Opinion
No. 99 C 7239
July 12, 2001
MEMORANDUM OPINION AND ORDER
Defendants Lawrence Dixon and Patricia Dixon seek relief from the entry of a judgment against them under the False Claims Act. For the reasons explained below, the motion is denied.
FACTS
Between 1993 and 1997, Defendants Lawrence Dixon and Patricia Dixon applied for and received $13,030 in Pell Grants and Supplemental Education Opportunity grants to finance their childrens' college education. On June 11, 1999, Plaintiff, the U.S. Department of Justice, notified Defendants that their financial aid application contained false income information and, therefore, Defendants were not eligible for such funds and would be responsible for repaying the monies received. Defendants claim they did not respond to this notice "due to a misunderstanding as to the instruction and nature of the notice, inadvertence, and/or excusable neglect." Plaintiff notes, however, that Emerson Blue, an attorney, contacted the investigator in the case and stated that he represented Defendants in this matter. Both parties do agree that they did not resolve the debt owed at that time. After failing to reach a resolution with Defendants for payment, the United States filed a complaint on November 5, 1999, seeking treble damages under the False Claims Act, 31 U.S.C. § 3729 et seq. Defendants failed to answer the complaint and Plaintiff filed a motion for entry of default judgment on December 16, 1999. Because Defendants failed to answer the complaint within the requisite time period and failed to appear in court to respond to Plaintiff's motion for entry of default judgment, this court entered default judgment against Defendants on December 23, 2000, for $39,090 plus interest.
Blue was served with the complaint by way of summons and the Dixons were mailed a copy of the complaint. Defendants have not challenged service, nor do they suggest they did not have notice of the suit. Instead, they contend that they did not respond to the complaint due to their "misunderstanding as to instructions, confusion, and lack of sophistication in legal matters."
Following the entry of judgment, Plaintiff sent several letters to the Dixons in an effort to establish a payment plan. According to Plaintiff, in response to a letter dated January 4, 2000, Mrs. Dixon called the Financial Litigation Agent involved in this matter and stated that she and her husband were being represented by Blue. In response, the agent sent Blue a copy of the default judgment and subsequently sent him another letter on April 5, 2000 requesting a payment plan. Defendants maintain, however, that after the judgment was entered, they received no further information about this matter until June 8, 2000, when they were given Notice of Citation in Supplemental Proceedings. According to Defendants, at this time they began to call different attorneys to get information concerning their legal options.
On September 7, 2000, Defendants signed an agreement to pay the judgment. Despite this agreement, on September 18, 2000, less than two weeks after signing the agreement but nearly nine months after the entry of default judgment, Defendants filed a motion to vacate the default judgment pursuant to Federal Rule of Civil Procedure 60(b)(1) and 60(b)(6). Defendants contend that their lack of legal representation and lack of legal sophistication caused them confusion. They further contend that they acted "quickly" to correct this default and that they have a meritorious defense to this action: namely, that they themselves were victims of fraud perpetrated by a third party who completed the financial aid forms.
DISCUSSION
Rule 60(b) provides that "[o]n a motion and upon such terms as are just, the court may relieve a party . . . from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; . . . or (6) any other reason justifying relief from the operation of the judgment." FED. R. CIV. P. 60(b); Jones v. Phipps, 39 F.3d 158, 162 (7th Cir. 1994). Any such motions should be made "within a reasonable time" and, in the case of mistake, inadvertence, surprise or excusable neglect, "not more than one year after the judgment, order, or proceeding was entered or taken." FED. R. CIV. P. 60(b). Such relief, however, is an extraordinary remedy and is granted only in exceptional circumstances. Schwinn Bicycle Co. v. AFS Cycle Co., 248 B.R. 328, 333 (N.D.Ill. 2000) (citing Dickerson v. Board of Educ., 32 F.3d 1114, 1116 (7th Cir. 1994)). A party requesting relief under Rule 60(b)(1) must show: (1) "good cause" for the default; (2) quick action to correct the default; and (3) the existence of a meritorious defense to the original complaint. Jones, 39 F.3d at 162 (7th Cir. 1994) (citing Pretzel Stouffer v. Imperial Adjusters, Inc., 28 F.3d 42, 45 (7th Cir. 1994)); Ocampo De Kalb, LLC v. GMAC Commercial Mortgage Corp., No. 01 C 189, 2001 WL 428179, at *4 (N.D.Ill. Apr. 25, 2001).
