2018 | Cited 0 times | D. Maine | July 15, 2018




Plaintiff ) v. ) No. 2:18-cv-00165-NT

ARTHUR MERSON, et al., )

Defendants )


In this case alleging that the defendants conspired to induce the plaintiff, John F. Chase, into investing $500,000 in a fraudulent investment scheme, see Complaint (ECF No. 1) at 2, defendant Robert Cloutier moved for an extension of time to answer the complaint nunc pro tunc, and, nearly simultaneously, the plaintiff moved for both the entry of default and default judgment against him, see To Extend Deadline To Answer or Otherwise To Extend Time (ECF No. 12); Application for Entry of Default Default Motions (ECF No. 15). I held oral argument on the motions following which I granted the tion and deemed the , see ECF No. 33, and now set forth in writing the bases for my oral ruling.

I. Background The plaintiff filed the instant complaint on April 19, 2018, alleging that 10 named defendants fraudulently induced him to invest $500,000 in standby letters of credit by promising a $10 million return in seven to 12 days on every $250,000 invested. See Complaint at 2. The plaintiff alleges, in relevant part, that:

1. Defendants Arthur Merson and Keith Roy informed his attorney that, in exchange for introducing him to this opportunity, they and four other defendants, Endeavor Project Consultants, LLC, Don Patch, Mark Cloutier, and Robert Cloutier , would require a collective fee of 17.5 percent See id. ¶ 32.

2. In late March 2017, the Consultants presented him with an Irrevocable 17.5% . See id. ¶ 33 & Success Fee Agreement, Exh. 1 (ECF No. 1-1) thereto.

3. On March 29, 2017, he and the Consultants executed the Success Fee Agreement, and, pursuant to a separate agreement with defendant Stellar Enterprises, Inc., through defendant Christopher M. Ochoa, he wired $500,000 to the IOLTA trust account of defendant The Law Office of Chris Ochoa, P.A., the same day. See Complaint ¶¶ 36, 48-49.

4. Pursuant to that separate agreement, disbursed from the trust account until Ochoa provided him proof that two banking instruments, including a standby letter of credit, had been issued and transmitted. See id. ¶¶ 43-44, 46.

5. In fact, the funds were immediately disbursed from the trust account without the promised proof, and, as of the date of the filing of the instant complaint more than a year later, despite inquiries and/or demands, the plaintiff still had not received proof of the issuance and transmission of the banking instruments, any return on his investment, or a refund of any portion of the $500,000 that he invested. See id. ¶¶ 50, 52-54, 58-61.

Robert Cloutier was served with a summons and copy of the complaint on April 30, 2018, triggering a May 21, 2018, deadline to answer, see ECF No. 6, and Mark Cloutier was served on

May 7, 2018, resulting in a May 29, 2018, deadline to answer, see ECF No. 8. According to Robert Cloutier, the following series of events then transpired:

1. He and Mark Cloutier, who is his brother, reviewed the complaint together and discussed how to respond. 1

See Declaration of Robert Cloutier (ECF No. 24-1), attached to Defendant (ECF No. 24), ¶¶ 3-4. 2

They agreed that Mark, who was more experienced in legal matters, would coordinate with their cousin Jim Cloutier, an attorney, to respond appropriately to the complaint and protect their rights. See id. ¶¶ 15, 17.

2. Robert did not focus on the fact that he had apparently been served with the complaint a few days earlier than Mark and that, as a result, his response was due sooner. See id. ¶ 16.

3. When Robert and Mark learned that Jim Cloutier was unable to represent them needed more time to find counsel and respond. See id. ¶¶ 17-18. attorney agreed

to give Mark additional time to do so. See id. ¶ 18. Mark reassured Robert that, although the , Id.

1 For ease of reference, I hereinafter 2 Although and default judgment against him, the facts presented therein were integral to the consideration of all three related motions. Hence, I took that affidavit, as well as a responsive affidavit of Attorney Piper, see Declaration of Benjamin -1), attached to Plaintiff[] and Default Judgment (ECF No. 27), into acc .

4. and was told that because he was already a day late[,] he would simply have to explain why he was a day or two late and would be allowed to go forward, or words to that effect. See id. ¶ 19.

