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Umansky v. Melton International Tackle, Inc.

United States District Court, E.D. Pennsylvania

October 22, 2019



          SLOMSKY, J.


         Before the Court are two Motions filed by Defendant Melton International Tackle, Inc.: (1) a Motion for an Order Vacating [a] Default Judgment Pursuant to Fed.R.Civ.P. 60(b) (Doc. No. 33), and (2) a Motion to Quash [a] Writ of Execution (Doc. No. 34). Defendant filed the instant Motions on April 22, 2019, seeking Orders to vacate the Default Judgment (Doc. No. 30) entered in favor of Plaintiff Ellen Umansky and to quash the Writ of Execution on the Judgment (Doc. No. 32). On March 7, 2019, the Court held a hearing on Defendant's Motions. (See Doc. No. 40.) At the hearing, counsel for the parties presented arguments in support of their respective positions, and following the hearing, both parties submitted supplemental memorandums. (See Doc. Nos. 47, 48.) After consideration of the counsels' arguments and the filings of record, the Court will deny Defendant's Motions.


         This case resulted from a dispute about the purchase, shipment, and return of high-end fishing reels that Plaintiff purchased from Defendant. She contends that Defendant misled her about the return policy, overcharged her for shipping costs, and failed to refund the purchase price of merchandise that she never received. The following facts explain Plaintiff's claims in more detail.[1]

         In December 2016, Plaintiff decided to purchase fishing reels to gift as Christmas presents. (Doc. No. 13 at 3.) On December 21, 2016, she called Defendant, a big-game fishing supply company, and spoke with one of its sales representatives. (Id.) Also on the call was Plaintiff's friend, George Barnard, whom she enlisted to help her coordinate the purchase. (Id.) Barnard, a former fishing reel retailer, led the conversation and acted as her agent. (Id. at 3-4.)

         The record makes clear that Barnard tried to ensure that Plaintiff could return the fishing reels. First, Barnard advised Plaintiff to order the fishing reels in silver, their standard color. (Id. at 4.) Second, Barnard informed Defendant's sales representative that Plaintiff intended to purchase the fishing reels as Christmas presents and that the fishing reels may need to be returned. (Id.) And third, Barnard instructed the sales representative to send the fishing reels without fishing lines installed so that they would remain in a “new” condition and be capable of return, if necessary. (Id.) Defendant's sales representative confirmed that Plaintiff would be able to return the fishing reels. (Id.) He made no mention of any terms or conditions of return other than that the reels remain in “new” condition. (Id.)

         Later in the day, Plaintiff called Defendant to finalize the purchase of twelve fishing reels: six Accurate AT D -30 fishing reels and six Accurate ATD-50W fishing reels. (Id.) At that time, Defendant only had four Accurate ATD-50W fishing reels in stock, so two Accurate ATD-50W fishing reels were placed on back-order and were shipped and billed separately. (Id.) The cost of the first shipment of ten fishing reels was $12, 236.46, which included $196.56 in shipping fees. (Id.) The cost of the second shipment of the back-ordered fishing reels was $2, 629.97, including $59.99 in shipping fees. (Id. at 7.) The first order was delivered to Plaintiff on December 24, 2016. (Id. at 6.)

         On December 27, 2016, Plaintiff called Defendant to return the already-delivered fishing reels and cancel her order for the back-ordered fishing reels. (Id. at 7.) While on the call, Defendant's sales representative provided her with a return authorization form, and confirmed that she would be refunded her money in two-to-four weeks and that the back-ordered shipment would be cancelled. (Id.) On December 28, 2016, Plaintiff mailed the fishing reels back to Defendant. (Id. at 8.) Defendant confirmed receipt of the reels on January 5, 2017. (Id.)

         By January 10, 2017, Plaintiff had not received a refund for the fishing reels she had returned. (Id.) To make matters worse, Plaintiff's credit card was charged for the back-ordered fishing reels, even though the order was supposedly cancelled. (Id.) To correct these errors, she made numerous telephone calls to Defendant. (Id.) Her calls were not returned. (Id.) Plaintiff then sent an email to Defendant inquiring about the status of her refund. (Id.) The next day, on January 11, 2017, a sales representative returned Plaintiff's email and informed her that she was only eligible for store-credit, rather than a refund, and the store-credit was subject to a 20% restocking fee. (Id.)