A. Good Cause
Defendants have not met their burden of proving good cause for the default. To prove good cause requires "extraordinary circumstances . . . or at least the absence of any willful disregard for duties, simple carelessness, or negligence." Jones, 39 F.3d at 164 (citations omitted). A party who "willfully abdicates its responsibilities" is not entitled to relief from judgment. United States v. Gamble, No. 95 C 5690, 1996 WL 715540, at *2 (N.D.Ill. Dec. 3, 1996) (citing Zuelzke Tool Eng'g Co. v. Anderson Die Castings, Inc, 925 F.2d 226, 229 (7th Cir. 1991)). Defendants make much of the fact that they were not represented by counsel and they were confused as to how to proceed in this litigation. The government notes there is at least some evidence that Defendants were in fact represented by attorney Emerson Blue: According to Plaintiff, Blue called the investigator before the United States filed its complaint and later, after default judgment was entered, Mrs. Dixon stated that Blue represented them. Assuming, however, that Defendants were not represented by Blue, they still do not present any "extraordinary circumstances" showing good cause for the default. Almost five months before Plaintiff filed this action, Defendants were given an opportunity to resolve the debt, but chose not to do so. Nor did they respond to the complaint or appear in court, despite having notice of this action. The fact that Defendants were proceeding pro se and may have been confused as to how to proceed did not give them the right to simply ignore this action. See Jones, 39 F.3d at 163 (citing Jourdan v. Jabe, 951 F.2d 108, 110 (6th Cir. 1991) ("[P]ro se litigants are not entitled to a general dispensation from the rules of procedure or court imposed deadlines.")
In similar cases where the litigant has claimed general confusion as to the legal process, the Seventh Circuit has found that this confusion did not make out the requisite showing of good cause. For example, in Jones v. Phipps, the defendant failed to respond to plaintiff's default motion or to appear in court for a "prove-up" hearing, nor did she contact the court or seek a continuance during the hearings. 39 F.3d at 161. When defendant filed a motion to vacate the default judgment approximately five weeks after the judgment was entered, the court found that neither plaintiff's pro se status nor her incarceration could excuse her failure to act before the judgment was entered. Id. at 163. In making this decision, the court pointed out that Phipps had some access to counsel because she was represented in another case pending against her. Id. The court reasoned that any access to legal counsel would make a defendant's task of showing "good cause" or "excusable neglect" more difficult. Id.
Similarly, the fact that Defendant may not have been represented by counsel does not protect them in this instance, particularly where they admit that they had some access to counsel: Blue, even if he was not acting as their lawyer, was a family friend with whom they had discussed the matter. Further, Defendants do nothing to explain why they were able to obtain counsel almost nine months after the default judgment was entered but were not able to do so before this time. Defendants' lack of diligence in defending themselves in this action, even if it stemmed from their fear of the legal system and general confusion as they assert, does not make out a sufficient showing for good cause for default. Jones, 39 F.3d at 162 (citing North Cent. Ill. Laborers' Dist. Council v. S.J. Groves Sons Co., 842 F.2d 164, 167 (7th Cir. 1988); Ben Sager Chems. Int'l, Inc. v. E. Targosz Co., 560 F.2d 805, 809 (7th Cir. 1977)) (parties seeking to show good cause must show something "more compelling than ordinary lapses of diligence or simple neglect.")
B. Quick Action
Additionally, even if Defendants could establish good cause for their default, they have not shown that they took quick action to correct the default. The quick action prong of the standard is judged from the time elapsing between entry of judgment and the motion to vacate. Jones, 39 F.3d at 165. Whether the time in which it takes a party to respond after the entry of a default judgment constitutes "quick action" depends on the particular circumstances of the defaulted defendant. Id.
Defendants did not act to correct the default judgment until nearly nine months after it was entered. They have presented no reason for this delay except for their confusion as to the process. Nor have they explained what made it possible for them to find an attorney and understand their rights today that was not possible nine months ago. Even if it is true, as Defendants contend, that after judgment was entered they heard nothing more about the debt they owed until six months later, they were nevertheless aware of the default judgment, and did not need to receive any more information about the debt in order to act. Without any explanation for the nine months delay, this court cannot conclude that Defendants took quick action to remedy the default. See, e.g. Leadership Council for Metro. Open Communities, Inc. v. Quality Realty Inc., No. 98 C 7853, 1999 WL 1046431, at *2-*3 (N.D.Ill. Nov. 10, 1999) (finding that defendants could not establish quick action to correct the default where they did not act until three months after entry of default and two months after the default judgment); Jones, 39 F.3d at 165 (five weeks is not "quick action").
C. Meritorious Defense
Finally, Defendants contend that they would have a meritorious defense to the complaint if they were allowed to present it today. Specifically, they claim that any fraud committed on the financial aid application was committed by a third party and that they were unaware of any fraudulent representations on this application. "A meritorious defense is not necessarily one which must, beyond a doubt, succeed in defeating a default judgment, but rather one which at least raises a serious question regarding the propriety of a default judgment and which is supported by a developed legal and factual basis." Jones, 39 F.3d at 165. Because Defendants have failed to show both good cause for the default and quick action to correct the default, this court need not decide whether or not Defendants have presented a meritorious defense. It is worth noting, however, that Defendants have presented no evidence in support of this defense. Instead, they merely contend that they are "prepared to submit" that defense at this time, but fail to attach even one affidavit to support their assertion that the fraudulent application was completed by a third party.
CONCLUSION
Because Defendants have not met their burden of proving good cause for the default, quick action taken to correct the default or the existence of a meritorious defense, their motion to vacate the default judgment (Doc. No. 11-1) against them is denied.