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Entral Group International, LLC v. 7 Day Café & Bar Inc.

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK


June 7, 2007

ENTRAL GROUP INTERNATIONAL, LLC, PLAINTIFF,
v.
7 DAY CAFÉ & BAR INC., CHUN HON CHAN, AND YU YIP, DEFENDANTS.

The opinion of the court was delivered by: John Gleeson, United States District Judge

ORDER

On May 17, 2007, defendants 7 Day Café & Bar Inc. and Chun Hon Chan moved pursuant to Fed. R. Civ. P. 60(b) to vacate the default judgment against them,*fn1 alleging "[f]raud on the Court and [m]isrepresentation." Defendants' Memorandum in Support of Rule 60(b) Motion ("Def. Br.") 1. This is the second motion to vacate I have considered in this case. Previously, the defendants argued they never received notice of this action. After a hearing on January 9, 2007, I denied that motion because I found the defendants did, in fact, have such notice. The defendants now concede this point, but argue that the plaintiff committed fraud in its motion for default judgment by representing to the Court that the defendants had not responded in this action.

Under Rule 60(b)(3), I may vacate a final judgment, order or proceeding on a showing of "fraud . . . misrepresentation, or other misconduct of an adverse party." Rule 60(b) must "strike[ ] a balance between serving the ends of justice and preserving the finality of judgments." Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986). The moving defendants argue I should disrupt the final judgment here because the plaintiff obtained that judgment through "[f]raud on the Court and [m]isrepresentation." Def. Br. 1. They claim plaintiff's counsel misled the Court by asserting that (1) the "defendants have not answered or otherwise moved with respect to the complaint" and (2) the "[d]efendants have failed to plead or otherwise defend in this action." Id. I conclude there was no fraud, however, because both statements were true. The first statement was true because, as the docket sheet reflects, the defendants had not answered or moved with respect to the complaint as of the time of the motion. The second statement was true because the defendants did fail to answer or appear to defend the action. To be sure, the docket sheet reflects the parties had some settlement discussions early on in the action, but that does not make the challenged statements false. Furthermore, the defendants concede they failed to appear in this action even after receiving actual notice of the motion for a default judgment.*fn2 Thus, even if fraud had been perpetrated, the defendants still squandered a chance to challenge the plaintiff's application.

The defendants also claim the plaintiff obtained its default judgment through fraud because "Mr. Chai mislead [sic] the Court into believing that he has in fact performed some kind of reproducible methodology to come up with the gross revenues," which prevented adequate factual development of 7 Day Café's actual profits. Def. Br. 2, 5. This attempt to relitigate the damages issue to which the court gave considerable attention sua sponte has no merit. It is therefore denied.

In sum, the motion for relief from judgment pursuant to Rule 60(b) is denied.

So ordered.

John Gleeson, U.S.D.J.


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