Court Opinion

ID: 2961862
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:48:57.794078+00
Date Added: 2024-06-11T11:42:22.423895
License: Public Domain

USCA1 Opinion

	

          March 31, 1993        [NOT FOR PUBLICATION]                            United States Court of Appeals                            United States Court of Appeals                                For the First Circuit                                For the First Circuit                                 ____________________        No. 92-2107                       ROBERT PLOUFFE, d/b/a HOBBIES UNLIMITED,                                Plaintiff, Appellant,                                          v.                               NEW PACE, INC., ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF RHODE ISLAND                [Hon. Raymond J. Pettine, Senior U.S. District Judge]                                          __________________________                                 ____________________                                        Before                             Torruella, Selya, and Stahl,                                   Circuit Judges.                                   ______________                                 ____________________            Jeffrey A. Lanphear for appellant.            ___________________            Peter F. Mathieu with  whom Dennis S. Baluch and Baluch, Mahoney &            ________________            ________________     _________________        Gianfrancesco were on brief for appellees.        _____________                                 ____________________                                 ____________________                      Per  Curiam.   In this  appeal, plaintiff-appellant                      ___________            Robert Plouffe claims that  the district court (1) improperly            vacated an entry  of default in order to reach  the merits of            his book account claim; and (2) erred when, upon reaching the            merits,  it declined to pierce the corporate veil in order to            hold  defendants-appellees Bruce  and Pamela  Ross personally            liable on the claim.  Finding no error, we affirm.                                          I.                                          I.                                          __                       FACTUAL BACKGROUND AND PRIOR PROCEEDINGS                       FACTUAL BACKGROUND AND PRIOR PROCEEDINGS                       ________________________________________                      In  1983, Bruce  and Pamela  Ross formed  New Pace,            Inc.  (hereinafter "New Pace"),  a Massachusetts corporation,            in  order to own and operate hobby shops in Massachusetts and            New  Hampshire.    From  approximately  1983  to  1990,  they            purchased hobby supplies  for their stores from  Plouffe.  By            1990, however, the stores had failed, the corporation and the            Rosses were insolvent, and Plouffe was owed over $61,000.                      In  May  of  1990,  Plouffe  commenced  a diversity            action  in Rhode  Island Federal  District Court  against New            Pace and against  the Rosses individually  for the amount  of            the debt.  The  Rosses failed to answer the  complaint within            twenty days as required by Fed. R. Civ. P. 12(a), and Plouffe            promptly filed for an entry of  default under Fed. R. Civ. P.            55.                         Subsequent  to  the  entry  of  default,  New  Pace            admitted  liability  on the  full amount  of  the debt.   The                                         -2-                                          2            Rosses, however, denying personal liability,  moved to vacate            the  entry  of default  against  them.    A Magistrate  Judge            granted the motion to vacate, and the case went to trial.                      The  sole  issue at  the  one-day  bench trial  was            whether the Rosses  should be held personally  liable for New            Pace's debt.  The evidence at trial  showed that New Pace had            failed  to observe  several corporate  formalities, including            record-keeping and holding annual meetings.   The corporation            had, however, filed corporate income tax  returns, maintained            a separate corporate bank  account, and made all  payments to            Plouffe from  the corporate account.   Moreover, the district            court  found no bad faith or  misuse of the corporate form by            the Rosses.   Accordingly, it declined  Plouffe's entreaty to            disregard the  corporate form and hold  the Rosses personally            liable  on  New Pace's  debt.   As  noted above,  Plouffe now            argues  that the  district court  erred in  (1)  vacating the            entry of default; (2) refusing to hold  the Rosses personally            liable on the debt.  We address these arguments in turn.                                         II.                                         II.                                         ___                                      DISCUSSION                                      DISCUSSION                                      __________            A.  