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LaBollita v. Home Rental Connections Ltd.

United States District Court, D. Massachusetts

June 13, 2017

STEPHEN LABOLLITA and JENNIFER LABOLLITA, Plaintiffs,
v.
HOME RENTAL CONNECTIONS LTD. d/b/a PARIS RENTAL CONNECTIONS and HELIOS VIDAL, Defendants.

          ORDER ON MOTION TO SET ASIDE DEFAULT JUDGMENT (DOC. NO. 25) AND MOTION TO DISMISS (DOC. NO. 30)

          Leo T. Sorokin United States District Judge.

         Plaintiffs Stephen and Jennifer LaBollita sued Home Rental Connections and Helios Vidal over injuries Stephen suffered during a trip to Paris. Defendant HRC filed a motion to set aside the default judgment entered by this court because this Court lacks personal jurisdiction over HRC. Doc. No. 25. Plaintiffs opposed, Doc. No. 36, HRC replied, Doc. No. 45, and Plaintiffs filed a surreply, Doc. No. 51. Vidal filed a Motion to Dismiss for lack of personal jurisdiction. Doc. No. 30. Plaintiffs opposed, Doc. No. 37, both Defendants replied, Doc. No. 37, and Plaintiffs filed a surreply, Doc. No. 51. The Court held a hearing on May 31, 2017. Doc. No. 56. The Court ALLOWS the Motion to Set Aside Default Judgment, Doc. No. 25, and the Motion to Dismiss, Doc. No. 30.[1]

         FACTS[2]

         Plaintiffs Stephen and Jennifer LaBollita are Massachusetts residents. In 2013 they were were planning a vacation in Paris. Doc. No. 1 at 3. Defendant Paris Rental Connections is an alternate name for Home Rental Connections (HRC). Id. at 1. HRC is located in London. Id. HRC advertises apartments (as well as other types of properties) for owners including Defendant Helios Vidal. Vidal, a French resident, owns the “French Flair” apartment in Paris. Id. at 2-3. HRC advertises properties online through websites including Slow Travel, TripAdvisor, HomeAway, Rent by Owner, Airbnb, YouTube, Facebook, Twitter, and Instagram. Id. at 2. Plaintiffs read reviews written in English by Americans including Massachusetts residents. While those websites can be accessed from Massachusetts, HRC does not target Massachusetts or its consumers specifically. Doc. No. 27 at 2.

         In early 2013 Plaintiffs searched online for an apartment to rent for their trip to Paris in July 2013 and found the Paris Rental Connections website. Doc. No. 1 at 3. After reading online reviews on multiple websites, including the Paris Rental Connections website, Plaintiffs filled out an online inquiry form on the Paris Rental Connections website stating their interest in one or more properties, their contact information including the city that they lived in, and their vacation dates. Doc. No. 1 at 3; Doc. No. 38-1 at 136. An HRC representative emailed Plaintiffs in response. Doc. No. 1 at 3. After a few emails back and forth, Plaintiffs and HRC agreed that Plaintiff would rent the French Flair apartment in Paris owned by Vidal on July 11, 2013 for seven nights. Id. Plaintiffs and HRC executed by email a form contract with the dates, apartment, amount and other similar information completed. Doc. No. 1 at 3 Plaintiffs paid a rental fee and security deposit by wire transfer from Massachusetts before they left for Paris. Id. According to the rental agreement, the check in time was 2:00 pm and a local agent of HRC would meet Plaintiffs at the property. Id.

         Plaintiffs arrived in Paris at 2:35 pm on July 11, 2013, and contacted HRC's agent who said she would arrive shortly. Id. Plaintiffs went to the building in which French Flair is located. They entered the common area of the building using a code provided to them by HRC. Id. No representative of HRC was present. Id. at 4. Plaintiffs called and emailed HRC several times but were left waiting in the common area of the property for “several hours.” Id. While waiting, Plaintiff Stephen LaBollita descended a spiral staircase in the common area and fell, sustaining serious injuries. Id. Stephen LaBollita went to the hospital after some confusion over the ambulance with HRC and was diagnosed with a complete rupture of his quadriceps tendon requiring emergency surgery. Id.

