Trade Well International v. United Central Bank
2016 U.S. App. LEXIS 10983
| 7th Cir. | 2016Background
- Trade Well International (Pakistani lessor) sued United Central Bank (UCB) in W.D. Wis. for replevin after UCB foreclosed a hotel holding Trade Well’s leased furnishings and refused to return them. Trade Well later added negligence and conversion claims.
- Trade Well’s pro hac vice counsel, Maurice Salem, filed a Notice of Lien on the hotel; the district court struck the filing, held Salem in contempt, revoked his pro hac vice status, fined him, and referred him for discipline.
- UCB filed a counterclaim alleging slander of title and sought damages and a declaratory judgment voiding the lien. Salem appealed the contempt order to this Court; in the meantime Salem’s pro hac vice was revoked, and Trade Well (a corporation) had no local counsel.
- Because Trade Well failed to obtain substitute counsel, the district court entered default judgments against Trade Well on its claims and on UCB’s counterclaim while Salem’s appeal was pending.
- This Court in Trade Well I vacated the contempt/sanctions against Salem and reinstated his pro hac vice status. Salem then sought to vacate the defaults; after an evidentiary hearing the district court denied the motion, finding Trade Well’s efforts to secure replacement counsel insufficient and untimely.
- Trade Well appealed, arguing the defaults were void for lack of personal jurisdiction and inadequate service, that it showed good cause and prompt action to vacate, and that this Court’s earlier Trade Well I decision required vacatur of the defaults.
Issues
| Issue | Trade Well's Argument | UCB's Argument | Held |
|---|---|---|---|
| Whether district court lacked personal jurisdiction over Trade Well, making defaults void | Filing suit in Wisconsin did not waive jurisdictional objections; as a foreign corp without counsel defaults are void | By suing in Wisconsin Trade Well submitted to jurisdiction and must expect adjudication of counterclaims | Held: No. Trade Well submitted to forum by filing suit; defaults not void for lack of jurisdiction |
| Whether defaults violated due process because counsel was removed | Revocation of Salem’s pro hac vice made it impossible for a corporation to proceed, so defaults were fundamentally unfair | Trade Well had notice and ample time (nearly 7 months) to secure replacement counsel or seek a stay | Held: No due-process violation; Trade Well had notice and opportunity and did not act promptly |
| Whether service was inadequate | Trade Well contended service was improper given foreign status and counsel removal | UCB served filings at Trade Well’s last known address; service complied with Rules 4 and 5 and Hague methods where applicable | Held: Service was proper under Rules 4 and 5 |
| Whether the district court abused its discretion in denying Rule 60(b) motion to vacate defaults | Trade Well alleged diligent, extraordinary efforts to find counsel and that credibility determinations lacked contradicting evidence | UCB argued Trade Well’s evidence was vague, inconsistent, belated, and failed to show good cause or quick action | Held: No abuse of discretion; district court reasonably discredited testimony, found efforts insufficient and motion untimely |
Key Cases Cited
- Trade Well Int’l v. United Cent. Bank, 778 F.3d 620 (7th Cir. 2015) (this Court vacated contempt and sanctions against Salem)
- Bally Exp. Corp. v. Balicar, Ltd., 804 F.2d 398 (7th Cir. 1986) (Rule 60(b) relief required if judgment is void)
- Relational, LLC v. Hodges, 627 F.3d 668 (7th Cir. 2010) (judgment void as to inadequately served parties)
- United States v. Indoor Cultivation Equip. from High Tech Indoor Garden Supply, 55 F.3d 1311 (7th Cir. 1995) (judgment void if rendered inconsistent with due process)
- J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873 (U.S. 2011) (purposeful availment governs personal jurisdiction)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (forum-selection and reasonable anticipation of being haled into court)
- Pretzel & Stouffer, Chartered v. Imperial Adjusters, Inc., 28 F.3d 42 (7th Cir. 1994) (standards for vacating default judgment: good cause, quick action, meritorious defense)