United States District Court, D. Maryland
Richard D. Bennett United States District Judge.
November of 2013, Plaintiff Xiao Ma ("Plaintiff" or
"Ma") executed a written agreement with Defendants
CaerVision Corporation; CTCI, LLC; and AA Medica, LLC
(collectively "Defendants") wherein CaerVision
agreed to re-pay a sum of $500, 000 that Ma had previously
invested in its business ventures. See Pl.’s
Compl., Ex. A, ECF No. 1-1. In exchange, Ma agreed to return
his 41% equity position in those ventures. The parties
subsequently extended the repayment deadline to December 1,
2014. See Pl.’s Compl., Ex. B, ECF No. 1-2. Ma
alleges that, as of November 25, 2015, CaerVision had only
returned $400, 000 of the agreed $500, 000. Therefore,
seeking to recover the remainder, Ma filed the present
lawsuit, alleging breach of contract, on April 13, 2015.
See Pl.’s Compl., ECF No. 1. CaerVision did
not waive service of process in accordance with Rule 4 of the
Federal Rules of Civil Procedure. Subsequently, Ma filed a
Motion for Alternative Service in August of 2015 (ECF No. 5),
which this Court granted via Order dated September 29, 2015.
See Order, ECF No. 6. Plaintiff effected alternative
service on October 1, 2015, see Aff. of Service, ECF
No. 11, but Defendants did not file responsive pleadings
within the twenty-one day deadline under Rule 12 of the
Federal Rules of Civil Procedure. Accordingly, on November 3,
2015, Ma filed a Motion for Clerk’s Entry of Order of
Default against all Defendants. (ECF No. 14). That motion was
granted, and default was entered against all Defendants.
See Entry of Default, ECF No. 15. Ma subsequently
filed a Motion for Default Judgment (ECF No. 16) against all
Defendants for the sum of $117, 052.35, the balance owed
under their agreement plus interest and costs (ECF No. 16).
Defendants still did not respond, and Default Judgment was
entered against all Defendants. See Default J., ECF
pending in this Court are Defendants’ Motions to Set
Aside Default Judgment pursuant to Rule 60(b) of the Federal
Rules of Civil Procedure (ECF Nos. 18, 19, 20). Defendants seek
to vacate the default judgment entered against them, arguing
inadvertence and excusable neglect. Mots. to Set Aside at
¶ 3, ECF Nos. 18, 19, 20. Plaintiff opposes these
motions. See Pl.’s Opp’n, ECF No. 21.
The parties’ submissions have been reviewed, and no
hearing is necessary. See Local Rule 105.6 (D. Md.
2014). For the reasons stated herein, Defendants’
Motions to Set Aside Default (ECF Nos. 18, 19, 20) are
support a motion under Rule 60(b), the moving party must show
"timeliness, a meritorious defense, a lack of unfair
prejudice to the opposing party, and exceptional
circumstances." Ruston v. Holder, 544 Fed.
App’x 215 (4th Cir. 2013) (quoting Dowell v. State
Farm Fire & Cas. Auto. Ins. Co., 993 F.2d 46, 48 (4th
Cir. 1993)). Once these threshold requirements are met, the
moving party must then show either: (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, misrepresentation or other misconduct of an
adverse party; (4) the judgment is void; (5) the judgment has
been satisfied, released, or discharged; it is based on an
earlier judgment that has been reversed or vacated; or
applying it prospectively is no longer equitable; or (6) any
other reason justifying relief from the operation of the
judgment. See Fed. R. Civ. P. 60(b). The moving
party "must clearly establish the grounds therefor to
the satisfaction of the district court, " and those
grounds "must be clearly substantiated by adequate
proof." In re Burnley, 988 F.2d 1, 3 (4th Cir.
1992) (citations omitted). Although this Court strongly
prefers to avoid defaults and to adjudicate claims on their
merits, Rule 60(b) motions impose a more onerous burden on
the moving party because these motions request relief from
judgments, implicating interests in "finality and
repose." Colleton Preparatory Academy, Inc. v.
Hoover Universal, Inc., 616 F.3d 413, 420 (4th Cir.
2010) (quoting United States v. Moradi, 673 F.3d
725, 727-28 (4th Cir. 1982)). A Rule 60(b) motion is an
"extraordinary remedy", only to be granted in
"exceptional circumstances." See Mayfield v.
