UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

Mosaic Technology Corporation

v. Civil No. 05-cv-043-JM

Internet Now Technologies, LTD

O R D E R

Defendant moves for reconsideration of the court’s order

denying its motion to vacate the default judgment entered in this

action, or for relief under Fed. R. Civ. P. 60(b)(3) and

60(b)(6). Plaintiff filed an objection. 

Background

Plaintiff Mosaic Technology Corporation (“Mosaic”) is a New

Hampshire corporation with a principal place of business in

Salem, New Hampshire. Mosaic purchases high-end computer servers

and components, refurbishes them, and sells the refurbished

computer systems to end user clients nationwide.

Defendant Internet Now Technologies, Ltd. d/b/a iNow

Technologies (“iNow”), is a Delaware corporation with a principal

place of business in Fort Lee, New Jersey. iNow sells high-end

computer servers and computer components. iNow’s principals are

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1Litigation between the principals of iNow has been ongoing

in the New Jersey state courts since November 2004.

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its CEO Mario Ruiz and a company owned by the family of iNow’s

CFO, CTO and Co-Director Alan Kaplan.1 

On February 8, 2005, Mosaic commenced this action by filing

a complaint alleging that iNow breached a contract under which

Mosaic ordered certain high-end computer products from iNow for

which it pre-paid over $1,400,000. Mosaic alleged that iNow

forwarded only roughly half of the ordered product and refused to

refund the prepaid balance amount. Mosaic further alleged that

iNow sold some of the computer products for which Mosaic had prepaid directly to Mosaic’s customers interfering with Mosaic’s

business relationships. Mosaic sought to recover the amounts

owed on the contract and damages for iNow’s alleged tortious

interference with contractual and business relations, conversion

and unfair and deceptive trade practices. Mosaic mailed the

complaint to iNow’s CEO and CFO, but the complaint was not served

under Fed. R. Civ. P. 4. The parties made efforts were to

resolve the dispute over the next two and one-half months.

On April 27, 2005, Mosaic served the summons and complaint

on iNow’s CEO by certified mail. The receipt was signed by

Colleen Santiago, iNow’s former manager, who has stated in an

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2Although he did not file an appearance in this action,

Kaplan’s personal counsel sent a letter to the Clerk of Court

dated June 29, 2005 indicating that he had received an entry of

default as to iNow from Plaintiff’s counsel. See Document No. 8. 

Kaplan’s counsel stated that “it is our understanding that INOW

has not been served,” and therefore he believed that the entry of

default was premature. Id.

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affidavit that she gave the materials to Ruiz. On April 28,

2005, Mosaic served iNow’s appointed agent for service of process

by certified mail in Wilmington, Delaware. 

iNow did not file an answer. On June 3, 2005, the clerk

entered a default and directed Mosaic to submit its motion for

default judgment. On June 15, 2005, pursuant to LR 55.1(a),

Mosaic mailed a notice of default to iNow, to iNow’s agent for

service of process and to personal counsel for each of the

corporate principals.2

Mosaic moved for the entry of a default judgment for a sum

certain on July 5, 2005. On July 6, 2005, Mosaic’s counsel

mailed copies of the motion to iNow’s place of business, iNow’s

agent for service of process, and personal counsel for iNow’s

corporate principals. On July 15, 2005, a default judgment in

Mosaic’s favor in the amount of $708,848.44 plus pre-judgment

interest of $12,429.12 was entered. On the same day, the next

docket entry is iNow’s motion to vacate default judgment. Mosaic

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filed an objection on August 15, 2005.

 The Court denied iNow’s motion to vacate default judgment by

order dated August 19, 2005. See Document No. 20. The Court

found that there was no doubt that service had been made on iNow. 

The Court further found that iNow did not demonstrate that it had

a meritorious defense. The Court noted that Mosaic submitted an

affidavit from the Defendant’s CEO Ruiz. In his affidavit, Ruiz

acknowledged receipt of the service of process documents and that

iNow owes Mosaic the amount of the judgment entered against it.

