Court Opinion

ID: 4692747
Source: CourtListenerOpinion
Date Created: 2021-06-03 20:01:59.717604+00
Date Added: 2024-06-11T08:05:17.807927
License: Public Domain

USCA11 Case: 20-13530     Date Filed: 06/03/2021   Page: 1 of 9

                                                           [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                       ________________________

                             No. 20-13530
                         Non-Argument Calendar
                       ________________________

                   D.C. Docket No. 0:11-cv-61073-DPG

JUDY L. FORSTER,
PATRICK LACY,
BRUCE HIRSCHFELD,

                                                            Plaintiffs-Appellees,

                                   versus

SOOKRANI NARAIN,

                                                           Defendant-Appellant.

                       ________________________

                Appeal from the United States District Court
                    for the Southern District of Florida
                      ________________________

                                (June 3, 2021)

Before WILLIAM PRYOR, Chief Judge, WILSON and ROSENBAUM, Circuit
Judges.
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PER CURIAM:

      Sookrani Narain appeals the denial of her motion to vacate a final default

judgment in a proceeding supplementary commenced by Judy Forester, Patrick

Lacy, and Bruce Hirschfeld, who were former employees of Narain’s defunct

investment company. The district court entered a final judgment against Narain

after she failed to answer the employees’ amended complaint to pierce the

corporate veil and require her to satisfy a default judgment previously entered

against her company for wrongful termination. Narain argues to vacate the final

judgment based on “excusable neglect.” See Fed. R. Civ. P. 60(b)(1). We affirm.

      Forster, Lacy, and Hirschfeld obtained a default judgment of $204,464.15

against Narain’s company for violating the Age Discrimination in Employment

Act. Forster v. Nations Funding Source, Inc., 648 F. App’x 850, 850–51 (11th Cir.

2016). The district court dismissed a related complaint against Narain without

prejudice because the three employees failed to comply with a filing deadline. Id.

at 851. When the employees were unable to collect the judgment against Narain’s

company, they filed motions to commence proceedings supplementary and to

implead Narain to collect the unsatisfied judgment based on the corporate alter ego

doctrine, but the district court denied the motions on the ground the employees

sought to “circumvent the sanction” against them. Id. On appeal, we concluded that

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the employees were entitled to proceedings supplementary, vacated the order that

denied their motion, and remanded for further proceedings. Id. at 851–52.

      On remand, the three employees filed an amended complaint for proceedings

supplementary that was served, along with an order of the district court setting

January 12, 2017, as the deadline to file an answer, on Narain at her residence in

Lauderdale by the Sea, Florida. In the amended complaint, the employees alleged

that bank records proved that Narain drained her company’s accounts of more than

$200,000 while the employment action was pending and that Narain admitted

under oath to intentionally destroying corporate records.

      In April 2017, on the employees’ motion, the district court ordered Narain to

show cause why judgment should not be entered against her. On May 16, 2017,

Narain mailed a letter to the district court on which she listed her Lauderdale by

the Sea residence as the return address on the envelope. In her letter, Narain

challenged the default judgment against her company, argued that her company did

not have “$203,001.69 when [it] closed” or when the judgment was entered, and

denied “tak[ing] the funds from the company” or “hav[ing] an account . . . [where

she] was wrongfully accused of fraudulent transfer of funds.” She stated she

received the amended complaint and the order to file an answer, but she “did not

know that [she] needed to respond” and had yet to file an answer because “there

was no time frame on the document to respond.”

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      The district court treated Narain’s letter as a motion for an extension of time.

On March 29, 2018, the district court ordered Narain to file an answer to the

amended complaint “[b]y Noon on Friday, April 20, 2018,” with the warning that

noncompliance would result in it “entertain[ing] a renewed Motion for Default

Final Judgment from Plaintiffs.” The order was mailed to Narain at her Lauderdale

by the Sea address. Narain failed to file an answer.

      On July 9, 2018, the employees moved for a final default judgment. The

employees attached to their motion copies of bank records showing that Narain

systematically withdrew all the funds in two corporate accounts. After the copy of

the motion mailed to Narain’s address was returned by the postal service marked as

undeliverable, the employees notified the district court of the service issue.

      In September 2018, Narain sold her building in Lauderdale by the Sea and

moved to Central Florida. Narain did not notify the district court of her change of

address.

      On March 25, 2019, the district court sua sponte entered a final default

judgment against Narain in the proceeding supplementary. The district court ruled

that the three employees could avoid Narain’s transfer of “funds from two separate

[company] bank accounts” because “the[] transfers were insider transfers,

undertaken with the intent to delay and defraud [them], as judgment creditors with

respect to [Narain’s company] . . . [as the] Judgment Debtor,” the “transactions

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were concealed from [them] during their discovery in aid of execution, and the

transfers consisted of assets that were substantially belonging to Judgment

Debtor.” The district court also ruled that the employees could pierce the corporate

veil and apply Narain’s assets to satisfy the default judgment against her company

because it “was a mere instrumentality or alter ego of [Narain] . . . [that she]

improperly used . . . [and because] an unfavorable spoliation inference should

apply based on [her] intentional destruction of [company] records.”

