BV Reomie Automateriaal v. IDE Invest and Real Estate LLC

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF WYOMING
B.V. Reomie Automateriaal,
Plaintiff,
v.
IDE Invest and Real Estate, LLC,
Defendant.
Case No. 22-CV-00091-SWS
ORDER DENYING DEFENDANT’S MOTION TO SET ASIDE (ECF NO. 20)
This matter comes before the Court on Defendant’s Motion to Set Aside Entry of Default
and Default Judgment. (ECF No. 20.) 	Plaintiff responded on October 18, 2022. (ECF No. 25.)
Defendant filed a reply on October 25, 2022 (ECF No. 26.) Having considered the parties’
arguments, reviewed the record herein, and being fully advised upon the matter, the Court DENIES
the Motion.
BACKGROUND
Plaintiff, B.V. Reomie Automateriaal (“Reomie”), a private company formed under Dutch
law with its principal place of business in the Netherlands, brought this action seeking damages
against Defendant, IDE Invest and Real Estate, LLC (“IDE”), for intentional interference with
prospective economic advantage and intentional misrepresentation arising out of a land purchase
and proposed development in the Netherlands. (ECF No. 1.) Reomie initiated this lawsuit against
IDE on April 26, 2022, asserting diversity jurisdiction based upon IDE being “incorporated in the
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State of Wyoming and has its principal place of business in this state.” (Id. at 2.)1 The Summons
and Complaint were served on IDE’s registered agent in Sheridan, Wyoming that same day: April
26, 2022. (ECF No. 5, 6.) IDE was required to serve an answer or response to the Complaint within
twenty-one (21) days after the date of service, which was May 17, 2022. (See id.) IDE’s deadline
to plead or defend expired on May 17, 2022. Upon verification of service, the Clerk of Court
entered default against IDE on May 18, 2022, after IDE’s deadline to plead or defend had expired
without a response. (ECF No. 8.) Reomie moved for a Default Judgment on June 15, 2022 (ECF
No. 9), which this Court granted on July 12, 2022 (ECF No. 12). Default Judgment in favor of
Reomie against IDE was entered on July 14, 2022, in the amount of $5,749,394.41, plus post
judgment interest at the statutory rate of 2.86% in accordance with 28 U.S.C. § 1961. (ECF No.
13.)
After a month passed counsel for IDE filed an appearance in this case on August 13, 2022
(ECF No. 14.) On the same day, IDE’s counsel moved to quash subpoenas Reomie had served on
internet domain and email address providers, seeking to identity the name, address and contact
information for the customer who held those sites and emails associated with IDE. (ECF No. 15).
Unsuccessful in their quest, IDE, over a month later, on September 22, 2022, then and only then
moved to set aside the default judgment. (ECF No. 20.)
JURISDICTION
As a threshold matter this Court must determine whether it has subject matter jurisdiction
over this dispute. Shaw v. AAA Eng’g & Drafting, Inc., 138 F. App’x 62, 67 (10th Cir. 2005)
(unpublished) (despite absence of either party challenging subject matter jurisdiction district court
1 This is incorrect. LLCs are not “incorporated” but rather are to be treated as “unincorporated associations” for
purposes of determining diversity jurisdiction under 28 U.S.C. § 1332(a). See Mgmt. Nominees, Inc. v. Alderney
Invs, LLC, 813 F.3d 1321, 1323–24 (10th Cir. 2016).
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was required to sua sponte satisfy itself that subject matter jurisdiction exists). In doing so this
Court is not limited to the Complaint but may consider other documents referenced by the parties
and take judicial notice of its own files and records as well as facts which are a matter of public
record. See Van Woudenberg ex rel. Foor v. Gibson, 211 F.3d 560, 568 (10th Cir. 2000), abrogated
on other grounds by McGregor v. Gibson, 248 F.3d 946 (10th Cir. 2001). IDE is a Wyoming
Limited Liability Company, and the Court takes notice of IDE’s Articles of Organization which
lists its principal office in Sheridan, Wyoming. See WY SEC. OF STATE, Bus. Ctr., “IDE invest and
real 	estate, 	LLC,” 	Initial 	Filing 	(July 	21, 	2020),
https://wyobiz.wyo.gov/Business/FilingDetails.aspx?eFNum=1180231222222101480600880020211590992130242
33049#:~:text=Initial%20Filing%20%2D%20See-,Filing,-ID%C2%A0. But this does not resolve the concern
over subject matter jurisdiction because for jurisdictional purposes IDE’s citizenship is derivative
of the citizenship of its members. Siloam Springs Hotel, L.L.C. v. Century Sur. Co., 781 F.3d 1233,
1237–38 (10th Cir. 2015); Mgmt. Nominees, Inc. v. Alderney Invs., LLC, 813 F.3d 1321, 1323–24
(10th Cir. 2016). The potential rub is that since Reomie is a foreign entity created under Dutch
law, if IDE’s members are also foreign citizens, this Court lacks diversity jurisdiction. Id. at 1325
(citing with approval Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 569 (2004) (where
neither plaintiffs nor defendants are United States citizens requisite diversity is absent)). On the
other hand if IDE’s members are citizens of states in the United States, there is diversity
jurisdiction. See Bayerische Landesbank, N.Y. Branch v. Aladdin Cap. Mgmt. LLC, 692 F.3d 42,
49 (2nd Cir. 2012) (Federal courts have diversity jurisdiction over cases between citizens of the
United States and citizens of foreign states); 28 U.S.C. § 1332(a).
