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Margaret Kinney v. HSBC Bank USA

Summarizing by Lars Fuller

Macias v. Dillworth (In re Maria E. Macias)

Macias v. Dillworth (In re Macias), Case No. 13-10336 (11th Cir. Oct. 1, 2013) (unpublished) (per curiam).
Appellate court ruled that for purposes of setting aside or vacating a final default judgment under Rule 60(b), the test set forth by In re Worldwide Web Sys., Inc., requiring a defaulting party to show: (1) that it had a meritorious defense that might have affected the outcome; (2) granting the motion would not result in prejudice to the non-defaulting party; and (3) a good reason existed for failing to reply to the complaint, remained unchanged by the Supreme Court’s decision in Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. Court further ruled that there was no violation of 28 U.S.C. Section 1654 by the bankruptcy court for informing Macias that it would reconsider its decision on the motion to vacate if Ms. Macias obtained counsel within 7 days and such counsel could show a meritorious defense.
Procedural context:
Appeal from the District Court for the Southern District of Florida affirming the decision of the Bankruptcy Court for the Southern District of Florida to deny a motion to vacate final default judgment for failure to show a meritorious defense.
Ms. Macias filed for chapter 7 bankruptcy protection and Mr. Dillworth was appointed the chapter 7 trustee (the "Trustee"). He filed an adversary proceeding against Ms. Macias contending that she made a post-petition transfer of a tax refund to her husband in violation of 11 U.S.C. Section 727(a). Ms. Macias was served with the complaint and summons on or about October 31, 2011. She failed to respond to the complaint and a default was entered against her. The Trustee then filed a motion for final default judgment, which was granted by the bankruptcy court. Ms. Macias filed a motion to vacate the final default judgment, arguing that she did not receive the complaint and summons until November 19, 2011, and she responded within 30 days of that date. The bankruptcy court held a hearing on Ms. Macias motion and found that she had presented nothing that would legally entitle her to vacate the default judgment. Out of an abundance of caution, the bankruptcy court offered to reconsider this decision if: (i) Ms. Macias obtained counsel within 7 days of the ruling; (ii) said counsel could show a valid reason why the case should proceed to trial; and (iii) said counsel would be able to proceed to trial in 14 days. Rather than obtain counsel, Ms. Macias filed an appeal to the district court arguing that she sufficiently showed excusable neglect and that the Pioneer decision did not require her to show the existence of a meritorious defense in order for the default judgment to be vacated. Additionally, she argued that the bankruptcy court violated her right to proceed pro se when it required her to obtain counsel to go to trial. The district court affirmed the bankruptcy court's decision and Ms. Macias appealed to the Eleventh Circuit.
Wilson, Martin and Anderson

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