter of the pending action, and because this matter
resulted in a default judgment, discovery would be premature until the default judgment is
vacated. Further, CFT argues that the only issues for this motion are questions of law,
therefore, no fact-finding needs to occur except for what is presently in the record.
3
ANALYSIS
I. CFT’s Motion to Vacate Default Judgment
“A motion to vacate a default judgment pursuant to . . . Civil Rule 60(b) is addressed
to the sound discretion of the Court.”2 “Delaware courts review such motions with favor
because they promote Delaware's strong judicial policy of deciding cases on the merits,
giving parties to litigation their day in court.” 3 As such, all doubts should be resolved in
favor of the movant.4 Three elements must be shown before a motion to vacate judgment
may be granted:
(1) excusable neglect in the conduct that allowed the default
judgment to be taken; (2) a meritorious defense to the action
that would allow a different outcome to the litigation if the
matter was heard on its merits; and (3) a showing that
substantial prejudice will not be suffered by the plaintiff if the
motion is granted.5
“Excusable neglect is defined as neglect which might have been the act of a
reasonably prudent person under the circumstances.”6 While Rule 60(b) does not require a
movant to file a motion within a particular time period, the courts have held that
unreasonable delay in bringing such a motion will preclude the Court from granting relief.7
The Court may consider a motion to vacate under Rule 60(b)(6), “any other reason
justifying relief” whenever such action is appropriate to accomplish justice.8 Paragraph (b)(6)
is an independent ground for relief, with a different standard to be applied than under the
2
Verizon Delaware, Inc. v. Baldwin Line Const. Co., Inc., CIV.A.02C-040212JRS, 2004 WL 838610, at *1
(Del. Super. Apr. 13, 2004).
3
Id.
4
Id.
5
Id.
6
Lewes Dairy, Inc. v. Walpole, 1996 WL 111130, at *2 (Del. Super. Jan. 5, 1996).
7
Id.
8
Jewell v. Div. of Social Servs., 401 A.2d 88 (Del. 1979).
4
other paragraphs of Rule 60.9 The movant must demonstrate a showing of “extraordinary
circumstances.”10 “Rule 60(b)(6) is a ‘grand reservoir of equitable power to do justice in a
particular case.’”11 “Like the other provisions of Rule 60(b), the interest of justice provision
is addressed to the Court's sound discretion.”12 The Superior Court has held that “[d]espite
the broad power inherent in the provision, the Court must, of course, identify a valid reason
to grant relief from a judgment, and must recognize that such reasons exist only in
‘extraordinary situation[s] or circumstances.’”13 “Generally speaking, the extraordinary
circumstances test is not defined but rather is illustrated by way of the facts.”14 “Extraordinary
circumstances do not exist where the conduct of the moving party has been intentional or
willful.”15
Under a Rule 60(b) analysis, CFT has not shown excusable neglect. Delaware law
requires that an answer is to be filed within twenty (20) days after service of the complaint.16
Here, CFT did not enter an appearance until July 15, 2014, more than two years after the
default judgment was entered. CFT has not provided any compelling facts which
demonstrate neglect that support a basis for the Court to vacate the judgment for failure to
file an answer.
9
Id.
10
Id. (emphasis added).
11
Rembrandt Technologies, L.P. v. Harris Corp., 2009 WL 2490873, at *2 (Del. Super. Ct. Aug. 14, 2009)
(citing Compton v. Alton Steamship Co., 608 F.2d 96, 106 (4th Cir. 1979)).
12
Wife B v. Husband B, 395 A.2d 358 (Del. 1978).
13
Rembrandt Technologies, 2009 WL at *2 (citing Jewell, 401 A.2d at 90) (emphasis added).
14
Cristina Bd. of Educ. v. 322 Chapel St., Civ. A. No. 88C-08-227, 1995 WL 163509, at *7 (Del. Super.
Ct. Feb. 9, 1995) (emphasis added).
15
Concors Supply, Co. v. Jon Berger d/b/a Jon’ B’s Restaurant, 1988 WL 130437, at *3 (Del. Super. Nov.
9, 1988).
16
Ct. Com. Pl. Civ. R. 12(a).