The absence of an allegation by Reomie as to the citizenship of IDE’s members is
unfortunately a function, or more accurately a dysfunction, of the Wyoming Limited Liability
Company Act (hereinafter “Wyoming Act”), WYO. STAT. §§ 17–29–101 et seq. Regrettably, and
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probably intentionally, the Wyoming Act does not require the identification or registration of any
individuals, members or managers of a Wyoming LLC. This “feature” has in turn created many
undesirable problems, not just limited to this Court’s. See JANE G. GRAVELLE, CONG. RSCH. SERV.,
R40623, TAX HAVENS: INTERNATIONAL TAX AVOIDANCE AND EVASION 7–10, 29 (2022). Given
the legal analysis required for determining jurisdiction, enabling anonymity of Wyoming LLCs’
members creates an absolute nightmare for Federal Courts in sorting out their place(s) of
citizenship, which are determinative of whether they have subject matter and personal jurisdiction.
The Court notes this case is not the first nor an anomaly—it is one of several where a Wyoming
LLC has been sued with unnamed and unidentifiable members, many of which have a foreign
origin or citizenship. That being said, in this case, it does not appear this Court lacks subject matter
jurisdiction for several reasons and further, Defendant has waived any objection to personal
jurisdiction.
First, IDE is not identified or registered as a Foreign limited liability company. See WYO.
STAT. § 17–29–114; WY SEC. OF STATE, Initial Filing. Thus, one would presume that it is
operating legally and not a foreign entity or wholly comprised of foreign citizens. In addition, the
Affidavit2 of a Lilly Sophie Smith (ECF No. 20-3 at 1 [Exh. 2]), who purports to be “the owner
and managing member of IDE Invest and Real Estate LLC” is alleged to have appeared before a
New Jersey notary. Id. at 2. 	Mysteriously nowhere in her affidavit is there any address or
identification of Ms. Smith’s residence or domicile, or that of IDE. Id. at 1–2. While Ms. Smith
references that “ms van Essen-Hagen did not forward to any other member of IDE Invest and Real
2 While generally applicable to summary judgment, this Court is concerned as to the overall reliability of Ms.
Smith’s affidavit, given that it does not appear to be based upon her personal knowledge and belief. See Told v. Tig
Premier Ins. Co., 149 F. App’x 722, 725–26 (10th Cir. 2005) (unpublished); Sanchez v. State Farm Fire & Cas. Co.,
No. 14-CV-0433 MCA/RHS, 2015 WL 12864232, at *5 (D.N.M. Mar. 31, 2015) (applying same requirements on a
Rule 12(b)(2) motion).
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Estate LLC” the Plaintiff’s Complaint, she does not indicate or represent where any other
member(s) reside or, to the extent they exist, who they even are. Finally, the September 27, 2020,
so-called “proxy” document IDE submits in support of their Reply (ECF No. 26) represents Ms.
Smith’s and IDE’s addresses as 1309 Coffeen Avenue in “Sherdan [sic]”, Wyoming. (ECF Nos.
26 at 3, 26-3 at 1–2 [Exh. 3A].) Simply put the only information before this Court suggests that
IDE’s members are citizens of the United States which enables this Court to exercise subject matter
jurisdiction. Personal jurisdiction is an easier calculation, given the absence of any objection.3
A lack of personal jurisdiction is a “personal defense which may be asserted or waived by
a party.” Williams v. Life Sav. & Loan, 802 F.2d 1200, 1202 (10th Cir. 1986) (per curiam).
