Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-15-03353/USCOURTS-ca7-15-03353-0/pdf.json

Parties Involved:
Trade Well International
Appellant
United Central Bank
Appellee

Document Text:

In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 15-3353

TRADE WELL INTERNATIONAL,

Plaintiff-Appellant,

v.

UNITED CENTRAL BANK,

Defendant-Appellee.

____________________

Appeal from the United States District Court for the

Western District of Wisconsin.

No. 3:12-CV-00701 — James D. Peterson, Judge.

____________________

ARGUED MAY 27, 2016 — DECIDED JUNE 17, 2016

____________________

Before POSNER and FLAUM, Circuit Judges, and ALONSO,

District Judge.*

FLAUM, Circuit Judge. This appeal arises out of a 2012 replevin action brought by Trade Well International, a Pakistani 

company that leases furnishings to hotels, against United 

Central Bank (the “Bank” or “UCB”) in federal court. In 2010, 

 * The Honorable Jorge L. Alonso, United States District Court for the 

Northern District of Illinois, sitting by designation.

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UCB foreclosed on a hotel that had leased items from Trade 

Well. After Trade Well’s attorney, Maurice Salem, attempted 

to file a lien on property owned by the Bank, the district court 

held Salem in contempt and revoked his pro hac vice status. 

The Bank then filed a counterclaim against Trade Well alleging slander of title. Because Trade Well failed to retain a different attorney, the district court entered default judgments 

in favor of the Bank in the replevin action and counterclaim. 

In February 2015, we reversed the district court’s contempt order against Salem and reinstated his pro hac vice status. With Salem appearing once again on its behalf, Trade 

Well moved to set aside the default judgments. The district 

court denied Trade Well’s motion. We affirm.

I. Background

This is the second appeal arising out of Trade Well’s 2012 

replevin action against UCB. See Trade Well Int’l v. United Cent. 

Bank, 778 F.3d 620 (7th Cir. 2015) (“Trade Well I”). After UCB

foreclosed on the hotel housing Trade Well’s leased furnishings and started searching for buyers, Trade Well demanded

the return of its property. The Bank refused and Trade Well 

sued the Bank for replevin in the Western District of Wisconsin. Trade Well later amended its complaint to add claims of 

negligence and conversion.

While the replevin action was pending, Trade Well’s attorney, Salem, filed a “Notice of Lien” on the hotel with the Sauk 

County Register of Deeds in March 2014. The Bank asked Salem to withdraw the notice, but he refused. The Bank then 

asked the district court to strike the notice, revoke Salem’s pro 

hac vice admission, and assess costs and attorney’s fees 

against Trade Well and Salem. On April 4, 2014, the district 

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No. 15-3353 3

court held Salem in contempt of court and revoked his pro 

hac vice admission as a sanction for filing the lien. The court 

also referred him for disciplinary action by the States of Wisconsin and New York, and imposed a $500 fine.

Additionally, the district court granted the Bank leave to 

file a counterclaim seeking a temporary restraining order, injunction, or damages related to the filing of the lien. In June

2014, the Bank filed a counterclaim against Trade Well alleging slander of title and seeking damages, costs, attorney’s 

fees, as well as a declaratory judgment that the notice Salem 

had filed was void.

The dispute between Trade Well and the Bank was still 

pending before the district court when Salem filed a pro se 

appeal of the contempt and sanctions order with this Court. 

On February 10, 2015, in Trade Well I, we vacated the district 

court’s contempt order and imposition of sanctions. 778 F.3d 

at 628.

Because he had been deprived of his pro hac vice status 

during the pendency of the Trade Well I appeal, Salem was 

unable to represent Trade Well in the replevin action before

the district court. Trade Well did not secure alternative representation and, due to its corporate status, was unable to appear in court without counsel. Consequently, nearly seven

months after Salem was removed as counsel, the district court 

entered default and dismissed with prejudice Trade Well’s 

claims against the Bank for failure to prosecute. The court also 

entered a default judgment against Trade Well on the Bank’s 

counterclaim. 

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In March 2015, after this Court reinstated Salem’s pro hac 

vice status, Trade Well—with Salem back as its representative—filed a motion to vacate the default judgments in the 

original suit and the counterclaim.1 In September 2015, the 

district court held an evidentiary hearing on the motion to vacate. Salem testified that following revocation of his pro hac 

vice status, he had tried to obtain substitute counsel for Trade 

Well. He claimed to have spoken with four law firms and approximately ten attorneys about taking the case between 

April and June of 2014. He also testified that he had contacted 

between 50 and 100 attorneys following the district court’s entry of default judgment in October 2014. However, Salem’s 

court filings consistently stated that he had contacted four 

firms and “over ten attorneys.”