In the instant motion, iNow argues that it should be granted

relief because the default judgment that was entered against it

was obtained through collusion between Mosaic and iNow’s CEO.

iNow argues that it is not liable to Mosaic on its breach of

contract claim because iNow’s CEO had the money to pay Mosaic,

but instead forwarded that money to a third party with Mosaic’s

consent. Mosaic denies these allegations.

Discussion

Relief under Fed. R. Civ. P. 60(b) “is extraordinary in

nature.” Karak v. Bursaw Oil Corp., 288 F.3d 15, 19 (1st Cir.

2002). Therefore, motions for relief under Rule 60(b) are only

to be granted sparingly. Id. “To succeed on a Rule 60(b)

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3Rule 60(b)(1) provides that a court may relieve a party

from a final judgment based on mistake, inadvertence, surprise or

excusable neglect. Fed. R. Civ. P. 60(b).

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motion, the movant must show that (1) the motion is timely, (2)

exceptional circumstances justify granting extraordinary relief,

and (3) vacating the judgment will not cause unfair prejudice to

the opposing party” Caisse v. DuBois, 346 F.3d 213, 215 (1st

Cir. 2003). The First Circuit has further found that the movant

must “show that granting the motion will not be an ‘empty

exercise’ by demonstrating that the underlying claim for relief

is likely to succeed on the merits.” Id. 

In an order issued on August 19, 2005, this Court found that

iNow had not demonstrated that it was entitled to relief under

Rule 60(b)(1).3 After reviewing iNow’s motion for consideration,

the Court finds no basis to vacate the August 19th order. iNow

still does not contest the validity of service upon it. 

Moreover, as the Court noted in its previous order, iNow cannot

show that it is likely to succeed on the merits because its CEO

has signed an affidavit that supports the entry of the judgment

against iNow. Accordingly, iNow has not demonstrated that

reconsideration of its claim for relief under Fed. R. Civ. P.

60(b)(1) is warranted either because the Court overlooked “a

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relevant factor deserving of significant weight” or because the

Court committed “a palpable error of judgment in calibrating the

decisional scales.” Serrano-Perez v. FMC Corp., 985 F.2d 625,

628 (1st Cir. 1993); see also Lumber Ins. Cos. v. Allen, 892 F.

Supp. 31, 32 (D.N.H. 1993).

Having found no support for the motion for reconsideration,

the Court considers whether iNow has established that it is

entitled to relief under Fed. R. Civ. P. 60(b)(3) and 60(b)(6). 

Rule 60(b) provides in pertinent part that:

On motion and upon such terms as are just, the court

may relieve a party or a party’s legal representative

from a final judgment, or proceeding for the following

reasons: . . . (3) fraud (whether heretofore denominate

intrinsic or extrinsic), misrepresentation, or other

misconduct of an adverse party; . . . or (6) any other

reason justifying relief from the operation of

judgment.

Fed. R. Civ. P. 60(b). To be entitled to relief under Rule

60(b)(3), a movant must satisfy two requirements; first, the

movant must demonstrate the opponent’s misconduct by clear and

convincing evidence, and second, the movant must show that the

misconduct foreclosed full and fair preparation or presentation

of its case. Karak, 288 F.3d at 21 (citing Anderson v. Cryovac,

Inc., 862 F.2d 910, 923 (1st Cir. 1988)); see also United States

Steel v. M. DeMatteo Constr. Co., 315 F.3d 43, 52-53 and n.10

Case 1:05-cv-00043-JM Document 27 Filed 10/13/05 Page 6 of 10
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(1st Cir. 2002); Tiller v. Baghdady, 294 F.3d 277, 280 (1st Cir.

2002). 

 iNow asserts that the default judgment entered in this case

was the result of collusion between Mosaic and iNow’s CEO Mario

Ruiz. Df.’s Mot. at 2, ¶ 1. iNow alleges that Mosaic and Ruiz

established a secret alliance and conspired to cause iNow’s

default. Id. iNow alleges that “the object of this collusion is

to erode iNow, capture its intellectual property and its customer

base, and place Mosaic in a more dominant position in the

marketplace in derogation of the rights of iNow’s other

shareholders.” Id. iNow supports its allegations with the

affidavit from Alan Kaplan and documents attached thereto. 