Although untimely, IDE appeared in this matter but to date has not raised or asserted that the
District of Wyoming lacks personal jurisdiction.4 Moreover, at this point of the proceedings, a
court cannot inquire into its personal jurisdiction and dismiss the case sua sponte. Williams, 802
F.2d at 1202. Even if it could, IDE has waived the defense by voluntarily appearing without
objecting; IDE did not assert a lack of personal jurisdiction as a potential meritorious defense in
its motion. See id. (stating “jurisdiction over a party may be conferred upon a court by . . . voluntary
appearance of a party.” (citation omitted)); Travelers Cas. & Sur. Co. v. Unistar Fin. Serv. Corp.,
35 F. App’x 787, 787 (10th Cir. 2002) (unpublished) (“Rule 12 not only contemplates the lodging
of certain defenses at the earliest point in a lawsuit, it mandates a waiver of those defenses if not
presented at the first available opportunity.” (emphasis added)). Similarly, IDE cannot now attack
3 While the issue does not appear to have been decided, another jurisdictional enigma presented in these cases is
where none of the members are citizens of Wyoming and neither they nor the LLC conduct business or reside in
Wyoming. This presents a due process, minimum contacts issue because, unlike a corporation the LLC’s
jurisdictional presence is limited to that of the members or where it is conducting business, not where it is formed.
4 The absence of the assertion of this defense may be attributable to the conundrum that to raise the defense
Defendant would have to identify IDE’s member(s) and their place of citizenship. Again, to put it plainly, it is
impossible to determine the citizenship of a Wyoming-formed LLC unless the LLC provides identification or
information regarding its members.
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the default judgment for improper venue. See Williams, 802 F.2d at 1202 (“[I]f a party is in default
by failing to appear or to file a responsive pleading, defects in venue are waived, a default judgment
may be validly entered and the judgment cannot be attacked collaterally for improper venue.”).
Thus, this Court has personal jurisdiction over Defendant and will turn to the merits of the motion.
LEGAL STANDARD FOR RELIEF
Rule 60(b) of the Federal Rules of Civil Procedure sets forth the standard for setting aside
a default judgment. “Relief under Rule 60(b) is extraordinary and may only be granted in
exceptional circumstances.” Cashner v. Freedom Stores, Inc., 98 F.3d 572, 576 (10th Cir. 1996). A
“district court has substantial discretion in connection with a Rule 60(b) motion.” Pelican Prod.
Corp. v. Marino, 893 F.2d 1143, 1146 (10th Cir. 1990). Rule 60(b) “‘seeks to strike a delicate
balance between two countervailing impulses: the desire to preserve the finality of judgments and
the incessant command of the court’s conscience that justice be done in light of all the facts.’”
Jennings v. Rivers, 394 F.3d 850, 856 (10th Cir. 2005) (quoting Cessna Fin. Corp. v. Bielenberg
Masonry Contracting, Inc., 715 F.2d 1442, 1444 (10th Cir. 1983)).
Under Rule 60(b), the Court may relieve a party from final judgment for the following
reasons: “(1) mistake, inadvertence, surprise, or excusable neglect . . . [or] (3) fraud . . .
misrepresentation, or other misconduct of an adverse party.” Fed. R. Civ. P. 60(b). “‘[F]or
purposes of Rule 60(b), “excusable neglect” is understood to encompass situations in which failure
to 	comply 	with 	a 	. 	. 	. 	deadline 	is 	attributable 	to 	negligence.’” Jennings, 	394 	F.3d 	at
856 (quoting Pioneer Inv. Servs. Co. v. Brunswick Assoc. Ltd. P’ship, 507 U.S. 380, 394 (1993)).
In a general sense: “[t]he ordinary meaning of ‘neglect’ is ‘to give little attention or respect’ to a
matter, or, closer to the point for our purposes, ‘to leave undone or unattended to esp[ecially]
through carelessness.’” Pioneer Inv. Servs. Co., 507 U.S. at 388 (quoting Webster’s Ninth New
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Collegiate Dictionary 791 (1983)). “The word [neglect] therefore encompasses both simple,
faultless omissions to act and, more commonly, omissions caused by carelessness.” Id.
In analyzing excusable neglect, the Court “must consider ‘all relevant circumstances
surrounding the party’s omission.’” Doran L. Off. v. Stonehouse Rentals, Inc., 678 F. App’x 733,
736 (10th Cir. 2017) (unpublished) (quoting Pioneer Inv. Servs. Co., 507 U.S. at 395). Relevant
circumstances include “(1) the danger of prejudice to the [nonmoving party], (2) the length of the
delay and its potential impact on judicial proceedings, (3) the reason for the delay, including
whether it was within the reasonable control of the movant, and (4) whether the movant acted in
good faith.” Id. at 736. Fault or the reason for delay is the most important factor, “which alone
may preclude a finding of excusable neglect.” Id. (citing United States v. Torres, 372 F.3d 1159,
1163 (10th Cir. 2004)). “Carelessness by a litigant or his counsel does not afford a basis for relief
under Rule 60(b)(1).” Pelican Prod. Corp., 893 F.2d at 1146. Further, the burden is on the moving
party “to plead and prove excusable neglect.” Id.
