Case 4:14-cv-00559-ALM Document 117 Filed 05/12/16 Page 1 of 14 PageID #: 3199
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`United States District Court
`EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`CASE NO. 4:14-CV-559
`Judge Mazzant
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`CROP PRODUCTION SERVICES, INC.
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`v.
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`JOHN KEELEY, individually
`JOHN AND DAWN KEELEY,
`individually, G&K FARMS, a general
`partnership
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`§
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`§
`§
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`§
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`MEMORANDUM OPINION AND ORDER
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`Pending before the Court is Defendants John Keeley and Dawn Keeley’s Renewed
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`Motion to Vacate Default Judgment Against G&K Farms Under Federal Rules of Civil
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`Procedure 55 and 60 And/Or to Amend or Alter the Judgment Against John Keeley and Dawn
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`Keeley Under Federal Rule of Civil Procedure 59 (Dkt. #102). After reviewing the relevant
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`pleadings, the Court finds the Keeleys’ motion is denied.
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`BACKGROUND
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`From January 1, 2008, until September of 2009, Defendants Thomas Grabanski, John
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`Keeley, and Dawn Keeley (the “Keeleys”) were general partners of G&K Farms, a North Dakota
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`General Partnership (Dkt. #43, Ex. 3). Plaintiff Crop Production Services, Inc. (“CPS”) alleges
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`that during 2009 it delivered several shipments of product to G&K Farms and was not paid for
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`the goods (Dkt. #43, Ex. 1 at pp. 3-4). CPS argues that G&K Farms’ debt for goods received in
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`2009 amounts to $642,669.55 (Dkt. #43, Ex. 1 at p. 4).
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`On September 15 and 16 of 2009, the Keeleys assigned their interests in G&K Farms to
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`Thomas Grabanski (Dkt. #43, Ex. 3 at p. 2). On July 29, 2013, Thomas Grabanski filed for
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`bankruptcy (the “Bankruptcy Case”) in the United States Bankruptcy Court for the Eastern
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`District of Texas (the “Bankruptcy Court”) (Dkt. #43, Ex. 5 at p.2). On July 31, 2013, CPS
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`Case 4:14-cv-00559-ALM Document 117 Filed 05/12/16 Page 2 of 14 PageID #: 3200
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`initiated an action against Thomas Grabanski and John Keeley for claims arising from the
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`alleged debt as a state court action, captioned Crop Production Services, Inc. v. Thomas
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`Grabanski and John Keeley, in the 76th/276th Judicial District Court of Camp County, Texas
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`(the “Debt Case”). On September 10, 2013, John Keeley filed a Notice of Removal with the
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`Bankruptcy Court. The case was automatically referred to the Court, and the Court referred the
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`Debt Case to the Bankruptcy Court based on its relation to the Bankruptcy Case pursuant to 28
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`U.S.C. §§ 1334 and 1452(a). John Keeley filed a cross-claim against Tom Grabanski in the Debt
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`Case. On Thomas Grabanski’s motion, the Bankruptcy Court dismissed the claims and cross-
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`claims asserted against him. On August 13, 2014, following a motion from the Keeleys, the
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`Court withdrew the reference of the Debt Case from the Bankruptcy Court so that the Debt Case
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`might proceed before the Court (Dkts. #2, 7).
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`While the Debt Case was pending as an adversary proceeding in the Bankruptcy Court,
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`CPS filed a Second Amended Complaint on April 22, 2014, adding G&K Farms and Dawn
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`Keeley as parties and making claims under six causes of action: (1) sworn account; (2) common
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`law action on account; (3) breach of contract; (4) quantum meruit; (5) suit on guaranty; and (6)
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`fraud, fraudulent inducement, and fraudulent concealment (Dkt. #43, Ex. 1).
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`On November 6, 2014, CPS moved for default judgment against G&K Farms (Dkt. #26).
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`No party objected, and the clerk entered default of G&K Farms on October 27, 2014 (Dkt. #25).
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`The Court granted default judgment to CPS against G&K Farms on January 8, 2015 (Dkt. #30).
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`On February 27, 2015, the Supreme Court of Texas issued its ruling in American Star
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`Energy and Minerals Corporation v. Stowers, holding that: “[T]he limitations period against a
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`partner generally does not commence until after final judgment against the partnership is
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`entered.” 457 S.W. 3d 427, 428 (Tex. 2015).