Salem further testified that his primary method of finding 

counsel was to search the internet for attorneys in Madison. 

He also claimed that he had called the district court’s clerk’s

office for a list of attorneys. Salem said that he had even contacted the Pakistani embassy in an effort to recruit counsel. 

Salem testified that despite these efforts, he was unable to 

recruit substitute counsel. Salem expressed his belief that 

Madison attorneys were afraid to take the case because they 

did not want to jeopardize their relationship with the district 

court. According to Salem, one of the attorneys he spoke with 

described the case as a “hot potato.” Salem said that two of 

his friends in Illinois declined the case because they were 

afraid of unfair prejudice by the district court.

 1 Following our decision in Trade Well I, the original district court

judge recused himself in the case on March 16, 2015.

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Trade Well also presented testimony from Umar Paracha, 

the brother of one of Trade Well’s owners. Paracha testified 

that he had attempted to recruit counsel for Trade Well. While

Paracha admitted that he had not contacted any attorneys 

who had represented him in previous matters, he said that he 

had approached between ten and fifteen lawyers about representing Trade Well. He testified that he primarily used the internet to find attorneys. Like Salem, Paracha was unable to 

secure counsel for Trade Well. He suggested that attorneys 

were afraid to take the case because they did not believe that 

they could win.

In addition to this testimony, Trade Well offered four exhibits. Two of the four exhibits listed names and phone numbers for four attorneys that Paracha claimed to have contacted. Salem also submitted notes containing a list of nine attorneys with phone numbers as well as information for his

two friends in Illinois. Moreover, Trade Well submitted an affidavit from Muhammad Tahir, who is one of Trade Well’s

owners and Paracha’s brother. The affidavit states that the 

company instructed Salem and Paracha to offer money to any 

attorney willing to take the case. Yet, Salem and Paracha testified that they never mentioned Trade Well’s willingness to 

pay to any of the attorneys they contacted because the discussions never reached the matter of compensation.

The district court expressed skepticism about Trade Well’s 

efforts to find counsel. In particular, the court found incredible Salem’s claim that he contacted 50 to 100 attorneys. The 

court determined that Salem had contacted approximately 

fourteen attorneys, mostly between April and June 2014. The 

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court also noted that many of the attorneys Salem had contacted practiced criminal law and thus, Salem had not made a 

substantial effort to find commercial litigators. 

Similarly, the district court found that Paracha’s testimony 

was exaggerated. The court determined that he had contacted 

approximately four attorneys starting in October 2014. The 

court further found incredible the assertion that Salem and 

Paracha never discussed compensation with any of the attorneys.

Based on these findings, the district court denied Trade 

Well’s motion to set aside the default judgments. It found that 

Trade Well had not demonstrated good cause for and quick 

action to correct the defaults. The district court also rejected 

Trade Well’s efforts to argue that the judgments were invalid. 

Trade Well appeals, arguing that the default judgments are 

void for lack of personal jurisdiction, that it demonstrated 

good cause for and quick action to correct the defaults, and 

that precedent requires us to vacate the defaults.

II. Discussion

A. Validity of the Default Judgments

Trade Well first argues that the district court lacked personal jurisdiction over it, rendering the default judgments invalid. Under Federal Rule of Civil Procedure 60(b), a final

judgment must be set aside if the court lacked personal jurisdiction. Bally Exp. Corp. v. Balicar, Ltd., 804 F.2d 398, 400 (7th 

Cir. 1986). A judgment is also void as to any party who was 

not adequately served. Relational, LLC v. Hodges, 627 F.3d 668, 

671 (7th Cir. 2010). In addition, a judgment is void if it was 

rendered “in a manner inconsistent with due process of law.” 

United States v. Indoor Cultivation Equip. from High Tech Indoor 

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No. 15-3353 7

Garden Supply, 55 F.3d 1311, 1316 (7th Cir. 1995) (citation and 

internal quotation marks omitted). Although the standard of 

review for appeals under Rule 60(b) is abuse of discretion, it 

is a per se abuse of discretion for a district court to refuse to 

vacate an invalid judgment. Id. at 1317. 

