Minnie Rose LLC v. Yu

Background

Minnie Rose LLC brought claims for fraudulent misrepresentation and unjust enrichment against Anna Yu, Elva Green Clothing Company Ltd., and unnamed defendants. Minnie Rose alleged that, during a business relationship from 2009 through 2014, the defendants altered factory invoices to inflate clothing-production costs, increased their commission, directed payments to an account controlled by them, and sought reimbursement for advance payments they allegedly never made.

The case proceeded through discovery and motion practice from 2015 through 2024. A trial was scheduled for June 24, 2024. The defendants’ lawyer, Martin Mushkin, said that he would not personally try the case because of his health and that he was considering retirement. The court directed the defendants to obtain trial counsel. The defendants did not provide new counsel’s contact information, and the court later ordered them to have trial counsel appear by June 6, 2024, warning that failure to do so could result in default.

The defendants said they did not receive the court’s orders because they had changed addresses and did not receive the emails sent to Yu. They also said Mushkin stopped communicating with Yu and did not inform her about the case’s developments. After the defendants failed to appear or comply with a later deadline, the court entered a default judgment for $1,327,500.71, plus prejudgment interest and costs, on July 15, 2024. An amended judgment entered on August 1, 2024, increased the total to $1,983,435.01. The court also dismissed the defendants’ counterclaims and third-party claims with prejudice.

Yu learned of the amended judgment on February 3, 2025, after receiving demand letters. She retained counsel and moved on July 29, 2025, under Federal Rule of Civil Procedure 60(b)(1) to vacate the default judgment. That rule permits relief from a judgment because of mistake, surprise, or excusable neglect.

Court’s analysis

The court applied the three factors used to decide whether there was good cause to set aside a default judgment: whether the default was willful, whether reopening the case would prejudice Minnie Rose, and whether the defendants had a potentially valid defense.

On willfulness, the court found no indication that the defendants deliberately evaded the case. Although Yu’s failure to contact Mushkin for eleven months was negligent, the court concluded that it did not by itself meet the higher standard for willfulness. The court also found that the record raised doubt about whether Yu received the orders warning of the impending default.

On prejudice, the court rejected Minnie Rose’s arguments that reopening the case would cause the loss of evidence, make recovery more difficult, or justify prejudice based on legal fees and costs. Discovery had already been completed before the default judgment, and Minnie Rose did not show that reopening the case would cause additional evidence loss or prevent recovery.

On the defense, the court held that the defendants had met the relatively low threshold for showing a potentially valid defense. The defendants denied intentional wrongdoing and suggested that invoice discrepancies resulted from clerical errors. The court stated that Yu’s credibility and knowledge of the alleged fraud presented a factual issue that could be tested at trial.

The court also held that the motion was timely because it was filed within one year of the amended judgment, as required for a motion under Rule 60(b)(1).

Disposition

Judge Edgardo Ramos granted the motion to reopen the action and vacate the default judgment. The parties were directed to appear for a conference on November 18, 2025, and the clerk was directed to terminate the motion.