CARE ONE MANAGEMENT, LLC [Note 1] vs. GLORIA BROWN & another. [Note 2]

NEYMAN, J. In this case we consider whether a Superior Court judge abused his discretion in imposing an unusual condition on the removal of a default judgment under Mass. R. Civ. P. 60 (b) (1), 365 Mass. 828 (1974). Specifically, the judge vacated a default judgment against the defendant, Gloria Brown, [Note 3] conditioned upon her agreement to waive her counterclaims against the plaintiff

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nursing facility, Care One Management, LLC (Care One), to the extent that her recovery, if any, exceeded any amount she owed to Care One. Gloria refused to accept the condition, and thus the default judgment remained in place. She now challenges the judge's order on appeal. We conclude that although a judge has substantial discretion to impose a range of conditions on the removal of a default judgment, neither the judge's findings nor the record before us justifies the imposition of the specific condition in this case. We therefore vacate the order on the motion for relief from judgment and remand the case for a determination as to what condition, if any, should be imposed on the removal of the default judgment. [Note 4]

Background. 1. Verified complaint. On or about April 22, 2016, Care One filed a verified complaint in the Superior Court claiming breach of contract and "spousal duty to support" pursuant to G. L. c. 209, § 1, [Note 5] for "necessities provided" to Gloria's now-deceased husband, George, while he resided at the facility. The complaint alleged, among other things, that George entered Care One's facility on July 24, 2015, and remained there until December 24, 2015; [Note 6] that George entered into a written "Resident Admission Agreement" (agreement) with Care One; that, pursuant to the agreement, "Care One agreed to provide [George] with skilled nursing services in exchange for . . . [George's] promise to pay for the services provided and to apply for and cooperate in the Medicaid eligibility determination process"; and that the agreement required George to "apply for and seek to establish eligibility and entitlement to receive benefits under the [F]ederal Medicare" and "diligently take all steps necessary . . . to submit,

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apply for, and obtain any available benefits." The complaint further alleged that Care One provided twenty-four hour skilled nursing care to George throughout his stay, but George failed to submit necessary information to obtain MassHealth benefits, [Note 7] failed to appeal the denial of MassHealth benefits, and abandoned all responsibility to obtain the benefits he was obligated to seek under the agreement. As a result, the complaint alleged, George violated the agreement and owed Care One $67,200 plus interest for the care provided to him. Care One timely served the summons and complaint, and Gloria received timely notice of the present action. [Note 8]

Concurrent with the filing of its complaint, Care One filed a prejudgment motion for allowance of real estate attachment (attachment motion) against Gloria. Gloria appeared at the May 9, 2016, initial hearing on the attachment motion, during which she sought a continuance because George was hospitalized and in critical condition, and she wanted time to speak with an attorney. Gloria also attended the subsequent June 8, 2016, hearing on the attachment motion, and she told the judge that George had been home for four days, after having been on life support and in intensive care. She also represented, among other things, that George "[was] a dementia patient"; did not knowingly sign the agreement as he "never sign[ed] anything when" she was not present; was "sent back" to the Care One facility against Gloria's wishes; and was neglected and mistreated at the Care One facility resulting in bed sores and sepsis. The judge advised Gloria that she or George needed to file an answer to the complaint, and the judge told her that she would "be very well served by having an attorney." That same day, the judge issued an order denying the attachment motion that stated, in part, "[T]here are potentially meritorious defenses based on [George's] cognitive capacities (reported dementia) and possible counterclaims relating to the quality of care provided."

2. Default and default judgment. Neither George nor Gloria filed an answer to the complaint, [Note 9] and thus a default entered pursuant to Mass. R. Civ. P. 55 (a), 365 Mass. 822 (1974), on June

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28, 2016. Care One subsequently filed a motion for default judgment and assessment of damages. Notice of the motion was sent to George and Gloria, but neither responded. On October 25, 2016, a different Superior Court judge held a hearing on the motion for default judgment and assessment of damages, and the judge found that George and Gloria "were given notice of the hearing, but did not appear." On or about October 27, 2016, the judge issued findings and an order allowing the motion, and on October 31, 2016, judgment entered against George and Gloria in the amount of $67,200 plus costs and statutory interest.

