Submitted: April 10, 2014
Upon Defendant's Motion to Vacate Default Judgment.
Denied. Jeffrey M. Weiner, Esquire, Wilmington, Delaware; attorney for Plaintiff.
Daniel A. Griffith, Esquire of Whiteford Taylor & Preston, LLC, Wilmington, Delaware; attorney for Defendant.
WILLIAM L. WITHAM, JR. KENT COUNTY RESIDENT JUDGE.
The issue before the Court is whether it should grant Defendant's Motion to Vacate Default Judgment on the grounds of excusable neglect.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Parkway Gravel, Inc. (hereinafter "Plaintiff") seeks to recover damages for breach of a commercial lease agreement between Plaintiff and Defendant U.S. Lubes, LLC (hereinafter "Defendant"). Plaintiff is a Delaware corporation, and Defendant is a foreign corporation with its principal place of business at 725 Skippack Pike, Suite 140 in Blue Bell, Pennsylvania. Under the commercial lease agreement, Plaintiff leased Defendant space at 410 Churchman's Road in New Castle, Delaware for a term of ten years commencing on April 1, 2011 and terminating on September 30, 2021.
On November 25, 2013, Plaintiff filed a complaint alleging that Defendant breached the lease by defaulting on several rent payments, and by completely failing to make any rent payments as of July 1, 2013. Service was effected upon Defendant on or about December 11, 2013 by mailing the notice, summons and complaint to Defendant's Pennsylvania address via certified mail. A "P. George" signed the return receipt card at Defendant's Pennsylvania address. Plaintiff subsequently amended the complaint on December 11 to include an affidavit of service.
Defendant failed to answer Plaintiff's complaint within 20 days after service of process was accomplished. On January 7, 2014, Plaintiff directed the Court to enter default judgment against Defendant. One week later, on January 14, 2014, counsel for Defendant contacted Plaintiff's counsel requesting that the default judgment be vacated. Plain tiff's counsel ultimately denied the request, and Defendant subsequently filed the instant Motion to Vacate pursuant to Superior Court Civil Rule 60(b).
Defendant argues that there is excusable neglect under Civil Rule 60(b) sufficient to justify vacating the default judgment. Defendant contends that its principal, William Packer, Jr. (hereinafter "Packer") was on vacation in the Galapagos from December 20, 2013 through December 30, 2013 for the holidays. Defendant argues that Packer was unaware of Plaintiff's complaint because the complaint was actually addressed to Scott Surrell (hereinafter "Surrell") rather than Packer. Surrell was Defendant's former president, who had left the company in April of 2013. Defendant contends that excusable neglect exists because the 20-day window to respond was during the holidays, and because process was directed to Surrell who was no longer with Defendant. Defendant also points out that Defendant's counsel promptly contacted Plaintiff's counsel seven days after default judgment was entered, approximately 35 days after service of process was accomplished.
Plaintiff argues that Defendant's actions constitute mere neglect, rather than excusable neglect sufficient to vacate the default judgment. Plaintiff contends that Defendant is incorrect that the original complaint was addressed to Surrell, and argues that even if Packer was away from December 20 through December 30, there was still sufficient time from the service of process on or about December 11 for Packer to learn of the complaint. Plaintiff further argues that because Defendant is a foreign corporation that failed to properly qualify under 8 Del. C. § 371, Defendant is barred from defending this action until it has properly qualified to do business in Delaware. Plaintiff purports to rely on Verizon Delaware, Inc. v. Baldwin Line Construction Co. for this argument.
A motion to vacate a default judgment is addressed to the "sound discretion" of the Court. Civil Rule 60(b) sets forth different grounds for vacating a judgment, including inter alia "[m]istake, inadvertence, surprise, or excusable neglect." Any doubts in a Rule 60(b) motion should be resolved in favor of the moving party in order to further Delaware's "strong judicial policy of deciding cases on the merits and giving parties to litigation their day in court." The moving party bears the burden to prove excusable neglect. Specifically, in order for the Court to grant relief on the basis of excusable neglect, the moving party must meet three prongs: (1) excusable neglect in the moving party's conduct that allowed default judgment to be taken; (2) a meritorious defense to the action that would allow a different outcome if the case was heard on the merits; and (3) that substantial prejudice will not result to the non- moving party if the motion is granted. The moving party must first establish excusable neglect in order for the Court to consider the second and third prongs.E ...