5. Robert felt reassured and believed the matter was under control, and was surprised to learn that the plaintiff was seeking a default judgment against him. See id. ¶¶ 20-21. Plaintiff s attorney Benjamin Piper confirms that, on Friday, May 25, 2018, prior to the Memorial Day weekend, he received separate calls from both Mark and Robert. See Piper Decl. ¶¶ 2, 6. However, his account of those conversations differs in some respects from that set forth by Robert, and he describes a further conversation with each brother on Tuesday, May 29, 2018. See id. ¶¶ 3-16. Specifically, he avers that:

1. On May 25, 2018, he told Mark that he needed to speak with the partner managing the case, Attorney Timothy Bryant, to determine whether the requested extension was acceptable but that deadline to respond did not expire until May 29, 2018, he would not seek to default him before he got back to him regarding his request for an extension. See id. ¶¶ 3-4. Mark did not purport to be seeking an extension on make any represen See id. ¶ 5.

2. When Robert called Attorney Piper minutes later, seeking an extension of time to respond to the complaint, Attorney Piper informed him that he could not tell him at that time whether the plaintiff would grant him an extension. See id. ¶¶ 6, 8-9. Attorney Piper also told Robert that (i) his deadline to respond had expired four days earlier, (ii) if he wished to defend himself, he would need to get an attorney or otherwise appear as soon as possible, and (iii) there could be consequences for his failure to serve a timely response. See id. ¶ 9. He denies assuring Robert that the plaintiff would not seek a default against him or telling him that his response to the

complaint was only one day late and that he would simply have to explain his lateness to the court and would be allowed to go forward. See id. ¶¶ 10-12. He did tell Robert that an explanation for his lateness likely would be necessary, but not necessarily sufficient, to allow him to go forward. See id. ¶ 12.

3. Attorney Piper again spoke separately with both Mark and Robert on May 29, 2018, advising Mark that the plaintiff would give him an extension until June 1, 2018, to find counsel and would consider a further extension request from counsel, and advising Robert that, because his deadline to respond to the complaint had expired before he requested an extension, the plaintiff would not consent to an extension. See id. ¶¶ 13-15. Following h Attorney Piper, they retained Attorney Edward MacColl, who entered an appearance on their behalf on May 31, 2018, 10 days after deadline to retain counsel to which the plaintiff had agreed. See ECF Nos. 13, 14. That same day, Attorney MacColl filed , time-stamped at 2:04 p.m. See ECF No. 12. The plaintiff filed his motions for the entry of default and default judgment against Robert later that afternoon, time-stamped at 3:15 p.m. See ECF No. -to motion to extend the deadline to answer was filed on June 1, 2018, see ECF No. 17, and was granted, extending his deadline to June 14, 2018, see ECF No. 20. Mark and Robert filed their consolidated answers to the complaint on June 13, 1018. See ECF No. 29.

II. Applicable Legal Standard Because motion to extend time was filed after the expiration of his deadline to answer the complaint, Federal Rule of Civil Procedure 6(b)(1)(B) applies. That rule states: When an act may or must be done within a specified time, the court may, for good cause, extend the time

. . . on motion made after the time has expired if the party failed to act because of excusable Fed. R. Civ. P. 6(b)(1)(B).

III. Discussion Although those of the plaintiff were filed nearly simultaneously, was filed first, and so I consider it first. Because I find it meritorious, motions for competing relief are moot.

As Robert observed, see that is not limited strictly to omissions caused by circumstances beyond the

control of the movant[,] Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P ship, 507 U.S 380, 392 (1993) (footnotes and internal quotation marks omitted). Indeed, the Supreme Court has explained:

[T]he determination is at bottom an equitable one, taking account of all relevant circumstances prejudice to [the nonmovant], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith. Id. at 395 (citation and footnotes omitted). Each of these factors favor Robert. First, there is minimal delay or prejudice to the plaintiff. As of the date Robert filed the instant motion, no defendant had answered the complaint; as of the time of oral argument, only two had answered: Robert and Mark. The plaintiff confirmed at oral argument that he was likely to seek leave from the court to serve several of the defendants by alternative means because he had not as yet been able to locate them, and he has now done so. See Motion to Extend Time for

Service of Process and to Authorize Service by Publication (ECF No. 37). In short, this case has just begun.

