United States District Court, S.D. Mississippi, Northern Division
THOMAS P. MCDONNELL, III AND CLM RENTALS, INC. PLAINTIFFS
WILLIAM C. BURCH, III, MERIT ASSOCIATES, INC., AND W. SCOTT BRANDON DEFENDANTS
P. JORDAN III UNITED STATES DISTRICT JUDGE.
are two motions pending in this contract dispute: Defendant
W. Scott Brandon's Motion to Dismiss  and Defendant
William C. Burch, III's Motion to Set Aside Default .
Plaintiffs have also made a request to amend their Complaint,
though not in a formal motion. For the reasons that follow,
the Court takes Brandon's motion to dismiss under
advisement, and Plaintiffs are instructed to file a proper
motion seeking leave to amend. Burch's motion to set
aside is granted.
Thomas P. McDonnell and CLM seeks to enforce various
financial agreements regarding the asset sale of CLM Rentals,
Inc., a company for which he was the president and sole
shareholder. On March 1, 2008, Defendant William C. Burch,
III, purchased CLM's assets and signed a Promissory Note
[1-1] pledging to repay McDonnell, who financed the purchase.
Plaintiffs say the Promissory Note was secured by four
additional agreements signed that same day: (1) Brandon's
Stock Pledge Agreement [1-3] with CLM giving CLM a security
interest in Defendant Merit Associates, Inc., stock should
Burch default on the Promissory Note; (2) Burch's Stock
Pledge Agreement [1-2] with CLM making similar promises in
CLM's favor; (3) Brandon's Continuing Guaranty [1-5]
guaranteeing payment of Burch's debt to CLM; and (4)
Merit's Continuing Guaranty [1-4] also guaranteeing
payment of Burch's debt to CLM.
heart of this dispute is a disconnect between the terms of
Burch's Promissory Note and the agreements allegedly
securing it-primarily Brandon's Continuing Guaranty.
Burch's Promissory Note establishes a debt Burch owed
McDonnell. Yet Brandon's Continuing Guaranty states that
it secures only Burch's debt to CLM, with no
mention of the McDonnell debt. Brandon therefore says his
guaranty gives CLM no right to demand payment for any debts
Burch owed McDonnell. Def.'s Mem.  at 1. And because
“[t]here is no alleged indebtedness of Burch to
CLM”-the debt addressed in his guaranty-Brandon seeks
dismissal. Id. at 2.
addressing that motion, the Court concludes that it should
clean up the record and address Plaintiffs' desire to
amend their complaint and Burch's motion to set aside the
Clerk's entry of default.
Leave to Amend
responded to Brandon's motion in a legal memorandum. In
it, they seek leave to amend the Complaint so they can allege
mutual mistake and seek reformation of Brandon's
Continuing Guaranty. See Pls.' Memo.  at 7.
Simply put, they say the guaranty misidentified CLM as the
creditor rather than McDonnell.
Court should freely give leave [to amend a complaint] when
justice so requires.” Fed.R.Civ.P. 15(a)(2). But
parties must follow the Court's rules. In particular,
“[a] response to a motion may not include a
counter-motion in the same document” as was done here.
L.U. Civ. R. 7(b)(3)(C). And even assuming Plaintiffs had
followed this rule, they otherwise failed to attached a
proposed amended pleading. See L.U. Civ. R. 7(b)(2)
(“If leave of court is required under Fed.R.Civ.P. 15,
a proposed amended pleading must be an exhibit to a motion
for leave to file the pleading.”).
said, both parties address this issue to some extent in their
briefs, and it appears that there might be a plausible basis
for a mutual-mistake claim. Without going into detail, the
other agreements that unambiguously secure the
Burch-to-McDonnell Promissory Note seem to misidentify CLM as
Burch's creditor, making it plausible that the disputed
guaranty contains the same mistake. In addition, the Court
believes it would be more prudent to consider the
mutual-mistake amendment before exploring Brandon's
Motion to Dismiss. The former could impact the latter.
Accordingly, Plaintiffs may file a motion to amend-attaching
a proposed amended complaint-within ten (10) days of the
entry of this order.
Motion to Set Aside Default
Burch seeks an order setting aside the Clerk's Entry of
Default  entered against him on July 11, 2017. Plaintiffs
have not timely responded in opposition, and under Local Rule
7(b)(3)(E), the Court may grant non-dispositive motions as
unopposed. Accordingly, the Court finds that Burch's
motion  should be granted. See United States v. One
Parcel of Real Prop., 763 F.2d 181, 183 (5th Cir. 1985)
(“The decision to set aside a default decree lies
within the sound discretion of the district court.”).
The Clerk's Entry of Default  is hereby set aside,
and Burch's Answer  is now properly before the Court.
Court has considered all the parties' arguments. Those
not specifically addressed do not change the outcome. For the
foregoing reasons, Brandon's Motion to Dismiss  is
taken under advisement; Plaintiffs are given ten (10) days to
file a ...