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`Case 4:14-cv-00559-ALM Document 117 Filed 05/12/16 Page 3 of 14 PageID #: 3201
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`On April 30, 2015, CPS brought a motion for partial summary judgment based in part on
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`the default judgment (Dkt. #38). On May 1, 2015, John and Dawn Kelley (the “Keeleys”)
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`brought a motion to vacate the default judgment against G&K Farms (the “First Motion”) (Dkt.
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`#41). On May 22, 2015, CPS filed its response to the First Motion (Dkt. #55), and on June 1,
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`2015, the Keeleys filed their reply in support of the First Motion (Dkt. #60). On July 24, 2015,
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`the Court entered an order denying the First Motion (Dkt. #78).
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`On August 14, 2015, the Court granted, in part, CPS’s Motion for Partial Summary
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`Judgment and found that the Keeleys were jointly and severally liable for the entire Default
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`Judgment against G&K Farms under general partnership law (Dkt. #86). On September 22,
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`2015, the Court held a bench trial on CPS’s remaining claims against Defendant John Keeley for
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`suit on a guaranty, fraud, fraudulent inducement and fraudulent concealment. On October 14,
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`2015, the Court entered written findings of fact and conclusions of law and found that CPS was
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`not entitled to relief under its claims for suit on guaranty, fraud, fraudulent inducement, and
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`fraudulent concealment against Defendant John Keeley (Dkt. #98). On October 27, 2015, the
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`Court entered Final Judgment in favor of CPS against the Keeleys.
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`On November 3, 2015, the Keeleys filed their Renewed Motion to Vacate Default
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`Judgment Against G&K Farms Under Federal Rules of Civil Procedure 55 and 60 And/Or to
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`Amend or Alter the Judgment Against John Keeley and Dawn Keeley Under Federal Rule of
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`Civil Procedure 59 (the “Renewed Motion”) (Dkt. #102). On November 23, 2015 CPS filed its
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`response to the Renewed Motion. On November 30, 2015 the Keeleys filed their reply in
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`support of the Renewed Motion (Dkt. #111). On December 7, 2015, CPS filed a sur-reply (Dkt.
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`#114).
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`Case 4:14-cv-00559-ALM Document 117 Filed 05/12/16 Page 4 of 14 PageID #: 3202
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`RULE 59 ANALYSIS
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`Although Federal Rule of Civil Procedure 54(b) applies to motions for reconsideration of
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`an interlocutory order, courts have utilized the standards of Rule 59 when analyzing such
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`motions. Dos Santos v. Bell Helicopter Textron, Inc. Dist., 651 F. Supp. 2d 550, 553 (N.D. Tex.
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`2009) (“considerations similar to those under Rules 59 and 60 inform the Court’s analysis”); T-M
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`Vacuum Prod., Inc. v. TAISC, Inc., No. H-07-4108, 2008 WL 2785636, at *2 (S.D. Tex. July 16,
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`2008), aff’d sub nom. T-M Vacuum Prod. v. Taisc, Inc., 336 Fed. Appx. 441 (5th Cir. 2009)
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`(“Rule 59(e)’s legal standards are applied to motions for reconsideration of interlocutory
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`orders.”). “Although the general rule is that motions for reconsideration will not be considered
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`when filed more than [twenty-eight] days after the judgment at issue is entered, this deadline
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`does not apply to the reconsideration of interlocutory orders.” T-M Vacuum Prod., Inc., 2008
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`WL 2785636, at *2 (citing Standard Quimica De Venez. v. Cent. Hispano Int’l, Inc., 189 F.R.D.
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`202, 204 (D.P.R. 1999)).1 Therefore, “[a] court may consider a motion to reconsider an
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`interlocutory order so long as the motion is not filed unreasonably late.” Id. (citing Standard
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`Quimica De Venez., 189 F.R.D. at 205; Martinez v. Bohls Equip. Co., No. SA-04-CA-0120-XR,
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`2005 WL 1712214, at *1 (W.D. Tex. July 18, 2005)).2
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`A motion seeking reconsideration, “calls into question the correctness of a judgment.”
