Thyssenkrupp Presta Danville, LLC v. TFW Indus. Supply & CNC Mach.

THYSSENKRUPP PRESTA DANVILLE, LLC, Petitioner, v. TFW INDUSTRIAL SUPPLY & CNC MACHINE, LLC, Respondent.

Case No. 19-mc-50863

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

October 31, 2019

U.S. DISTRICT COURT JUDGE GERSHWIN A. DRAIN

OPINION AND ORDER DENYING RESPONDENT'S MOTION TO SET ASIDE JUDGMENT [#8] AND DENYING RESPONDENT'S MOTION TO VACATE ARBITRATION AWARD AND RESPONSE IN OPPOSITION TO PETITION TO CONFIRM ARBITRATION AWARD [#9]

I. INTRODUCTION

Presently before the Court is Respondent's Motion to Set Aside Judgment Based on Excusable Neglect and Respondent's Application to Vacate Arbitration Award. ECF Nos. 8, 9. Petitioner filed responses to each motion on August 30, 2019. ECF Nos. 11, 12. Respondent filed its replies on September 6, 2019. ECF Nos. 14, 15.

Upon review of the parties' submissions, the Court concludes that oral argument will not aid in the disposition of this matter. Therefore, the Court will resolve the instant motion on the briefs. See E.D. Mich. L.R. § 7.1(f)(2). For the reasons discussed herein, the Court will DENY Respondent's Motion to Set Aside Judgment Based on Excusable Neglect [#8] and DENY Respondent's Application to Vacate Arbitration Award [#9].

II. FACTUAL BACKGROUND

Petitioner Thyssenkrupp Presta Danville ("Presta") commenced arbitration against Respondent TFW Industrial Supply & CNC Machine ("TFW") in December 2017. See ECF No. 1-5, PageID.54. Presta sought monetary damages for breach of an automobile equipment supply contract. TFW filed a counter-complaint against Presta with seven claims, including breach of contract and fraud.

Less than a year after their original contract formation, TFW and Presta began disagreeing about equipment prices as stated in the contract, subsequent negotiations, and email communications. TFW attempted to negotiate a price above the original contract amount, at times "threate[ning] to cease production to Presta absent a price increase." ECF No. 1-5, PageID.63. As a result, Presta sent TFW multiple notices of breach and demands to cure. Additionally, the sole arbitrator in this matter, Scott A. Wolfson, found that "testimony and documentary evidence also established that TFW was under significant financial strain during the relevant time period . . . ." Id. at PageID.66. This required Presta to pay various vendors and suppliers on behalf of TFW to cover TFW's production shortfalls.

The arbitrator found that Presta and TFW's contract was "for a fixed price, unambiguous, and integrated" with all terms in writing. ECF No. 1-5, PageID.69. This included clear language that the parties were bound only by the terms of the contract as written, so oral negotiations or agreements could not be considered. Further, the arbitrator determined that Presta demonstrated by a preponderance of the evidence that TFW breached contractual obligations and caused Presta to incur significant costs. The arbitrator also found that TFW failed to carry its burden of proving any of its seven counterclaims. Ultimately, on May 20, 2019, the arbitrator found that Petitioner Presta was entitled to an award totaling $2,417,095.98. Id. at PageID.88.

III. PROCEDURAL BACKGROUND

Petitioner filed the instant action on June 7, 2019, seeking confirmation of this arbitration award and entry of judgment pursuant to the Federal Arbitration Act ("FAA"). ECF No. 1; 9 U.S.C. §§ 9, 13. Respondent was served on July 10, 2019 but failed to timely file its response. ECF No. 5, PageID.100. The Court therefore presumed that Respondent had no objection to the Petition. Id. On August 7, 2019 the Court entered judgment confirming the award in favor of Petitioner and against Respondent. ECF No. 7.

IV. DISCUSSION

A. Motion to Set Aside Judgment Based on Excusable Neglect

Rule 6 of the Federal Rules of Civil Procedure provides, "[w]hen an act may or must be done within a specified time, the court may, for good cause, extend the time on motion made after the time has expired if the party failed to act because of excusable neglect." Fed. R. Civ. P. 6(b)(1). Rule 60 further states, "[o]n motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for . . . excusable neglect." Fed. R. Civ. P. 60(b)(1). In defining excusable neglect, the Supreme Court has specified four factors for courts to consider: (1) the danger of prejudice to the nonmoving party, (2) the length of the delay and its potential impact on judicial proceedings, (3) the reason for delay, including whether it was within the reasonable control of the movant, and (4) whether the movant acted within good faith. Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 395 (1993). The Sixth Circuit has "considered excusable neglect in different contexts and repeatedly underscored that it is a difficult standard to satisfy." In re Edwards, 748 F. App'x 695, 698 (6th Cir. 2019) (citing Nicholson v. City of Warren, 467 F.3d 525, 526 (6th Cir. 2006) ("Excusable neglect has been held to be a strict standard which is met only in extraordinary cases.")).

