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Marian Tankersley, et al v. John R. Lynch


June 27, 2011


The opinion of the court was delivered by: Howard R. Lloyd United States Magistrate Judge

** E-filed June 27, 2011 **




In April 2007, California residents Marian Tankersley ("Tankersley") and Richard Diehl ("Diehl") (collectively, "Plaintiffs") purchased a franchise and three exclusive territories from Collision on Wheels International, LLC ("CoW"), a Michigan-based seller of mobile auto body 20 repair system franchises. Docket No. 1, Ex. A ("Compl.") ¶¶ 1, 2, 8. Their decision to do so was 21 based in part on information found in CoW's Uniform Franchise Offering Circular ("UFOC"), 22 which contains certain disclosures to potential franchisees and which CoW provided to Plaintiffs the 23 month before. Id. ¶¶ 7, 19, 25.

Plaintiffs alleged that the UFOC upon which they relied contained misstatements and omissions of material fact and that they have been harmed as a result. Id. ¶¶ 18, 21, 24, 26. They 26 filed suit against Michigan residents John Lynch ("Lynch"), Gregory Longe ("Longe"), Gregory Mancina ("Mancina"), Louis Maio ("Maio"), and Richard Bass ("Bass") (collectively, "Defendants"), all of whom are officers or employees of CoW, for violations of Michigan franchise 2 law. Id. ¶¶ 2-6.

Defendants removed this action from California state court and moved to dismiss Plaintiffs' complaint on the ground that this Court did not have personal jurisdiction over Defendants. Docket 5 Docket No. 20 ("Opp'n"). While acknowledging that it was a "close call," the Court granted 7

Defendants' motion, concluding that the exercise of personal jurisdiction over Defendants would 8 have been unreasonable. Docket No. 26 ("Corrected Order") at 6. In so concluding, the Court noted No. 1 ("Notice of Removal"); Docket No. 14 ("MTD"). Plaintiffs opposed Defendants' motion.

-- based on both parties' representations -- that Plaintiffs could "obtain the same relief in Michigan 10 that they could in this Court." Id. at 8. As such, the Court dismissed Plaintiffs' complaint without prejudice. Id.

Procedure 60(b)(1) and (b)(6), for an order vacating the dismissal and transferring the case to the Ten days later, Plaintiffs filed the instant motion, pursuant to Federal Rule of Civil Eastern District of Michigan. Docket No. 27 ("Motion"). The basis of Plaintiffs' motion is that their 15 counsel, Bruce Napell, failed to "recheck" the applicable Michigan statute of limitations -- which has 16 now run -- and so he did not request in his opposition to Defendants' motion to dismiss that the ("Opp'n").

without oral argument, and the June 28, 2011 hearing is vacated.

Federal Rule of Civil Procedure 60(b) provides, in relevant part:

On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:

(1) mistake, inadvertence, surprise, or excusable neglect;

. . . [or];

(6) any other reason that justifies relief.

Court transfer the case rather than dismiss it. Defendants opposed Plaintiffs' motion. Docket No. 28 18

Pursuant to Civil Local Rule 7-1(b), the Court finds the matter suitable for determination


FED. R. CIV. P. 60(b)(1), (6).

A. Rule 60(b)(6)

representative from a final judgment, order, or proceeding for . . . any other reason [in addition to 5 those categories specified in Rules 60(b)(1)-(5)] that justified relief." This Rule "is to be 'used 6 sparingly as an equitable remedy to prevent manifest injustice and is to be utilized only where 7 extraordinary circumstances prevented a party from taking timely action to prevent or correct an 8 erroneous judgment.'" Harvest v. Castro, 531 F.3d 737, 749 (9th Cir. 2008) (quoting Latshaw v.


Rule 60(b)(6) provides that, on motion, "the court may relieve a party or a party's legal

Trainer Wortham & Co., Inc., 452 F.3d 1097, 1103 (9th Cir. 2006) (internal quotation marks 10 omitted). It makes sense, then, that a party moving for relief under this provision "must demonstrate

both injury and circumstances beyond his control that prevented him from proceeding with the

action in a proper fashion." Latshaw, 452 at 1103 (internal quotation marks and alteration omitted).