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`Templet v. HydroChem Inc., 367 F.3d 473, 478 (5th Cir. 2004) (quoting In re Transtexas Gas
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`Corp., 303 F.3d 571, 581 (5th Cir. 2002)). A Rule 59(e) motion is “not the proper vehicle for
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`1 Federal Rule of Civil Procedure 59(e) was amended in 2009, in which it provided for the twenty-eight day
`limitation. The case referenced by the Court, uses the original ten day limit, as it was decided before the amendment
`took effect.
`2 CPS argues that the Keeley’s motion is untimely because it was made more than 28 days after the Court’s
`publication of the Default Judgment and Memorandum Opinion and Order which granted summary judgment on the
`claims at issue in the Keeley’s Renewed Motion (Dkt. #107 at p. 24). However, this was an interlocutory order, and
`the Renewed Motion was made within 28 days of the Final Judgment. See Dkt. #111 at p. 13; see also Calpetco
`1981 v. Marshall Expl., Inc., 989 F.2d 1408, 1414 (5th Cir. 1993) (finding that “[b]ecause a partial summary
`judgment is interlocutory in nature, the district court retains the discretion to revise it”). Therefore, the Court finds
`that the Keeley’s Renewed Motion is timely.
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`Case 4:14-cv-00559-ALM Document 117 Filed 05/12/16 Page 5 of 14 PageID #: 3203
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`rehashing evidence, legal theories, or arguments that could have been offered or raised before the
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`entry of judgment.” Templet, 367 F.3d at 479 (citing Simon v. United States, 891 F.2d 1154,
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`1159 (5th Cir. 1990)). “Rule 59(e) ‘serve[s] the narrow purpose of allowing a party to correct
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`manifest errors of law or fact or to present newly discovered evidence.’” Id. (quoting Waltman
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`v. Int’l Paper Co., 875 F.2d 468, 473 (5th Cir. 1989)). “Relief under 59(e) is also appropriate
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`when there has been an intervening change in the controlling law.” Milazzo v. Young, No. 6:11-
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`CV-350, 2012 WL 1867099, at *1 (E.D. Tex. May 21, 2012) (citing Schiller v. Physicians Res.
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`Grp., 342 F.3d 563, 567 (5th Cir. 2003)). “Altering, amending, or reconsidering a judgment is
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`an extraordinary remedy that courts should use sparingly.” Id. (citing Templet, 367 F.3d at 479).
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`The Keeleys argue that default judgment should not have been entered against G&K
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`Farms under the Frow doctrine (Dkt. #102 at p. 8). See Frow v. De La Vega, 82 U.S. 552
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`(1872). The Keeleys maintain that because they were “actively defending the claims involving
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`joint and several liability” the default judgment should not have been entered against G&K
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`Farms (Dkt. #102 at p. 8). The Keeleys argue that the Court should amend or alter the judgment
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`against the Keeleys by eliminating any amounts for the invoices outside of the statute of
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`limitations period (Dkt. #102 at p. 26).3
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`In Frow, the plaintiff filed a claim against several defendants alleging that they acted in a
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`joint civil conspiracy to commit fraud. Frow, 82 U.S. at 553. Frow was the only defendant who
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`did not submit a timely answer, and the court entered the equivalent of an order for default
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`judgment. Id. Frow sought to vacate the order but the court entered a “final decree” against
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`3 CPS argues that since the Keeleys did not mention Frow in their first motion to vacate, the Court should refuse to
`consider arguments and evidence relating to Frow (Dkt. #107 at p. 9). However, the Court finds that while the
`parties argue Frow’s relevance under both their Rule 59 analysis as well as their Rule 55 and 60 analysis, it is
`appropriate for the Court to consider its applicability to discern if there has been an error of law.
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`Case 4:14-cv-00559-ALM Document 117 Filed 05/12/16 Page 6 of 14 PageID #: 3204
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`Frow. Id. After a trial that was resolved in the other defendants’ favor, the Supreme Court
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`overturned the default judgment against Frow. Id. at 553-555.
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`The Keeleys assert that “the ‘incongruous’ result that Frow seeks to avoid is exactly what
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`occurred in this case.” (Dkt. #102 at p. 12). The Keeleys argue that “[t]he same four-year statute
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`of limitations that applied to CPS’s suit on guaranty against John Keeley applied to the contract
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`claims against G&K Farms.” (Dkt. #102 at p. 17). However, the Keeleys also concede that
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`although “CPS was seeking the exact same damages from the three defendants” it was doing so
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`on different legal theories (Dkt. #102 at p. 12). The Keeleys also admit that “CPS claimed G&K
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`Farms, and the Keeleys were jointly and severally liable for partnership debts, while it was
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`seeking to hold John Keeley personally liable under a personal guaranty for the same debt” (Dkt.
