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STOCK 'IN S.A. v. SWISSCO

October 10, 1990

STOCK 'IN S.A., Plaintiff,
v.
SWISSCO, INC., et al., Defendants


Stanley S. Harris, United States District Judge.


The opinion of the court was delivered by: HARRIS

STANLEY S. HARRIS, UNITED STATES DISTRICT JUDGE

 This matter is before the Court on defendant Swissco's motion to vacate default, defendants Swissco's and Dahan's motion to dismiss, and plaintiff's motion for sanctions. Upon consideration of the motions, the oppositions and replies thereto, and the entire record, defendants' motions are denied, and plaintiff's motion is denied without prejudice.

 Background

 On or about July 19, 1985, Dahan created Swissco, Inc. (Swissco), a corporation established to facilitate the importation of plaintiff's merchandise into the United States and to permit Dahan to enter into a contract with a factor. Defendant Swissco was incorporated in the District of Columbia, with Dahan as the president, sole shareholder, and Chief Executive Officer (CEO). On July 26, 1985, the Corporations Division of the District of Columbia Department of Consumer and Regulatory Affairs' Business Regulation Administration issued Swissco a certificate of incorporation. This certificate verifies that "all applicable provisions of the District of Columbia Business Corporation Act [D.C. Code ┬ž 29-301 et seq.] have been complied with." (See Defendant Dahan's Motion For Summary Judgment, Ex. 8.)

 Plaintiff has at all times relevant to this action been defendant's sole supplier of merchandise in the United States. Defendant's contractual duty was to act as plaintiff's exclusive agent by promoting, marketing, and selling its merchandise in the United States. Plaintiff retained control over credit, manufacture, delivery, customer service, advertising and promotional materials, collection, and payment of all costs incurred in connection with these activities. (Parties' Agreement at 1.) Plaintiff conducted all of its business through its agent, defendant Swissco, and has not, to the Court's knowledge, transacted business through any other entity in the United States.

 Plaintiff filed this action on July 6, 1987, to collect outstanding sums for goods delivered to defendant Swissco, and for damages for breach of contract, misrepresentation, and interference with contract. This case has since undergone a protracted pretrial process characterized by substantial delay. *fn1" The Court first entered default against defendant Swissco on November 6, 1987, and against Dahan on November 16, 1987, which later was vacated. On February 1, 1990, plaintiff served its motion to reenter default against defendant Swissco by hand to Dahan's personal attorney, in her presence, at a status call before this Court. *fn2" Plaintiff also mailed a copy of its motion to Swissco on this same date.

 The Court granted plaintiff's motion on February 13, 1990, and the Clerk's office formally reentered default against Swissco on February 16, 1990. Defendant Swissco filed its motion to vacate default on March 8, 1990. It also filed, along with defendant Dahan, a motion to dismiss for plaintiff's failure to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6). In response to both motions, plaintiff filed a motion for sanctions on March 22, 1990. For the reasons set forth below, the Court denies defendants' motions, and denies plaintiff's motion for sanctions without prejudice.

 Default Judgment

 As alluded to above, this case has a long history of evasion and delay on the part of defendants. Defendant Swissco's motion to vacate default is yet another attempt to antagonize plaintiff and manipulate the Court. Defendant offers four grounds as to why the Court should again vacate default. Defendant's strongest argument is its objection to the timing of the reentry of default. Defendant's remaining claims are weak at best.

  Defendant Swissco claims that the Court issued its February 13, 1990, Order reentering default at least two days earlier than it should have. Even though Dahan, Swissco's corporate agent and CEO, had personal knowledge of plaintiff's in-hand service, effected in her presence upon her attorney, in-hand service was not perfected. Fed. R. Civ. P. 4(d)(3). *fn3" Therefore, service on Swissco was perfected only by mail. Local Rule 108(b) and Fed. R. Civ. P. 6(e) grant defendant, served with a motion by mail, a total of 14 days in which to file a response. Defendant thus claims that these rules obligated the Court to wait until February 15 before reentering default. While defendant is technically correct, its own actions render this argument moot. Defendant never filed an opposition to the motion. Finally, 20 days from the date on which the Clerk's office reentered default, defendant filed its motion to vacate. Accordingly defendant never made a timely opposition and the Court will not condone defendant's lateness by granting its motion.

 Defendant Swissco next maintains that its interests would be severely prejudiced were the Court not to vacate the default. In support of this claim defendant argues that it has participated in every step of the case thus far. While defendant has indeed taken part in some pretrial proceedings, defendant has failed to participate in the case since its previous attorney, Leon Zeiger, was disqualified on May 30, 1989. Defendant never obtained substitute counsel until well after default was entered. The Court has given defendant more than adequate time to protect its interests. Therefore, it is unnecessary to vacate the Court's Orders entering default.

 Defendant Swissco's most frivolous claim is that it was unaware that it was unrepresented by counsel following the disqualification of Zeiger. Defendant maintains that it was under the impression that John Monahan, its attorney before Zeiger, would resume his representation of defendant in light of Zeiger's disqualification. The Court finds this claim to be disingenuous given the quantity and clarity of past motions and ...


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