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However, CFT has raised a credible argument under 60(b)(6) where the Court may
exercise its discretion to accomplish justice. CFT argues that in absence of a statute or
contractual provision, to award attorneys’ fees, the Court must analyze the nature of the
services rendered and the complexity of the issues.17
Court of Common Pleas Civil Rule 55(b)(1) provides that the Clerk may enter
judgment against a defendant:
When plaintiff’s claim against a defendant is for a sum certain
or for a sum which can by computation be made certain, the
Clerk of the Court upon written direction of the plaintiff and
upon affidavit of the amount due, shall enter judgment against
the defendant, if the defendant has failed to appear . . . unless
the defendant is an infant or incompetent person . . . . The party
shall submit with the party’s direction to the Clerk of the Court
to enter judgment a statement showing the principal amount
due, which shall not exceed the amount demanded in the
complaint, giving credit for any payments and showing the
amounts and dates thereof, and a computation of interest to the
date of judgment.18
Therefore, the Clerk of Court has authority to enter default judgment only where the
specific circumstances under the rule are demonstrated. The direction in this case was for
legal services rendered. While there may be a sum demanded, it is not based upon a note or
instrument and subject to computation without evaluation. The instant motion to enter
default merely set a sum certain and did not itemize the services rendered.
Moreover, Edelstein’s Affidavit for entry of default judgment seeks “all reasonable
attorneys’ fees and expenses incurred by Plaintiff thus far in this action, plus future
17
Honaker v. Farmers Mutual Insurance Co., Del.Super., 313 A.2d 900 (1973); J.J. White, Inc. v.
Metropolitan Merchandise Mart, supra; Great American Indemnity Co. v. State, 32 Del. Ch. 562, 88 A.2d 426
(1952); Maurer v. International Re-Insurance Corp., 33 Del. Ch. 456, 95 A.2d 827 (1953).
18
Ct. Com. Pl. Civ. R. 55(b)(1).
6
collection expenses.”19 Regarding present expenses and Attorneys’ fees, Delaware follows
the American Rule, which requires that “litigants are normally responsible for paying their
own litigation costs.”20 Furthermore, Delaware law is well settled that a court may not order
court costs and attorneys’ fees to be paid by the losing party unless such payment is
authorized by some provision of statute or contract.21 A review of the retainer agreement
does not provide a provision for the payment of Attorneys’ fees and court costs in a
potential fee dispute between the parties.22
Edelstein’s argument that CFT, in filing the instant motion to vacate, is estopped
from challenging the judgment due to untimely filing is misplaced. While there is clear delay
in bringing the motion, such delay does not prevent the court from reviewing when the
judgment was improperly granted. So long as the Court can identify a valid reason to vacate
the Default Judgment, it may do so.23 In this case, default judgment should never have been
entered under Civil Rule 55(b)(1) due to lack of a sum certain. Therefore, CFT’s motion to
vacate default judgment has merit.
II. Edelstein’s Motion to Compel
Court of Common Pleas Civil Rule 37(a) governs motions for order compelling
discovery and provides that:
A party, upon reasonable notice to other parties and all persons
affected thereby, may apply for an order compelling discovery
19
Pl.’s Notice of Direction of Default Judgment, Ex. A.
20
SIGA Technologies v. PharmAthene, Inc., 67 A.3d 330, 352 (Del. 2013).
21
See fn. 19.
22
See Compl. Ex. A, Engagement Letter.
23
Rembrandt Technologies, 2009 WL at *2 (citing Jewell, 401 A.2d at 90).
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as follows… (2) Motion. If… a party fails to answer an
interrogatory submitted under Rule 33, or if a party, in response
to a request for inspection submitted under Rule 34, fails to
respond that inspection will be permitted as requested or fails to
permit inspection as requested, the discovering party may move
for an order compelling an answer, or a designation, or an order
compelling inspection in accordance with the
request…(3)…For purposes of this subdivision an evasive or
incomplete answer or response is to be treated as a failure to
answer or respond.24
Additionally, Court of Common Pleas Civil Rule 30(a) provides that:
After the commencement of any action, any party may take the
testimony of any person, including a party, by deposition upon
oral examination. Leave of Court is only required when a party
seeks to take a deposition prior to the expiration of thirty (30)
days after service of the summons.25
Edelstein claims it was attempting to conduct discovery in preparation of its response
to CFT’s motion to vacate. Edelstein has since filed a response. Edelstein’s assertion that
CFT raises allegations that “appear for the first time in the history of the lawsuit, and
references documents that are not attached” provides good cause to conduct a deposition.
CFT’s claim that discovery at this point is premature would have merit if the motion to
vacate was denied. However, because the default judgment must be vacated, the matter is
not ripe for resolution. The final decision on this motion is reserved, until CFT has filed a
response to the Complaint as required by Civil Rule 12(a).
24
Ct. Com. Pl. Civ. R. 37(a).
25
Ct. Com. Pl. Civ. R. 30(a).
8
CONCLUSION
Accordingly, IT IS HEREBY ORDERED that CFT’s motion to vacate default
judgment is granted.
Edelstein’s motion to compel is reserved for further consideration.
SO ORDERED
_________________________________
Alex J. Smalls
Chief Judge
Edelstein-ORD Nov 2014
9