United States District Court, W.D. Texas, Austin Division
PITMAN, UNITED STATES DISTRICT JUDGE
the Court is Defendant AmbiCom Holdings Inc.'s Motion for
Reconsideration. (Dkt. 37). Having reviewed the pleadings and
the relevant legal authorities, the Court issues the
PC Drivers Headquarters, L.P. (“PCD”) sued
Defendant AmbiCom Holdings, Inc. (“AmbiCom”) for
breach of contract. According to Plaintiff, PCD and AmbiCom
entered into a joint business venture to develop, market, and
sell certain software-related products and services. (Orig.
Pet. ¶ 7; Mot. Default. J. ¶ 8). PCD contended
that, following AmbiCom's repeated failure to perform its
contractual obligations, it was forced to make payments owed
by AmbiCom to various third parties in order to preserve
PCD's ownership of certain assets. (Mot. Default. J.
¶ 8). PCD sought compensatory damages for the payments
made on behalf of AmbiCom, a declaratory judgment defining
its surviving rights following the termination of the
business venture, a permanent injunction, and attorneys'
October 29, 2015, Plaintiff filed this action in the 201st
Judicial District Court of Travis County, Texas. On November
17, 2015, AmbiCom removed the case to this Court. AmbiCom did
not file an answer or any other defensive pleading in the
state court action prior to removal, nor did it do so after
removal in this Court. On December 4, 2015, AmbiCom's
counsel filed a motion to withdraw. The Court held a hearing
on December 17, 2015, and entered an order granting the
motion to withdraw. In the order, the Court admonished
Defendant “if its financial situation should change, it
should retain litigation counsel expeditiously, as the
probable consequence of proceeding without counsel is the
issuance of a default judgment.” (Order, Dkt. 9.) After
AmbiCom's counsel withdrew, no other attorney made an
appearance on its behalf.
January 27, 2016, PCD filed a Motion for Entry of Default.
(Dkt. 11). The Clerk of the Court entered a default against
AmbiCom on January 26, 2016. (Dkt. 12). PCD thereafter moved
the Court for the entry of default judgment, (Dkt. 13), which
this Court granted by order dated April 19, 2016. (Dkt. 14).
The Court entered final default judgment that same day. (Dkt.
January 19, 2017, nearly a year after PCD initially moved for
entry of default, an attorney appeared on behalf of AmbiCom
and filed a motion to set aside the default judgment. This
Court denied the motion on March 20, 2017. AmbiCom has now
filed a motion for reconsideration in which AmbiCom argues
the Court erred in holding that a violation of Federal Rule
of Civil Procedure 54(c) does not, standing alone, provide a
basis for setting aside a judgment.
the Federal Rules of Civil Procedure do not specifically
provide for motions for reconsideration, see Shepherd v.
Int'l Paper Co., 372 F.3d 326, 328 (5th Cir. 2004),
courts often consider such motions by the standards of
Federal Rule of Civil Procedure 59(e), a provision governing
the grounds for alteration or amendment of a judgment.
See Jacoby v. Trek Bicycle Corp., No. 2:11-cv-124,
2011 WL 3240445, at *1 (E.D. Tex. July 28, 2011). The party
moving for the remedy must show “(1) an intervening
change in controlling law; (2) the availability of new
evidence not previously available; or (3) the need to correct
a clear error of law or prevent manifest injustice.”
Id. (quoting In re Benjamin Moore &
Co., 318 F.3d 626, 629 (5th Cir. 2002)).
59(e) motion “calls into question the correctness of a
judgment.” In re Transtexas Gas Corp., 303
F.3d 571, 581 (5th Cir. 2002). It is not the proper vehicle
for “rehashing evidence, legal theories, or arguments
that could have been offered or raised before the entry of
judgment.” Templet v. HydroChem, Inc., 367
F.3d 473, 478 (5th Cir. 2004); Simon v. United
States, 891 F.2d 1154, 1159 (5th Cir. 1990). Rather, the
rule “serve[s] the narrow purpose of allowing a party
to correct manifest errors of law or fact or to present newly
discovered evidence.” Waltman v. Int'l Paper
Co., 875 F.2d 468, 473 (5th Cir. 1989). Thus,
reconsideration of a judgment after its entry is an
extraordinary remedy to be used only sparingly.
Templet, 367 F.3d at 478.
prior motion to set aside the default judgment in this case,
AmbiCom argued that this Court's final default judgment
was void, and thus should be set aside under Rule 60(b)(4),
because it provided relief beyond what was requested in the
pleadings in violation of Rule 54(c). (Mot. Set Aside Default
J., Dkt. 16, at 10-12). The Court rejected AmbiCom's
argument, holding that a violation of Rule 54(c) is
insufficient to warrant relief under Rule 60(b)(4) absent a
showing that the Court lacked jurisdiction or acted in a
manner inconsistent with due process. (Dkt. 36, at 5-6).
Because AmbiCom had not made that showing, the Court denied
its motion to set aside the default judgment under Rule
60(b)(4). (Id.). AmbiCom's motion for
reconsideration now goes further than its initial motion and
argues that a violation of Rule 54(c) constitutes a violation
of due process.
Court is not persuaded that AmbiCom's new argument
justifies the relief it seeks. First, AmbiCom's due
process arguments could have been raised in support of its
motion to set aside the default judgment. Instead, AmbiCom
argued that a violation of Rule 54(c), standing alone,
warrants relief under Rule 60(b)(6). As noted above, a motion
for reconsideration is not the proper vehicle for presenting
“arguments that could have been offered or raised
before the entry of judgment” but were not.
Templet, 367 F.3d at 478.
the Court disagrees with the substantive proposition that a
violation of Rule 54(c) is a per se violation of due process.
This Court is of the view that Rule 54(c), like the rule
governing service in Espinosa, is designed to
safeguard a defaulting party's right to notice and an
opportunity to be heard by apprising him of the allegations
against him and allowing him to consider whether to avail
himself of his right to proceed with the litigation. See
In re Jacuinde, Bankruptcy No. 08-15509-B-7, 2009 WL
9083939, at *4 (Bankr. E.D. Cal. Apr. 16, 2009) (“Rule
54(c) serves to protect the rights of defendants to due
process by limiting the relief granted against a defaulting
defendant to the relief the defendant was properly notified
would be at issue.”). Accordingly, violations of the
rule may indeed correlate with violations of due process.
See Stafford v. Jankowski, 338 F.Supp.2d 1225, 1228-
29 (D. Kan. 2004) (“The purpose ...