The allegations in Kaplan’s affidavit are not entirely

clear, and many of the allegations are plainly irrelevant to the

instant action. See e.g., Kaplan Aff., ¶ 9 (accusing Ruiz of

interfering in interstate and international commerce through a

pattern of racketeering activity including threatening to have

Kaplan killed, diverting millions of dollars of cash and equity

from iNow subsidiary companies, using iNow funds to bribe a judge

in Ecuador to escape a criminal prosecution, and breaching his

fiduciary duty to protect iNow). To the extent that the

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allegations in the affidavit pertain to Mosaic’s claims, Kaplan’s

allegations of wrongdoing are focused primarily on the actions of

iNow’s CEO. Kaplan complains that Ruiz did not inform Kaplan

that Mosaic had served him with the suit papers, and did not

inform Kaplan that Ruiz intended to cooperate with Mosaic in

obtaining a judgment against iNow. Kaplan Aff., ¶ 8. Citing an

e-mail that was allegedly sent from Mosaic’s President, Tom

Desmet, to Ruiz on July 19, 2005, Kaplan asserts that Mosaic

unfairly solicited and affidavit in support of the default

judgment from Ruiz. 

Even assuming that Kaplan’s allegations of Ruiz’s failures

to notify him of service of process or of Ruiz’s willingness to

sign an affidavit for Mosaic are accurate, those facts do not

demonstrate Mosaic engaged in misconduct. While the facts show

that Plaintiff’s President and Defendant’s CEO communicated

regarding Mosaic’s motion for default judgment, there is no

evidence Mosaic and Ruiz presented false information to the

court. iNow has not demonstrated that Ruiz’s testimony that iNow

owes the amount claimed by Mosaic is inaccurate. 

Furthermore, Kaplan confirms in his affidavit that Mosaic

wired iNow prepayments for the two purchase orders upon which

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Mosaic sought collection in this action, and admits that iNow

encountered a problem fulfilling the orders. Kaplan Aff., ¶¶ 20-

22. To the extent that the Court can decipher Kaplan’s remaining

allegations, the upshot appears to be that Mosaic’s original

purchase orders were supplanted by other “secret” purchase

orders, and that Mosaic consented to Ruiz forwarding money owed

to Mosaic to Sun Microsystems. Id., ¶¶ 24-29. 

The Court finds that iNow’s collusion claim is not clearly

supported by the evidence presented to the court, and is plainly

contradicted by its CEO’s affidavit. To be entitled to relief

under Fed. R. Civ. P. 60(b)(3), iNow must demonstrate that Mosaic

engaged in misconduct by clear and convincing evidence. iNow

falls well short of that standard here. 

Since iNow cannot demonstrate that Mosaic engaged in

misconduct, iNow cannot show that Mosaic’s misconduct prevented

it from fully and fairly defending this action before the default

judgment was entered against it. Thus, iNow has not demonstrated

that it meets either of the two requirements for relief under

Fed. R. Civ. P. 60(b)(3). 

iNow further requests that the Court grant it relief from

judgment under Fed. R. Civ. P. 60(b)(6). To obtain relief under

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Rule 60(b)(6), “a party must show ‘extraordinary circumstances’

suggesting that the party is faultless in the delay.” DavilaAlvarez v. Escuela de Medicina Universidad Central del Caribe,

257 F.3d 58, 67 (1st Cir. 2001). Rule 60(b)(6) does not apply to

the facts of this case. iNow’s CEO and agent for service of

process were served in this matter. Moreover, personal counsel

for iNow’s CFO was provided notice of the entry of default and of

the motion for default judgment, and iNow still did not respond

promptly. Thus, iNow cannot be found to be faultless in the

delay.

Conclusion 

For the reason set forth above, Defendant’s motion for

reconsideration or for relief under Fed. R. Civ. P. 60(b)(3) and

60(b)(6) (document No. 21) is denied in its entirety. 

SO ORDERED.

____________________________________

James R. Muirhead

United States Magistrate Judge

Date: October 13, 2005 

cc: David P. Eby, Esq.

Robert E. McDaniel, Esq. 

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