The Default            _______________                        While there is no precise formula for determining            when to set aside a default, a district court should consider            "`whether the  default was willful, whether  setting it aside            would  prejudice  the adversary,  and  whether a  meritorious                                         -3-                                          3            defense is  presented.'" Leshore v. County  of Worcester, 945                                     _______    ____________________            F.2d 471, 472 (1st  Cir. 1991) (quoting Coon v.  Grenier, 867                                                    ____     _______            F.2d  73,  76  (1st  Cir. 1989))  (citation  omitted).    Our            standard  of review  on appeal is  deferential.   "A district            court's action on a motion to set aside a default lies within            the court's  sound discretion  and should be  overturned only            for abuse of that discretion."  Id.  Moreover, we are  guided                                            ___            by  the  "`philosophy  that  actions   should  ordinarily  be            resolved on their merits.'"   Id. (quoting Coon, 876  F.2d at                                          ___          ____            76).                      A  careful review of the record in the instant case            satisfies us  that the Magistrate Judge  properly weighed the            factors  of  willfulness,  prejudice  and the  merit  of  the            defense  in  vacating  the  entry of  default.    The  record            presents  no  evidence  of  willful default  by  the  Rosses;            Plouffe  failed  to articulate  any  prejudice;1  and, as  is            demonstrated more fully infra,  the Rosses' defense that they                                    _____            were  not personally  liable for  the debts  of New  Pace was            meritorious.  Accordingly, we find no  abuse of discretion in            the Magistrate Judge's order vacating the entry of default.2                                            ____________________            1.  Both below  and on appeal, Plouffe  has insisted, without            elaboration,  that he was  prejudiced by the  passage of time            which  followed the  default.  We  agree with  the Magistrate            Judge that, Plouffe's  insistence aside, the record  provides            no evidence of prejudice due to the passage of time.            2.  Plouffe  also argues that he  is entitled to  the cost of            personal service on New Pace and the Rosses because he served            them  once   by  mail,   received  no   acknowledgement,  and                                         -4-                                          4            B.  Piercing the Corporate Veil            _______________________________                      Plouffe's second ground for appeal fares no better.            Relying almost exclusively on  the Rosses' failure to observe            corporate formalities, Plouffe argues that the district court            erred  in declining to pierce the corporate veil and hold the            Rosses personally liable on New Pace's debt.                      Under  Massachusetts  law,3   while  disregard   of            corporate formalities is one  factor which courts consider in            determining whether  to  disregard the  corporate  form,  see                                                                      ___            Evans  v.  Multicon Constr.  Corp.,  574  N.E.2d 395,  398-99            _____      _______________________            (Mass.  App. Ct.  1991);  Pepsi-Cola Metro.  Bottling Co.  v.                                      _______________________________                                            ____________________            subsequently effected personal service as required by Fed. R.            Civ.  P.  4(c)(2)(C)(ii).    Costs  are  allowed  in  such  a            situation  "[u]nless good cause is  shown."  Fed.  R. Civ. P.            4(c)(2)(D).   In the instant case, the Magistrate Judge heard            evidence  on  the  Rosses'  failure  to  acknowledge service,            including their assertions that  they were preoccupied trying            to keep their business afloat and that they had no counsel in            Rhode Island.   Based on this evidence, the  Magistrate Judge            determined that  good cause  had been  shown for the  Rosses'            failure to acknowledge service by mail.  Plouffe v. New Pace,                                                     _______    _________            Inc.,  1992  WL  426456,  at  *1  (D.R.I.   July  19,  1992).            ____            Reviewing  this determination  under  an abuse  of discretion            standard, Coon, 867 F.2d at 76, we find nothing in the record                      ____            which  would warrant reversing the Magistrate Judge's finding            of good cause.                        To the  extent that  Plouffe seeks other  costs and            attorney's fees, he does so in a perfunctory manner.  We have            often  warned that  arguments made  in a  perfunctory manner,            unaccompanied by some effort at developed argumentation,  are            deemed waived.    Federal Deposit  Ins. Co.  v. World  Univ.,                              _________________________     _____________            Inc.,  978  F.2d 10,  15 (1st  Cir.  1992).   Accordingly, we            ____            reject Plouffe's additional requests for costs and attorney's            fees.            3.  