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`#102 at p. 12).
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`CPS explains that Frow does not apply to this case because when the Court “entered
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`Default Judgment, it was doing so as it pertained to the discrete claims CPS alleged against G&K
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`Farms (breach of contract, suit on open account, sworn account, quantum meruit) for whose
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`liability Defendants are derivatively liable as admitted general partners” (Dkt. #107 at p. 3). In
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`contrast, “Defendant John Keeley’s direct and individual liability under CPS’s suit on a guaranty
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`(a specific claim CPS did not make against G&K Farms) did not depend on G&K Farms’
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`liability for the separate claims CPS asserted against it.” (Dkt. #102 at p. 3). Therefore, “[w]hen
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`the Court entered its Default Judgment, the potential of inconsistent judgments as to different
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`parties was not present . . . because that Judgment addressed CPS’s specific claims against G&K
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`Farms, and not as to John Keely individually, which were left for trial.” (Dkt. #107 at p. 15).
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`There are two schools of thought regarding the interpretation of Frow. The school of
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`thought that supports a broad reading of Frow establishes a general rule that “when one of
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`Case 4:14-cv-00559-ALM Document 117 Filed 05/12/16 Page 7 of 14 PageID #: 3205
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`several defendants who is alleged to be jointly liable defaults, judgment should not be entered
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`against that defendant until the matter has been adjudicated with regard to all defendants, or all
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`defendants have defaulted.” 10A CHARLES A. WRIGHT, ARTHUR R. MILLER AND MARY KAY
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`KANE, FEDERAL PRACTICE AND PROCEDURE: CIVIL § 2690 at 73 (3d ed. 1998). Wright, Miller
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`and Kane further state that the Frow doctrine applies where liability is joint and several and
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`speculates that it can be extended to situations in which several defendants have closely related
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`defenses. Id. See U.S. ex rel Costner, 56 F. App’x. at 288 (finding that Frow applies where
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`liability was joint and several, as opposed to merely joint as in Frow, because “[t]he principle on
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`which Frow relies is that logically inconsistent verdicts should be avoided. Although joint
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`liability is one circumstance in which such inconsistency may arise, it is not the only one.”).
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`The more narrow school of thought states that Frow stands for the rule that default
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`judgment cannot be entered against one of several defendants when the theory of recovery is one
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`of joint liability, where, as a matter of law, no one defendant may be liable unless all defendants
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`are liable. Under this approach, “Frow . . . does not apply to cases involving the joint and
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`several liability of multiple defendants for damages because in such a case the liability of each
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`defendant is not necessarily dependent upon the liability of any other defendant, and plaintiff
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`may be made whole by a full recovery from any defendant.” Id. See In re Uranium Antitrust
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`Litig., 617 F.2d 1248, 1258 (7th Cir. 1980) (explaining that “when different results as to different
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`parties are not logically inconsistent or contradictory, the rationale for the Frow rule is lacking”
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`and that “to apply Frow to a claim of joint and several liability is to apply that venerable case to
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`a context for which it was never intended”); Mori Seiki USA, Inc. v. McIntyre, No. CIV A 306-
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`CV-2344-B, 2008 WL 577274, at *2 (N.D. Tex. Mar. 4, 2008) (agreeing with the findings in
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`Uranium that “entry of default judgment as to liability is appropriate where liability is joint and
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`Case 4:14-cv-00559-ALM Document 117 Filed 05/12/16 Page 8 of 14 PageID #: 3206
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`several.”); Friedman v. Lawrence, 1991 WL 206308, at *3 (S.D.N.Y. 1991) (holding that “if the
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`liability sought to be imposed is joint and several rather than joint, most courts have held that the
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`rationale of Frow does not directly apply, since it would not be inconsistent to hold some but not
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`all defendants liable.”).
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`The Fifth Circuit has yet to decide which interpretation of Frow it agrees with.4 While
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`other circuit courts have addressed Frow, many have done so without specifically asserting that
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`they follow the broad or the narrow interpretation of the case’s applicability. See U.S. ex rel.