         Almost three years later, Plaintiffs filed suit against HRC and Vidal in the District of Massachusetts on July 8, 2016. Doc. No. 1. Plaintiffs allege negligence against HRC (Count 1) and Vidal (Count 2), negligent misrepresentation against HRC (Count 3) and Vidal (Count 4), breach of contract against HRC (Count 5), breach of warranty against HRC (Count 6) and Vidal (Count 7), loss of consortium against HRC (Count 8) and Vidal (Count 9).

         Plaintiffs filed an affidavit of service as to HRC on October 5, 2016. Doc. No. 5. On October 20, 2016, Plaintiffs requested that the clerk enter default as to HRC. Doc. No. 6. On October 25, 2016, the clerk entered default. Doc. No. 7. On November 21, 2016, Plaintiffs moved for a default judgment as to HRC. Doc. No. 8. On January 12, 2017, the Court allowed this motion. Doc. No. 13, 14. However, no judgment entered against HRC. Rather, the Court referred the matter to the Magistrate Judge for an assessment of damages hearing and recommendation. Doc. No. 15. On February 8, 2017, Magistrate Judge Bowler schedule an assessment of damages hearing for March 8, 2017; the Clerk mailed the notice of hearing to HRC that day. Doc. No. 16, 18. On the same day, Vidal's attorney entered a notice of appearance. Doc. No. 19. On March 2, 2017, HRC's attorneys entered notices of appearance and filed a motion to set aside the default judgment. Doc. Nos. 23, 24, 25. On March 2, 2017, Vidal filed a motion to dismiss for lack of personal jurisdiction. Doc. No. 30. Plaintiffs opposed both motions, Doc. Nos. 36, 37, and Defendants replied, Doc. Nos. 45, 46. Plaintiffs filed a surreply to the motion to dismiss for lack of personal jurisdiction. Doc. No. 51. On May 31, 2017, the Court heard oral argument on both motions. Doc. No. 56.

         ANALYSIS

         A. Motion to Lift Default

         While Defendants filed a motion to set aside the default judgment under Rule 60(b)(1), Rule 55(c) governs because no final judgment has entered. See Fed.R.Civ.P. 55(c) (“The court may set aside an entry of default for good cause, and it may set aside a final default judgment under Rule 60(b).”). The ruling on the motion for a default judgment was not itself a final judgment. The Court had reached no conclusion regarding damages. Nor had the Court entered a judgment let alone a final judgment under Rule 54(b). Thus, the less stringent Rule 55(c) standard applies.

         “The demanding standards set by Rule 60(b) apply only in seeking relief from a final judgment.” Fed R. Civ. P. 55 advisory committee note on 2015 amendment. “Good cause” under Rule 55(c) “is a liberal standard, ‘but not so elastic as to be devoid of substance.'” Commerce Bank & Trust Co. v. Ria LLC, Civ. A. No. 4:14-cv-40140-TSH, 314 F.R.D. 338, 340 (D. Mass. 2016) (quoting Coon v. Grenier, 867 F.2d 73, 76 (1st Cir. 1989)). “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 of the parties; the amount of money involved; and the timing of the motion.” Id. While those factors are relevant, however, “[t]he ‘Rule 55(c) determinations are case-specific' and ‘must, therefore, be made in a practical, commonsense manner, without rigid adherence to, or undue reliance upon, a mechanical formula.'” KPS & Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d 1, 12 (1st Cir. 2003) (quoting Gen. Contracting & Trading Co. v. Interpole, Inc., 899 F.2d 109, 112 (1st Cir. 1990)). The First Circuit has noted that the policy considerations inherent in Rule 1 “are at their zenith in the Rule 55(c) milieu.” Coon v. Grenier, 867 F.2d 73, 76 (1st Cir. 1989); see Fed.R.Civ.P. 1 (“These rules . . . should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.”).

         Plaintiffs argue only that the motion should be denied because HRC failed to show excusable neglect in reliance on the Rule 60(b) standard. However, Rule 55(c) directs the Court to consider other relevant factors as well. Here, the delay was short, a month and a half from the order entering default judgment and the motion to set aside the default judgment. There is little, if any, prejudice to Plaintiffs as the litigation has not proceeded, no hearing on the assessment of damages was held, and final judgment has not been entered. Additionally, the owner of HRC states that the papers she received did not include a summons and pages were missing. Doc. No. 27 at 3. She states that, while she knew that she had been sued in the US, she did not know when or to whom she was meant to respond to. Id.[3] Finally, once HRC learned of ...


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