National Ass’n for Stock Auto Car Racing, Inc.,
674 F.3d 369, 378 (4th Cir. 2012); Wilson v.
Thompson, 138 Fed. App’x 556, 557 (4th Cir. 2005);
Bell v. United States, No. RDB-12-3042, 2015 WL
4561837, at *2 (D. Md. July 27, 2015). The decision to grant
or to deny a Rule 60(b) motion is a matter of the District
Court’s discretion. Universal Film Exchanges, Inc.
v. Lust, 479 F.2d 573, 576 (4th Cir. 1973) ("When a
Rule 60(b)(1) motion is made, the District Court denies or
grants relief based on its discretionary appraisal of the
particular facts of the case").
Defendants’ Motions are Timely
moving under Rule 60(b)(1) must file within a reasonable time and
within one year of the entry of judgment. Fed.R.Civ.P. 60(c).
Despite their earlier continued failure to respond to this
action, Defendants did file their Rule 60(b) motions ten days
after the entry of default judgment. Plaintiffs do not
contest the timeliness of Defendants’ motions, and more
belated filings have been held to be timely. See Park
Corp. v. Lexington Ins. Co., 812 F.2d 894, 896 (4th Cir.
1987) (explaining that there is "no question" that
a Rule 60(b) motion filed within five months of the date of
default judgment and within fifteen days of the
defendant’s discovery of that judgment was timely).
Granting Defendants’ Motions Would Not Unfairly
Prejudice the Plaintiff
finding of unfair prejudice requires harms beyond those that
inevitably result whenever a judgment is vacated. See
Westlake Legal Group v. Yelp, Inc., 599 Fed. App’x
481, 484 (4th Cir. 2015). Here, Plaintiff complains of
litigation expenses he has incurred, and the future costs he
will incur if this Court vacates the judgment. Such expenses
are inevitable whenever a judgment is vacated. They are not
Defendants Have Failed to Show that They Possess a
establish a meritorious defense, the moving party must
proffer some evidence "which would permit a finding for
the defaulting party or which would establish a valid
counterclaim". Augusta Fiberglass Coatings, Inc. v.
Fodor Contracting Corp., 843 F.2d 808, 812 (4th
Cir.1988). Conclusive proof is not required; affidavits will
do. Id. Movants, however, must do more than
"allege in a conclusory fashion" that they possess
a meritorious defense. Consolidated Masonry &
Fireproofing, Inc. v. Wagman Const. Corp., 383 F.2d 249,
251 (4th Cir. 1967). In this case, Defendants hint at a
potential defense, but do not present evidence of any kind to
support it. Despite having repaid $400, 000 of the
agreed $500, 000, Defendants now briefly claim that they
"intend to enter evidence that Plaintiff was an EB-V
Visa investor", and that this status renders him
ineligible for repayment of his investment. Mot. to Set Aside
at ¶ 9, ECF Nos. 18, 19, 20. Plaintiff correctly
distinguishes between Defendants’ stated intentions to
adduce evidence and the actual presentation of evidence.
Defendants have put forward no evidence at all that Plaintiff
obtained an EB-V visa. On the contrary, Recital B of the
Return of Capital and Release Agreement, which both
CaerVision CEO Jack Zhang and Plaintiff signed, acknowledged
that Plaintiff withdrew his EB-V visa application. (ECF No.
1, Exhibit A). Because Defendants have not adequately
demonstrated that they possess a meritorious defense to
Plaintiff’s claims, they fail to meet the threshold
requirements of a Rule 60(b) motion. See, e.g., H&W
Fresh Seafoods, Inc. v. Schulman, 200 F.R.D. 248, 253-54
(D. Md. 2000) (denying Defendant’s Rule 60(b) motion to
vacate a default judgment entered against him because his
memoranda and affidavit revealed only "tenuous"
Defendants Have Failed to Demonstrate Excusable Neglect
argue that their failure to respond to Plaintiff’s
complaint resulted from "inadvertence" or
"excusable neglect" pursuant to Rule 60(b)(1). Mot.
to Set Aside at ¶ 3, ECF Nos. 18, 19, 20. Defendants
complain that they were fielding other lawsuits and
conducting a large product launch, and that those demands
rendered the relevant principals "not readily
available." Mot. to Set Aside at ¶ 5, ECF Nos. 18,
19, 20. These circumstances delayed Defendants’
litigation pursuits in this case, they ...