Court Opinion

ID: 3003152
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:39:40.760403+00
Date Added: 2024-06-11T12:53:43.659276
License: Public Domain

In the

United States Court of Appeals
              For the Seventh Circuit

No. 08-1967

B AKERY M ACHINERY & F ABRICATION, INCORPORATED ,

                                                 Plaintiff-Appellant,
                                 v.

T RADITIONAL B AKING, INCORPORATED ,

                                                Defendant-Appellee.

            Appeal from the United States District Court
       for the Northern District of Illinois, Eastern Division.
        No. 1:06-cv-05150—Joan Humphrey Lefkow, Judge.

     A RGUED F EBRUARY 11, 2009—D ECIDED JUNE 29, 2009

 Before B AUER, R IPPLE and W OOD , Circuit Judges.
  B AUER, Circuit Judge. This case is an example of how
the sins of a lawyer can be visited upon the client. In a
contract dispute between Bakery Machinery & Fabrica-
tion (BMF), an Illinois corporation, and Traditional
Baking, Incorporated (TBI), a California corporation, the
district court entered default judgment against BMF
and denied BMF’s motion to vacate the default. On
2                                              No. 08-1967

appeal, BMF argues that the judgment should be vacated
under Federal Rule of Civil Procedure 60(b)(6). We dis-
agree; the record does not warrant vacating the default
judgment. Therefore, we affirm the district court’s denial.

                   I. BACKGROUND
   BMF hired attorney James Hinterlong to sue TBI in an
Illinois court over a contract dispute. TBI successfully
removed the lawsuit to the district court on diversity of
citizenship grounds. Although the court clerk mailed
Hinterlong an appearance form, Hinterlong failed to
file an appearance.
  TBI answered the complaint and counterclaimed. The
district court entered a scheduling order that required
Rule 26(a)(1) disclosures to be filed by January 10,
2007. Hinterlong did not file the disclosures by the dead-
line.
  The district court then ordered that any amended
pleadings be filed by February 28, 2007, with responses to
be filed by March 14, 2007. Hinterlong did not file an
amended complaint, but TBI filed an amended counter-
claim on February 28, 2007. Hinterlong failed to respond
to TBI’s amended counterclaim by March 14, 2007.
  TBI informed Hinterlong that he had not addressed
the amended counterclaim; Hinterlong responded that
he had not seen the amended counterclaim. Although
there is a dispute as to whether Hinterlong had received
a copy of the amended counterclaim, TBI sent, and
Hinterlong received, another copy. Hinterlong agreed to
No. 08-1967                                             3

file an answer to the counterclaim and make his Rule 26
disclosures by March 27, 2007. In the event, Hinterlong
filed neither an answer nor disclosures by that date; the
district court then ordered that he respond by April 2,
2007. Once again, he failed to do so.
  TBI then moved for default judgment based on BMF’s
failure to comply with the district court’s order of
March 27, 2007, and also moved for sanctions and an
order to compel BMF to serve its tardy Rule 26 disclo-
sures. In response to the default motion, Hinterlong filed
(albeit not electronically in accordance with the court’s
General Order on Case Filing) an answer to TBI’s
amended counterclaim.
  On April 17, 2007, the district court granted TBI’s
motion to compel and continued TBI’s motion for
sanctions until May 29, 2007. The district court
also denied, without prejudice, TBI’s motion for default
judgment.
  On June 25, 2007, the district court granted TBI’s
motion for sanctions in the amount of $1,375.00. The
district court also ordered Hinterlong to deliver a
copy of the sanctions order to BMF which included the
statement that “unless the default is attributable to the
client . . . the cost of this award will not be imposed on
the client but rather will be borne by counsel.” Hinter-
long did not provide the order to BMF.
  TBI then filed a 73-item request for admission of
facts and the genuineness of documents, which Hinter-
long never answered.
4                                              No. 08-1967

