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New York Independent System Operator, Inc. v. Fulton Cogeneration Associates

May 3, 2007


The opinion of the court was delivered by: Thomas J. McAvoy, Senior United States District Judge



On September 29, 2006, New York Independent System Operator, Inc. ("Plaintiff" or "NYISO") commenced the instant action against Defendants Fulton Cogeneration Associates, L.P. ("Fulton"), and Lions Capital Management, LLC, d/b/a Lion Capital Management Group, Lion Capital Group and Lion Capital Management ("Lions Capital")(collectively, "Defendants"). See Compl. [dkt # 1]. Plaintiff seeks $272,835.00 in damages from Defendants on breach of contract and account stated claims. Id. ¶¶ 1, 30--42.

On August 29, 2006, the summons and complaint were personally served on Fulton's registered agent, CT Corp. See Aff. of Service [dkt # 4]. Lions Capital was personally served on August 30, 2006 through its authorized agent at its principal place of business in San Francisco, California. See Aff. of Service [dkt # 5]. Pursuant to Fed. R. Civ. P. 12(a)(1)(A), the answers from Defendants Fulton and Lions Capital were due on September 18 & 19, 2006, respectively. Timely answers were not filed. On September 20, 2006, Plaintiff requested from the Clerk of the Court an entry of default as to both defendants. See Request for Entry of Default [dkt. # 7]. Default was entered by the Clerk on September 21, 2006. See Entry of Default [dkt # 8]. On September 27, 2006, Plaintiff requested a default judgment holding both defendants jointly and severally liable for $272,835.00 in damages plus interests and costs. See Request for Default Judgment [dkt. # 9]. Judgment, as requested, was entered on September 29, 2006. See Default Judgment [dkt # 10]. On October 17, 2006, the Court rejected a pro se individual's attempt to file an answer and counterclaim on behalf of Defendants. See Doc. Rej. Order [dkt. # 13]. In rejecting the attempted filing, the Court wrote:

1. The clerk has been directed to return this document without filing by Order of the court as this action has been closed and no formal application to vacate the default judgment has been filed in accordance with the Federal Rules of Civil Procedure and the Local Rules of the Northern District of New York.

2. Corporate named defendants must appear through counsel. Id.

Presently before the Court is Defendants' motion, through counsel, to vacate the default judgment pursuant to FED. R. CIV. P. 55(c) & 60(b).


Plaintiff NYISO is a not-for-profit corporation that acts as the "independent system operator," or ISO, for the State of New York. The NYISO's functions are to oversee the operation of New York State's bulk electric transmission system and administer the State's wholesale market for electricity under federal tariffs filed with the Federal Energy Regulatory Commission ("FERC"). In administering the wholesale market, the NYSIO acts as a conduit or clearinghouse for buyers and sellers of wholesale electricity. Compl. ¶ 4.

Fulton operated an electricity generation facility that contracted with Plaintiff NYISO to supply electricity and to reimburse NYISO for electricity that it purchases when Fulton fails to provide the agreed upon amount. Lions Capital is Fulton's general partner. See id.

¶ 9. "The NYISO's claims relate to 'installed capacity' ('ICAP') purchased by the NYISO in the NYISO-administered spot market after Fulton failed to meet its obligations under various agreements with the NYISO and related FERC-filed tariffs, the terms of which are incorporated in the agreements." Def. Mem. L. p. 2.

As indicated above, Plaintiff obtained a default judgment against Defendants, and Defendants now move to vacate the judgment. Defendants do not challenge the adequacy of service of process. Rather, in support of the instant motion, Defendants contend that excusable neglect caused them to fail to answer in a timely manner. In this regard, Defendants submit the affidavit of Mr. Hausmann-Alain Banét, Executive Managing Officer of Fulton and Chief Executive Officer of Lions Capital. Banét asserts that, shortly after Defendants were served, he learned of his father's death in France. He left immediately and remained in France for two weeks. Prior to leaving, he purportedly asked his assistant to prepare an answer. However, upon Banét's return to the United States, he learned that his assistant had not prepared an answer. He contends that he then prepared an answer himself and faxed it to Plaintiff's counsel on September 13, 2006. Plaintiff contends that its counsel did not receive a copy of the Answer on that date, but did receive an "incomplete copy" of an answer on October 13, 2006 sent by facsimile to counsel's office. On January 11, 2007, Defendants filed the instant motion seeking to vacate the default and default judgment. See Mot. to Vacate Def. Jud. [dkt. # 15].

III. ...

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