NO T REC OM ME ND ED F ORF ULL -TEXT PUB LIC ATION Fi le Name: 10a001 4n.06 No. 08- 4418 UN ITED STATES C OU RT O F APPEA LS FO R THE S IXTH C IR CU IT

T RI-CORNER INVES T MENTS LLC, Pl ain ti ff-A ppel lee , v. FI RS T D E F E N S E I N TE R N ATI O N A L G R O UP , IN C. ; CH RI ST OP HE R BA DS EY, Defend ant s-Appe llants, and JAC K M ALLORY ; STEVE H OD GES, Defendant s. / On ap p e a l from the Uni ted S tates Distr ict Court for the So uth ern District of Oh io

BEF OR E: RY

AN , C OLE, and CLA

Y , C ircui t J udg es. RY AN, Circuit Judge. T ri-C orne r Investm ent s, LLC, f iled a brea ch of contract sui t ag ain st Fi rs t D efense In ter nati onal Group, Inc. (FD IG) , and i ts cor porate o ff ic ers i n the Uni ted S tates D is tr ict C our t for the S outher n D is tr ic t of Ohi o, al leg ing f e d e ra l div ersi ty jurisdiction. Af

ter FDIG failed to answer the com plaint , T ri-C orne r f iled a mo tion fo r default judgme nt, which w as granted bythe district co urt. FDIG f iled a mo tion to v acat e the default jud g ment pursuantto Fede ra l Rul e of C iv il Procedu re 60( b) (1 ). The di str ic t c our t den ied the mot ion after f inding tha t FDIG h ad failed to esta blish excusable neglect for its fa ilure(0 8- 4418) -2
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to an sw er Tri-Corner’s com plaint

. W e ho ld tha t the district court did no t com mit an abu se of dis creti on i n deny ing F DI G’ s mot ion to v acat e the defaultj udg ment. I. FD IG is a C ali forni a c ompany thatmanufactures bul let -resist a n t product s. The presi dent of FD IG is C hr is topher Badsey , a named defendant in this case. In Ma rc h 2007, Tri -C or ner

ente re d i nto a w ri tten ag re ement w it h F DI G t o purc hase ele v en ar mored
v ehi cl es that w ere to be s hip ped t o N ige ria o n behal f of Tri -C or ner . Tri -C or ner made approx imat ely

$495, 000 i n wire t ra nsfers to FD IG as a depos it

. Tri -C or ner al leg es that F D IG di d no t s hi p th e v eh i c l es as ag ree d. F D IG al l eg es in re s po ns e th at , un de r t he t er ms of the purch ase agreem ent , it w as no t required to ship th e v ehicles u ntil it receiv ed th e f ull payme nt. FDIG also allegedly no tif ied T ri-C orne r by ema il that T ri-C orne r w as respo nsible for obt ain ing proper

cu sto ms doc umentati on and that, w it hout thi s document ati on, F DI G coul d notsh ip the v ehi cl es. C onseq uentl y , F DI G al leg es that itdi d notsh ip the v ehi cl es be c au s e pa y me ntin f ul l w as st i l l la c k i ng and bec au s e i t di d no t ha v e th e prop er c us to ms document ati on. On O cto ber

9, 2007, Tri -Co rn e r filed a c omplai nt ag ain st FD IG and i ts cor porate of f icers in the United Sta tes D istrict Court for the Sou the rn District of Ohio, alleging breach of contract , unj ustenri ch m e n t, and fraud

. Tri -C or ner se rv ed F DI G by

mai li ng a c erti fied copy of the compl ain t to FD IG’ s Cal ifor nia busi ness address . The answ er to the c omplai nt
w as due on Nov ember 13, 2007. T here is no dispu te that ser v ic e w as eff ect iv e and that FDIG failed to f ile an answ er as required by Fede ral Rule of Civ il Proced ure 12 (a)(1)(A).(0 8- 4418) -3
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In ex pla ini ng the re ason for it s failu re to file an answ er to the c omplai nt, FD IG sta tes that the C ali forni a address whe re F DI G w as law fully se rv ed i s a “ drop box ” address that FD IG opened as a nec ess ity . FD IG ex pla ins thatsi nce iti s a federal co ntract or i n the busi ness of manufactur ing defense- re lat ed i tems, i t i s i nv olv ed i n af fairs o f natio nal se cur ity and i s s ubj ectto cer

tai n s ecur ity

co nst ra int s. F DI G cl aims thatbec ause of this , i t ope ned a “drop bo x ” address an d tha t its practice w as to retrieve mail f rom th is “drop box” every one t o tw o w eeks

