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Chase v. Merson

United States District Court, D. Maine

July 15, 2018

JOHN F. CHASE, Plaintiff
v.
ARTHUR MERSON, et al., Defendants

          MEMORANDUM DECISION AND ORDER ON MOTIONS FOR ENTRY OF DEFAULT AND DEFAULT JUDGMENT AND MOTION TO EXTEND TIME TO FILE ANSWER

          JOHN H. RICH III UNITED STATES MAGISTRATE JUDGE

         In this case alleging that the defendants conspired to induce the plaintiff, John F. Chase, into investing $500, 000 in a fraudulent investment scheme, see Complaint (ECF No. 1) at 2, defendant Robert Cloutier moved for an extension of time to answer the complaint nunc pro tunc, and, nearly simultaneously, the plaintiff moved for both the entry of default and default judgment against him, see Defendant Robert Cloutier's Motion To Extend Deadline To Answer or Otherwise Respond to Complaint (“Motion To Extend Time”) (ECF No. 12); Application for Entry of Default and Default Judgment Against Plaintiff Robert Cloutier (“Default Motions”) (ECF No. 15). I held oral argument on the motions following which I granted the defendant's motion and deemed the plaintiff's motions moot, see ECF No. 33, and now set forth in writing the bases for my oral ruling.

         I. Background

         The plaintiff filed the instant complaint on April 19, 2018, alleging that 10 named defendants fraudulently induced him to invest $500, 000 in standby letters of credit by promising a $10 million return in seven to 12 days on every $250, 000 invested. See Complaint at 2. The plaintiff alleges, in relevant part, that:

1. Defendants Arthur Merson and Keith Roy informed his attorney that, in exchange for introducing him to this opportunity, they and four other defendants, Endeavor Project Consultants, LLC, Don Patch, Mark Cloutier, and Robert Cloutier (together, the “Consultants”), would require a collective fee of 17.5 percent of the plaintiff's proceeds from the investment. See Id. ¶ 32.
2. In late March 2017, the Consultants presented him with an Irrevocable 17.5% Success Fee Participation & Payorder Agreement (the “Success Fee Agreement”). See id. ¶ 33 & Success Fee Agreement, Exh. 1 (ECF No. 1-1) thereto.
3. On March 29, 2017, he and the Consultants executed the Success Fee Agreement, and, pursuant to a separate agreement with defendant Stellar Enterprises, Inc., through defendant Christopher M. Ochoa, he wired $500, 000 to the IOLTA trust account of defendant The Law Office of Chris Ochoa, P.A., the same day. See Complaint ¶¶ 36, 48-49.
4. Pursuant to that separate agreement, the plaintiff's funds were not to be disbursed from the trust account until Ochoa provided him proof that two banking instruments, including a standby letter of credit, had been issued and transmitted. See id. ¶¶ 43-44, 46.
5. In fact, the plaintiff's funds were immediately disbursed from the trust account without the promised proof, and, as of the date of the filing of the instant complaint more than a year later, despite inquiries and/or demands, the plaintiff still had not received proof of the issuance and transmission of the banking instruments, any return on his investment, or a refund of any portion of the $500, 000 that he invested. See Id. ¶¶ 50, 52-54, 58-61.

         Robert Cloutier was served with a summons and copy of the complaint on April 30, 2018, triggering a May 21, 2018, deadline to answer, see ECF No. 6, and Mark Cloutier was served on May 7, 2018, resulting in a May 29, 2018, deadline to answer, see ECF No. 8. According to Robert Cloutier, the following series of events then transpired:

1. He and Mark Cloutier, who is his brother, reviewed the complaint together and discussed how to respond.[1] See Declaration of Robert Cloutier (ECF No. 24-1), attached to Defendant Robert Cloutier's Objection to Application for Entry of Default and Default Judgment (“Defendant's Objection”) (ECF No. 24), ¶¶ 3-4.[2] They agreed that Mark, who was more experienced in legal matters, would coordinate with their cousin Jim Cloutier, an attorney, to respond appropriately to the complaint and protect their rights. See Id. ¶¶ 15, 17.
2. Robert did not focus on the fact that he had apparently been served with the complaint a few days earlier than Mark and that, as a result, his response was due sooner. See id. ¶ 16.
3. When Robert and Mark learned that Jim Cloutier was unable to represent them because of a conflict of interest, Mark called the plaintiff's attorney and advised that he and Robert needed more time to find counsel and respond. See id. ¶¶ 17-18. The plaintiff's attorney agreed to give Mark additional time to do so. See id. ¶ 18. Mark reassured Robert that, although the plaintiff's attorney had told him that Robert's response was already “one day late, ” he (the plaintiff's attorney) would “not enforce it.” Id.
4. At Mark's suggestion, Robert promptly called the plaintiff's attorney and was told that because he was already “a day late[, ]” he would simply have to explain why he was a day or two late and would be allowed to ...

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