      On December 24, 2019, Narain moved to vacate the default judgment. She

argued that she was unaware of the March 2018 order, she had meritorious

defenses to the employees’ argument to pierce the corporate veil, and her failure to

file an answer was due to excusable neglect. See Fed. R. Civ. P. 60(b)(1). Narain

submitted a declaration that she had “recently learned” of the March 2018 order

and that it “either never made it to [her] Lauderdale-by-the-Sea address or was

inadvertently lost while [she] and [her] family were dealing with [her] mother’s

[diagnosis and treatment for diverticulitis] and [her] constant commutes to

Orlando” to assist her mother. She also declared that, “[d]espite [her] constant

commutes,” she “was still receiving all mail at [her] Lauderdale by the Sea

address” and her “husband was in the office of the building and forwarded all

important mail” until they sold the building in September 2018.

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      On recommendation of a magistrate judge, the district court denied Narain’s

motion to vacate. The district court ruled that the “facts and circumstances” of the

litigation “negate[d] a finding of excusable neglect.” The district court found that

Narain identified no good cause to excuse her failure to file an answer when she

“acknowledged receiving” the order to respond “nearly 3.5 years” earlier and then

received an extension of time “over a year after her answer was due.” The district

court found that Narain “speculate[d], without supporting evidence, that [the

March 2018 order] may not have been delivered” “[y]et . . . [also] acknowledge[d]

that it may have been received and misplaced thereafter.” In any event, the district

court determined that Narain “compounded the problem by ignoring the case for

more than 2.5 years (from when she sent in her letter)” and regarded her “failure to

even check on the status of th[e] case for such a long period . . . [as] exhibit[ing] a

reckless disregard for the[] judicial proceedings.” The district court also found that

Narain “fail[ed] to establish the existence of any meritorious defenses” by denying

liability on behalf of her company, “general[ly] . . . denying that she made any

fraudulent conveyances,” disclaiming ownership of and the existence of the

corporate bank accounts, and admitting that her company was insolvent. And the

district court found that vacating the default judgment would prejudice the

employees because, in addition to already enduring “spoliation of evidence,” they

would have difficulty “discover[ing] relevant witnesses and records” due to the

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passage of time and would lose the benefit of the proceeding supplementary to

promptly satisfy the outstanding judgment.

      We review the denial of a motion to vacate a final judgment for abuse of

discretion. In re Worldwide Web Sys., Inc., 328 F.3d 1291, 1295 (11th Cir. 2003).

“A district court abuses its discretion if it applies an incorrect legal standard,

follows improper procedures in making the determination, or makes findings of

fact that are clearly erroneous.” Cordoba v. DIRECTV, LLC, 942 F.3d 1259, 1267

(11th Cir. 2019) (quoting Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1264 (11th

Cir. 2009)). We will not disturb the denial of motion to vacate unless there exists

“a justification so compelling that the [district] court was required to vacate its

order.” In re Worldwide Web, 328 F.3d at 1295 (quoting Solaroll Shade & Shutter

Corp. v. Bio-Energy Sys., Inc., 803 F.2d 1130, 1132 (11th Cir. 1986)).

      A district court “may relieve a party . . . from a final judgment, order, or

proceeding . . . for excusable neglect.” Fed. R. Civ. P. 60(b)(1). “The

determination of what constitutes excusable neglect is generally an equitable one,

taking into account the totality of the circumstances surrounding the party’s

omission.” Sloss Indus. Corp. v. Eurisol, 488 F.3d 922, 934 (11th Cir. 2007). A

party may obtain relief based on excusable neglect if “(1) it had a meritorious

defense that might have affected the outcome; (2) granting the motion would not

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result in prejudice to the non-defaulting party; and (3) a good reason existed for

failing to reply to the complaint.” In re Worldwide Web, 328 F.3d at 1295.

      The district court did not abuse its discretion by refusing to vacate the final

default judgment. Narain failed to provide a good reason for failing to participate

in an action for proceedings supplementary that lasted more than three years. See

Eurisol, 488 F.3d at 934. She ignored the order of the district court to file an

answer by January 2017, and she squandered the opportunity to file a response for

more than a year after the deadline expired.

      “The longer a defendant . . . delays in responding to a complaint, the more

compelling the reason [she] must provide for [her] inaction . . . to set aside a

default judgment.” Id. at 935. And the district court reasonably determined, in its

words, that “[t]he reasons Narain provide[d] for her inaction [were] far from

compelling.” Narain declared that she did not receive the order instructing her to

file an answer by April 2018, but service of other filings had been effected for

years at the same address where the order was sent. Likewise, Narain’s alternative

explanation that she misplaced the order was insufficient to justify her inactivity.

      Narain also failed to act diligently in her defense. See id. at 935–36; Fla.

Physician’s Ins. Co. v. Ehlers, 8 F.3d 780, 784 (11th Cir. 1993). Despite knowing

that the action for proceedings supplementary was pending, Narain failed to

monitor the status of the case. Narain never notified the district court of her change

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in address in September 2018. Although Narain contends that she thought the

action had ended, as the district court stated, the belief that her “case disappeared”

after she sent her letter “is simply not reasonable or excusable.”

      We AFFIRM the denial of Narain’s motion to vacate the final default

judgment.

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