Marvin H. Schein Descendants LLC v. Brown

Background

In 2015, Leslie J. Levine, acting as trustee of the Marvin H. Schein Descendants’ Trust, sued Michael D. Brown for allegedly breaching a 2007 settlement agreement. The agreement required Brown, among other things, to keep an escrow account at a specified level. After Brown did not respond, Judge Shira A. Scheindlin entered a default judgment on June 19, 2015, for $89,008.30, including $9,795.03 in attorney’s fees, costs, and disbursements.

In 2019, the judgment was assigned first to Louis P. Kreisberg and then to Marvin H. Schein Descendants’ LLC (MHS). MHS obtained an order requiring turnover of funds held in the name of Back Bay Consulting Corporation, which the court found was Brown’s alter ego. MHS later acknowledged partial satisfaction of the judgment in the amount of $10,000.

Motion

MHS moved to change the judgment and the case caption. It sought to increase the judgment from $79,008.30 to $751,137.83 based on the alleged current escrow deficiency, additional attorney’s fees and costs, and related interest calculations. The requested increase included alleged losses caused by Brown’s continuing failure, after the 2015 judgment, to comply with the settlement agreement.

MHS also sought $285,007.25 in additional attorney’s fees. It alternatively asked the court to treat the motion as a new lawsuit and convert the motion into a complaint.

Court’s analysis

The court held that using a motion to increase the existing judgment for alleged breaches occurring after the judgment was procedurally improper. Those alleged new breaches had to be pursued in a new lawsuit rather than added to the old default judgment. The court also relied on Rule 54(c) of the Federal Rules of Civil Procedure, which limits a default judgment to the type and amount of relief demanded in the pleadings and requires meaningful notice of the requested relief.

The court declined to convert the motion into a new lawsuit. It stated that MHS would have to start any new action under the Federal Rules of Civil Procedure and the court’s local rules and procedures.

The court treated the request for additional fees separately. It concluded that the settlement agreement might permit fees and costs for post-judgment efforts to enforce the judgment. But MHS did not provide the time records, hourly rates, or other information needed to determine whether the requested fees were reasonable and connected to collecting the existing judgment. Fees connected to the alleged later breaches would also be premature and would need to be sought in a new action.

Ruling

The court denied MHS’s motion to alter the judgment. The denial was without prejudice to a new, properly documented application for fees attributable to efforts to collect the existing judgment, rather than efforts to add unresolved new claims. The court granted MHS’s motion to amend the caption because it accurately reflected the assignment of the judgment and Brown identified no substantive prejudice from the change. The Clerk was directed to amend the caption and terminate the motion.