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`Costner v. United States, 56 F. App’x at 288 (finding specifically that Frow applies in cases in
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`which there is joint and several liability and that it could probably extend to situations in which
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`“several defendants have closely related defenses”) (citation omitted); Farzetta v. Turner &
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`Newall, Ltd., 797 F.2d 151, 154 (3d Cir. 1986) (holding that “Frow stands for the proposition
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`that if at trial facts are proved that exonerate certain defendants and that as a matter of logic
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`preclude the liability of another defendant, the plaintiff should be collaterally estopped from
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`obtaining a judgment against the latter defendant” and then analyzing “whether there were
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`proved at trial facts that as a matter of logic preclude the liability of [the non-participating
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`defendants].”); Gulf Coast Fans, Inc. v. Midwest Electronics Importers, Inc., 740 F.2d 1499,
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`1511–12 (11th Cir. 1984) (stating that under Frow, a plaintiff who failed to recover from one
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`defendant on a breach of contract claim could not recover from a second defendant who had not
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`defended the suit); In re Uranium Antitrust Litig., 617 F.2d at 1256-58 (stating specifically that
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`“to apply Frow to a claim of joint and several liability is to apply that venerable case to a context
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`4 The Keeleys assert that “while the Fifth Circuit has not directly addressed the Frow doctrine, it has adopted its
`essential holding. (Dkt. #102 at p. 10) In Lewis v. Lynn, the court stated that “several courts have held that where ‘a
`defending party establishes that plaintiff has no cause of action . . . this defense generally inures also to the benefit
`of a defaulting defendant.” 236 F.3d 766, 768 (5th Cir. 2001). The court stated that “[t]he policy rationale behind
`this rule is that it would be ‘incongruous’ and ‘unfair’ to allow some defendants to prevail, while not providing the
`same benefit to similarly situated defendants.” Id. The Court agrees that while the Fifth Circuit has not specifically
`stated which interpretation of Frow it agrees with, it finds the underlying rationale behind the doctrine persuasive.
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`Case 4:14-cv-00559-ALM Document 117 Filed 05/12/16 Page 9 of 14 PageID #: 3207
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`for which it was never intended, and ignores the several or independent aspects of the claim set
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`forth in this complaint.”); Int’l Controls Corp. v. Vesco, 535 F.2d 742, 746 (2d Cir. 1976)
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`(holding that default judgment was proper in Securities Exchange Act case and distinguishing
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`Frow on grounds that it only controls “in situations where the liability of one defendant
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`necessarily depends upon the liability of the other”), cert. denied, 434 U.S. 1014 (1977).
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`However, relevant case law supports the conclusion that the case at hand does not
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`implicate the concerns underlying Frow. In many of the cases that discuss Frow, the issue is
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`whether it is incongruous to find one or more defendants liable under a theory of default while
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`other defendants who did not default on the same claim are found not to be liable. See Lewis,
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`236 F.3d at 768 (after the court granted the non-defaulting defendant’s summary judgment the
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`plaintiff moved for a default judgment on the same claims, which the court refused to grant
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`because plaintiff’s factual allegations were insufficient to establish liability) (emphasis added);
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`Shaunfield v. Paramount Recovery Sys., No. 3:12-CV-4686-M BH, 2014 WL 4814827, at *4
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`(N.D. Tex. Sept. 29, 2014) (finding that “[d]espite default, it would be ‘incongruous and unfair’
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`to allow the other defendants to prevail against Plaintiff while entering judgment in his favor
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`against Paramount on the same issues under the same allegations”) (emphasis added). These
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`cases hold that it would be incongruent to allow a default judgment to be entered against a
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`defendant who is similarly situated to a defendant who is found not to be liable for the same
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`claim.
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`The situation at hand is different because the entry of a default judgment against G&K
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`Farms does not logically conflict with a finding that John Keeley could avoid liability through a
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`statute of limitations defense regarding the suit on guaranty against him individually. See
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`Farzetta, 797 F.2d at 154 (upholding the district court’s entry of default judgment because the
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`Case 4:14-cv-00559-ALM Document 117 Filed 05/12/16 Page 10 of 14 PageID #: 3208
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`jury’s finding that the plaintiff assumed the risk of exposure to one defendant’s asbestos does not
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`compel, as a matter of logic, the conclusion that the plaintiff had also assumed the risk of
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`exposure to the other defendants’ asbestos); Gulf Coast Fans, Inc., 740 F.2d at 1511–12 (finding
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`that the plaintiff who failed to recover from one defendant because the plaintiff had breached the
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`contract could not recover from a second defendant who had failed to defend the suit on the same
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`breach of contract claim).