Here, Plaintiffs do not contend that circumstances beyond their counsel's control prevented him from proceeding with the action in a proper fashion. On the contrary, Plaintiffs' counsel 15 declares that he simply failed to "recheck" the applicable statute of limitations. Napell Decl. ¶ 11. In 16 these circumstances, Plaintiffs clearly do not meet the standard for relief under Rule 60(b)(6).

Plaintiffs' contend that their counsel's failure to "recheck" to see whether the Michigan statute of limitations had run on their claims is "excusable neglect."

account of all relevant circumstances surrounding the party's omission.'" Lemoge v. United States, 507 U.S. 380, 395 (1993)). "To determine when neglect is excusable, [the district court must] 24 conduct the equitable analysis specified in Pioneer by examining 'at least four factors: (1) the 25 danger of prejudice to the opposing party; (2) the length of the delay and its potential impact on the 26 proceedings; (3) the reason for the delay [or other error, including whether it was within the

B. Rule 60(b)(1)

"The determination of whether neglect is excusable 'is at bottom an equitable one, taking 587 F.3d 1188, 1192 (9th Cir. 2009) (quoting Pioneer Inv. Servs. Co. v. Brunswick Associates L.P., reasonable control of the movant]; and (4) whether the movant acted in good faith.'"*fn1 Id. (quoting Bateman v. United States Postal Serv., 231 F.3d 1220, 1223-24 (9th Cir. 2000)).

the first factor, Defendants would not be prejudiced by defending this action in Michigan, where all 5 of them reside. On the contrary, it is Plaintiffs who would suffer prejudice, since they can no longer 6 re-file their action in Michigan. See Lemoge, 587 F.3d at 1196 (explaining that prejudice to movant 7 may be considered as a "relevant circumstance" and granting movants' motion for relief under Rule 8

The first, second, and fourth Pioneer factors all weigh in Plaintiffs' favor.*fn2 With respect to 60(b) in part because they would have been prejudiced because the statute of limitations on their 9 claims had run). As for the second factor, the length of the delay was minimal -- Plaintiffs filed the 10 instant motion ten days after the Court issued the Corrected Order -- and it has not hampered the proceedings in any way. And with respect to the fourth factor, there is no indication that Plaintiffs' counsel acted in bad faith or for gamesmanship purposes.

other authority, Judge Kozinski's dissenting opinion in Pincay v. Andrews (the leading Ninth Circuit decision on Rule 60(b)(1)), Defendants argue that the third factor -- the reason for the delay 16 or other error-- is the most important factor and should be given greater weight than the others.

The Ninth Circuit, however, has made clear on several occasions -- both in Pincay and in subsequent 19 cases -- that no one factor is more important than the others, and that "the weighing of Pioneer's 20 equitable factors" must be left "to the discretion of the district court in every case." Pincay, 389 F.3d 21 at 860; see also, Mendez v. Knowles, 556 F.3d 757, 765 (9th Cir. 2009); Pincay, 389 F.3d at 860-61

Given this reality, Defendants focus their arguments on the third factor. Citing to, among Opp'n at 8 (citing Pincay v. Andrews, 389 F.3d 853, 861 (9th Cir. 2004) (Kozinski, J., dissenting)).

(Berzon, J., concurring) (specifically addressing Judge Kozinzki's dissenting opinion and explaining

that "Pioneer portends a balancing test, and does not ascribe determinative significance to any single 2 factor") (emphasis in original).

explanation of his mistake, but he did not provide an excuse for it. See Opp'n at 1 ("[N]either Plaintiffs nor their counsel offer any justifiable excuse for failing to raise an issue that counsel 6 previously researched. Not keeping track of the statute of limitations is not an excuse."), 7 (stating 7 that "Plaintiffs' attorney admits a mistake and provides no excuse"). According to Defendants,

Defendants' argument is two-fold. First, they argue that Plaintiffs' counsel provided an

"Plaintiffs miss the key point from Pioneer and [subsequent Ninth Circuit decisions], which is that 9 the moving party must offer some excuse for the neglect, upon which the court may base a 10 determination that the neglect was excusable." Id. at 5 (emphasis in original).