Apart from the burden to plead and prove justifiable grounds for relief permitted by Rule
60, the moving party must also demonstrate the existence of a meritorious defense. In re Stone,
588 F.2d 1316, 1319, 1322 (10th Cir. 1978). Where defendants have failed to establish justifiable
grounds for relief under Rule 60, it is unnecessary to consider whether there is a meritorious
defense. See id. at 1322; White v. Cassey, 30 F.3d 142 (Table), 1994 WL 395902, at *1, *3 (10th
Cir. 1994) (unpublished).
DISCUSSION
IDE seeks relief from the default judgment under Rules 60(b)(1) and 60(b)(3). The Court
will address each in turn.
Rule 60(b)(1): Excusable Neglect
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First, IDE seeks relief from default judgment because of “excusable neglect” pursuant to
Rule 60(b)(1). (ECF No. 20-1 at 2, 4–5.) IDE argues its basis for excusable neglect is due to the
only person who received the Plaintiff’s Complaint and summons being a Ms. Gemma van Essen-
Hagen. (Id. at 5.) IDE argues the Complaint “was apparently received by her on or about March
26, 2022”5 and “[d]ue to the nature of her apparent illness, Ms. van Essen-Hagen apparently did
not either appreciate the importance of the documents she received or forgot about receiving them
due to her terminal condition at the time.” (Id.)
The owner and managing member of IDE, Lilly Sophie Smith, attests that Ms. van Essen-
Hagen was IDE’s sole employee and the only person at IDE’s office in Veenendaal, Netherlands,
from March 2022 until her death on June 6, 2022. (ECF No. 20-3 at 1 [Exh. 2].) Ms. Smith also
claims that during this time, Ms. van Essen-Hagen was “ill” and “bedridden for several months
from march 2022 [sic]” and passed away “after an intense sickbed.” (Id. at 1–2).6
IDE argues its lack of a timely responsive pleading is due to “the circumstances involving
the only person in the Defendant’s principal place of business at the time of service.”7 (Id.) IDE’s
argument is unavailing.
The Court first looks to IDE’s proffered reason for delay and whether the delay in seeking
relief was within the IDE’s reasonable control. See Jennings, 394 F.3d at 856. It was. The parties
agree that IDE was served through its registered agent, Cloud Peak Law, LLC, on April 26, 2022.
5 Unless Ms. van Essen-Hagen received an advanced edition of the Complaint directly, the Court presumes this date
was meant to read as “April 26, 2022.”
6 It is unclear how Ms. Smith is aware of the decedent’s past conditions. Ms. Smith’s affidavit does not indicate how
she has such personal knowledge. The Court assumes, arguendo, what little is stated is based on Ms. Smith’s
knowledge as owner and managing member of IDE.
7 Whether inadvertent or a misrepresentation, the Court notes IDE’s statement here conflicts with the 2021 and 2022
LLC Annual Reports submitted by Plaintiff from the Wyoming Secretary of State’s website. Those reports, as well as
the LLC’s initial filing with the WY Secretary of State, provide that the mailing address and the principal office
address of the Defendant IDE is 1309 Coffeen Avenue in Sheridan, WY 82801. Under Wyoming law, “‘Principal
office’ means the principal executive office of a limited liability company or foreign limited liability company,
whether or not the office is located in this state.” WYO. STAT. ANN. § 17–29–102(xvii).
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Ashley Preston, of Cloud Peak Law Group, P.C.,8 attests to forwarding the Plaintiff’s Complaint
and Summons to IDE at “the following email address: ideinvestandrealestate.com.”9 (ECF No. 20-
2 at 1 [Exh.1].) Defendant’s argument is premised on Ms. van Essen-Hagen having been the only
one to have received the Plaintiff’s Complaint and the Summons. This fails as an initial matter—
service was made on IDE’s registered agent. The same agent designated and chosen by IDE.
