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Loucks v. Smith

United States District Court, M.D. Alabama, Northern Division

August 19, 2014



W. HAROLD ALBRITTON, Senior District Judge.


This case is before the court on the Defendants' Motion to Set Aside Default Judgment (Doc. #101).

The Plaintiffs filed a Complaint in this case on April 3, 2012, naming Shorest, LLC and RHI, Inc. d/b/a Shoney's of Clanton as Defendants. An Amended Complaint was filed on April 9, 2012 against the same Defendants. The Plaintiffs sought relief under Title VII and state law for alleged sexual harassment while they were employed at a Shoney's Restaurant in Clanton, Alabama.

The case was set for trial on May 13, 2013. On May 9, 2013, former Defendant, Shorest, LLC, filed a Suggestion of Bankruptcy (Doc. #76). The court stayed the case as to Shorest, LLC, and, at the request of the Plaintiffs, the trial of this case against Defendant RHI, Inc. was continued until October 28, 2013 because it was the Plaintiffs' intention to file a motion to lift the stay as to Shorest, LLC, and to proceed to trial against both Defendants. (Doc. #77). On October 1, 2013, RHI, Inc. filed a suggestion of bankruptcy, and the case was dismissed without prejudice. (Doc. #84).

On January 21, 2014, the Plaintiffs filed a Motion to Reinstate, explaining that the bankruptcy court had dismissed RHI, Inc.'s case for failure to appear at a meeting of creditors. (Doc. #85). The Plaintiffs asked for leave to amend the Amended Complaint to name new Defendants which they contended were running the Shoney's business from its same location, with the same people involved as before, and to seek limited discovery on facts to pierce the corporate veil of successor corporations. This court reinstated the case, allowed the Plaintiffs to file a Second Amended Complaint, and granted the request by Defense counsel to withdraw from representation of the Defendants. (Doc. #88, 91).

The Plaintiffs filed a Second Amended Complaint on February 19, 2014, naming Restaurant Help, Inc. ("RHI"); Rory S. Smith; Sunrise USA, Inc.; and Service Solutions, Inc. as Defendants. These parties were served by certified mail and the certificates of service were signed and returned to the court. The certificate for Rory Smith was signed on February 27, 2014 and the signature was illegible. The certificate for Sunrise USA, Inc. was sent addressed to its registered agent on February 27, 2014, and signed for by Peggy Moss. Service Solutions, Inc.'s was mailed to its registered agent and its certificate was signed on February 27 with the signature Tammy Easterling. No Answer or other response to the Second Amended Complaint was filed by any Defendant.

On April 14, 2014, the Plaintiffs filed a Motion for Default, which was referred to the Clerk of the Court. (Doc. #96). On May 20, 2014, the Clerk entered default against all Defendants based on failure to file responses to the Second Amended Complaint. (Doc. #97). The Plaintiffs filed a Motion for Default Judgment on May 29, 2014, which the court granted as to liability on June 9, 2014. The court then set the case for jury trial on the issue of damages. (Doc. #99). In an Order entered on June 23, 2014, the court re-set the case for a jury trial on the issue of damages. (Doc. #100).

On June 25, 2011, the Defendants, through their new attorney, David Gatch, filed their motion to set aside the default judgment. The Defendants seek to have the default judgment set aside pursuant to Rule 60(b)(1) & (6)[2] of the Federal Rules of Civil Procedure. (Doc. #101).

The court set the Motion to Set Aside the Default Judgment for evidentiary hearing, granted a Motion to Strike previously-filed affidavit evidence, and informed the parties that it would not consider affidavit evidence at the evidentiary hearing (Doc. #110).

The Plaintiffs then filed a Motion to Disqualify attorney David Gatch on the grounds that they had spoken with him about the merits of the case while he was a patron in the Shoney's restaurant where the Plaintiffs worked. At the evidentiary hearing, Gatch denied that the Plaintiffs had spoken with him.

The Plaintiffs subpoenaed several witnesses for the evidentiary hearing.

At the evidentiary hearing, the court orally denied the Motion to Disqualify, after hearing the evidence on that matter, finding that if the Plaintiffs talked to attorney Gatch, it was not in a way which caused him to consider them to be clients protected by privilege, and even if the Plaintiffs' testimony as to the contact with attorney Gatch were accepted in full, there would not be any prejudice resulting from Gatch proceeding with representation of the Defendants on the Motion to Set Aside the Default Judgment.

Testifying at the evidentiary hearing on the Motion to Set Aside the Default Judgment were various people who signed certificates of service including Tammy Easterling, who signed the certificate of service for Service Solutions, Inc., and who works at the Shoney's restaurant, where the agent for service of process for Service Solutions, Inc., Mike Glancy ("Mike Glancy"), also works. Glancy testified that he was not made aware of the lawsuit. There was testimony that Defendant Service Solutions, Inc. was set up by Ted Burkhalter, but Ted Burkhalter did ...

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