Choice Hotels International, Inc. v. Grove

792 F.3d 753 (2015)

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Nature of the Case

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Facts

Choice Hotels (P) sued SBQI, Inc., plus several of its managers and investors, (Ds) seeking damages for a breach of a franchise agreement. Ds did not answer the complaint, and the clerk of court entered a default. One of the defendants, Tarranpaul Chawla, an attorney admitted to practice in Illinois, represented the others but did so poorly, which led to the default. Three of the defendants-Anuj Grover, Arjun Grover, and Dharam Punwani asked Chawla to find a new attorney. Chawla told the Investors that Elton Johnson had agreed to represent their interests. Johnson filed an appearance and took some steps in the litigation but did not answer the complaint or file a motion to vacate the default, engage in discovery concerning damages, respond to P's request for admissions, or reply to its motion for summary judgment on damages. Johnson did not say what he was doing or share with Ds any documents he filed in the suit. He did not return phone calls. The district court set damages at $430,286.75 and entered a final judgment in that amount. Ds hired a new lawyer who motioned to set aside the judgment. It fell into Fed. R. Civ. P. 60(b)(6), the residual clause, which covers 'any other reason that justifies relief' (that is, any reason other than ones in Rule 60(b)(1) to (5)). A motion under Rule 60(b)(6) is addressed to the district court's discretion. The district judge observed that the remedy for legal neglect lies in a malpractice suit against the lawyer, rather than continuing the original litigation and upsetting the adversary's legitimate expectations based on a final judgment. Ds appealed.