Outsourcing Management Limited v. My Goals Solution Inc.

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 24-cv-23425-ALTMAN

OUTSOURCING MANAGEMENT LTD.,

Plaintiff,

v.

MY GOALS SOLUTIONS INC.,

Defendant.

______________________________________/

ORDER GRANTING MOTION TO VACATE DEFAULT JUDGMENT

On October 23, 2024, we entered final default judgment against the Defendant, My Goals

Solutions, Inc. (“MGS”). See Final Judgment [ECF No. 18]. MGS had “failed to appear, answer, or

otherwise respond to the Plaintiff’s Amended Complaint[,]” Order Granting Motion for Final Default

Judgment [ECF No. 17] at 1, and our Plaintiff (Outsourcing Management) had sufficiently alleged

“that there was a valid contract between it and MGS, that MGS materially breached that contract, and

that the breach caused Outsourcing Management to suffer $432,783 in damages (as of September 11,

2024),” id. at 4.

Seven days after we entered our final judgment, on October 30, 2024, counsel for MGS finally

appeared. See Notice of Appearance [ECF No. 19]. MGS then filed this Motion to Vacate Default on

November 4, 2024. See Motion to Vacate [ECF No. 22]. MGS alleges that its failure to timely appear

in this case “was the result of excusable neglect” because it was “unaware that this lawsuit was even

filed until October 20, 2024[,] as [MGS’s] registered agent mailed a copy of the pleadings to a prior

address where an unknown third-party signed for the documents.” Id. at 4. Outsourcing Management

filed a Response to the Motion [ECF No. 25], and MGS submitted a Reply to that Response [ECF

No. 26]. After careful review, we now GRANT the Motion to Vacate.

THE LAW

“Rule 60(b) allows a party to seek relief from a final judgment, and request reopening of his

case, under a limited set of circumstances including fraud, mistake, and newly discovered evidence.”

Gonzalez v. Crosby, 545 U.S. 524, 528 (2005). “Rule 60(b) ‘is an extraordinary remedy which may be

invoked only upon a showing of exceptional circumstances.’” Tucker v. Commonwealth Land Title Ins.

Co., 800 F.2d 1054, 1056 (11th Cir. 1986) (alteration in original) (quoting Griffin v. Swim Tech Corp., 722

F.2d 677, 680 (11th Cir. 1984)). Rule 60(b) requires the moving party to “demonstrate a justification

for relief so compelling that the district court [is] required to grant [the] motion.” Maradiaga v. United

States, 679 F.3d 1286, 1291 (11th Cir. 2012) (cleaned up). Because “Rule 60(b) motions are directed to

the sound discretion of the district court,” the Eleventh Circuit “will set aside the denial of relief from

such motion only for abuse of that discretion.” Conn. State Dental Ass’n v. Anthem Health Plans, Inc., 591

F.3d 1337, 1355 (11th Cir. 2009) (cleaned up).

“[T]he court may relieve a party . . . from a final judgment” in one of six enumerated

circumstances:

(1) mistake, inadvertence, surprise, or excusable neglect;

(2) newly discovered evidence that, with reasonable diligence, could not have been

discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or

misconduct by an opposing party;

(4) the judgment is void;

(5) the judgment has been satisfied, released, or discharged; it is based on an earlier

judgment that has been reversed or vacated; or applying it prospectively is no longer

equitable; or

(6) any other reason that justifies relief.

FED. R. CIV. P. 60(b)(1)–(6). In our case, MGS seeks vacatur of our final judgment based solely on

Rule 60(b)(1)’s “excusable neglect” exception. See Motion to Vacate at 6 (“[D]efault judgement should

be vacated as Defendants failure to file a responsive pleading was a result of excusable neglect[.]”).

Excusable neglect “is understood to encompass situations in which the failure to comply with a filing

deadline is attributable to negligence.” Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S.

