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Service First Logistics, Inc. v. J. Rodriguez Trucking, Inc.

United States District Court, E.D. Michigan, Southern Division

April 14, 2017

SERVICE FIRST LOGISTICS, INC., Plaintiff,
v.
J. RODRIGUEZ TRUCKING, INC., Defendant.

         ORDER GRANTING DEFENDANT'S AMENDED MOTION TO SET ASIDE DEFAULT AND DEFAULT JUDGMENT, MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION [DKT. NO. 12], VACATING THE ENTRY OF DEFAULT [DKT. NO. 6] AND THE DEFAULT JUDGMENT [DKT. NO. 10] AND DISMISSING PLAINTIFF'S CAUSE OF ACTION WITHOUT PREJUDICE

          Denise Page Hood, United States District Court Chief Judge

         I. INTRODUCTION

         On January 18, 2017, the Court entered Default Judgment against Defendant. On February 2, 2017, Defendant filed its Amended Motion to Set Aside Default and Default Judgment, Motion to Dismiss for Lack of Subject Matter Jurisdiction and Lack of Personal Jurisdiction (“Amended Motion”). Dkt. No. 12. The motion has been fully briefed. The Court, having concluded that the decision process would not be significantly aided by oral argument, ordered that the motions be resolved on the motion and briefs submitted by the parties. E.D. Mich. L.R. 7.1(f)(2). Dkt. No. 13. For the reasons that follow, the Court sets aside the entry of default and default judgment against Defendant and dismisses Plaintiff's cause of action, without prejudice, for lack of subject matter jurisdiction.

         II. BACKGROUND

         This case stems from a shipment of produce (lettuce products) that Plaintiff contracted with Defendant to have Defendant deliver. Plaintiff alleges that Defendant failed to properly refrigerate the load at 35 degrees Farenheit, which caused the products to spoil and the consignee to reject the entire load. The spoiled products caused Plaintiff to incur a loss of $21, 863.32, which amount Defendant refused to reimburse Plaintiff.

         Plaintiff filed this action on December 13, 2016, asserting that this Court had subject matter jurisdiction pursuant to 49 U.S.C. § 14706 (the “Carmack Amendment”). A certificate of service and summons was executed on December 19, 2016, and Defendant's answer was due on January 9, 2017. When Defendant did not file an answer, Plaintiff moved for and was granted a Clerk's Entry of Default on January 10, 2017. Dkt. Nos. 5 and 6. Plaintiff served Defendant with the Clerk's Entry of Default on January 12, 2017, Dkt. No. 7, and Plaintiff moved for entry of judgment by default with affidavit of sum certain on January 17, 2017, Dkt. No. 8, the same day that counsel for Defendant filed an appearance in this case. Dkt. No. 9. On January 18, 2017, the Clerk of the Court entered Judgment by Default. Dkt. No. 10. On February 2, 2017, Defendant filed a Motion to Set Aside Default and Default Judgment, Motion to Dismiss for Lack of Subject Matter Jurisdiction and Lack of Personal Jurisdiction, Dkt. No. 11, and the Amended Motion. The Court now addresses the Amended Motion.

         III. ANALYSIS

         A. Legal Standard

         Pursuant to Federal Rules of Civil Procedure 55(c) and 60(b), an entry of default and a default judgment may be set aside only upon the showing of: (1) mistake, inadvertence, or excusable neglect; (2) newly discovered evidence; (3) fraud, misrepresentation or other misconduct of the adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged; or (6) any other reason justifying relief from judgment. See also Burrell v. Henderson, 434 F.3d 826 (6th Cir. 2006); United Coin Meter Co. v. Seaboard Coastline R.R., 705 F.2d 839 (6th Cir. 1983). As set forth in United Coin, the Court also must determine that good cause exists for setting aside default judgment by assessing whether: (a) the plaintiff will be prejudiced; (c) the defendant has a meritorious defense; and (c) culpable conduct of the defendant led to the default. Id. at 845; Shepard Claims Serv., Inc. v. William Darrah & Assocs., 796 F.2d 190, 194 (6th Cir. 1986). The foregoing standards are applied more stringently under Rule 60(b) than Rule 55(c). Shepard, 796 F.2d at 194. As the entry of default is a harsh sanction, “[a]ny doubt should be resolved in favor of the petition to set aside the judgment so that cases may be decided on their merits. United Coin, 705 F.2d at 846; Shepard, 796 F.2d 193 (there is a strong preference for deciding cases on the merit rather than by default).

         B. Analysis

         Defendant argues that there is good cause to set aside the entry of default judgment. Defendant maintains that the default judgment is void because the Carmack Amendment is not applicable in this case. If the Carmack Amendment does not apply, the Court would lack subject matter jurisdiction and would have to dismiss Plaintiff's cause of action. As the Sixth Circuit stated in Antoine v. Atlas Turner, Inc., 66 F.3d 105, 108 (6th Cir. 1995) (emphasis added):

If the underlying judgment is void, it is a per se abuse of discretion for a district court to deny a movant's motion to vacate the judgment under Rule 60(b)(4). United States v. Indoor Cultivation Equipment, 55 F.3d 1311, 1317 (7th Cir. 1995). A judgment is void under 60(b)(4) “if the court that rendered it lacked jurisdiction of the subject matter, or of the parties, or if it acted in a manner inconsistent with due process of law.” In re Edwards, 962 F.2d 641, 544 (7th Cir. 1992) (citation omitted).

         Defendant contends that this meritorious defense precludes any prejudice to Plaintiff, particularly as there was no culpable conduct by Defendant. The Court agrees.

         It is undisputed that the sole basis for subject matter jurisdiction in this Court is Plaintiff's claim for damage to perishable food goods, a claim allegedly rooted ...


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