3. Rule 60 (b) motion. The Browns took no action in response to the notices and the default judgment for over eight months. On July 17, 2017, Gloria filed a "Request to Re-Open Civil Action . . . Remove Default Judgment & Attachment and Dismiss Plaintiff's Claim with Prejudice for Fraud." The judge treated Gloria's filing as a motion for relief from judgment under Mass. R. Civ. 60 (b) (1) based on a claim of "excusable neglect" (rule 60 [b] motion). [Note 10] The rule 60(b) motion, which Gloria signed "under pains and penalties of perjury," averred, inter alia, that Gloria "was hospitalized with heart problems on July 17, 2016 and medically, could not continue this case"; that although Gloria did not file an answer to the complaint, she did provide Care One with a copy of her answer; that George's signatures on the agreement were "forgeries"; that George suffered from dementia and therefore "would not have understood what he was supposed to be signing"; that Care One "submitted bills incorrectly coded" to Medicare; and that Care One was attempting "to induce this court to accept as genuine, false documents, incorrect billing amounts, statements and affidavits."

As further discussed below, the judge weighed the relevant factors for determining whether the specific circumstances here constituted excusable neglect. See Berube v. McKesson Wine & Spirits Co., 7 Mass. App. Ct. 426, 430-431 (1979). He concluded that most of the Berube factors weighed in favor of allowing

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Gloria's rule 60 (b) motion. [Note 11] He also determined that although "the question of whether relief under [r]ule 60 (b) (1) is warranted is a close one," the present circumstances and "interests of justice generally" warranted resolving the parties' dispute on its merits. Accordingly, on November 7, 2017, the judge ordered that the defaults and ensuing judgment entered against Gloria "are vacated." However, the judge further ruled:

"[T]his Order is conditioned upon [Gloria]'s agreement to waive any and all claims she and/or her husband's estate may have against [Care One] to the extent that the claims result in a monetary recovery which exceeds the amount, if any, determined to be owed to [Care One] for the nursing and other services provided to George while he resided at [Care One]'s [f]acility."

Gloria refused to accept the condition. The default judgment thus remained in effect, and she now appeals from the order. [Note 12]

Discussion. 1. Legal standards. Pursuant to Mass. R. Civ. P. 60 (b), "[o]n motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for . . . (1) mistake, inadvertence, surprise, or excusable neglect." [Note 13] Rule 60 (b) "provides a procedure for removing the burdens of a judgment where the interests of justice and fairness

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require relief." Berube, 7 Mass. App. Ct. at 429. It "contemplate[s] an equitable balancing of interests in determining the merits of a motion brought under its provisions." Id. See Harris v. Sannella, 400 Mass. 392, 395 (1987). Motions for relief from final judgment brought under rule 60 (b) "are commended to the judge's discretion, and a judge's decision will not be overturned, except upon a showing of a clear abuse of discretion" (quotations and citation omitted). Adoption of Quan, 470 Mass. 1013, 1014 (2014). See Burger Chef Sys., Inc. v. Servfast of Brockton, Inc., 393 Mass. 287, 289 (1984), quoting Silkey v. New England Tel. & Tel. Co., 9 Mass. App. Ct. 816, 816 (1980) ("The removal of an entry of default under rule 55 [c] is a matter 'addressed to the sound discretion of the trial judge'").

In addition, where, as here, a party bases its rule 60 (b) motion on a claim of excusable neglect, courts engage in "a case by case assessment of the circumstances," Berube, 7 Mass. App. Ct. at 430, and consider

"among other relevant circumstances . . . at least the following factors: (1) whether the offending party has acted promptly after entry of judgment to assert his claim for relief therefrom; (2) whether there is a showing either by way of affidavit, or otherwise apparent on the record, that the claim sought to be revived has merit; (3) whether the neglectful conduct occurs before trial, as opposed to during, or after the trial; (4) whether the neglect was the product of a consciously chosen course of conduct on the part of counsel; (5) whether prejudice has resulted to the other party; and (6) whether the error is chargeable to the party's legal representative, rather than to the party himself . . . ."

Id. at 430-431.

