United States District Court, D. New Hampshire
T. Dilworth, Esq., Keriann Roman, Esq., Demetrio F. Aspiras,
III, Esq., Melissa A. Hewey, Esq., Kenneth B. Walton, Esq.,
Lindsey D. Smith, Esq., Jason P. Rogers, Esq., Michael P.
Sams, Esq., Matthew V. Burrows, Esq., Samantha D. Elliott,
Esq., Andrew B. Livernois, Esq.
J. McAuliffe Judge
2010, the Unity School District entered into two contracts
with Vaughn Associates and its principal, Scott Vaughn
(collectively, “Vaughn”), to design and oversee
construction of a new elementary school in Unity, New
Hampshire. Things did not go as planned. What was originally
expected to be a $4.7 million project ballooned into one
exceeding $9 million. Prior to the project's completion,
the contracts between Unity School District and Vaughn were
terminated and the School District secured the services of a
new architect and a new construction manager. Construction
was completed and the school eventually opened - nearly two
years later than planned and at a cost almost twice that
which was originally budgeted.
not surprisingly, the school district brought this action
against Vaughn, advancing claims of architectural
malpractice, breach of contract, negligent misrepresentation,
and unfair and deceptive trade practices in violation of New
Hampshire's Consumer Protection Act. Vaughn, in turn,
brought third-party claims against several defendants,
including Excel Mechanical Systems. But, Excel failed to
answer, plead, or otherwise defend. Accordingly, the court
entered default against it.
Vaughn settled the claims advanced against it by the Unity
School District. Vaughn then moved the court to enter default
judgment against Excel, in the amount of $1.3 million.
Counsel appeared on behalf of Excel and now moves the court
to strike the entry of default. For the reasons discussed,
that motion is granted.
material facts are undisputed. In June of 2015, William
Souza, the president and owner of Excel, was served with
Vaughn's third-party complaint and immediately forwarded
it to corporate counsel, Michael Murphy, Esq. Although Murphy
agreed to represent Excel in this matter, he neglected to
file an appearance or otherwise plead. After Souza learned
that a default had been entered against Excel, he confronted
Murphy, who assured him that he was working on getting the
default lifted. See Email from Murphy to Souza
(dated June 16, 2016) (document no. 106-8) (assuring Souza
that he was “finalizing” a motion to vacate the
entry of default and expected to file it the following week).
Subsequently, Murphy (falsely) represented to Souza that
Vaughn wished to settle its claims against Excel, but Murphy
counseled against settlement, saying Vaughn's claims were
weak (thus conveying the false impression that he had cured
the default and litigation was proceeding apace).
February of 2017, believing that the default had been set
aside and the case was on a typical trajectory toward trial,
Souza dutifully appeared for his deposition and was examined
by Vaughn's counsel. When counsel asked Souza if he was
aware that Excel was in default, Souza replied that he was
not. See Deposition of William Souza (document no.
117-2) at 8-9. Immediately after his deposition, Souza spoke
with Murphy about the default. Murphy assured him that it was
“just a paper issue” and that he would take care
of it. Souza says that because Murphy had ably represented
the company for 15 years, and because he had been a personal
friend of the family for 30 years, he had no reason to doubt
that Murphy would resolve the issue.
of 2017, the default remained and Vaughn filed a motion for
the entry of default judgment against Excel. Then, in October
of 2017, the Massachusetts Board of Bar Overseers contacted
Souza (a professional misconduct investigation into Attorney
Murphy's practices was underway). Souza says a BBO
representative informed him that Excel needed to secure the
services of a new attorney. According to Souza, “until
that time, I thought, based on the representations of
Attorney Murphy and the pending BBO investigation against
him, that the matter was being rectified. Excel promptly
retained new counsel.” Souza Affidavit (document no.
117-1) at para. 17. Less than a month later, counsel appeared
on behalf of Excel and filed the pending motion to strike the
entry of default.
55(c) of the Federal Rules of Civil Procedure provides that
the court may “set aside an entry of default for good
cause.” In determining whether a movant has shown good
cause, the court considers the totality of the circumstances,
see, e.g., Coon v. Grenier, 867
F.2d 73, 76 (1st Cir. 1989), including the following factors:
(1) whether the default was willful;
(2) whether setting it aside would prejudice the ...