Subsequent action or inaction taken by IDE’s registered agent—which the Court notes is a law
firm—and IDE’s employee or employees (e.g. Ms. van Essen-Hagen), was within the selection
and control of IDE. See Doran L. Off., 678 F. App’x at 736 (noting Defendant’s chosen registered
address to receive service of lawsuit(s) was within Defendant’s control); Gripe v. City of Enid, 312
F.3d 1184, 1189 (10th Cir. 2002) (“Those who act through agents are customarily bound by their
agents’ mistakes.”); White, 1994 WL 395902, at *3 (“[E]ven where the blame lies with the
attorney, the denial of 60(b) relief is not too harsh a result for a party, who freely selected the
attorney as their agent.”).
Ms. Smith, as sworn in her affidavit, states Ms. van Essen-Hagen was effectively confined
to her home and bed from March 2022 until her death. (ECF No. 20-3 at 1–2.) Based on the
8 Defendant’s brief names IDE’s registered agent as “Cloud Peak Law Group, LLC” (ECF No. 20-1 at 2) whereas the
affidavit submitted by IDE from Ashley Preston states she is an employee of Cloud Peak Law Group, P.C. (ECF No.
20-2 at 1 [Exh. 1]). The Court recognizes the Summons issued lists “IDE Invest and Real Estate, LLC c/o Cloud Peak
Law, LLC.” (ECF No. 5 at 1 (emphasis added).) The executed summons states service of the Summons and Complaint
was made on “Roesler Tasha, customer service representative of Cloud Peak Law, LLC, designated by law to accept
service of process on behalf of IDE Invest and Real Estate, LLC.” (ECF No. 6 at 1.) The discrepancies, inconsistencies
and conflicts with the names and record herein, make this Court question the credibility of the information provided.
To the extent these problems are the result of mistaken drafting, the Court finds such sloppiness throughout the
submissions disappointing.
9 The Court notes this address does not take the proper format of a standard email address and reads instead like a
website domain name or web address. Ms. Preston does not provide a date that Cloud Peak forwarded the Summons
and Complaint on—Ms. Preston only avers they were emailed “[u]pon receiving” them. There is no submission of the
email sent by Cloud Peak and no evidence of receipt by IDE or Ms. van Essen-Hagen of Plaintiff’s Complaint or the
Summons. The Court struggles to understand how one may receive emails through a web address. There is only Ms.
Smith’s affidavit that “it appears” a person, now deceased, was the only one to have received the lawsuit from the
registered agent. (ECF No. 20-3 at 1 [Exh. 2].) Further, it is not at all clear how or when precisely Ms. Smith found
out about this lawsuit. See footnote 8 of this opinion.
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arguments and evidence submitted by IDE, Ms. van Essen-Hagen was clearly bedridden before
Plaintiff’s Complaint and the Summons were even served on IDE’s registered agent. Yet, during
that period of time, there is no evidence IDE did anything to substitute or replace Ms. van Essen-
Hagen, inquire about or manage lawsuits in Ms. van Essen-Hagen’s absence, or have someone
take over her responsibilities or just monitor her email. If IDE’s proffered reason for delay is to be
believed, then as the proclaimed owner and managing member of IDE, Ms. Smith presumably
knows who and who is not in IDE’s or her employee and their abilities. (See footnote 2 of this
opinion.) It was IDE’s internal decision to have Ms. van Essen-Hagen be the sole employee
working at their [alleged] office in Veenendaal, Netherlands. See In re Gourlay, 465 B.R. 124, 132
(B.A.P. 6th Cir. 2012) (“It was [Defendant’s] internal decision to have its chief operating officer
work at a location other than its listed principal address.”). IDE’s failure to respond to Plaintiff’s
Complaint was not “due to circumstances which were beyond its reasonable control.” Torres, 372
F.3d at 1162 (quoting Pioneer, 507 U.S. at 383–84). See also In re Lang, 305 B.R. 905, 910
(B.A.P. 10th Cir. 2004) (citing decisions by other circuits holding that mistakes by office staff do
not constitute excusable neglect), aff’d, 414 F.3d 1191 (10th Cir. 2005); United States v.
$310,659.56 in U.S. Currency, 92 F.3d 1197 (Table), 1996 WL 437395, at *1 (10th Cir. 1996)
(unpublished) (affirming district court’s denial to set aside default judgment, stating that “relying
on someone other than their own counsel to represent their interests in the courts, [is] an
unreasonable proposition at best.”); Ins. Co. of N. Am. v. S/S “Hellenic Challenger,” 88 F.R.D.
545, 548 (S.D.N.Y. 1980) (evidence that employee misplaced complaint so that it never reached
attention of appropriate authorities did not establish excusable neglect); Lexington–Fayette Urb.