380, 394 (1993). “The determination of what constitutes excusable neglect is generally an equitable

one, taking into account the totality of circumstances surrounding the party’s omission.” Sloss Indus.

Corp. v. Eurisol, 488 F.3d 922, 934 (11th Cir. 2007). The Eleventh Circuit has adopted a three-part test

to help us determine whether the defaulting party has established “excusable neglect” under Rule

60(b)(1): “(1) [the defaulting party] 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.” In re Worldwide Web Sys., Inc., 328 F.3d 1291, 1295 (11th

Cir. 2003) (quoting Fla. Physician’s Ins. Co. v. Ehlers, 8 F.3d 780, 783 (11th Cir. 1993)).

ANALYSIS

We’ll start by asking whether MGS had “a good reason . . . for failing to reply to the

complaint.” Ibid. MGS explains that it “did not know the suit existed, and the reason for the delay was

not within Defendants’ control as an unknown, uncontrolled third-party took possession of Plaintiffs’

pleadings and did not notify Defendants of the same.” Motion to Vacate at 7–8. The full details of

this story are laid out in a declaration authored by Joshua M. Lurie, “counsel for [MGS] since its

creation in 2018.” Declaration of Joshua M. Lurie (“Lurie Decl.”) [ECF No. 22-1] ¶ 2.

Lurie and MGS concede that MGS was properly served on September 17, 2024, when “a copy

of the summons and complaint [was received by] Defendants’ registered agent, Corporation Service

Company at 1201 Hays Street, Tallahassee, FL 32301.” Motion to Vacate at 5; see also Executed

Summons [ECF No. 8] at 1. “Corporation Service Company thereafter mailed a copy of the summons

and complaint to Defendants’ general counsel’s previous office located at 15 Warren Street, Suite 36,

Hackensack, NJ 07601 where a third-party signed for the documents and did not notify Defendants

of its receipt.” Motion to Vacate at 5 (emphasis added); see also Lurie Decl. ¶ 3 (“From August of 2018

until August 31, 2024, my office was located at 15 Warren Street, Hackensack, New Jersey 07601.

Effective September 1, 2024, my office location has been 411 Hackensack Avenue, 6th Floor, in the

same municipality.”).1 Lurie had visited his former office on September 15, 2024, “to remove a few

other items and see if there had been any mail that was delivered and not forwarded[,]” but had not

been back since. Lurie Decl. ¶ 4. On Friday, October 18, 2024, Lurie “received notice from my former

office location that there was mail that was delivered”—but Lurie wasn’t told that this “mail” included

“service of process documents.” Id. ¶ 5. Lurie retrieved the mail on Sunday, October 20, 2024, and

“began a review of the documentation that was in the mail” the next day. Id. ¶¶ 6–7. At 8:56 a.m., on

October 22, 2024, Lurie “sent an email to Plaintiff’s counsel” advising that he “had just received the

filings [that had been] sent to another location and signed for by unknown/unauthorized parties” and

requested “that Plaintiff’s counsel sign a stipulation to extend time to answer so I could retain local

counsel.” Id. ¶ 12. We granted the Plaintiff’s motion for default final judgment the same day, see Order

Granting Motion for Final Default Judgment [ECF No. 17], and entered final judgment on October

23, 2024, see Final Judgment [ECF No. 18]. Plaintiff’s counsel didn’t respond to Lurie’s request until

after we entered final judgment. See Lurie Decl. ¶ 13.