. In ad dit ion , FDIG ex pla ins thatbec ause of the s ecur ity cl earances re q uired i n F DI G’ s b usi ness , c ompany pol icy st ated that the mai l w oul d be opened only by the p re si dent, Bads e y. F DI G c ontends thatdue to c ertai n c ircums tanc es, i ncl udi ng Bads ey ’s abs ence from the count ry for an extended ti me peri od, the mail w as not p ic ked up for some t ime and F DI G di d notl ear n aboutthe lawsui t f il ed byTri -C or ner unti l after the entr y of default jud g ment. On N ov ember

16, 2007, three day s a fter F DI G’ s a nsw er to the c omplai nt w as due, T ri-Corne r filed a mo tion for default jud gmen t. On Jan uary 4, 2008 , the district court g ra n te d t h e moti on for default jud g ment. On Febr uar y 1, 2008, the d is tr ic t c our t hel d a hear ing on t he q uest ion of damag es. Atthi s h ear ing , onl y c o u n se l fo r Tri -C or ner w as present

. At th e c los e of the damag es hear ing , t he di str ic t c our t aw arded Tr i- Cor ner $476,32 3.72 in compens ator y damag es and $47 6,323. 72 i n puni ti v e damag es, for a tot al sum of $952, 647.44. On F ebr uar

y 18, 2008, three months after the answ er w as due, FD IG filed a moti on to vacat e t h e d e fault jud gmen t pursua nt to Federa l Rule of Civ il Procedu re 60(b)(1), cl aimi ng ex cus abl e neg lect. A h ear ing on t he moti on to v acat e w as held o n M ar ch 25,(0 8- 4418) -4
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200 8, w it h c o u n s e l for both sides prese nt. On Se pte mb er 22, 2 008 , the district court den ied FDIG’s mo tion, ruling tha t FDIG’s fa ilure to an sw er the co mp laint w as no t the result of ex cusab le neglect. FDIG the n ap pea led to this court see king relief f rom th e de f a u lt jud g ment. II. W e rev iew

a di str ict cour

t’ s deci si on to denya mot ion to v acat e a d efault jud g ment
s o u g h tp u rs u a n tt o Ru le 6 0 (b )( 1 ) u n d e r t h e “a b u s e o f d is c re t io n ” s t a n d a rd

. Bu rr e ll v. Hend erson , 434 F.3d 82 6, 83 1 (6th Cir. 200 6). “‘Ab use o f discretion is def ined as a def inite an d f irm conviction tha t the t rial court com mitt ed a clear error of judgmen t.’” Amer nati onal Indu s., Inc . v . Acti on- Tung sram, In c. , 9 2 5 F .2d 9 70, 9 75 ( 6th C ir . 199 1) (c it ati on omi tted)

. III . A district court may set aside a def ault judgmen t pursu ant to Federal Rule of Civ il Procedu re 60( b) on t he g ro unds of “mi sta ke, i nadv ertenc e, s ur pr is e, or ex cus abl e neg lect.” Fed. R . C iv . P. 60( b) (1 ). I n U nit ed C oin M eter C o. v . Se aboard C oast line R a ilroad, 705 F. 2d 839, 845 (6 th C ir . 198 3) , t his co urt s et ou t t hree appl ic abl e factors i n det er mini ng
w hether to v acat e a d ef a u lt j u d gment: “ (1 ) w hether the oppos ing par

ty w oul d be preju dic ed; ( 2) w hether the proponenthad a m er it or iou s c lai m or defense; and (3 ) w hether the propo nen t’s culpab le cond uct led to the default. ” W eiss v . St. Pa ul Fire & Marine Ins. Co. , 283 F .3d 7 90, 7 94 ( 6th C ir . 200 2) ( ci ti n g U nit ed C oin M eter , 705 F .2d a t 845 ). “ [A] par ty se eki ng to v acat e a d efault jud g ment und er R ule 60( b) (1 ) must demonst ra te firs t and foremostthatthe default did not re sul t from his cul pabl e condu ct.