Cnty. Hum. Rts. Comm’n v. Wal–Mart Stores, Inc., 111 S.W.3d 886, 890–91 (Ky. App. 2003)
(holding tribunal’s refusal to vacate default judgment was not abuse of discretion where
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defendant’s lack of participation resulted from defendant’s own “internal corporate problem” and
tribunal “properly held [defendant] duly accountable for an alleged breakdown within its own
corporate structure”). The Court further finds curious IDE’s argument that, “Ms. van Essen-Hagen
apparently did not either appreciate the importance of the documents she received or forgot about
receiving them due to her terminal condition at the time.” (ECF No. 20-1 at 5.) Apart from
questioning the choice of someone with such an alleged terminal condition that it results in
misplacing of legal papers, it strains credulity that a party puts in charge (without any independent
monitoring even of email) of handling legal matters an individual who cannot appreciate their
importance.
Further, “default that is caused by the movant’s failure to establish minimum procedural
safeguards for determining that action in response to a summons and complaint is being taken does
not constitute default through excusable neglect.” Gibbs v. Air Canada, 810 F.2d 1529, 1537 (11th
Cir. 1987). See also Rogers v. Hartford Life & Acc. Ins. Co., 167 F.3d 933, 939 (5th Cir. 1999)
(affirming a finding of no excusable neglect where a lack of minimum internal safeguards “was at
least a partial cause of [defendant’s] failure to respond”); Park Corp. v. Lexington Ins. Co., 812
F.2d 894, 898 (4th Cir. 1987) (Haynsworth, J., concurring) (“Rule 60(b) relief was properly denied
not because of the loss of the papers and not because the loss was unexplained but because
[defendant] made no showing that it had in place reasonable internal controls designed to prevent
or discover such losses.”); Zuelzke Tool & Eng’g v. Anderson Die Castings, 925 F.2d 226, 229
(7th Cir. 1991) (“[W]here a party willfully, albeit through ignorance or carelessness, abdicates its
responsibilities, relief from judgment under Rule 60(b) is not warranted.”); RDG Oil & Gas, LLC
v. Jayne Morton Living Tr., 2014 WY 102, ¶ 25, 331 P.3d 1199, 1205 (Wyo. 2014) (“[F]ailure to
attend to business is not excusable neglect.”). Formation as an LLC in Wyoming does not exempt
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IDE from adequate or at least, minimum, procedures or policies to ensure timely responses to
lawsuits filed against it.10
As previously stated, the burden of proving that any neglect was excusable is on the party
seeking relief. Pelican Prod. Corp., 893 F.2d at 1146. Here, IDE has not presented any evidence
indicating that it has a reasonable policy in place to see that important mail is delivered to the
appropriate personnel or that said policy was or was not followed here. Cf. Owens–Illinois, Inc. v.
T & N Ltd., 191 F.R.D. 522 (E.D. Tex. 2000) (finding the mislaid complaint was the result of an
isolated human error, rather than a product of a systemic failure to establish minimum procedural
safeguards). Either way, IDE’s failure to respond appears to be the product of an internal decision
to have its registered agent in Wyoming forward complaints for lawsuits to its sole, terminally ill,
bedridden employee in an office in the Netherlands.11 IDE’s default was a result of a systemic
failure to effectively handle service of process, despite knowing well in advance of the alleged
health problems of its lone employee.
10 The Court is aware of the boundless “flexibility” provided by the 2010 Wyoming Limited Liability Company Act.
See GreenHunter Energy, Inc. v. W. Ecosystems Tech., Inc., 337 P.3d 454, 461–62 (Wyo. 2014) (providing examples
of the flexibility provided by the Act); WYO. STAT. ANN. §§ 17–29–101 et seq.; 2010 Wyo. Sess. Laws, ch. 94. The
Court is also aware of the weak and problematic regulation of LLCs formed in Wyoming and their registered agents.
See Debbie Cenziper et al., The Gatekeepers Who Open America to Shell Companies and Secret Owners, WASH. POST
(Apr. 5, 2022), https://www.washingtonpost.com/business/interactive/2022/tax-havens-wyoming-pandora-papers/
(“In Wyoming, the owners of LLCs are not required to identify themselves . . . . In Wyoming, the number of LLCs
has soared in the past decade from about 4,200 to more than 220,000, state data shows. . . . Wyoming registered agents
acknowledge knowing little or nothing about the owners of companies they are paid to front, or what function those
companies serve.”); Debbie Cenziper & Will Fitzgibbon, The ‘Cowboy Cocktail’: How Wyoming Became One of the
World’s 	Top 	Tax 	Havens, 	WASH. 	POST 	(Dec. 	20, 	2021),
https://www.washingtonpost.com/business/interactive/2021/wyoming-trusts-finance-pandora-papers/ (“Wyoming is
now among the 10 least restrictive, most customer-friendly trust jurisdictions in the world. . . . Wyoming . . . [was]
named in October by the European Parliament as [a] hub[] of ‘financial and corporate secrecy.’”). LLCs formed in
Wyoming are permitted to operate with utmost privacy and the bare minimum of oversight.