MGS believes that these unique circumstances constitute a “good reason” for not responding

to the Plaintiff’s lawsuit. After all, Lurie (MGS’s counsel) wasn’t aware of the lawsuit until October

21, 2024, because MGS’s registered agent sent a copy of the summons and complaint to the wrong

address. See Motion to Vacate at 7. This error was compounded when “an unknown, and definitely

unauthorized party” signed for the documents and the Corporation Service Company failed to send

an “email of service” to Lurie. Lurie Decl. ¶¶ 9–10. Once Lurie learned about the lawsuit, MGS says,

1 Neither party presents any evidence showing when the copy of the summons and complaint was

delivered to counsel’s former address at 15 Warren Street, Suite 36, Hackensack, NJ 07601. See generally

Motion to Vacate; Response.

he quickly moved to contact Plaintiff’s counsel, hire local counsel, “appl[y] for my admission pro hac

vice,” and “defend against [the Plaintiff’s] claim[.]” Id. ¶¶ 12–18. The Plaintiff has a simple (but

compelling) response: All of this could have been avoided if MGS and Mr. Lurie had updated their

address with their registered agent. See Response at 9–10 (“Defendant’s assertion that its Registered

Agent forwarded the Summons and Complaint to an outdated address, due to Defendant’s failure to

update it, does not constitute a “good reason” that would support excusable neglect. . . . [B]oth before

and after moving, Defendant never told its Registered Agent of the new address before the Registered

Agent forwarded the Summons and Amended Complaint[.]”).

At first blush, most of the relevant case law is not in MGS’s favor. We agree with the Plaintiff,

for instance, that MGS and Mr. Lurie had a duty to provide their registered agent with an updated

address—and that their failure to do so cannot constitute excusable neglect. See Claytor v. Mojo Grill &

Catering Co. of Belleview, LLC, 2015 WL 1538111, at *3 (M.D. Fla. Apr. 7, 2015) (Moody, J.) (“[E]ven if

the Court accepted Defendants’ explanation that the mail was being left at the previous address,

Defendants nevertheless had a duty to provide a forwarding address and to update the address of their

registered agent with the State of Florida.”). Likewise, MGS can’t rely on its own agent’s errors (to the

extent there were any) to establish excusable neglect. See Brice v. Mezzano Condo. Ass’n, 2015 WL

10857399, at *3 (S.D. Fla. Apr. 10, 2015) (Ryskamp, J.) (“If what Mezzano alleges constituted

excusable neglect, any company that has a registered agent could avoid a judgment by saying it never

received the relevant documents.”); Hensel Phelps Constr. Co. v. Drywall Sys. Inc. of S. Fla., 2007 WL

2433839, at *2 (S.D. Fla. Aug. 22, 2007) (Cooke, J.) (“[I]n this matter the Complaint and Summons

were properly served upon Drywall Systems’ registered agent but Drywall Systems failed to establish

sufficient minimum procedural measures to ensure that the process was properly forwarded and/or

identified.”); see also Gibbs v. Air Canada, 810 F.2d 1529, 1537 (11th Cir. 1987) (“Default that is caused

by the movant’s failure to establish minimum procedural safeguards for determining that action in

response to a summons and complaint is being taken does not constitute default through excusable

neglect.”).

Even so, there is one unique fact in this case that distinguishes it from the precedents we’ve

cited above: MGS alleges that an unknown third-party “signed for the documents and did not notify

Defendants of its receipt.” Motion to Vacate at 7; see also Lurie Decl. ¶ 9 (“It also appeared that an

unknown, and definitely unauthorized party (as I had left this office some time before) had signed for

same.”); Reply at 6 (“Upon the Complaint’s forwarding to Defendants’ counsel’s prior address, an

unknown individual by the name of ‘Y. Oliver’ signed for receipt of same from FedEx, despite not

having authority to do so, and they did not notify Defendants of receipt of the Complaint.”). MGS

couldn’t have foreseen this third-party’s unauthorized acceptance of the summons and complaint, and

that third party’s intervention arguably delayed MGS and its agent from realizing that something was

wrong. See, e.g., Pioneer Inv. Servs., 507 U.S. at 387 (“There is, of course, a range of possible explanations

for a party’s failure to comply with a court-ordered filing deadline. At one end of the spectrum, a party

may be prevented from complying by forces beyond its control, such as . . . unforeseeable human

intervention.”); Carmondy v. MHM Sols., 2008 WL 2844038, at *2 (S.D. Fla. July 23, 2008) (Martinez,

J.) (“The Defendant’s failure to answer the Complaint appears to be due to the clerical errors of a

third party, the Defendant’s mail courier service. This type of error qualifies as excusable neglect.”).