. . . Onl y i f the mov ing(0 8- 4418) -5
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party make s this showing may the district court proce ed to consid er t he oth er Un ited Coin Me ter factors.” W eis s, 283 F .3d a t 794

. To show t h a t th e d e f aul t di d notresul t from cul pabl e c onduc t, a par ty mustdemonstrate the req uirements of Rul e 60( b) (1 )—that the default “‘ w as the p ro ductof mis tak e, i nadv ertenc e, s ur pr is e, or e x cus abl e neg lect.’ ” Id. (q uoti ng W aifersong , Ltd. v . Cl ass ic Mu si c Vendi ng , 976 F. 2d 290, 292 ( 6th C ir . 199 2) ). Asc ertai nin g w hether

neg lect i s ex cus abl e is an e q uit abl e det er minat ion tak ing i nto
acc ount all rel ev ant ci rc umstan ces , i ncl udi ng the follo w ing factors s et forth by the Uni ted Stat es Supreme Cour

t in Pione er

Inv est ment Serv ic es Co. v. Bruns w ic k Ass oci ates , 507 U. S. 3 80 ( 1993) : “( 1) the dang er of preju dic e to the other par ty , (2 ) the l eng th of del ay , ( 3) it s p otent ial i mpact on j udi ci al proceed ing s, (4 ) the reason for t he del ay , and ( 5) w hether the movant a cted in g ood faith. ” Jinks v . AlliedSigna l, I n c . , 2 5 0 F.3d 38 1, 38 6 (6th Cir. 2001) ( ci ti ng Pi oneer

Inv . Se rv s., 507 U. S. a t 395 ). The di str ict c our

t hel d tha t F DI G’ s fai lu re to answ er the compl ain t w as not d ue to
ex cus abl e neg lect. The di str ict c our t found t hat FD IG’ s ex pla nati on for i ts mail pol icy w as unreason abl e bec ause FD IG faile d to protec t ag ain st mail goi ng unread for long per iod s of time, ev en tho ugh the m ail proced ure w as com plete ly w ithin FDIG’s cont rol. The district
cour t found t hat F DI G had not present ed a v ali d jus ti ficat ion for th eir mai l pol icy

and faile d to presentan e x pla nati on w hy alt er nati v e means for ensur ing the re adi ng of mail w ere not used. The di str ict c our t hel d tha t F DI G’ s reason for t he del ay w eig hed ag ain st findi ng ex cus abl e neg lect. W e ag re e w it h the di str ic t c our t t hat F DI G has fail ed to presenta com pelling explanat ion fo r w hy it neglecte d to ensure that mail accep ted a tFD I G ’s busi ness address w as re ad i n a t imel y manner .(0 8- 4418) -6
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The dis tr ict cour

t als o found that there w as dang er of preju dic e to T ri- Cor ner beca use o f

the de lay and pos s ib le f utu re delay in obtain ing a ref und for the n early $500,00 0 tha t Tr i- Cor ner pai d to FD IG. The di str ic t c our t al so found that, w hil e the del ay in li ti g ati on w as onl y

a few months , t he del ay

and it s p otent ial i mpact on j udi ci al proceed ing s d id not s uppor t F DI G’ s c ontent ion thati ts del ay i n ans w er ing the compl ain t
w as ex cus abl e. Onl y

the final factor

—w hether FD IG act ed i n g ood fait h—w eig hed i n fav or of FDIG. Balancin g all the se facto rs as required und er the Pion eer case , the district court found that FD IG had fail ed to es tabl is h ex cus abl e neg lect. W e c annot say , as w e mustto find an abuse of di sc re ti on, that w e hav e a d efini te and fir m conv icti on th at the dis tr ict cour t commi tted a cl ear er ro r of judg ment i n c oming to it s c onclusion

. The di str ict c our t w eig hed t he Pi oneer

factors a ppropr iat ely

and did not abuse i ts dis creti on i n findi ng thatF DI G had fail ed to sh ow ex cus abl e neg lect. Since FDIG had no t dem onst rated ex cusab le n e glect, the district cou rt correctly decl ine d to cons ide r the o ther U nit ed C oin M eter factors of preju dic e and t he ex is tenc e of
a mer it or iou s d efense, a nd s o do w e. See W eis s, 283 F .3d a t 794

. IV. W e c oncl ude t hat t he dis tr ict cour t did not commi t an abuse of di sc re ti on by deny ing FD IG’ s moti on to v acat e the d efault jud g ment, and w e A FFIRM t he judgme nt of the district
cour t.