  On September 6, 2007, TBI moved to strike BMF’s
pleadings, for a default judgment against BMF, and
additional sanctions; Hinterlong responded, although
not electronically. The district court, on September 24,
2007, ordered Hinterlong to file an appearance, pay a
sanction for his failure to file an appearance on time, pay
the un-paid sanctions ordered on June 25, 2007, and
explain why he had failed to file electronically. The
district court noted that “Hinterlong has unreason-
ably failed to comply with the court’s General Order
on Electronic Case Filing . . . . Hinterlong does not deny
that he has failed to comply with the court’s General
Order on Electronic Case filing after having been ad-
monished by the court to do so.” The district court
warned Hinterlong that if these orders were not
complied with by October 24, 2007, all of BMF’s pleadings
would be stricken without leave to re-file and that the
court would consider TBI’s motion for default on
October 25, 2007.
  Hinterlong did not comply with the district court’s
September 24, 2007 orders and failed to appear before
the court on October 25, 2007. The district court then
struck all of BMF’s pleadings without leave to re-file;
granted TBI’s motion for default on its amended counter-
claim against BMF; and set a date to determine TBI’s
damages under the amended counterclaim.
   On November 7, 2007, TBI moved for entry of judg-
ment against BMF on the issue of damages based on
supporting affidavits. On November 20, 2007, Hinterlong
filed a response, but again not electronically, and failed
No. 08-1967                                             5

to explain his failure to comply with any portion of the
September 24, 2007 order. That same day, the district
court granted TBI’s default motion and entered judg-
ment against BMF in the amount of $582,000.00.
  On December 14, 2007, Hinterlong moved to vacate
the order striking BMF’s pleadings, and the default
award in favor of TBI. TBI timely responded, but BMF
did not reply by the deadline of January 11, 2008.
  On January 23, 2008, BMF was informed, purportedly
for the first time, that a default judgment had been
entered and recorded against it. A week later, BMF moved
to substitute its counsel and stay all proceedings. In
support of the motion, BMF asserted that for the
previous nine months, every inquiry it made of Hinter-
long concerning the status of the litigation was
answered with his assurance that it was “going well.”
The district court granted the motion.
  On February 19, 2008, BMF moved for leave to file a
reply in support of its motion to vacate, originally filed
by Hinterlong, citing Hinterlong’s repeated inactions.
TBI objected and argued that the reply was to have
been filed by January 11, 2008 and that BMF’s motion
made new arguments—matters not made in the
original motion to vacate—about Hinterlong’s perfor-
mance. Although the district court granted BMF’s motion
for leave to file, it indicated that it would disregard
any new facts and arguments inappropriate for a reply
brief.
 The district court denied BMF’s motion to vacate on
April 15, 2008. It found that Hinterlong had never ex-
6                                                  No. 08-1967

plained his repeated failures to comply with the court’s
orders and that his actions were willful and did not
warrant relief under Fed. R. Civ. P. 60(b)(1). The district
noted that, except for excusable neglect, a party is held
to the conduct of its attorney.
    This timely appeal followed.

                     II. DISCUSSION
  On appeal, BMF argues that the district court erred
when it denied BMF’s motion to vacate the default judg-
ment. Specifically, BMF argues that the residual provision
of Fed. R. Civ. P. 60(b)(6) allows this relief on equitable
grounds. We review the district court’s denial of a
motion to vacate a default judgment only for an abuse of
discretion. e360 Insight v. Spamhaus Project, 500 F.3d 594,
598 (7th Cir. 2007). “Abuse of discretion in denying a 60(b)
motion is established only when no reasonable person
could agree with the district court; there is no abuse of
discretion if a reasonable person could disagree as to the
propriety of the court’s action.” Williams v. Hatcher, 890
F.2d 993, 995 (7th Cir. 1989). The district court has great
latitude in making a Rule 60(b) decision because that
decision “is discretion piled on discretion.” Swaim v.
Moltan Co., 73 F.3d 711, 722 (7th Cir. 1996) (citing Tolliver v.
Northrop Corp., 786 F.2d 316, 319 (7th Cir. 1986).
  Rule 60 of the Federal Rules of Civil Procedure “regulates
the procedure for obtaining relief from final judgments.”
Arrieta v. Battaglia, 461 F.3d 861, 864 (7th Cir. 2006). Under
the “catchall” provision of Rule 60, a district court may
reopen a judgment “for any other reason justifying relief
No. 08-1967                                                  7