So, while MGS is at least partially responsible for the default, we can’t ignore the fact that an

unaccountable (and unforeseeable) third party shoulders much of the blame. We thus conclude that

MGS had a “good reason” for failing to timely appear in this case. See In re Worldwide Web Sys., 328

F.3d at 1295.

The remaining factors also weigh in favor of a finding of excusable neglect. First, MGS has

pled the existence of a “meritorious defense.” “A general denial of the plaintiff’s claims contained in

an answer or another pleading is not sufficient.” S.E.C. v. Simmons, 241 F. App’x 660, 664 (11th Cir.

2007) (quoting In re Worldwide Web Sys., 328 F.3d at 1296). The defaulting party must instead “make

an affirmative showing of a defense that is likely to be successful.” Ibid. MGS has met this burden.

MGS has proffered evidence suggesting that the Plaintiff failed to “perform their end of the contract”

and that the contract between the parties was terminated effective March 31, 2024. Motion at 8; see

also Lurie Decl. ¶ 24 (“Plaintiff failed to meet the criteria required under the Statement of Work in any

[way]—including failing to meet staffing and productivity time. This created a major disruption for

the Defendant, including lost sales and lack of any real benefit from the service of Plaintiff. In fact,

my client advises that some of the staff of Plaintiff were even simply picking up the phone, calling

leads, letting it ring, and then hanging up without any answer.”); December 18, 2023 Email [ECF No.

22-2] at 8 (“Please find attached Notice of Termination of our services effective March 31, 2023

[sic]. It is with regret we have gotten to this point but we wish the company every success for the new

year and beyond.”). This evidence, at a minimum, calls into question the damages the Plaintiff is

entitled to since it relied on invoices that (mostly) post-date this March 31, 2024, termination date. See

Order Granting Motion for Final Default Judgment at 5 (“As to damages, the Plaintiff seeks

$479,863.20[.] . . . [T]he Plaintiff supports [this] figure[ ] with copies of the unpaid invoices from

February 29, 2024, through September 11, 2024[.]” (cleaned up)).

Outsourcing Management responds with its own evidence—what it calls “an elaborate set of

subsequent communications between the parties”—purportedly showing that this December 18,

2023, termination date is misleading and that the parties “agreed to continue (i.e., not terminate) the

concierge portion of the Service Agreement in SOW 1, including after March 31, 2024.” Response at

5–6. But the Plaintiff’s contrary evidence merely confirms that there is a legitimate dispute as to who

breached the contract first and when this breach occurred. MGS has thus met its burden under Rule

60(b)(1) by alleging the existence of a specific defense that—if true—would result in a favorable

outcome (i.e., it has “ma[de] an affirmative showing of a defense that is likely to be successful”). In re

Worldwide Sys., 328 F.3d at 1296 (quoting Solaroll Shade & Shutter Corp. v. Bio-Energy Sys., Inc., 803 F.2d

1130, 1133 (11th Cir. 1986)); cf. Sword v. Dolphin Moving Sys., Inc., 2020 WL 42829, at *2 (M.D. Fla. Jan.

3, 2020) (Jung, J.) (“Plaintiffs have alleged willful violations, which Defendants have failed to rebut.

