Derek Smith Law Group, PLLC v. Seth Carson, doing business as "Carson Legal Group"

Summary

The United States District Court for the Eastern District of Pennsylvania denies Seth Carson’s motion to vacate a default judgment and motion to dismiss for lack of subject matter jurisdiction. The Court concludes that vacatur is unwarranted because Carson failed to present a complete meritorious defense, waived any right to arbitration by not timely asserting it, and engaged in culpable conduct. The Court also finds that complete diversity exists between the parties and that the plaintiff’s fraud claim does not satisfy Federal Rule of Civil Procedure 9(b).

Holdings

1. The Court denied the motion to vacate because Carson failed to establish a complete meritorious defense and his failure to respond constituted culpable conduct; the balance of the Rule 60(b) factors favored upholding the default judgment.
2. Carson did not establish a complete meritorious defense because his asserted defenses were either insufficiently supported, partial, waived, or did not address his alleged liability under the 2024 Contract.
3. The Court had subject matter jurisdiction under 28 U.S.C. § 1332(a) because complete diversity existed when the complaint was filed.
4. Carson waived any right to arbitration by failing to timely assert that right and by failing to respond to the action.
5. The complaint did not satisfy Rule 9(b)'s heightened pleading requirement for the fraud claim because it failed to plead the circumstances of the alleged fraud with sufficient particularity.

Questions Presented

1. Whether the default judgment should be vacated under Federal Rule of Civil Procedure 60(b) based on prejudice, the existence of a meritorious defense, and culpable conduct.
2. Whether the Court lacked subject matter jurisdiction because complete diversity did not exist between the parties.
3. Whether Carson's asserted defenses—including limitations, pleading specificity, arbitration, and alleged debt miscalculation—constituted a complete meritorious defense sufficient to support vacatur.
4. Whether Carson waived any right to arbitrate by failing to timely assert it and by defaulting.

Disposition

denied