         Not satisfied with this response, Plaintiff resorted to litigation. She eventually filed a Complaint in the Court of Common Pleas of Bucks County, Pennsylvania on September 29, 2017. (Doc. No. 34 at 1.) In her Complaint, Plaintiff named as defendants Melton International Tackle, Inc. (“Melton” or “Defendant”), Discover Financial Services, Inc., Discover Bank, and Discover Financial Services, LLC. (Doc. No. 1 at 1.) With respect to Melton, Plaintiff brought claims for breach of contract, fraud, and violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law. (Id. at 26-27, 30-31.) On October 20, 2017, the Discover defendants removed the case to this Court based on both federal question jurisdiction and diversity of citizenship jurisdiction.[2] (Doc. No. 1 at 5.)

         Once in federal court, Plaintiff amended her original complaint twice. On November 14, 2017, Plaintiff filed a First Amended Complaint (Doc. No. 6) and served Defendant by certified mail on December 2, 2017. (See Doc. No. 10.) On December 18, 2017, Plaintiff filed a Second Amended Civil Complaint (Doc. No. 13), seeking redress against Defendant for the following claims:

1. Breach of contract and breach of the implied duty of good faith and fair dealing (Count I);
2. Unjust enrichment (Count II);
3. Fraud and fraudulent misrepresentation (Count III); and
4. Violation of the Pennsylvania Unfair Trade Practices & Consumer Protection Law, 73 P.S. § 201-1 et seq. (Count IV).

(See Doc. No. 13.) Plaintiff served Defendant the Second Amended Complaint by ECF notice filing and regular mail on December 14, 2017. (Id. at 22.)

         The events that transpired between the filing of the First Amended Compliant (Doc. No. 6) and the Second Amended Civil Complaint (Doc. No. 13) are a source of contention. Defendant's counsel claims that on December 8, 2017, Plaintiff's counsel and Jonathan Stein, Defendant's California counsel, agreed that Plaintiff would not seek a default judgment without providing notice to Defendant. (Doc. No. 33 at 3.) In addition, Defendant alleges that the agreement was memorialized in a letter sent by Attorney Stein to Plaintiff's counsel the same day (the “Notice Letter”). (Id. at 12.) The Notice Letter reads:

         Dear Mr. Schafkopf:

I am counsel for Mr. Tracy Melton and Melton International Tackle. This will confirm our conversation of today wherein you agreed not to take a default of Mr. Melton without giving me notice so that Mr. Melton and Melton International can obtain local counsel to file a responsive pleading. This will give us time to sort out the pleadings and try to resolve this matter.
By:__ Jonathan G. Stein

(Id.) Notably, the Notice Letter was unsigned and the outgoing fax number, which was ostensibly meant to be the fax number for Plaintiff's counsel, was incorrect.[3] Plaintiff's counsel denies that an agreement existed. (Doc. No. 44 at 48.)

         On June 5, 2018, more than five months after Defendant was served with the Second Amended Complaint, Plaintiff filed a Request for Default (Doc. No. 24), seeking a default against Defendant pursuant to Rule 55 of the Federal Rules of Civil Procedure for failure to appear, plead or otherwise defend. Defendant was served the Request for Default the same day via e-filing and regular mail. (Id. at 2.) On June 6, 2018, a default was entered against Defendant. (Doc. No. 27.)

         From late-July to mid-August 2018, counsel for the parties made sporadic overtures to reach a settlement. Emails were exchanged between counsel that show the parties held at least one phone call to try to resolve the matter. (See Doc. No. 37-1 at 4.) There was also other occasional email correspondence. (See id.) The emails from this period make clear that Defendant was aware that a default had been entered against it. On August 14, 2018, in response to an email about settlement from Attorney Stein, Plaintiff's counsel wrote: “[W]e have a default against your client[.] What [settlement offer] are you proposing?” (Id. at 5.) Attorney Stein countered that Defendant's offer remained $11, 000 in store credit - unchanged from the terms offered before litigation began. (Id. at 6.)