No facts were set forth to establish the hours were overtime or the violations were not willful. The

defenses are neither ‘likely to be successful’ nor would they probably change the outcome if the case

is reopened.”). We are also ever mindful that “[e]ntry of judgment by default . . . should be used only

in extreme circumstances” and that “cases [should] be heard on the merits[.]” Mitchell v. Brown &

Williamson Tobacco Corp., 294 F.3d 1309, 1316–17 (11th Cir. 2002) (cleaned up). We think this

admonition rings especially true in cases like ours, where both parties have presented facially

meritorious claims and defenses.2

Second, granting the Motion won’t prejudice the Plaintiff. The undisputed facts are that Lurie

contacted Plaintiff’s counsel for the first time hours before we granted the Plaintiff’s motion for final

default judgment on October 22, 2024. See Lurie Decl. ¶ 12. MGS then appeared in the case and filed

its motion to vacate less than two weeks after we entered final judgment. See Motion at 5. Courts in

our Circuit have repeatedly held that such a short delay—especially in the case’s early stages—does

not prejudice the non-defaulting party. See, e.g., Perez v. Fla. Millenium Invs., LLC, 2015 WL 13239312,

at *2 (S.D. Fla. July 8, 2015) (Bloom, J.) (“Mere delay in the litigation, especially given the early stages

of this case (prior to entry of a scheduling order or commencement of discovery), does not constitute

prejudice to Plaintiff for present purposes.” (citing Conn. State Dental Ass’n, 591 F.3d at 1357)); Cardona

v. C&C Prods., Inc., 2016 WL 11734753, at *3 (S.D. Fla. Oct. 19, 2016) (Altonaga, J.) (“In this case,

there is little to no prejudice in vacating the Final Default Judgment. Defendants’ default occurred

2 The Plaintiff also asks us to deny the Motion because “no defense offered in the Motion addresses

or would otherwise upend[s] the claims for account stated and unjust enrichment in Counts II and III

of the Complaint[.]” Response at 8. This is silly. We didn’t grant final judgment on Counts II and III,

so there was no need for MGS to present a defense to those claims. See Order Granting Final Default

Judgment at 6 (“Counts II and III of the Amended Complaint are hereby DISMISSED.”).

during the infancy of the case, and Defendants moved to vacate within three weeks of entry of the

Final Default Judgment.”); YHB Mgmt. Corp. v. Fountain Bleau Cap., LLC, 2022 WL 4657663, at *2

(Sept. 30, 2022) (Land, J.) (“As soon as he realized his mistake, Whaling set about fixing it, and

Defendants filed their motion to set aside only two weeks after the default judgment was entered. It

was a short delay, there is no prejudice to Plaintiff based on a simple delay or being required to prove

its case on the merits[.]”); but see Am. Credit Acceptance, LLC v. Magic Auto Sales Corp., 2019 WL 3940560,

at *3 (S.D. Fla. Aug. 21, 2019) (Moreno, J.) (“Here, Plaintiff diligently litigated its case against both

Defendants, in an effort to recover a judgment on accounts that have been in default for [more than

three weeks].”). Since there was minimal delay between the entry of final judgment and MGS’s motion

to vacate that judgment, we find that the Plaintiff will not suffer prejudice if we grant the Motion to

Vacate.

Accordingly, we ORDER and ADJUGE as follows:

1. The Defendant’s Motion to Vacate Default Judgment [ECF No. 22] is GRANTED.

2. The Final Judgment [ECF No. 18], the Order Granting Final Judgment [ECF No. 17], and

the Clerk’s Entry of Default [ECF No. 13] are hereby VACATED.

3. The Defendant shall file its answer or responsive pleading to the Amended Complaint

[ECF No. 4] by December 16, 2024.

4. The parties are directed to prepare and file a joint scheduling report, as required by S.D.

Fla. L.R. 16.1(b)(2), by December 16, 2024. In addition, by December 16, 2024, the

parties, including governmental parties, must file certificates of interested parties and

corporate disclosure statements that contain a complete list of persons, associated persons,

firms, partnerships, or corporations that have a financial interest in the outcome of this

case, including subsidiaries, conglomerates, affiliates, parent corporations, and other

identifiable legal entities related to a party. Throughout the pendency of the action, the

parties are under a continuing obligation to amend, correct, and update the certificates.

DONE AND ORDERED in the Southern District of 2, 2024.

ROY K. ALTMAN

UNITED STATES DISTRICT JUDGE

cc: counsel of record

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