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Christopher Addison, David Willet v. Reitman Blacktop

December 16, 2010

CHRISTOPHER ADDISON, DAVID WILLET, AND JAMES VANDERHEYDT, PLAINTIFFS,
v.
REITMAN BLACKTOP, INC., REITMAN SEALCOATING INC., AND ROBERT REITMAN, AN INDIVIDUAL, DEFENDANTS.



The opinion of the court was delivered by: Arthur D. Spatt United States District Judge

MEMORANDUM OF DECISION AND ORDER

On April 2, 2010, the plaintiffs Christopher Addison and David Willet commenced this action against Reitman Blacktop, Inc., Reitman Sealcoating Inc., and Robert Reitman (collectively the "Defendants") for damages arising from an employment dispute ("Initial Complaint"). On September 22, 2010, Addison and Willet filed an Amended Complaint ("Amended Complaint") adding James Vanderheydt as an additional plaintiff (together with Addison and Willet the "Plaintiffs").

Presently before this Court are three motions: 1) Plaintiffs' Motion to Strike the Defendants' Answer to the Initial Complaint ("Motion to Strike"); 2) Plaintiffs' Motion for a Default Judgment ("Motion for a Default Judgment"); and 3) Defendants' Motion to Set Aside the Default Judgment ("Motion to Set Aside the Default"). For the foregoing reasons, the Court denies the Motion to Strike as moot, denies the Motion for a Default Judgment, and grants the Motion to Set Aside the Default.

I. BACKGROUND

A. Factual Background

On April 2, 2010, two of the plaintiffs, Christopher Addison and David Willett, commenced the instant action against Defendants Reitman Blacktop, Inc. ("Blacktop") and Reitman Sealcoating, Inc. ("Sealcoating" and together with Blacktop the "Corporate Defendants"), and Robert Reitman individually ("Reitman" and together with the Corporate Defendants the "Defendants"). On September 22, 2010, the complaint was amended to include allegations by James Vanderheydt. The following facts are derived from the Amended Complaint, as well as the parties' submissions on the Motion to Strike, Motion for a Default Judgment, and Motion to Set Aside the Default. The Court notes that because James Vanderheydt was added as a plaintiff on September 22, 2010, references to actions by the "Plaintiffs" prior to the Amended Complaint, including arguments in the Motion to Strike, only include Addison and Willet.

The Plaintiffs in this action were formerly employed by Defendant Blacktop in the construction business, where they primarily performed manual labor relating to asphalt, paving, and driveway construction. Defendant Blacktop is a construction company that provides driveway construction, paving, asphalt laying, masonry, and related services.

Defendant Sealcoating is a related entity that the Plaintiffs allege form a "single integrated enterprise" with Blacktop and does business as Reitman Blacktop or B. Reitman Blacktop. (Am. Compl. ¶¶ 13 & 15.) Defendant Reitman has an ownership interest and is one of the ten largest shareholders of Blacktop. The Plaintiffs' allege that during their employment, Reitman and the Corporate Defendants failed, among other things, to pay them a minimum wage; properly record their hours; provide break time; and pay them overtime. The Initial Complaint and the Amended Complaint assert causes of action for violations of the Fair Labor Standards Act and the New York Labor Law, unjust enrichment, and breach of contract.

B. Procedural Background

After filing the Initial Complaint on April 2, 2010, the Plaintiffs attempted to effectuate service on the Defendants. The Amended Affidavits of Service reflect that the Corporate Defendants were served via the Secretary of State of the State of New York on June 21, 2010. (Docket #s 5, 6.) In an Affidavit of Due Diligence and Attempted Service dated June 21, 2010 (the "Affidavit of Attempted Service"), a process server named Jonathan Safran detailed his attempt to personally serve Reitman on May 6, 2010. (Docket # 4.) However, according to the Plaintiffs, although not personally served, Reitman had actual notice of the lawsuit as early as April 23, 2010, and by April 24, 2010 was in possession of the Initial Complaint. (See Aff. of Penn Dodson in Opp. to the Motion to Set Aside the Default; Opp. to Motion to Set Aside the Default, Ex. A.)

Nevertheless, on July 16, 2010, four days after the Corporate Defendants answer was due, Reitman filed an answer in his capacity as President of the Corporate Defendants ("Initial Answer"). Although the Electronic Case Filing System ("ECF") indicates that the Initial Answer was filed on July 16, 2010, and an affirmation of service is attached to the Initial Answer dated July 16, 2010, the Plaintiffs' assert that the Initial Answer was not posted on ECF until July 20, 2010. As a result of this confusion, on July 19, 2010, the Plaintiffs filed a Request for an Entry of Default as to the Corporate Defendants on the ground that they did not answer the Initial Complaint. The Clerk of the Court declined to enter a notation of default because the Corporate Defendants had filed the Initial Answer.

Thereafter, on July 21, 2010, the Plaintiffs filed the Motion to Strike the Initial Answer. On August 8, 2010, Reitman submitted a letter to the Court requesting a thirty day extension to respond to the motions and to retain an attorney to represent himself and the Corporate Defendants. The Court granted Reitman's request on August 10, 2010 and noted that it was a "Final Extension."

On September 9, 2010, Neal Mandel, a representative from Citak Law Group PLLC contacted the Plaintiffs' counsel Penn Ueoka Dodson to discuss an extension of time for the Defendants to retain counsel and the possibility of reaching a settlement. In a follow up letter of the same date-although received by the Plaintiffs on September 13, 2010-the Defendants confirmed that the parties agreed to extend the time allowed for the Defendants to retain counsel; requested that the Plaintiffs' consent to extend the deadline to answer to October 12, 2010; and made a request for a settlement demand ("September 9th Letter"). The Defendants further stated:

Once you forward the documentation requested we should be able to complete our review of the information and compare same to Mr. Reitman's records. We should be able to reply to you and have an intelligent discussion within five days of receipt of information. (Opp. to Motion to Set Aside the Default, Ex. B.) There is no indication on the record whether the Plaintiffs consented to the Defendants' request to extend the deadline to answer the Initial Complaint to October 12, 2010.

On September 22, 2010, the Plaintiffs sent a settlement demand to the Defendants. Also on September 22, 2010, without waiting for a response to the settlement demand, and with the Motion to Strike the Initial Answer still outstanding, the Plaintiffs filed the Amended Complaint adding James Vanderheydt as an additional plaintiff, and correcting certain typographical errors. After the Defendants failed to answer the Amended Complaint, on October 20, 2010, the Plaintiffs, now including James Vanderheydt, filed a motion for an entry of default and the Motion for a Default Judgment against all Defendants based on their failure to answer the Amended Complaint or otherwise properly appear through counsel in accordance with the Court's August 10, 2010 Order. The Clerk of the Court entered a notation of default on November 3, 2010. The Defendants retained new counsel on November 4, 2010, and on November 8, 2010, the Defendants filed the Motion to Set Aside the Default the Default Judgment (together with the Motion for a Default Judgment the "Default Motions") and an answer to the Amended Complaint ("Second Answer").

The discussion below resolves the Motion to Strike and the Default Motions.

II. DISCUSSION

A. The Motion to Strike

On July 21, 2010, the Plaintiffs filed a Motion to Strike to Initial ...


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