Finally, "a judge may impose equitable conditions on the allowance of a motion to vacate a judgment." Currier v. Malden Redev. Auth., 16 Mass. App. Ct. 906, 907 (1983). The plain language of rule 60 (b) authorizes judges to condition relief "upon such terms as are just." Mass. R. Civ. P. 60 (b). See Burger Chef

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Sys., Inc., 393 Mass. at 290 (discussing trial judges' "power to condition relief upon appropriate conditions, such as the posting of a bond"). We likewise review a judge's decision to impose conditions on the allowance of a rule 60 (b) motion for abuse of discretion. See Currier, supra. See also L.L. v. Commonwealth, 470 Mass. 169, 185 n.27 (2014); Burger Chef Sys., Inc., supra (noting judge's discretion to impose conditions on allowance of rule 55 [c] motion). Furthermore, we review a decision to impose conditions on the allowance of a rule 60(b) motion in conjunction with the judge's assessment of the Berube factors. See Burger Chef Sys., Inc., supra at 291, quoting Damaskos v. Board of Appeal of Boston, 359 Mass. 55, 64 n.9 (1971) ("[A]ll aspects of the case and of the respective interests of the parties, appropriate for the consideration of a court of equity in granting or denying discretionary relief, may be taken into account").

2. Analysis. The judge imposed the above-referenced condition on the allowance of the rule 60 (b) motion "[i]n light of the significant delay caused by [Gloria]'s extended failure to respond to [Care One]'s complaint and her less-than-speedy request for relief under [r]ule 60 (b) (1)." The judge reasoned that "it would be unfair to permit [Gloria] to pursue her relatively stale defenses and counterclaims against [Care One] so as to obtain an affirmative recovery for her own benefit."

Gloria contends that the judge abused his discretion by imposing what she characterizes as "an unlawful condition on the removal of default." The condition, she claims, was unreasonable, disproportionate to any prejudice to Care One, punitive and excessive, and deprived her of her due process right to access to the courts. She further maintains that the judge's findings in support of the condition were "wholly conclusory," and failed "to determine the value of the damages [the judge] was requiring [her] to waive" vis-à-vis "the value of any harm suffered by Care One." Finally, she argues that insofar as Care One did not allege that it was prejudiced by the delay, and the judge did not find that Care One suffered any prejudice, the imposition of a "draconian condition" constituted an inappropriate sanction.

Care One counters that the condition was well within the judge's substantial discretion in view of the unreasonable delay caused by Gloria, and the staleness and meritless nature of her counterclaims and defenses. It further argues that the judge applied the correct standards, conducted a careful balancing of the parties' interests, and justified the condition with his "reasonable findings of fact."

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Care One's arguments carry more than a measure of persuasiveness. The record confirms that the judge conducted an attentive and assiduous assessment of the relevant circumstances, and sought to strike a careful balance of the parties' interests. The judge was familiar with the entire history of the litigation. He held hearings on the motion for default judgment and assessment of damages, and on the rule 60 (b) motion. He issued thoughtful written findings and rulings on both motions, and analyzed each of the Berube factors in allowing the rule 60 (b) motion based on excusable neglect. In addition, he considered the prior judge's findings from the denial of the attachment motion regarding Gloria's "potentially meritorious defenses . . . and possible counterclaims."

As Care One further argues, Massachusetts appellate courts have construed rules 60 (b) and 55 (c) to empower judges to allow relief upon appropriate conditions such as posting of a bond, and limiting or adjusting interest awards. See Burger Chef Sys., Inc., 393 Mass. at 290; Currier, 16 Mass. App. Ct. at 907. See also Wokan v. Alladin Int'l, Inc., 485 F.2d 1232, 1234 (3d Cir. 1973) (condition most commonly imposed upon opening of default judgment under Fed. R. Civ. P. 60 [b] is payment of costs or attorney's fees); Thorpe v. Thorpe, 364 F.2d 692, 694 (D.C. Cir. 1966) (same). Courts have also recognized the option, in suitable circumstances, of conditioning the removal of a default judgment on an attachment of property. See Thorpe, supra at 695. Moreover, our courts have not limited the types of conditions that judges may impose in removing a default judgment. To the contrary, our cases reference "equitable" relief, and rule 60 (b) itself contemplates conditioning relief "upon such terms as are just." Mass. R. Civ. P. 60 (b). See Burger Chef Sys., Inc., 393 Mass. at 290, quoting 10 C.A. Wright & A.R. Miller, Federal Practice and Procedure § 2700, at 539-540 (2d ed. 1983) ("Terms and conditions can be used to facilitate discovery, compensate for obstructionist tactics, and protect the ability of the nondefaulting party to obtain an appropriate remedy"). Thus, Care One argues, insofar as the judge considered the relevant facts, applied the appropriate legal standards, and justified his findings and rulings in writing, he did not abuse his discretion.