Nor has the plaintiff shown for purposes of Rule 6(b)(1)(B), which refer to a situation in which the party who would obtain a legal advantage from default is deprived

of that advantage. Robinson v. Wright, 460 F. Supp.2d 178, 180 (D. Me. 2006) (citation omitted). Instead, cognizable prejudice is, for example[,] Id. (citations and internal punctuation omitted). There has been no such showing here. At oral argument, the plaintiff identified only the cost and time entailed in filing his motions for default and the entry of default against Robert. The First Circuit has characterized the next relevant Pioneer Dimmitt v. Ockenfels, 407 F.3d 21, 24 (1st Cir.

2005). However, c See, e.g., Pratt v. Philbrook, 109 F.3d 18, 19 (1st Cir. 1997) ( neglect be excusable to those circumstances caused by intervening circumstances control. ) (discussing Pioneer Investment).

Instead, recognizing that excuses for a late filing could range from unforeseeable human intervention at one end of the spectrum , the Supreme Court held that the range of conduct in between, including

constitute excusable neglect. Pioneer, 507 U.S. at 387-88 (emphasis added).

The delay at issue here was not control; however, it also was not the result of indifference to the matter of the need to respond to the complaint. Even

Robert made substantial efforts to determine what was required of him once he was served with a lawsuit. He coordinated with his co-defendant brother, who was more experienced in legal matters; they sought representation by their cousin, whom they assumed for some period of time would serve as their attorney; upon learning that their cousin could not do so, they both separately called and spoke with the attorney; and, despite the fact that this is not a garden-variety civil lawsuit, potentially complicating a search for an attorney able and willing to take the case, they then swiftly engaged Attorney MacColl.

Robert on May 25, 2018, that the plaintiff would either refuse to consent to an extension or seek a default judgment against him. Robert, a non-lawyer relying in part on his non-lawyer brother understanding of his separate conversation that day with Attorney Piper, plausibly, albeit mistakenly, could have believed that the representations Attorney Piper made to Mark pertained to him as well and that excuse for his tardiness to the court constituted an assurance that he could go forward. Within two days of the date on which Attorney Piper did inform Robert that the plaintiff would not consent to his requested deadline extension, the brothers had secured the services of Attorney MacColl.

-lawyer, this series of actions can fairly be characterized as diligent, and demonstrate a good-faith effort to comply with the deadline at issue. The Pioneer factors, hence, all favor Robert.

Beyond this, Robert persuasively argued that the entry of default, and a default judgment against him for $500,000, would be unjust in view of the minimal part he is alleged to have played

in a complex multi-defendant scheme and his identification of what he believes to be substantial defenses to that claim. See Motion To Extend Time at 1- -3.

As Robert noted, see Motion To Extend Time at 2, he is named as a defendant in only one , see Complaint ¶¶ 87-151. He asserts that he has substantial defenses to that claim, including (i) binding arbitration as required by the contract at issue, integration clause, and (iii) the provision or term of the contract

that Robert breached. See Motion Objection at 4-5, 9-10.

Although the notions of unjust outcomes and substantial defenses are not among the non- exhaustive list of factors enumerated in Pioneer, the motion under Rule 6(b)(1)(B) [.] Pioneer, 507 U.S at 395. At oral

argument, given these circumstances persuasive, further tipping the balance in favor of the grant of his

motion. In sum, because Robert made a good-faith effort to comply with his deadline to answer the any delay in the case or prejudice to the plaintiff is minimal, and the denial of the motion is not in the interests of justice in view of the size of the default judgment sought exercised the discretion conferred by Rule 6(b)(1)(B), see, e.g., Cordero-Soto v. Island Fin., Inc.,

418 F.3d 114, 117 (1st Cir. 2005), to grant his motion.

IV. Conclusion For the reasons articulated above, I GRANTED motion to extend the deadline to file his answer nunc pro tunc, permitting his answer of June 13, 2018, to stand, and DEEMED the for the entry of default and default judgment against Robert MOOT.


In accordance with Federal Rule of Civil Procedure 72(a), a party may serve and file an objection to this order within fourteen (14) days after being served with a copy thereof.

Failure to file a timely objection shall constitute a waiver of the right to review by the district court and to any further appeal of this order.

Dated this 15 th

day of July, 2018.

/s/ John H. Rich III John H. Rich III United States Magistrate Judge

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