The parties do not dispute that Massachusetts law governs            the issue of  whether the  Rosses are to  be held  personally            liable for New Pace's debts.                                           -5-                                          5            Checkers, Inc., 754 F.2d 10, 14-16  (1st Cir. 1985) (applying            ______________            Massachusetts  law), it is by no means the sole determinative            factor.   Rather, courts examine a series of factors to "form            an opinion  whether  the  over-all  structure  and  operation            misleads."    Evans,  574  N.E.2d   at  400.    Of  paramount                          _____            importance is  the fact that, without  exception, "[t]here is            present in the  cases which have looked through the corporate            form  an  element of  dubious  manipulation  and contrivance,            finagling,  such that corporate  identities are  confused and            third  parties  cannot be  quite certain  with what  they are            dealing."  Id.                       ___                      After hearing Bruce  Ross's testimony and reviewing            all of the evidence at trial, the district court specifically            found no such dubious manipulation or contrivance on the part            of  the  Rosses.4   We  find  nothing  to  suggest that  this            factual finding was erroneous.                          In addition, while the Rosses'  record-keeping was            clearly  insufficient under  Massachusetts law, we  note that            New Pace met its corporate obligations at least to the extent            that it  (1) filed  corporate tax returns;  (2) maintained  a            separate  corporate  bank  account;   and  (3)  paid  Plouffe            exclusively from this corporate account.  In sum, the  record                                            ____________________            4.  In its final order, the district stated: "There is simply            no doubt that the defendant, Mr. Ross, is not a conniver.  He            is  merely   unsophisticated   and  ignorant   of   corporate            niceties."                                           -6-                                          6            offers no  evidence suggesting that the  Rosses' conduct rose            to a  level which justifies disregarding  the corporate form.            Accordingly,  we  decline  to  disturb  the  district court's            verdict in favor of the Rosses.5                                           III.                                         III.                                         ____                                      CONCLUSION                                      CONCLUSION                                      __________                      For  the  foregoing  reasons,   the  order  of  the            district court is affirmed.                              ________                                            ____________________            5.  Plouffe also  argues that the Rosses  assumed or admitted            personal  liability on New Pace's debt when Bruce Ross sent a            letter  to his  creditors,  including Plouffe,  promising  to            repay  his debts.    It is  well  established that  where  an            individual  assumes personal  responsibility for  a corporate            debt  due  to  a belief  that  s/he  is  morally, though  not            legally, inclined to do so,  such an agreement is  gratuitous            and unenforceable  due to lack of consideration.   See, e.g.,                                                               ___  ____            Gishen  v. Dura  Corp.,  285 N.E.2d  117,  123 (Mass.  1972).            ______     ___________            Bruce  Ross's  testimony at  trial,  as  well as  his  letter            promising  to  pay New  Pace's  debts,  established that  his            promise  to  pay  was  exactly  such  a  gratuitous  promise.            Accordingly, we  agree with  the district court's  finding of            unenforceability.                      In  addition,  Plouffe   raises  issues  of  unjust            enrichment  and quasi-contract.    To the  extent that  these            arguments were made to the district court, they were  offered            for  the first time in  a perfunctory manner  in a post-trial            memorandum.  It  is well  settled that "arguments  made in  a            perfunctory manner below are deemed waived on appeal."  World                                                                    _____            University,  978 F.2d at 16.  Thus, we treat Plouffe's unjust            __________            enrichment and quasi-contract arguments as waived.  Moreover,            even if we were to reach these arguments on their merits, our            decision that Plouffe contracted with  New Pace, and not with                                                                 ___            the Rosses,  would preclude  Plouffe from  recovering against            the  Rosses  on  theories  of unjust  enrichment  and  quasi-            contract.                      Finally, to  the extent  that Plouffe raises  other            arguments on appeal (such as his insistence that the district            court  should  have  levied  sanctions  and  entered  summary            judgment in his  favor), they are meritless and  are rejected            without further comment.                                         -7-                                          7