11 Raising even more questions than answers is the existence of IDE’s principal office address and mailing address
listed locally in Sheridan, Wyoming, according to the 2021 and 2022 LLC Annual Reports submitted by Plaintiff
(ECF Nos. 25-4, 25-5). The Court notes the Wyoming Secretary of State’s website confirms the addresses listed as
the 	principal 	and 	mailing 	address 	for 	IDE 	are 	in 	Sheridan, 	WY. 	See
https://wyobiz.wyo.gov/Business/FilingDetails.aspx?eFNum=1180231222222101480600880020211590992130242
33049. There was no evidence submitted by IDE as to its principal office in Wyoming and whether it did or did not
receive anything from the registered agent, also located in Sheridan, regarding this matter.
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IDE’s delay between learning that default judgment had been entered against it—which
date itself is uncertain and not provided other than being sometime after default judgment was
entered and after Ms. van Essen-Hagen died on June 6, 2022 (ECF No. 20-3 at 1 [Exh. 2])—and
moving to set aside the default judgment is also concerning to the Court.12 Judgment was entered
against IDE on July 14, 2022. (ECF No. 13.) When Reomie sought post-judgment discovery, IDE
made the deliberate choice to appear and seek the quashing of two subpoenas on August 13, 2022,
instead of promptly seeking relief under Rule 60(b).13 (See ECF Nos. 14, 15, 18.) IDE did not seek
relief under Rule 60(b) until September 22, 2022. (ECF No. 20.) It is troubling that IDE and its
counsel waited, at minimum, over a month to file a motion to set aside the default judgment. The
Tenth Circuit has noted two months is a significant delay in these circumstances. See Doran L.
Off., 678 F. App’x at 736 (“Even after learning of the lawsuit, [Defendant] waited almost two
months to move to set aside the judgment.”).
The reason for delay is “perhaps the most important single factor-in determining whether
neglect is excusable.” Torres, 372 F.3d at 1163. Because of the heavy emphasis that is placed on
the reason for the delay, it is unnecessary to consider other factors, such as whether IDE’s conduct
was in good faith, and the danger of prejudice to Plaintiff if the Court were to set aside the default
judgment. At the very least, if considered, Plaintiff would undoubtedly be prejudiced to some
12 The Court is not inattentive to the vagueness of Ms. Smith’s affidavit. Ms. Smith attests to discovering Reomie’s
instant lawsuit “after ms van Essen-Hagen [sic] had passed and after a default judgment was entered against IDE.”
Without providing a date, Ms. Smith attests, “As soon as I became aware of the problems, I contacted Wyoming
counsel to attempt to set aside the default judgement.” (ECF No. 20-3 at 1 [Exh. 2].) Based on her statements, Ms.
Smith may have learned of this lawsuit and the default judgment as early as July 15, 2022. While the timing is vague
as to when, Ms. Smith is entirely silent on how she learned of this lawsuit.
13 A party’s prompt motion to set aside an entry of default may serve to mitigate culpability that may exist. See Savin
Corp. v. C.M .C. Corp., 98 F.R.D. 509, 51011 (N.D. Ohio 1983) (emphasis added) (finding that a mistake regarding
the time to respond was not willful because the defendant “expeditiously moved to remedy his mistake”); Jennings,
394 F.3d at 857 (noting courts may take into account whether corrective action is promptly taken after discovering the
mistake). Apart from the lesser standard that is applied to set aside a clerk’s entry of default compared to a default
judgment, see Pinson v. Equifax Credit Info. Servs., Inc., 316 F. Appx. 744, 750 (10th Cir. 2009) (unpublished)
(quoting Dennis Garberg & Assocs., Inc. v. Pack-Tech Int’l Corp., 115 F.3d 767, 775 n.6 (10th Cir. 1997)), IDE
clearly did not move promptly or expeditiously to remedy the default.
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extent, given the increased difficulties in discovery, or an increased possibility of fraud or collusion
due to the death of Ms. van Essen-Hagen. (See ECF No. 25 at 10–11.)
The Court finds IDE’s conduct neglectful and careless, but not excusable.