from the operation of the judgment.” Fed. R. Civ. P.
60(b)(6). As a general rule, “relief from a judgment
under Rule 60(b) is an extraordinary remedy and is
granted only in exceptional circumstances.” Reinsurance
Company of America, Inc. v. Administratia Asigurarilor de Stat,
902 F.2d 1275, 1277 (7th Cir. 1990) (citation omitted); see
also Arrieta, 461 F.3d at 865 (“Relief under Rule 60(b)(6)
requires a showing of extraordinary circumstances justify-
ing the reopening of a final judgment . . . .”) (internal
quotations and citations omitted).
   BMF argues that the district court erred by denying its
motion to vacate the default judgment under the residual
provision of Fed. R. Civ. P. 60(b)(6). BMF points out that
its appeal is not a typical Rule 60(b)(1), “bad attorney”
case; rather, Hinterlong’s actions provided the exceptional
circumstances necessary for relief because more than
simple misconduct is present. Citing In re Robenson, 124
B.R. 757 (N.D. Ill. 1991), where Rule 60(b)(6) relief was
granted based on client diligence and unconscionable
attorney neglect, BMF argues that Rule 60(b)(6)
relief should have been awarded because Hinterlong
affirmatively deceived a diligent BMF about the litiga-
tion’s status.
  The problem with this argument is that three years
after Robenson, we drew a clear line in United States v. 7108
West Grand Avenue, 15 F.3d 632, 634 (7th Cir. 1994) when
we said that “[t]he clients are principals, the attorney is
an agent, and under the law of agency the principal is
bound by his chosen agent’s deeds.” The rule is that all
of the attorney’s misconduct (except in the cases where
8                                               No. 08-1967

the act is outside the scope of employment or in cases
of excusable neglect) becomes the problem of the client.
See id. A lawyer who inexcusably neglects his client’s
obligations does not present exceptional circumstances.
See Williams, 890 F.2d at 996. Hinterlong’s actions, even
with BMF’s purported diligence, do not fall within the
exceptions to the rule and do not rise to the level of
“exceptional” to warrant such “extraordinary” relief.
  BMF’s beef is against Hinterlong, not the court’s ruling
on the case. Deception of a client becomes the liability of
the client’s attorney and not the client’s opponent. See
Tolliver, 786 F.2d at 319 (“Holding the client responsible
for the lawyer’s deeds ensures that both clients and
lawyers take care to comply. If the lawyer’s neglect pro-
tected the client from ill consequences, neglect would
become all too common.”). Since clients must be held
accountable for their attorney’s actions, it does not
matter where the actions fall between “mere negligence”
and “gross misconduct.” See 7108 West Grand Avenue,
15 F.3d at 635. “Malpractice, gross or otherwise, may be
a good reason to recover from the lawyer but does not
justify prolonging litigation against the original adver-
sary.” Id. at 633. See United States v. Di Mucci, 879 F.2d
1488, 1496 (7th Cir. 1989) (“It seems clear to us that the
law in this circuit is that an attorney’s conduct must be
imputed to his client in any context.”) (emphasis in origi-
nal).
  BMF has sued its lawyer, but was unfortunately wel-
comed with, not surprisingly, Hinterlong’s lack of mal-
practice insurance. From our reading of the case, this is the
“exceptional circumstance” that BMF suffers: that it
No. 08-1967                                                9

cannot recover from an uninsured Hinterlong. This
reason, though, does not deem the district court’s denial
of the motion to vacate an abuse of discretion under
Rule 60(b)(6); BMF voluntarily chose Hinterlong, without,
presumably, inquiring into his insured status. See Link v.
Wabash Railroad Co., 370 U.S. 626, 633-34 (1962) (“Petitioner
voluntarily chose this attorney as his representative in
the action, and he cannot now avoid the consequences
of the acts or omissions of this freely selected agent. Any
other notion would be wholly inconsistent with our
system of representative litigation . . . .”).

                   III. CONCLUSION
  For these reasons, we find that the district court did not
abuse its discretion when it denied BMF’s motion to
vacate the default judgment. Therefore, we A FFIRM .

                           6-29-09