In re Vista-Pro Auto., LLC - Middle District of Tennessee at Nashville
- Summarized by Dean Langdon , DelCotto Law Group PLLC
- 1 year 7 months ago
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- 23-5881 (6th Circuit, Jul 26,2024) Published
- Tag(s):
-
- Ruling:
- The Sixth Circuit Court of Appeals affirmed lower court decisions district court denying a motion to set aside a default judgment under Rule 60(b)(4) of the Federal Rules of Civil Procedure/Bankruptcy Rule 9024. The motion claimed the judgment was void due to improper service. Recognizing the split with other circuits, the Court of Appeals held that Rule 60(b)(4) gives courts discretion to deny a motion to set aside a judgment that is not brought in a reasonable time, even if the judgment is void.
- Procedural context:
- Coney Island Auto Parts Unlimited sought to have a default judgment declared void under Bankruptcy Rule 9024 for improper service, but waited over five years after it knew of the judgment to bring the motion. The bankruptcy court denied relief and Coney Island Auto Parts appealed to the district court, which affirmed. Coney Island Auto Parts then appealed to the Sixth Circuit Court of Appeals, which affirmed the ruling of the bankruptcy court.
- Facts:
- Vista-Pro Automotive, LLC was subject to an involuntary Chapter 7 petition in November, 2014. The case converted to Chapter 11 by agreement and Vista-Pro sued Coney Island Auto Parts for unpaid invoices and obtained a default judgment. Contrary to the requirements of Bankruptcy Rule 7004(b)(3), the summons and complaint were not directed to an officer, managing agent or other agent as required. The case reconverted to Chapter 7 and in April 2016 the trustee sent a demand letter to Coney Island, which it acknowledged receiving. Only after the trustee was able to freeze a bank account in February, 2021 did Coney Island take action. In October, 2021, it asked the district court for the Southern District of New York to vacate the judgment, but that court said the motion should be brought in the Middle District of Tennessee. So, that's where Coney Island filed its Rule 60(b)(4) motion in July, 2022. Following Sixth Circuit precedent, the bankruptcy court held that the motion was not brought within a reasonable time based on Coney Island's prior knowledge and denied the motion on those grounds, without reaching the merits. The Court of Appeals examined the history of Rule 60(b)(4) and while recognizing other Circuits held there was no time limit to set aside void judgments, followed Sixth Circuit precedent which gives trial judges the discretion to deny motions which are not brought within a reasonable time, regardless of the validity or invalidity of the underlying judgment.
- Judge(s):
- Larsen, Boggs and McKeague. Opinion by Larsen. Dissent by McKeague.
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