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Flores v. Environmental Trust Solutions, Inc.

United States District Court, D. Maryland, Southern Division

May 16, 2018

JUAN FLORES, et al., Plaintiffs,
v.
ENVIRONMENTAL TRUST SOLUTIONS, INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          Paul W. Grimm, United States District Judge

         Plaintiffs Juan Flores, Angel Castillo, and Fidel Mejia filed suit in this Court against their former employer, Defendant Environmental Trust Solutions, Inc. (“ETS”), and it owners, husband and wife Bodger Johnson and Gbomai Bestman-Johnson on October 8, 2015. Compl., ECF No. 1. Plaintiffs sought to recover unpaid overtime wages through a breach of contract claim and claims of violations of the Federal Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 - 219; the Maryland Wage Payment and Collection Law (“MWPCL”), Md. Code Ann, Lab. & Empl. §§ 3-501 - 3-509; and the Maryland Wage and Hour Law (“MWHL”), Lab. & Empl. §§ 3-401 - 3-431. Id. The Clerk of the Court entered defaults as to all Defendants at Plaintiffs' request when they failed to answer or otherwise defend, and I then entered a default judgment as to all Defendants. Sixteen months later, while Plaintiffs were applying for writs of garnishment and pursuing discovery in aid of execution, Defendants moved to vacate the default judgment, and Plaintiffs then moved to compel discovery responses. ECF Nos. 23, 26.[1] Because Plaintiffs have provided insufficient evidence of service of process on ETS, I must vacate the entry of default as to ETS and the default judgment as to all Defendants, deny Plaintiffs' Motion to Compel Discovery Responses in Aid of Execution, and order service on ETS. Plaintiffs properly served the individual defendants, however, and therefore the entries of default as to Mr. Johnson and Mrs. Bestman-Johnson will not be vacated. Accordingly, I will grant Defendants' motion in part and deny it in part.

         Background

         Mr. Johnson is the President of ETS, and Mrs. Bestman-Johnson is the Resident Agent for ETS. Defs.' Mot. & Mem. 3, ECF No. 23. They reside at 18682 Brooke Road, Sandy Springs, MD 20860 (the “Brooke Road address”). Id. The docket reflects Proofs of Service as to ETS, Mrs. Bestman-Johnson, and Mr. Johnson. ECF Nos. 4, 5, 6.

         When Defendants did not respond to the Complaint, Plaintiffs filed a Request for Entry of Default and a Motion for Default Judgment on June 7, 2016, ECF Nos. 10 and 11, which Plaintiffs mailed to Defendants at the Brooke Road address, ECF Nos. 10-1 and 11-1. Plaintiffs contended that personal service on Mr. Johnson “was proper pursuant to Md. Rule 2-124(b).” Pls.' Req. for Entry ¶ 6. As for service on ETS and Mrs. Bestman-Johnson, they argued that it was proper under Md. Rule 2-124(b) for Mrs. Bestman-Johnson and Md. Rule 2-124(d) for ETS because “the summons and associated documents were handed to Defendant Bodger Johnson personally, ” and he is Mrs. Bestman-Johnson's husband and ETS's President, “and he simply refused to physically grab them.” Id. ¶¶ 7-9. The Clerk issued an Order of Default as to all Defendants on September 7, 2016, based on Defendants' failure to respond or otherwise defend in this proceeding. ECF No. 12.

         I concluded that Plaintiffs established Defendants' liability and some of the damages they sought, and accordingly, I entered judgment in the amount of $55, 120.00 against Defendants on September 26, 2016. ECF Nos. 13, 14. Plaintiffs sought attorneys' fees and costs on September 29, 2016, ECF No. 15, and mailed a copy of their fee petition to Defendants at the Brooke Road address, ECF No. 15-4. The fee petition memorialized the Court's entry of default and entry of judgment. Fee Pet. ¶¶ 6-7. I granted the petition on December 8, 2016. ECF No. 16.

