default judgment on or about March 23, 2004. After learning that Eileen was filing a Motion to
Vacate, he (and Makeco) also filed a Motion to Vacate on April 6, 2004.

Defendants have moved to vacate under both Federal Rule of Civil Procedure 60(b)(1)
and (6). However, these provisions are mutually exclusive. Pioneer Inv. Serv. Co. v. Brunswick
Assocs. Ltd. Partnership, 507 U.S. 380, 393 (1993). Rule 60(b)(6) allows relief only where
“extraordinary circumstances” show that the party seeking to vacate is faultless. /d. However,
where a party is partly to blame — as here — and seeks relief for neglect that is excusable, the party
may proceed only pursuant to and within the time frame of Rule 60(b)(1). Rule 60(b)(1)
provides that I may vacate a judgment for reasons of “mistake, inadvertence, surprise, or
excusable neglect.” This rule “establishes a high hurdle for parties seeking to avoid default
judgments and requires something more compelling than ordinary lapses of diligence or simple
neglect to justify disturbing a default judgment.” Jones v. Phipps, 39 F.3d 158, 162 (7th Cir.
1994). Defendants must show: (1) “good cause” for the default, (2) “quick action” to correct,
and (3) the existence of a “meritorious defense.” Jd.

It is doubtful that Defendants have satisfied their burden under Rule 60(b)(1). The initial
entry of default in this case was entered on April 8, 2003, and Defendants neither took action in
response to this entry nor took any action during the subsequent Rule to Show Cause proceeding
and during the course of the audit. In essence, the purported reason for their non-participation,
offered by Patrick and Makeco, was that Defendants essentially knew they were liable for
underpayment, but did not realize that the amount of underpayment would be so large and did not

realize that they would be also liable for attorneys’ fees and audit fees at the conclusion of the



On February 5, 2004, Plaintiff sent copies of the Audit Report to the Defendants, along
with a cover letter demanding payment of $334,670.65 and informing them that Plaintiff would
seek judgment if payment were not made.

On February 10, 2004, Plaintiff received a telephone call from a person identifying
himself as attorney Frank Howard and stating that he was calling for Patrick. Plaintiff informed
the caller of the status of this case, including that Patrick was in default, that the Audit Report
had been issued, and that Plaintiff was demanding over $330,000. There was no further contact.

On February 24, 2004, Plaintiff filed his Motion for Default Judgment and served copies
on Defendants. Defendants did not respond.

On March 2, 2004, I granted Plaintiffs Motion and entered a final judgment against
Defendants in the amount of $339,267.60.

On March 2, 2004, Plaintiff received a telephone call from a person identifying himself as
Patrick. At that time, Plaintiff confirmed that I had entered judgment for over $330,000.

Defendants Eileen, Patrick, and Makeco now move to vacate the default judgment.
Eileen Joyce claims that she was out of the country until February 25, 2004 and thus did not see
Plaintiffs most recent Motion for Default until after March 2, 2004. After notifying Patrick
Joyce of her intention to do so, she filed her Motion to Vacate on April 1, 2004.

Patrick Joyce (and Makeco) claims that he did not receive the Motion for Default until
March 3, 2004. Moreover, he claims that from a conversation with a union official on February
26, 2004 (this very well could have been the same conversation alleged to have occurred by
Plaintiff on March 2, 2004), he had the impression that I was going to continue the case to give

him time to obtain counsel. Patrick Joyce alleges that he subsequently learned of my entry of



audit. Defendants therefore acknowledge their liability but dispute the amount of liability. Their
failure to realize their liability for costs and fees is entirely irrelevant.

Although there might be good reason to doubt the sincerity of Defendants’ proffered
reason for failing to participate in this case and although Defendants may not have satisfied the
requirements of Rule 60(b)(1) for vacating a default judgment, I am inclined to proceed down a
path of lenity that gives Defendants an undeserved opportunity to dispute the amount of their
liability to Plaintiff. But such an opportunity must be crafted in a manner that acknowledges
Defendants’ history of non-participation in this case up to this point and the ensuing expenses
and work for Plaintiff as a result of their non-participation and refusal to cooperate with the
audit. Also, the opportunity must guard against further delay and prejudice to Plaintiff by
ensuring, as best as it can, that any further actions by Defendants will be taken for the good faith
purposes of meritoriously defending themselves.

If I grant any portion of Defendants’ respective Motions to Vacate Default Judgment, I
will not do so as to the portion of the entry of judgment pertaining to the $24,383.75 in audit
costs and the $22,746.52 in attorneys’ fees and costs. These are damages for which Defendants
acknowledge they are liable jointly and severally as a result of at least some amount of unpaid
contributions and their non-participation and refusal to cooperate in this case up to this point.
Accordingly, I will not consider granting any portion of Defendants’ motions unti! they satisfy in
full this portion of the entry of judgment for a total amount of $47,130.27. If Defendants fail to
satisfy this portion within twenty (20) days of the date of this order, then I will deny their
respective motions. If they pay within the time allowed, however, I will enter an order vacating

the default as to the remaining portions of the entry of judgment.



Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge James B. Zagel Sitting Judge if Other
or Magistrate Judge . than Assigned Judge
CASE NUMBER 02 C 9475 DATE 6/7/2004
CASE JAMES SULLIVAN vs. MAKECO PLUMBING, LTD., ET AL
TITLE
{In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
f be sented.
MOTION: of the motion being presented.)
DOCKET ENTRY:
qd) oO Filed motion of [ use listing in “Motion” box above.]
(2) a Brief in support of motion due
(3) o Answer brief to motion due. . Reply to answer brief due
(4) Oo Ruling/Hearing on set for at
(5) a Status hearing[held/continued to] [set for/re-set for] on set for at
(6) im} Pretrial conference[held/continued to] [set for/re-set for] on set for at :
7”) Oo Trial[set for/re-set for] on at
(8) oO [Bench/Jury trial] [Hearing] held/continued to at
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
COFRCP4(m) OLocal Rule 41.1 CFRCP41(a)(1) CIFRCP41(a)(2).
qo) oi {Other docket entry] Enter memorandum opinion and order entering and continuing
defendants motions (12-1 and 13-1) to vacate default judgment until further order of court.
(il) ff [For further detail see order attached to the original minute order.]
No notices required, advised in open court. “Document
lumber
No nolices required. number of notices :
Notices mailed by judge's staff. JUN 08 W
Notified counsel by telephone. ‘date docketed
o¥ | Docketing to mail notices.
Mail AO 450 form, Kah Sepa its
Copy to judge/magistrate judge.

date maited notice

courtroom Sheep bea hdge
pw deputy’s “ “SS
initials

Date/time received in
contra Clerk’s'OMmee 2 naling deputy inital

heel wn E ed



In the meantime, Defendant Patrick Joyce’s and Defendant Makeco Plumbing, Ltd.’s
Motion to Vacate Default Judgment and Defendant Eileen Joyce’s Motion to Vacate Default

Judgment are ENTERED AND CONTINUED.

ENTER:

\ oa

amgs B. Zagel : y
Unjted States Distridt Jud,

pare. JUN 0-7 2004



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

JAMES S. SULLIVAN, not individually but
as Trustee of PLUMBERS’ PENSION
FUND, LOCAL 130, U.A., ete.,

Plaintiff, No. 02 C 9475

Judge James B. Zagel
Vv.

MAKECO PLUMBING, LTD.; EILEEN
JOYCE d/b/a Makeco Plumbing; and
PATRICK JOYCE d/b/a Makeco Plumbing,

HOCKETED

Defendants. JUN 0 8 2004
MEMORANDUM OPINION AND ORDER

This is an ERISA action in which Plaintiff James T. Sullivan, not individually, but as
Trustee of Plumbers’ Pension Fund, Local 130, U.A., Plumbers’ Welfare Fund, Local 130, U.A.,
The Trust Fund for Apprentice and Journeymen Education and Training, Local 130, U.A., and
Chicago Journeymen Plumbers’ Local 130, U.A., Group Legal Services Plan Fund (“Plaintiff”)
secks damages against Defendants Makeco Plumbing, Ltd. (“Makeco”), Eileen Joyce d/b/a
Makeco Plumbing, Ltd. (“Eileen”), and Patrick Joyce d/b/a Makeco Plumbing, Ltd. (“Patrick”)
for unpaid contributions, penalties, interest, liquidated damages, audit costs, attorneys’ fees, and
court costs pursuant to collective bargaining agreements between Makeco and the Union and
pursuant to ERISA, 29 U.S.C. § 1001 e¢. seq.

After Defendants failed to allow an audit of their books and records, Plaintiff filed this
lawsuit on behalf of the Funds on December 30, 2002, to obtain an audit and recover all
appropriate damages. In the complaint — and at every subsequent stage thereafter — Plaintiff

requested the same relief, an audit for the period from January 25, 1996 to the present, and



judgment in favor of Plaintiff and against Defendants for all unpaid contributions, penalties,
interest, liquidated damages, audit costs, attorneys’ fees, and court costs owed under the
collective bargaining agreement and ERISA. Although duly served, Defendants did not respond.

On February 4, 2003, Plaintiff filed an Amended Complaint seeking an audit and all
appropriate damages. Although duly served, Defendants did not respond.

On April 1, 2003, Plaintiff filed a Motion for Default seeking judgment for an audit and
all appropriate damages. Although duly served, Defendants did not respond.

On April 8, 2003, I entered an Order finding each Defendant in default and awarding the
relief requested in Plaintiffs Motion for Default. The Order was duly served on Defendants.

On May 1, 2003, Plaintiff filed a Motion for a Rule to Show Cause and for attorneys’ fees
and costs incurred in preparing the Motion, based on Defendants’ failure to comply with the
Court Order of April 8, 2003. Defendants did not respond.

On May 8, 2003, I issued a Rule to Show Cause directing each Defendant to appear and
show cause why they should not be held in contempt for failing to comply with the Court Order.
I continued the hearing on the Rule on several occasions while Plaintiff tried to obtain
Defendants’ cooperation and the documents for the compliance audit. Unable to obtain
cooperation or sufficient documentation from Defendants, Plaintiff resorted to issuing subpoenas
to third parties in an effort to obtain information and documents for the audit.

Upon completing the compliance audit, the certified public accounting firm of Kaplan &
Co. issued its Report of Audit Changes (“Audit Report”). The Audit Report revealed that over

$210,000 was owed for unpaid contributions and other payments.