Care One further argues that we should not isolate the judge's decision to vacate the default judgment from his decision to impose the condition. We agree, and we review the judge's decision to impose the unusual condition as part and parcel of his

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decision to allow the rule 60 (b) motion. See, e.g., Burger Chef Sys., Inc., 393 Mass. at 291, quoting Damaskos, 359 Mass. at 64 n.9 ("[A]ll aspects of the case and of the respective interests of the parties, appropriate for the consideration of a court of equity in granting or denying discretionary relief, may be taken into account").

Neither this court nor the parties are aware of any reported cases in Massachusetts involving the imposition of a condition like the one imposed here. Although the judge's discretionary decision under rule 60 (b) requires "a case by case assessment of the circumstances," Berube, 7 Mass. App. Ct. at 430, we nonetheless look to Federal courts interpreting similar conditions imposed under Fed. R. Civ. P. 60 (b) and Fed. R. Civ. P. 55 (c) for guidance, see Hermanson v. Szafarowicz, 457 Mass. 39, 49 (2010) ("We generally follow the Federal courts' interpretation of Federal rules of civil procedure in construing our own identical rules"); Burger Chef Sys., Inc., 393 Mass. at 289 n.3, quoting Rollins Envtl. Servs., Inc. v. Superior Court, 368 Mass. 174, 180 (1975) ("The interpretation given to a Federal rule is to be applied to its Massachusetts counterpart, 'absent compelling reasons to the contrary or significant differences in content'").

In Dimanche v. Massachusetts Bay Transp. Auth., 893 F.3d 1, 5 (1st Cir. 2018), the defendant failed to file a timely answer to the complaint due to a clerical error. The United States District Court for the District of Massachusetts entered a default, and the defendant moved to set aside the default one week later. Id. The judge denied the motion without prejudice "to it being refiled within [thirty] days . . . supported by detailed evidentiary affidavits setting forth the so-called 'meritorious' defenses." Id. The defendant refiled its motion to set aside the default accompanied by several affidavits and two exhibits. Id. The judge allowed the motion but stated that the defendant "must understand . . . that its entire affirmative case is set forth in the data submitted in support of this motion." Id. Following a trial that resulted in a jury award of damages to the plaintiff, the defendant appealed, claiming, inter alia, that the condition imposed on the removal of the default constituted an unreasonable, "draconian," and "punitive" sanction. Id. at 10. The United States Court of Appeals for the First Circuit agreed that "it was entirely unreasonable for the district court to restrict the [defendant]'s proof at trial to what was said in th[e] affidavits." Id. at 11. The court noted that not only had it "found no case approving of such a sanction," but also that the

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sanction was "calibrated not to ameliorate any prejudice to [the plaintiff], but instead to punish [the defendant]." Id. It further noted that in cases where other Courts of Appeals did authorize the imposition of "a reasonable condition" for a default removal, "the plaintiff was actually prejudiced by the delay." Id. Moreover, in such cases, the courts had imposed "financial penalties" as conditions, such as the requirement to post a bond, which "in no way limited the [defendant]'s ability to fully litigate the case and to defend themselves at trial." Id.

In Powerserve Int'l, Inc. v. Lavi, 239 F.3d 508, 514-516 (2d Cir. 2001), the United States Court of Appeals for the Second Circuit upheld a decision by a judge of the United States District Court to condition vacatur of the defendants' default on their posting a $500,000 bond. The court noted that "a district court has inherent power to impose a reasonable condition on the vacatur in order to avoid undue prejudice to the opposing party." Id. at 515. The court then held that the bond condition was reasonable where (a) the judge expressed concern about evidence of the "defendants' actual and potential transfers of assets," and (b) the defendants offered no explanation "to dispel the impression that [certain] transfers and payments were collusive efforts to place their assets beyond the reach of judgment creditors." Id. at 516. In other words, the court recognized the judge's concern regarding potential prejudice to the nondefaulting party.