         Plaintiffs recorded the judgment in the Circuit Court of Maryland for Montgomery County on January 18, 2017. State Ct. Docket Nos. 1-3, ECF No. 24-7. The state court mailed a Notice of Entry of Foreign Judgment to Defendants on January 25, 2017. Id. at 7-8. Plaintiffs requested writs of garnishment in state court, id., and filed an Application for Writs of Garnishment and Proposed Writs on October 2 and 9, 2017 in this Court, ECF Nos. 19, 21.

         On December 7, 2017, Defendants responded to the legal proceedings for the first time, filing in state court an Answer and Motion to Quash/Dismiss Writ of Garnishment, as well as a Response to the state court's Show Cause Order. State Ct. Docket Nos. 39-40. Then, on February 8, 2018, more than two years after Plaintiffs filed suit, twenty months after Plaintiffs filed their Motion for Default Judgment, sixteen months after I granted it, almost a year after Plaintiffs recorded the judgment in state court, and two months after Defendants filed responses in state court, Defendants filed a Motion to Vacate Default Judgment in this action. ECF No. 23. They move to vacate the default judgment as to all Defendants and seek leave to respond to the Complaint, which I construe as a request to strike the entries of default as well. See id.; Fed.R.Civ.P. 1.

         Standard of Review

         Defendants filed their Motion to Vacate Default Judgment pursuant to Rule 55(c), arguing that there is good cause to set aside the default. Defs.' Mot. & Mem. 6, 8-9. Yet, Rule 55(c) provides that “[t]he court may set aside an entry of default for good cause, and it may set aside a final default judgment under Rule 60(b).” Fed.R.Civ.P. 55(c) (emphasis added). Because there is “an interest in ‘finality and repose'” when a court has entered a final judgment, relief from a default judgment, as opposed to relief simply from entry of default, “involves a more exacting standard to vacate.” Hawkins v. MV Transp., Inc., No. PJM-15-2169, 2017 WL 5716757, at *3 (D. Md. Nov. 27, 2017) (quoting United States v. Moradi, 673 F.2d 725, 727-28 (4th Cir. 1982)). Thus, for relief from a default judgment, a defendant typically must demonstrate not simply good cause but rather that “its motion is timely, that it has a meritorious defense to the action, that the opposing party would not be unfairly prejudiced by having the judgment set aside, and that one or more of the six grounds set forth in Rule 60(b) is satisfied.” Id. (citing Park Corp v. Lexington Ins. Co., 812 F.2d 894, 896 (4th Cir. 1986)). The grounds stated in Rule 60(b) are:

(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing 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 that justifies relief.

Fed. R. Civ. P. 60(b). Here, the Court entered a final default judgment, ECF No. 14, and therefore the Rule 60(b) standard applies. See Fed. R. Civ. P. 55(c); Hawkins, 2017 WL 5716757, at *3 (“Federal Rule of Civil Procedure 60(b) addresses the circumstances under which a Default Judgment may be vacated by a court.”).

         Discussion

         In support of their argument that there is good cause to set aside the default judgment, Defendants contend that service was improper. Defs.' Mot. & Mem. 18-21. Thus, the issue is whether Defendants are entitled to relief under Rule 60(b)(4) based on the premise that, as a result of the allegedly improper service, the judgment is void. See Koehler v. Dodwell, 152 F.3d 304, 306-07 (4th Cir. 1998) (“Absent waiver or consent, a failure to obtain proper service on the defendant deprives the court of personal jurisdiction over the defendant. Moreover, any judgment entered against a defendant over whom the court does not have personal jurisdiction is void.” (citing Armco, Inc. v. Penrod-Stauffer Bldg. Sys., Inc., 733 F.2d 1087, 1089 (4th Cir. 1984))); e.g., Hawkins, 2017 WL 5716757, at *4 (“MV argues that it is entitled to relief under Rule 60(b)(4), alleging that Hawkins did not properly effectuate service of process on MV because she failed to provide a copy of both the Summons and the Complaint to CT Corporation.”). Because I construe Defendants' Motion to rely on Rule 60(b)(4), timeliness is not an issue, and Defendants do not have to show that they have a meritorious defense. See Hawkins, 2017 WL 5716757, at *4 (noting that a “Rule 60(b)(4) Motion may be brought to set aside a void judgment at any time” and a “movant claiming relief under Rule 60(b)(4) need ...


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