We cannot accept Trade Well’s contention that the district 

court lacked personal jurisdiction over it because Trade Well 

is a foreign corporation that did not have counsel at the time

of the default judgments. By filing the original replevin action, Trade Well submitted itself to jurisdiction in Wisconsin 

for purposes of the replevin action and the counterclaim. In 

general, when a defendant interposes a permissive counterclaim, the plaintiff cannot object that the court lacks personal 

jurisdiction for purposes of adjudicating the claim. See Leman 

v. Krentler-Arnold Hinge Last Co., 284 U.S. 448, 451 (1932) (holding, in a patent case, that “[w]hen the [plaintiff] brought the 

suit in [federal district court], it submitted itself to the jurisdiction of the court with respect to all the issues embraced in 

the suit, including those pertaining to the counterclaim of the 

defendants”); 6 CHARLES ALAN WRIGHT & ARTHUR R. MILLER,

FEDERAL PRACTICE AND PROCEDURE § 1424 (3d ed. 2016).

Moreover, a district court may exercise personal jurisdiction over any party that purposefully avails itself of the forum. J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 880 (2011). 

By filing suit in Wisconsin, Trade Well availed itself of the forum, whether by explicitly consenting to jurisdiction, waiving

any challenge to jurisdiction, or simply receiving the privileges and benefits of the forum state. See id. at 880–81. Indeed, 

the purposeful availment inquiry is ultimately about whether 

the party should reasonably anticipate being haled into court 

in the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 

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474 (1985). When a plaintiff files a claim in a particular state, 

he should reasonably expect to answer a counterclaim in that 

forum.

Relatedly, Trade Well argues that it was fundamentally 

unfair and a violation of due process for the district court to 

impose a default judgment after its counsel was removed. We 

disagree. Trade Well received notice of the proceedings and 

an opportunity to be heard. See Grun v. Pneumo Abex Corp., 

163 F.3d 411, 423 (7th Cir. 1998) (outlining the requirements 

for due process). The Bank claims that following Salem’s removal, it served Trade Well directly with all relevant motions

at its last known address; Trade Well does not dispute that it 

had notice of the proceedings, including both motions for default judgment. Trade Well does argue that without Salem, it 

had no means of representing itself because corporations cannot proceed pro se. United States v. Hagerman, 545 F.3d 579, 

581 (7th Cir. 2008) (“A corporation is not permitted to litigate 

in a federal court unless it is represented by a lawyer licensed 

to practice in that court.”). Nonetheless, Trade Well had ample time—nearly seven months—to secure replacement counsel to prosecute the original action, and roughly five months 

to respond to the counterclaim. Trade Well also could have 

requested a stay pending Salem’s appeal, but did not do so. 

Given the circumstances, we agree with the district court that 

the default judgments did not violate due process.

Trade Well also suggests that the judgments are invalid 

due to inadequate service of process. This argument is unavailing because the Bank adequately served Trade Well under 

Rules 4 and 5. As mentioned above, Trade Well does not dispute the Bank’s assertion that, following Salem’s removal, it 

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No. 15-3353 9

served all filings on Trade Well at its last known address. Service of process therefore was proper under Rule 4, which provides that a foreign corporation may be served “by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague 

Convention on the Service Abroad of Judicial and Extrajudicial Documents.” Fed. R. Civ. P. 4(f)(1), (h)(2); see also Research 

Sys. Corp. v. IPSOS Publicite, 276 F.3d 914, 926 (7th Cir. 2002)

(“[S]imple certified mail [is] a method permitted by Article 

10(a) of the Hague Convention, so long as the foreign country 

does not object.” (internal citation omitted)). Similarly, service 

of process was valid under Rule 5 because all documents were 

mailed to Trade Well’s last known address. See Fed. R. Civ. P. 

5(b)(2)(C) (allowing service to a person’s last known address 

and specifying that service is complete upon mailing). 

In sum, the default judgments are valid and the district 

court did not abuse its discretion by refusing to set them 

aside.

B. Denial of the Motion to Vacate

Trade Well next argues that, even if the default judgments 

are valid, the district court abused its discretion by denying 

its motion to vacate. Trade Well’s primary contention is that 

the district court improperly discredited Salem’s and Paracha’s testimony without any evidence to contradict their allegations. Because Trade Well believes its efforts to find representation were “extraordinary and undisputed,” it claims that 

the district court should have granted the motion to vacate.

Courts grant relief under Rule 60(b) only in exceptional 

circumstances. Wehrs v. Wells, 688 F.3d 886, 890 (7th Cir. 2012). 

We review a motion to vacate a default judgment for abuse of 

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discretion. Shakman v. City of Chicago, 426 F.3d 925, 932 (7th 

Cir. 2005). A district court abuses its discretion when its factual findings are clearly erroneous. Id. We give special deference to a district court’s credibility determinations. See Anderson v. City of Bessemer City, 470 U.S. 564, 575 (1985). To vacate 

a default judgment, the movant must demonstrate good cause 

for the default, quick action to correct it, and a meritorious 

case. Pretzel & Stouffer, Chartered v. Imperial Adjusters, Inc., 28 

F.3d 42, 45 (7th Cir. 1994). The burden of proof rests on the 

party moving to vacate the judgment. Bally Export Corp., 804 

F.2d at 401. 