In Hritz v. Woma Corp., 732 F.2d 1178 (3d Cir. 1984), the United States Court of Appeals for the Third Circuit considered whether a judge abused his discretion in refusing to vacate a default judgment following the defendant's "repeated failure" to respond to the proceedings. Id. at 1179. The court noted that in exercising his discretion, the judge was obligated to consider "whether the defendant ha[d] a meritorious defense," whether removing the default would cause prejudice to the plaintiff, and "whether the default was the result of the defendant's culpable misconduct." Id. at 1181. After determining that the defendant had adequately pleaded a meritorious defense, the court ruled that "the trial judge did not fully address the prejudice issue because he found the defendant's conduct to be so irresponsible as to preclude opening the default judgment," rendering it "unnecessary for the district judge to reach the question of prejudice." Id. The court then noted that under Fed. R. Civ. P. 60 (b), "prejudice suffered by a non-defaulting party can be rectified through the trial court's power to impose terms and conditions upon the opening

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of a judgment," and thus the judge could consider requiring that the defendant "waive the statute of limitations on behalf of its parent corporation" in view of the delays it caused. Id. at 1182 n.3. Ultimately, "out of an abundance of caution," the court remanded the case to the District Court to "evaluate the questions of prejudice [to the plaintiff] and culpable conduct" on the part of the defendant. Id. at 1185.

Finally, in Thorpe, 364 F.2d at 694-695, the United States Court of Appeals for the D.C. Circuit held that the "unusual," "extraordinary," and "unprecedented" condition of requiring the defendant to "place in a joint bank account, in escrow, not only the amount of the default judgment, but the maximum amount demanded by [the plaintiff] in her complaint" was not justified by the District Court's findings. The court reasoned that the plaintiff did not allege, "nor [wa]s there any indication," that the plaintiff had "suffered prejudice from [the defendant]'s default over and above costs customarily incident to pressing a default judgment." Id. at 694. Thus, the court remanded the case to the District Court to determine, with "supporting findings," whether the extraordinary condition should be retained, and "whether [a] less onerous" condition "may not be more appropriate." Id. at 695. See Wokan, 485 F.2d at 1235 (stating that it was "perfectly proper for a district court in an appropriate case to impose the condition to vacating a default judgment that the judgment holder not be deprived of any payment or security he has obtained as a result of the judgment," but holding that the "unusual" condition of requiring "that the now disputed claim be made more secure than it was prior to the court's action on the [r]ule 60 (b) motion" could not be imposed on the record before the court, and remanding for reconsideration of motion to vacate default judgment).

Although the above-cited cases contemplate somewhat different conditions than the one the judge imposed here, they provide helpful guidance. First, the cases confirm that the condition imposed by the judge in the present case is unusual and extraordinary. See, e.g., Thorpe, 364 F.2d at 695. As discussed, there are no reported cases in Massachusetts addressing the type of condition imposed here. Second, the above-cited cases evince a common feature. In each case, in evaluating the exercise of discretion to impose an unusual, extraordinary, or onerous condition, the reviewing court considered whether the nondefaulting party suffered prejudice as a result of the default or delay. See Federal Deposit Ins. Corp. v. Francisco Inv. Corp., 873 F.2d 474,

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479 (1st Cir. 1989) ("The issue [of prejudice] is not mere delay, but rather its accompanying dangers: loss of evidence, increased difficulties of discovery, or an enhanced opportunity for fraud or collusion"); 10A C.A. Wright, A.R. Miller, & M.K. Kane, Federal Practice and Procedure § 2699, at 206 (4th ed. 2016) ("courts have recognized that opening a default may prejudice a litigant in a number of ways. In some instances, delay itself may thwart plaintiff's recovery or remedy. It also may result in the loss of evidence, create increased difficulties of discovery, or provide greater opportunity for fraud and collusion" [footnote omitted]). See also Burger Chef Sys., Inc., 393 Mass. at 289-291 (citing Federal cases and C.A. Wright & A.R. Miller, Federal Practice and Procedure [2d ed. 1983] in interpreting Mass. R. Civ. P. 55 [c]). In the present case, although the judge made comprehensive written findings, he did not find that Care One suffered any prejudice from the default or the delays. Likewise, Care One did not allege in its brief that it suffered any specific prejudice. [Note 14] Instead, Care One highlights the judge's reference to Gloria's "relatively stale defenses and counterclaims," and contends that insofar as "a stale claim is one that is barred by the defense of laches," the judge implicitly found that Gloria's unreasonable delay in pursuing her rights or claims caused prejudice to Care One. We disagree. The judge made no such specific finding, and we are unwilling, on this record, to read such a determination into the judge's findings and order. Furthermore, insofar as Gloria's claims sound, at least in part, in contract, it is difficult to see how laches or any other time-related claim or defense would preclude her from bringing her counterclaims in view of the six-year statute of limitations. See G. L. c. 260, § 2. [Note 15]