It is Defendants who misunderstand the Pioneer test. The giving of an "excuse" is not among the Pioneer factors, and the third factor -- the reason for the delay or other error -- requires only that: 13 a reason. Instead, as Judge Berzon explained in his concurring opinion in Pincay:

pertinent factors, not an independent element with moral content. Pioneer thus indicates that a district court may find neglect "excusable" if it is caught quickly, hurts no one, and is a real mistake, rather than one feigned for some tactical reason -- even if no decent lawyer would have made that error. There is no linguistic flaw in terming such errors "excusable," meaning nothing more than "appropriate to excuse."

Pincay, 389 F.3d at 860 (Berzon, J., concurring) (emphasis in original). Here, Plaintiffs' counsel 19 provided a reason for his mistake. He need not have provided an "excuse." Whether his mistake is 20 excusable is a matter for this Court to determine after considering the Pioneer factors and other 21 relevant considerations.

good enough to be excusable. See Opp'n at 5-7, 8-9. Although "inadvertence, ignorance of the rules, 24 or mistakes construing the rules do not usually constitute 'excusable neglect,'" Pioneer, 507 U.S. at 25 392, there is no clear-cut rule in this regard. See Pincay, 389 F.3d at 855 ("We now hold that per se 26 rules are not consistent with Pioneer . . . ."); see also Los Altos El Granada Investors v. City of Capitola, 583 F.3d 674, 683 (9th Cir. 2009) ("[I]n Pincay we rejected any sort of 'rigid rule' to 28 determine excusable neglect -- instead, we decided that we should give great deference to the district

[W]hether neglect is "excusable" is the conclusion one reaches after considering the Second, Defendants suggest that the reason for Plaintiffs' counsel's mistake simply is not court's determination."). Indeed, the Ninth Circuit has upheld several district courts which 2 concluded that attorneys' mistakes -- even those that were within their control -- constituted 3 excusable neglect. See, e.g., Los Altos El Granada Investors, 583 F.3d at 683 (party missed deadline 4 to file notice of appeal because attorney failed to forward judgment to calendaring clerk; Ninth 5

Circuit affirmed district court's finding of excusable neglect despite error being "entirely 'within the 6 reasonable control of the movant'") (quoting Pioneer, 507 U.S. at 398); Mendez, 556 F.3d at 765 Service to deliver it within two days; Ninth Circuit affirmed district court's finding of excusable 9 neglect despite USPS's advisement that first-class mail takes anywhere from one to three days for 10 delivery); Pincay, 389 F.3d at 858-59 (attorney's paralegal misread Federal Rule of Appellate

Procedure 4 and did not correctly calendar deadline to appeal, so party was late in doing so; Ninth Circuit affirmed district court's finding of excusable neglect despite the "egregious mistake").*fn3

In addition to its analysis of the Pioneer factors, the Court also notes that Plaintiffs were not alone in asserting that they could re-file their complaint in Michigan. Defendants, in arguing that the 15 exercise of personal jurisdiction in California would be unreasonable (an argument on which they 16 ultimately prevailed), adopted Plaintiffs' assertion in this regard. See Docket No. 23 at 12 (subsection entitled "The Existence of an Alternative Forum"). Defendants do not address this fact 18 in their opposition to the instant motion.

In sum, after considering the Pioneer factors and other relevant considerations, the Court finds that Plaintiffs' counsel's failure to request transfer of this action to the Eastern District of Michigan was due to excusable neglect. As such, Plaintiffs' motion for relief from the Court's Corrected Order is GRANTED.


Based on the foregoing, Plaintiffs' motion is GRANTED. The Court VACATES its prior order dismissing Plaintiffs' complaint and, instead, orders that this action be TRANSFERRED to 8 the United States District Court for the Eastern District of Michigan.


C09-05763 HRL Notice will be electronically mailed to: Bruce Jonathan Napell Bryan W. Dillon Charles G. Miller,, Jason David Maynard, Simon Richard Goodfellow See General Order 45 Section IX C.2 and D; Notice has NOT been electronically mailed to: Charles Godfrey Miller Bartko Zankel Tarrant & Miller A Professional Corporation 900 Front Street Suite 300 San Francisco, CA 94111

Counsel are responsible for distributing copies of this document to co-counsel who have not registered for e-filing under the court's CM/ECF program.

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