Petitioner timely filed to confirm the arbitration award within one year of the award's issuance. Respondent failed to file any response to the Petition to Confirm, this Court's Order, or this Court's Judgments in favor of Petitioner until the present motions. In moving to set aside the Judgments, Respondent argues its delay was the result of excusable neglect. Respondent states that a month and a half before the award was issued, its paralegal's husband died unexpectedly. Respondent explains that this death caused unexpected disruptions in the paralegal and legal assistant's schedules, leading to the Respondent firm's inadvertent failure to meet the award confirmation response deadline. Ultimately, an email communication between Petitioner and Respondent on August 16, 2019 put Respondent on notice that this Court entered an Order confirming the award a week prior.

1. The Danger of Prejudice to the Nonmoving Party and the Length of Delay and its Potential Impact on Judicial Proceedings

Respondent TFW argues that setting aside this Court's Order and allowing it to file its Application to Vacate the Arbitration Award would not prejudice Petitioner Presta. TFW filed its motion nearly one month after its original deadline and over one week after this Court confirmed Presta's award. The submission of these untimely motions presents a risk of prejudice, as Presta must now expend time and resources defending its award beyond the confirmation deadline.

TFW also claims that the length of the delay will have a minimal impact on judicial proceedings. The problem, however, is that TFW seeks to litigate issues already examined by the Court when Presta submitted its award confirmation application. The appropriate time to consider TFW's arguments about the award was within the response filing deadline. Setting aside the earlier judgment would delay the resolution of the case and impact the need for further judicial proceedings. Even though the delay in litigation may be relatively small, a delay of even a few months, coupled with the risk of prejudice, weighs against the moving party. See Tri-Corner Investments LLC v. First Def. Int'l Grp., Inc., 361 F. App'x 629, 632 (6th Cir. 2010). These two factors do not support a finding of excusable neglect.

2. The Reason for Delay, Including Whether it was Within the Reasonable Control of the Movant

Respondent states that the delay in submitting its response was unforeseeable, arguing that its paralegal's husband's death on April 8, 2019 was an exigent circumstance. Due to this unexpected death, Respondent did not calendar the relevant deadline, July 22, 2019, to respond to the award confirmation petition. Petitioner argues in response that, although the death was a tragic circumstance, this was attorney error that does not amount to excusable neglect.

The Court is persuaded by Petitioner's argument. The Sixth Circuit has found that "inadvertence . . . do[es] not usually constitute 'excusable' neglect." Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. at 392. Respondent conceded that at least three other individuals at Respondent's firm, two of whom are lawyers, could have caught the calendaring issue. This indicates that the mistake was within the reasonable control of Respondent's firm. While TFW experienced an inadvertent and unfortunate calendaring issue, these circumstances do not constitute excusable neglect.

Additionally, while Respondent requests that the client TFW is not punished for the calendaring mistakes of its attorneys, the Supreme Court "has expressly rejected such an argument." Gohl v. Livonia Pub. Sch., No. 12-CV-15199, 2016 WL 2848421 (E.D. Mich. May 16, 2016) (citing Pioneer, 507 U.S. at 396 ("[C]lients must be held accountable for the acts and omissions of their attorneys.")). Supreme Court and Sixth Circuit precedent weigh against finding excusable neglect for Respondent under these circumstances.

3. Acting Within Good Faith

Finally, Respondent asserts that it acted in good faith throughout the relevant period, as evidenced by its immediate submission of the present motions upon discovery of the filing error. Further, Respondent claims that it has been diligently attempting to find a Michigan attorney to represent the client or sponsor Respondent's attorney in this Court, further demonstrating its good faith efforts. Petitioner does not dispute that Respondent acted in good faith, but states that this factor alone is not enough to find excusable neglect.

There is nothing here to suggest Respondent TFW has acted in bad faith. It is evident that Respondent moved to remedy its mistake as soon as it was discovered. But Respondent must demonstrate more than just good faith to establish excusable neglect, and it has not done so here. See, e.g., Tri-Corner Investments LLC v. First Def. Int'l Grp., Inc., 361 F. App'x at 632.

B. ...