Ramus v. Bruwer

Background

Joshua Ramus sued Graham R. Bruwer and Gerard E. Metoyer concerning a renovation project at Ramus’s cooperative apartment. Ramus had entered into an agreement with Bulson Management, LLC, under which Bulson would act as the general contractor. Bruwer signed the agreement as Bulson’s chief executive officer. The opinion states that Metoyer was alleged to be Bulson’s comptroller, while Metoyer said he was only a part-time bookkeeper.

Ramus alleged that the project began on October 20, 2020, was supposed to be substantially completed by July 13, 2021, and remained mostly unfinished as of February 2023. The initial contract price was $1,275,811, later increased to $1,388,078. The parties agreed that Ramus paid Bulson $972,202.97. Ramus alleged that Bruwer abandoned the project and that the defendants exaggerated amounts owed or paid to subcontractors. Bruwer and Metoyer denied improperly taking or benefiting from Ramus’s money. They also asserted that Ramus delayed required decisions and failed to make all payments due under the agreement.

Ramus brought five causes of action: a demand for project books and records under Article 3-A of the New York Lien Law; fraud; breach of fiduciary duty; unjust enrichment; and a request for a constructive trust. He sought at least $972,202.97 in damages, along with other relief.

Default Judgment Motion

Ramus served Metoyer and Bruwer in March 2023. Neither defendant responded by the applicable deadline, and the Clerk issued certificates of default. Ramus then moved for a default judgment.

The court treated the defendants’ opposition as a request to set aside the defaults under Federal Rule of Civil Procedure 55(c). That rule permits a court to set aside an entry of default for “good cause.” Courts consider whether the default was willful, whether setting it aside would prejudice the opposing party, and whether the defaulting party has presented a potentially meritorious defense.

The court found good cause to vacate the defaults. Although the defendants failed to respond on time, the court concluded that their conduct did not amount to the bad faith or deliberate conduct required to find a willful default. The court noted that the renovation agreement contained mediation and arbitration provisions and that Ramus had separately started mediation and arbitration proceedings against Bulson concerning the project. The defendants appeared through counsel less than two weeks after Ramus filed the default judgment motion and promptly opposed that motion.

The court also found that Ramus had not shown the kind of prejudice relevant to setting aside a default. The court said that Ramus’s alleged financial injuries and litigation expenses did not establish that the delay caused loss of evidence, made discovery more difficult, or created a greater risk of fraud or collusion.

Finally, the court found that the defendants had presented meritorious defenses. At this stage, that requirement did not mean the defenses would ultimately succeed. The defendants identified the agreement’s mediation and arbitration provisions and argued that Ramus had not complied with the contract by delaying decisions and failing to make required payments. The court emphasized that it was not deciding whether those arguments would prevail.

The court therefore denied Ramus’s motion for a default judgment against Bruwer and Metoyer and vacated the certificates of default as to both defendants.

Motion to Compel Mediation or Arbitration

The defendants also purported to cross-move for an order compelling mediation or arbitration. The court denied that motion without prejudice. The motion did not include the required notice of motion, and the defendants had not filed the required pre-motion letter under the judge’s individual rules.

The court also observed that Ramus argued that the arbitration provision could not be enforced because, among other reasons, the defendants had waived arbitration by defaulting. Because the court vacated the defaults and denied default judgment, it concluded that Ramus should have an opportunity to decide whether he still opposed a motion to compel and, if so, to present his arguments fully.

Other Directions

The court scheduled a status conference for April 9, 2024. It directed Ramus to be prepared to address whether the complaint adequately alleged diversity jurisdiction, noting that allegations of residence alone do not establish citizenship for that purpose. The court directed the defendants to be prepared to address whether they intended to renew a motion to compel mediation or arbitration. The Clerk was directed to terminate the motion at Docket Number 22.

Disposition

The motion for default judgment was denied. The certificates of default against Graham R. Bruwer and Gerard E. Metoyer were vacated. The defendants’ cross-motion to compel arbitration was denied without prejudice.