As an initial matter, Trade Well’s claim that the district 

court erred in its credibility determinations because it lacked 

contrary evidence is without merit. A district court need not 

have contrary evidence to discredit a witness. Rather, a court 

may find a witness incredible based on a variety of testimonial issues, such as a lack of specific details, implausibility, internal inconsistences, as well as contrary evidence. See Anderson, 470 U.S. at 575 (“Documents or objective evidence may 

contradict the witness’ story; or the story itself may be so internally inconsistent or implausible on its face that a reasonable factfinder would not credit it.”). Additionally, Trade Well 

bore the burden of proof. A district court may properly find a 

witness insufficiently reliable such that this burden is not met. 

Furthermore, Trade Well cannot show that the district 

court’s factual findings were clearly erroneous. The testimony 

Trade Well presented at the evidentiary hearing lacked specific details, included implausible allegations, and contained 

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inconsistencies.2 In addition, the exhibits Trade Well submitted to support this testimony were insubstantial and suggested that Salem and Paracha in fact attempted to contact 

only a handful of attorneys. Even accepting the testimony at 

face value, the district court did not err by concluding that 

Trade Well’s efforts to find an attorney were belated and disorganized. 

We also agree with the district court that Trade Well cannot satisfy its burden to show that the default judgments 

should be set aside. The court correctly found that Trade Well 

could not establish good cause for the defaults. See Chrysler 

Credit Corp. v. Macino, 710 F.2d 363, 367 (7th Cir. 1983) (noting 

that evidence of delay may weigh against a finding of good 

cause). Trade Well had nearly seven months to secure a new 

attorney and avoid the default judgments between Salem’s removal and entry of the default orders. Trade Well does not 

dispute that it had ample notice prior to the defaults, yet it did 

nothing beyond Salem’s and Paracha’s alleged efforts to secure counsel. Furthermore, Paracha’s efforts did not commence until October 2014 and thus were too late to demonstrate good cause. Taken together, we conclude that the district court did not err by finding that Trade Well had not conducted a reasonable and diligent search for representation.

The district court also correctly found that Trade Well 

failed to take quick action to set aside the default judgments. 

 2 For instance, Salem could not remember any names of the attorneys 

he contacted, and both Salem and Paracha implausibly claimed that they 

did not discuss compensation with any of the attorneys they contacted. 

Salem’s filings are also inconsistent with his testimony. Salem alleged in 

court documents that he had contacted “over ten attorneys,” yet he testified that he had contacted 50 to 100 lawyers.

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This factorrelates to “the time elapsing between entry of judgment and the motion to vacate.” Jones v. Phipps, 39 F.3d 158, 

165 (7th Cir. 1994). Here, the default judgments were imposed 

on October 27, 2014, yet Trade Well waited five months before 

moving to set them aside. What constitutes “quick action” 

varies from case to case, but in this case the district court did 

not err by concluding that five months does not meet the 

standard, especially given that Trade Well had timely notice 

of the defaults. See id. (affirming the district court’s conclusion

that five weeks was too long to satisfy the quick action requirement).

Accordingly, the district court did not abuse its discretion 

by denying Trade Well’s motion to vacate. 

C. Effect of Trade Well I

Finally, Trade Well argues that this Court’s decision in 

Trade Well Irequires us to vacate the default judgments. Trade 

Well contends that had Salem not been erroneously removed 

from the case, the default judgments would not have been entered. Thus, in Trade Well’s view, our decision to vacate the 

order to remove Salem also operates to vacate the default orders caused by the district court’s later-reversed removal order.

We disagree. At the outset of Trade Well I, we noted that 

“[t]he only part of this messy case that is before us is Salem’s 

appeal from the various measures the court took against 

him.” 778 F.3d at 625. And we specifically stated that “[w]e 

are also not concerned with any possible appeal by Trade 

Well contesting the default judgment or the finding of a failure to prosecute.” Id.

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There is therefore no basis for reading Trade Well I to have 

any effect on the district court’s default orders. Moreover, 

even if we accept the premise of Trade Well’s argument, it is 

inaccurate to say that Salem’s removal caused Trade Well to 

default because Trade Well had ample opportunity to secure 

substitute representation and avoid default.

III. Conclusion

For the foregoing reasons, we AFFIRM the judgment of the 

district court.

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