Rule 60(b)(3): Misrepresentations
Defendant also argues default judgment should be set aside because of Plaintiff’s
misrepresentations, under Rule 60(b)(3), largely regarding damages Reomie suffered. (See ECF
No. 20-1 at 7–9, ECF No. 26 at 4–5.) IDE’s arguments mainly serve as disputing or denying
Plaintiff’s allegations. The Court recognizes the alleged misrepresentations also seemingly serve
to overlap with IDE’s presentation of its alleged meritorious defenses.
“[T]he party relying on Rule 60(b)(3) must, by adequate proof, clearly substantiate the
claim of fraud, misconduct or misrepresentation.” Zurich N. Am. v. Matrix Serv., Inc., 426 F.3d
1281, 1290 (10th Cir. 2005). IDE has failed to provide “clear and convincing proof” of fraud,
misconduct, or misrepresentation that Plaintiff interfered “substantially” with the prior proceeding.
See id. (stating moving party “must show ‘clear and convincing proof’ of fraud, misrepresentation,
or misconduct” and “the challenged behavior must substantially have interfered with the aggrieved
party’s ability fully and fairly to prepare for and proceed at trial.” (cleaned up)).
Defendant offers some evidence as conflicting or contradicting some of Plaintiff’s claims.
However, the Court is not persuaded these factual disagreements rise to the level of demonstrating
fraud or misrepresentation by Plaintiff. IDE has not met its burden—factual disagreements do not
automatically demonstrate misrepresentation by a party. Further, the alleged misrepresentations
do not warrant the extraordinary relief contemplated by Rule 60(b) which would upend the finality
of the judgment. See Weese v. Schukman, 98 F.3d 542, 552 (10th Cir. 1996) (“When alleging a
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claim of fraud on the court . . . all doubts must be resolved in favor of the finality of the
judgment.”).
The Court finds IDE’s carelessness, not any extraordinary circumstances, caused its
default, and IDE has not shown its failure to file a timely responsive pleading was due to excusable
neglect or grounds for relief under Rule 60(b)(3).
Meritorious Defenses
Having concluded that IDE has not shown grounds for relief under a provision of 60(b),
the Court need not consider whether IDE has a meritorious defense. See Otoe Cnty. Nat’l Bank v.
W & P Trucking, Inc., 754 F.2d 881, 884 (10th Cir. 1985) (district court did not need to consider
the merits of a defendant’s proposed defense when defendant did not make a showing of mistake,
inadvertence, or excusable neglect under Rule 60(b)(1)). E.g., United Specialty Ins. Co. v. Conner
Roofing & Guttering, LLC, 11-CV-0329-CVE-TLW, 2012 WL 1115766 (N.D. Okla. Mar. 28,
2012) (demonstrating where no finding of excusable neglect, district court did not analyze whether
defendant had meritorious defense).14
CONCLUSION
Defendant IDE’s Rule 60(b) motion attempts to have the Court set aside the Default
Judgment entered against it. IDE, an LLC formed under Wyoming law, chose a law firm in
Wyoming as its registered agent to receive service of lawsuits on its behalf. There is no dispute
service was perfected on IDE’s registered agent. IDE has an obligation to ensure appropriate action
14 Nevertheless, even if the Court considered IDE’s asserted defenses, they do not warrant setting aside the default
judgment here. IDE “cannot rely on conclusory statements” in demonstrating that there is a meritorious defense. Barta
v. Long, 670 F.2d 907, 909 (10th Cir. 1982). IDE’s assertions are conclusory and do not set out factual bases or legal
bases sufficient to establish their defense could be meritorious or in other words, if proven at trial, would constitute a
complete defense. See In re Stone, 588 F.2d 1316, 1319, 1319 n.2, 1320 n.4 (10th Cir. 1978); 10A Charles A. Wright,
Arthur R. Miller, & Mary Kay Kane, Fed. Prac. & Proc. Civ. § 2697 (4th ed., Apr. 2022 Update) (“The underlying
concern is to determine whether there is some possibility that the outcome of the suit after a full trial will be contrary
to the result achieved by the default.”).
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is subsequently taken. It did not. IDE failed to act with diligence and chose to operate carelessly.
A less favorable interpretation is that IDE’s choices and internal procedures—those which this
Court can ascertain—demonstrate a willful decision to be neglectful. Regardless, IDE’s choices
and inaction are assuredly not excusable.
Taking account of all circumstances surrounding IDE’s default, because nothing in
Defendant’s motion justifies the extraordinary relief provided by Rule 60(b) or setting aside the
default judgment, THEREFORE, it is hereby
ORDERED that Defendant’s Motion to Set Aside Entry of Default and Default Judgment
(ECF No. 20) is DENIED.
DATED this 11th day of November, 2022.
_________________________________
Scott W. Skavdahl
United States District Judge
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