As discussed, one of the factors that a judge must consider in

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the context of deciding a rule 60 (b) motion predicated on excusable neglect is "whether prejudice has resulted to the other party." Berube, 7 Mass. App. Ct. at 431. We recognize that the adjudication of a motion to vacate a default judgment, including the decision whether to impose conditions on the allowance of such a motion, involves "a case by case assessment of the circumstances," rather than a formulaic approach. Id. at 430. Nevertheless, the Federal cases discussed supra demonstrate that the prejudice factor may be of particular relevance and importance when imposing an unusual or extraordinary condition. This is just such a case. Here, the judge determined that most of the Berube factors weighed in favor of Gloria, and he accepted the prior judge's finding that Gloria had "potentially meritorious defenses" and "possible counterclaims relating to the quality of care." Although the judge made passing reference to Gloria's "less-than-speedy" rule 60 (b) motion and "relatively stale defenses and counterclaims," he did not explain how or why such factors impacted Care One's claim, and did not evaluate and explain whether and to what extent Care One suffered any prejudice, before imposing the unusual condition on the removal of the default judgment. The judge's lone statement that "it would be unfair to permit" Gloria to fully pursue her defenses and counterclaims is insufficient in these circumstances. See Powerserve Int'l, Inc., 239 F.3d at 515-516 ("it is incumbent on the district court to make findings sufficient to permit appellate review of the condition's reasonableness"); Thorpe, 364 F.2d at 695 ("When . . . an extraordinary condition is approved it must be accompanied by supporting findings to show that it represents a reasonable exercise of discretion"). See also Dimanche, 893 F.3d at 11.

Accordingly, we conclude that the judge's findings do not justify conditioning the removal of the default judgment on Gloria's agreement to waive any and all claims she may have against Care One to the extent that recovery would have exceeded any amount Gloria owed to Care One. Thus, the judge abused his

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discretion, [Note 16] and we vacate the order on the rule 60 (b) motion and remand the case for the judge to determine, with supplemental written findings, whether Care One suffered prejudice such that an unusual or extraordinary condition is warranted, or whether "less onerous" conditions, if any, "may not be more appropriate." Thorpe, 364 F.2d at 695. See Powerserve Int'l, Inc., 239 F.3d at 515-516. [Note 17]

To be clear, we do not hold that a judge may never impose a condition similar to the one imposed in the present case. Furthermore, we do not hold that a finding of prejudice must invariably be found before a judge may impose an unusual or extraordinary condition. In appropriate circumstances -- such as default judgments that stem from inexcusable conduct, cause substantial and unjustified delay, or prejudice the rights or claims of the non-defaulting party -- the imposition of such a condition might be warranted. See, e.g., Hritz, 732 F.2d at 1182 n.3 ("If the case before us were remanded, the district court could consider requiring, as a condition of opening the default judgment, that [the defaulting defendant] waive the statute of limitations on behalf of its parent corporation in Germany"); Bridoux v. Eastern Air Lines, Inc., 214 F.2d 207, 210 (D.C. Cir.), cert. denied, 348 U.S. 821 (1954) (dismissal of defaulting defendant's counterclaim was "[j]ust term[]" for relief under Fed. R. Civ. P. 60 [b]). Here, however, the judge's written findings did not justify the imposition of the unusual condition, and in view of what other courts have done in analyzing similar conditions, the more prudent (and here necessary) course is for the judge to reconsider his determination. [Note 18]

The order on the motion for relief from judgment is vacated, and the case is remanded for further proceedings consistent with

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this opinion. [Note 19]

So ordered.