         On September 6, 2018, Plaintiff filed a motion seeking a default judgment. It was titled as a Motion to Schedule an Evidentiary Hearing to Assess Damages and Judgment (Doc. No. 27). Defendant was provided a copy via e-filing and regular mail. (Id. at 5.) The following week, on September 11, 2018, the Court entered an Order scheduling a show-cause hearing on the Motion for September 26, 2018 (Doc. No. 28). Defendant was served with a copy of this Order via Federal Express overnight mail. (See Doc. No. 29.)

         On Monday, September 24, 2018, two days before the show-cause hearing, Defendant made a final attempt at settlement. Thomas Bielli, Defendant's local counsel, sent an email to Plaintiff's counsel increasing Defendant's settlement offer to $11, 687 in store credit or $5, 000 in cash. (Doc. No. 37-1 at 1.) Attorney Bielli stated that the offer was good until 11:00 a.m. the next day. (Id. at 1-2.) Plaintiff's counsel responded immediately and requested an extension of the offer's expiration date because he would not be able to confer with Plaintiff in less than 24 hours. (Id. at 1.) In addition, Plaintiff's counsel gave Defendant permission to seek a continuance of the show-cause hearing. (Id.) In a subsequent email, Attorney Bielli confirmed that he “sent [the] extension/continuance suggestion to [Defendant].” (Id. at 2.)

         Defendant opted not to extend the offer of settlement expiration date and, on September 25, 2018 at 11:00 a.m., the offer terminated. (Id.) Defendant also made no effort to seek a continuance of the show-cause hearing. (Id.) However, instead of appearing in court to contest the entry of a default judgment, Defendant did not attend the hearing and did not retain Attorney Bielli or other local counsel to represent him. (Id. at 3; Doc No. 44 at 34-35.) Consequently, at the hearing held the next day, the Court issued an Order granting Plaintiff's motion for an entry of judgment by default and entered judgment in favor of Plaintiff. The award in favor of Plaintiff and against Defendant included:

1. On Counts I, II, and III, compensatory damages in the amount of $14, 929; and
2. On Count IV, treble damages in the amount of $44, 787 for violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, plus $400 in costs.

(Doc. No. 30.) The total amount awarded was $45, 187. (Id.) On March 18, 2019, Plaintiff filed a Praecipe for Writ of Execution directing the United States Marshal for the Eastern District of Pennsylvania to garnish Defendant's bank account to satisfy the $45, 187 judgment. (Doc. No. 32.) Plaintiff's Writ was executed the same day. On April 15, 2019, Defendant's bank account was frozen pursuant to the Writ. (Doc. No. 34 at 2.)

         With its bank account frozen, Defendant finally took action after being litigation-dormant for more than eighteen months. On April 22, 2019, Defendant filed the instant Motions to Vacate [the] Default Judgment (Doc. No. 33) and to Quash the Writ of Execution (Doc. No. 34). In the memorandum that accompanied the Motions, Defendant argues that the default judgment should be set aside because Plaintiff's counsel breached the agreement not to seek default against Defendant without notice and because Plaintiff failed to properly serve Defendant. (Doc. No. 33 at 3, 5.)

         On May 7, 2019, this Court held a hearing on Defendants Motions. (See Doc. Nos. 40, 44.) During the hearing, counsel for the parties recited their respective positions. Defense counsel argued that the default judgment should be vacated under Rule 60(b)(1) or 60(b)(3) of the Federal Rules of Civil Procedure for excusable neglect or misconduct, or under Rule 60(b)(6), which is a catch-all provision for any other reason that justifies relief. (Doc. No. 44 at 18.) Defendant also argued that the default judgment should be vacated because of defective service because the parcel containing the summons and First Amended Complaint was not specifically addressed to an officer, director or agent of Defendant. (Id. at 14.) As discussed infra, the Court presumes that Defendant's improper service argument focuses on the First Amended Complaint in an attempt to invalidate the Court's personal jurisdiction over Defendant under the theory that Plaintiff's initial service in federal court did not comply with Rule 4 of the Federal Rules of Civil Procedure. Defendant does not contend here that service of the Second Amended Complaint was insufficient.

         With respect to Defendant's arguments under Rule 60(b), Defense counsel ...

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