GARY F. MARINELLI CASE NO. 02-52285
ELLEN B. VERGOS, U.S. TRUSTEE PLAINTIFF
VS. ADV. NO. 02-5453
GARY F. MARINELLI
SANDRA MARINELLI DEFENDANTS
Gary F. Marinelli and Sandra Marinelli (the "Debtors') are before the court on the Motion to Set Aside Default Judgment that they filed in this adversary proceeding on February 13, 2004. Having considered the motion, the objection filed by the United States Trustee (the "UST") and the supporting affidavit, and the arguments of counsel, the court has determined that the motion must be overruled.
Factual and Procedural Background
On October 28, 2002 the UST filed the complaint initiating this proceeding, which sought to bar the Debtors from receiving a discharge pursuant to § 727(a)(4) of the Bankruptcy Code. A summons was issued on November 5, 2002 and, the next day, process was served by mail on the Debtors at two different addresses and on the Debtors' attorney. One of the addresses used for the Debtors was the Nicholasville, Kentucky address set forth in the petition and original schedules, and the other address to which process was mailed was the Somerset, Kentucky address set forth in the amended schedules that the Debtors filed on September 3, 2002. (1) Both mailings were returned marked "Moved Left No Address, Unable to Forward, Return to Sender," so the UST obtained a third address, in Las Vegas, Nevada, from the Debtors' attorney and mailed process to that address on November 13, 2002. That mailing was never returned.
The Debtors' attorney could not represent them in connection with the adversary proceeding because he would be a witness in the proceeding, and the Debtors did not retain new counsel and file an answer or motion to dismiss in response to the complaint. Accordingly, on December 18, 2002 the UST filed a motion for a default judgment. The motion recited that the Debtors were served with process on November 5, 2002 but did not disclose that the original mailings were returned and re-sent to the Las Vegas address. The court granted the motion on December 19, 2002, and the adversary proceeding file was closed on March 3, 2003.
The motion presently before the court was filed on February 13, 2004.
The Debtors seek relief from the default judgment under Rule 60(b)(6) of the Federal Rules of Civil Procedure, made applicable in bankruptcy cases by Rule 9024 of the Federal Rules of Bankruptcy Procedure. Rule 60(b)(6) permits the court to grant relief from a final judgment for "any other reason justifying relief from the operation of the judgment." The burden of proving any of the grounds for relief under Rule 60(b) is on the Debtors: "A party seeking relief from judgment under Rule 60(b) must show that its case comes within the provisions of the Rule." Lewis v. Alexander, 987 F.2d 392, 396 (6th Cir. 1993) (citing Miller v. Owsianowski (In re Salem Mortgage Co.), 791 F.2d 456, 459 (6th Cir. 1986)). Furthermore, the Sixth Circuit has "repeatedly emphasized that Rule 60(b)(6) applies only in exceptional and extraordinary circumstances." McCurry ex rel. Turner v. Adventist Health Sys./Sunbelt, Inc., 298 F.3d 586, 596 (6th Cir. 2002). Accordingly, the burden under the provision upon which the Debtors rely is a particularly difficult one to meet.
The Debtors rely on their relocation to Las Vegas at some point and that "they did not immediately have a permanent address." The Debtors assert:
Based upon the problems with the mail and the Debtors being unable to effectively communicate with Lexington, Kentucky attorneys from Las Vegas, Nevada, the Debtors were not able to timely respond to the Complaint.
These allegations cannot demonstrate "exceptional and extraordinary circumstances" for several reasons.
First, the allegations have no evidentiary basis: the Debtors did not appear at the hearing on the motion or even sign an affidavit in support of the motion. Second, service of process was proper. Service by mail on a debtor is made by mailing copies of the summons and complaint to the debtor's attorney and "to the debtor at the address shown in the petition or statement of affairs or to such other address as the debtor may designate in a filed writing." Fed. R. Bankr. P. 7004(b)(9). The UST mailed the summons and complaint to the Debtors' attorney and to both the address show in the petition and statement of affairs and the only other address designated in a filed writing, i.e., the amendments to the schedules. (2) It is the debtor's "responsibility to apprise the bankruptcy court of his forwarding address." Hammer v. Drago (In re Hammer), 940 F.2d 524, 526 (9th Cir. 1991) (denying motion to vacate default judgment for excusable neglect); accord, e.g., Schnell v. Schnell (In re Schnell), 148 B.R. 365, 367 (D. Mass. 1992) (affirming entry of default judgment). The Debtors' failure to make arrangements to receive mail in connection with their bankruptcy case would not constitute excusable neglect and does not constitute "exceptional and extraordinary circumstances" justifying relief from the default judgment against them.
Third, the reasons that the Debtors were "unable to effectively communicate with Lexington, Kentucky attorneys from Las Vegas, Nevada" are unclear. There are, of course, many ways to communicate between locations within the United States: if the Debtors could not afford a long distance telephone call or fax and did not have access to e-mail, they could at the very least have corresponded with their attorney via the U.S. Postal Service. Yet there is no evidence that they made any effort to communicate with their attorney. The Debtors have simply offered no reason that they "were not able to timely respond to the Complaint."
For the foregoing reasons, (3) the court will enter a separate order overruling the Debtors' Motion to Set Aside Default Judgment. The order will also reopen this adversary proceeding for the limited purpose of considering the motion.
Mark T. Miller, Esq.
Gary F. and Sandra Marinelli
John R. Stonitsch, Esq.
1. The Debtors did not file a notice indicating any further changes of address.
2. The UST also mailed process to a third, Las Vegas address provided by the Debtors' attorney (but not found in the bankruptcy file), and waited more than a month after that before requesting a default judgment. That mailing was not returned, but the Debtors still did not respond to the complaint.
3. Although not necessary to resolve the Debtors' motion, the court also notes that a Rule 60(b)(6) motion must be "made within a reasonable time," Fed. R. Bankr. P. 9024; Fed. R. Civ. P. 60(b), and the Debtors have offered no excuse for the fourteen-month delay between the entry of the default judgment and the filing of the motion to set it aside.