United States District Court, E.D. Pennsylvania
JEFFREY L. SCHMEHL, District Judge.
Defendants have filed a motion to set aside a default judgment entered against them, claiming the judgment is void under Rule 60(b)(4) of the Federal Rules of Civil Procedure or is the product of excusable neglect under Rule 60(b)(1). The Court has heard oral argument on the motion. Following the oral argument, the case was referred to United States Magistrate Judge Richard A. Lloret for a mediation, which proved unsuccessful. For the reasons that follow, the motion is granted in part and denied in part.
The plaintiff law firm brought this breach of contract action on June 7, 2013, seeking $243, 616.29 in unpaid legal fees from the defendants for plaintiff's representation of the defendants in the matter of Mireskandari, et al. v. Mayne, et al., No. 2:13-cv-04796, in the United States District Court for the Central District of California (the "Mayne matter"). Neither defendant filed an Answer or Entry of Appearance in response to the Complaint within the applicable time limits.
Instead, on August 6, 2013, defendants filed a pro se Petition for Arbitration (the "California Petition") with the Los Angeles County Bar Association Attorney-Client Mediation and Arbitration Services against the plaintiff. (Declaration of Thomas C. Sullivan, Esq. "Sullivan Dec., " ECF 12-2, ¶ 18, Ex 12.) The California Petition was signed by both defendants. Attached to the California Petition was a copy of the Complaint filed by plaintiff in this matter. (Sullivan Dec., ECF 12-2, ¶¶ 19, 20, Ex. 12.) By letter dated August 7, 2013, the case coordinator for the Attorney-Client Mediation and Arbitration Services informed plaintiff that any outstanding court action concerning a fee dispute between plaintiff and defendants was automatically stayed pending the outcome of the California Petition. (ECF 8).
On December 12, 2013, just one week before a hearing on the California Petition was to take place, defendants, through California counsel, William K. Mills, Esq., withdrew the California Petition. (Sullivan Dec., ECF 12-2, ¶ 22, Ex. 13; ECF 9.) On December 23, 2013, defendants filed an action in the Superior Court of California (the "California State Court Action"), claiming legal malpractice and breach of fiduciary duty against plaintiff arising out of plaintiff's original representation of defendants in the Mayne matter. Plaintiff immediately moved to dismiss the California State Court Action on the grounds that it violated a forum selection clause contained in the original letter of engagement between plaintiff and defendants and for reasons of comity. (Sullivan Dec., ECF 12-2, ¶ 26, Ex. 20.)
On January 24, 2014, after the automatic stay in the California Petition had expired, plaintiff filed a praecipe for entry of default against the defendants. (ECF 10.) On February 4, 2014, plaintiff filed a praecipe to issue alias summons. (ECF 11.) On February 27, 2014, plaintiff filed a motion "for service to determine service has been effected and permit service by alternate means to remove any doubt as to service." (ECF 12.) By Order of March 4, 2014, the Court granted the motion. (ECF 13.)
On March 5, 2014, plaintiff filed another praecipe for default and the Clerk entered a default against defendants on that same day. (ECF 14.) On April 1, 2014, plaintiff filed another praecipe to enter default on the basis that alternate service had been completed. (ECF 16.)
On April 8, 2014, plaintiff filed a motion to "deem alternate service complete; enter default based on alternate service; and enter default judgment." (ECF 17.) The motion sought sum certain damages as follows: 1) $210, 930.43 in unpaid legal fees and expenses; 2) $10, 546.52 in interest; and 3) $8, 216.30 in attorney fees and expenses in having to defend the California State Court Action. (ECF 17-2.) By Order entered on April 10, 2014, the Court ordered that alternate service is deemed complete and effective against the defendants, as made in accordance with the Court's March 3, 2014 Order and entered default judgment against the defendants in the requested amount of $229, 693.25. (ECF 18.)
Defendants first argue that the judgment is void and must be vacated under Rule 60(b)(4) because it was entered in violation of Fed.R.Civ.P. 54(c) in that it differed in kind from the amount sought in the Complaint. Rule 54(c) provides that a default judgment may not be "different in kind or exceed in amount that prayed for in the demand for judgment." "[T]he relief available on default [should] be such as within the fair scope of the allegations of the complaint, and when money judgment is sought, the specific amount demanded." Compton v. Alton Steamship Co., 608 F.2d 96, 104 n.16 (internal citations omitted). See also Slige v. Merz, 510 F.3d 157, 159, 160 (2d Cir. 2007)(holding that the district court did not err by entering a default judgment "only for the amount sought in the complaint" and refusing to include an award for prejudgment interest, where the plaintiff's complaint did not specifically request prejudgment interest.)
Defendants contend that the entire default judgment should be vacated because it contains the amount of $8, 216.30 for the attorney's fees and costs allegedly incurred by the plaintiff in defending the California State Court Action, an amount which was not sought by plaintiff when it filed its Complaint in this action. Therefore, even though the total amount sought by plaintiff in its motion for default judgment ($229, 693.25) is actually less that the amount sought in the Complaint ($243, 616.20), these attorney's fees and costs should not be recoverable since the fees were not part of the prayer for judgment in the Complaint. Rather than void the entire judgment, however, the Court will simply modify the judgment to eliminate the sum of $8, 216.30. Compton, 608 F.2d at 107.
Defendants next argue that the judgment is void and must be vacated under Fed.R.Civ.P. 60(b)(4) because the plaintiff cannot establish that proper service was made on either defendant and, as a result, the Court lacks personal jurisdiction over the defendants.
Indeed, a "default judgment entered when there has been no proper service of the complaint is, a fortiori, void, and should be set aside.'" United States v. One Toshiba Color Television, 213 F.3d 147, 156 (3d Cir. 2000) quoting Gold Kist, Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14, 19 (3d Cir. 1985). "[T]he party asserting the validity of service bears the burden of proof on that issue." Grant Entertainment Group, Ltd. v. Star Media Sales, Inc., 988 F.2d 476, 488 (3d Cir. 1993).
With respect to defendant Paul Baxendale-Walker ("PBW"), Sullivan declares, under penalty of perjury, that PBW's last known address is his business address at Baxendale-Walker, Ltd., Warwick House, Fourth Floor, 25-27 Buckingham Palace Road, London, England (the "London address"). (Sullivan Dec., ECF 12-2, ¶ 3, Exs. 1, 16.) On June 14, 2013, the Clerk sent a copy of the summons and complaint to PBW at the London address via registered mail, return receipt requested. (Sullivan Dec., ECF 12-2, ¶ 4; ECF 4.) The service package was marked "delivered" on June 19, 2013, signed by "LUCY ANNE" (ECF 17-3, Ex. B.) However, the Clerk never received a return receipt from either the United States or British postal authorities for the registered mail. (Sullivan Dec., ECF 12-2, ¶ 6.)
Pursuant to this Court's March 4, 2014 Order permitting alternate service, the summons and complaint were sent to PBW by regular air mail to the London address as well as by regular mail to a California address, 9903 Santa Monica Boulevard, Suite 406 Beverly Hills, CA 90212, by regular mail to another California address, 433 N. Camden Drive, Sixth Floor, Beverly Hills, CA 90210, by e-mail to ...