United States District Court, D. Massachusetts
Commerce Bank & Trust Company, Plaintiff: Robert B. Gibbons,
Mirick, O'Connell, DeMallie & Lougee, Worcester, MA.
Daniel C. Hales, LEAD ATTORNEY, Cohn & Dussi, Burlington, MA.
Kenneth R Leisher, Defendant: Michael A Wirtz, Jack Mikels &
Associates LLP, Quincy, MA.
Kenneth R Leisher, Cross Claimant: Michael A. Wirtz.
AND ORDER ON DANIEL HALES'S MOTION TO VACATE DEFAULT AS
TO KENNETH LEISHER (Docket No. 49)
S. HILLMAN, DISTRICT JUDGE.
2007, Kenneth Leisher and Daniel Hales formed RIA, LLC, for
the purpose of purchasing a Baron Beechcraft airplane in
California. RIA financed the airplane with a $198,450 loan
from Commerce Bank & Trust Co. (Commerce), using the airplane
as collateral, with Hales and Leisher as personal guarantors.
According to Leisher, Hales excluded him from using the
plane, and in 2010 the parties agreed that Leisher would
resign from the LLC and that Hales would bear full liability
for the debt. According to Hales, Leisher unilaterally
abandoned the venture in 2010, and there was no agreement to
release Leisher from liability. Ultimately, Leisher left
California, Hales fell behind on payments, and RIA defaulted
on the debt.
September 29, 2014, Commerce brought the instant action
against Hales, Leisher, and RIA, to enforce the promissory
note obligation. Hales failed to respond, and this Court
entered default against him on December 16, 2014. On November
19, 2014, Leisher answered Commerce's complaint and
asserted a cross-claim against Hales for indemnification and
contribution, in the event that Leisher was held liable by
Commerce. Hales was served with Leisher's cross-claim on
or about January 22, 2015. Hales again failed to respond and
was defaulted on the
cross-claim on April 3, 2015. On the same day, this Court
also entered default against RIA on Commerce's claims.
1, 2015, this Court issued a separate and final judgment in
favor of Commerce against RIA and Hales, jointly and
severally, in the amount of $210,776.58, followed ten days
later by a writ of execution. In August of 2015, Commerce
apparently agreed to release and terminate its security
interest in the aircraft in exchange for $70,000 from a
third-party sale negotiated by Hales. According to Hales, he
has agreed to purchase the promissory note from Commerce and,
after he becomes the holder of the note, he " will be
entitled to assert all of [his] claims against, among others,
Leisher and Mrs. Leisher." (Docket No. 51 ¶ 18.)
Commerce has also commenced supplementary process against
Hales and RIA in the Central District of California, imposing
a judicial lien against Hales's residence.
November 30, 2015, nearly eight months after the entry of
default on Leisher's crossclaim, Hales filed the instant
motion to vacate. He has submitted an affidavit, explaining
his reasons for failing to respond to the claim. Hales is an
attorney who practices in California. In November of 2014,
his law partner injured her back and did not return to work
until March of 2015. Hales had to take responsibility for his
partner's cases while she was out. Additionally, in
January of 2014--approximately sixteen months before the
entry of default and nearly two years before the instant
motion--Hales's brother was killed in a car accident.
According to Hales, he has since devoted much of his time to
his brother's wrongful-death lawsuit.
claims that, because of these events, he " did not
notice and/or was unable to respond to the Notice of Default
filed by Commerce, and the Cross Complaint filed by
[Leisher]." (Docket No. 51 at ¶ 6.) Hales further
asserts that he has " meritorious defenses and
counterclaims against Leisher and against Leisher's
wife." (Docket No. 51 at ¶ 8.)
Specifically, Hales contends that Leisher breached his
fiduciary duty in 2010 by abandoning the LLC and neglecting
his obligation to make payments on the promissory note.
Leisher, for his part, opposes Hales's motion, arguing
that Hales's reasons for failing to respond are not
sufficient cause to set aside the default.
to Rule 55(c) of the Federal Rules of Civil Procedure, "
The court may set aside an entry of default for good cause .
. . ." " 'Good cause' is a mutable
standard, varying from situation to situation." Coon
v. Grenier, 867 F.2d 73, 76 (1st Cir. 1989). It is also
a liberal standard, " but not so elastic as to be devoid
of substance." Id. It is a lower standard than
that for vacating a judgment pursuant to Rule 60(b).
Id. Numerous factors are relevant to an analysis
under Rule 55(c): whether the default was willful; whether
setting aside the default would prejudice the adversary;
whether a meritorious defense is presented; the strength of
the proffered explanation for the default; the good faith ...