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`The Keeleys argue at length that the same statute of limitations that applied to the suit on
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`guarantee against John Keeley also applies to the contract claims against G&K Farms (Dkt. #102
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`at pp. 16-18; Dkt. #111 at pp. 3-4). Therefore, the Keeleys contend that a finding that the statute
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`of limitations barred recovery on the suit on guaranty logically precludes liability on the contract
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`claims against G&K Farms. This is simply not the case. CPS argues that it could have
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`introduced evidence and made legal arguments that would have shown that the statute of
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`limitations defense would not have applied to the contract claims against G&K Farms (Dkt. #107
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`at pp. 16-19). The Court finds that the parties’ hypothetical arguments about what could have
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`been proved at trial demonstrates exactly why Frow does not apply in the current case.5 The
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`finding of a valid defense on the suit on guaranty simply does not logically preclude liability on
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`the claims on which the Court entered default judgment.
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`5 CPS points out that it was “not required to introduce evidence supporting its counter-arguments as to why the
`statute of limitations had not run on its claims against G&K Farms.” (Dkt. #107 at p. 18). CPS successfully argues
`that there are several possible reasons (not applicable to the individual claim against Defendant John Keeley) why
`the statute of limitations might not apply to the contract claims against G&K Farms. See Dkt. #107 at p. 17 (arguing
`that an opening accounting existed and “the accrual date for suit on guaranty is different than the accrual date for
`CPS’s claim on an open account”); Dkt. #114 at p. 8 (asserting that evidence would have supported that claims
`against G&K Farms were not barred by that statute of limitations because G&K Farms “acknowledged that it owed
`CPS and intended to pay and never repudiated it). Without reaching the merits of these arguments, the Court find
`that CPS has demonstrated that different factual and legal scenarios could exist which would establish that a finding
`that the statute of limitations applied to one claim in this case does not logically necessitate a finding that the statute
`of limitations would have applied to the claims on which the Court found default.
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`Case 4:14-cv-00559-ALM Document 117 Filed 05/12/16 Page 11 of 14 PageID #: 3209
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`RENEWED MOTION TO VACATE ANALYSIS
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`The Keeleys argue that “[e]ven if this Court concludes the Frow doctrine does not apply,
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`it should nevertheless find the Keeleys have established good cause to vacate the default
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`judgment” (Dkt. #102 at p. 8). The Keeleys argue that good cause exists because they “have
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`established a meritorious defense to effectively all of Plaintiff’s partnership-related claims, and
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`the unique circumstances of this case justify the Keeleys’ initial failure to object to the entry of
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`default judgment against G&K Farms.” (Dkt. #102 at p. 8).
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`A court may set aside an entry of default “for good cause shown.” FED. R. CIV. P. 55(c).
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`“[T]he requirement of ‘good cause’ . . . ha[s] generally been interpreted liberally.” Amberg v.
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`Federal Deposit Ins. Corp., 934 F.2d 681, 685 (5th Cir. 1991). Courts will look at the following
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`factors to determine whether there is good cause to set aside a default: (1) whether the failure to
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`act was willful; (2) whether setting the default aside would prejudice the adversary; and (3)
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`whether a meritorious claim has been presented. Lacy v. Sitel Corp., 227 F.3d 290, 292 (5th Cir.
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`2000). These factors are not exclusive, but are to be regarded simply as a means to identify good
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`cause. Effjohn Intern. Cruise Holdings, Inc. v. A&L Sales, 346 F.3d 552, 563 (5th Cir. 2003)
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`(citing Dierschke v. O’Cheskey, 975 F.2d 181, 184 (5th Cir. 1992)). Other factors, such as
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`whether the party acted expeditiously to correct the default, may also be considered. Id.
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`The Keeleys argue the Court should find that the default judgment should be vacated for
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`good cause because “G&K Farms undisputedly has a meritorious defense to CPS’s claim, as the
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`statute of limitations precludes CPS from recovering for all but one invoice.” (Dkt. #102 at p.
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`13). As previously stated, the Keeleys assert that, “[t]he same four-year statute of limitations
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`that applied to CPS’s suit on guaranty against John Keeley applied to the contract claims against
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`G&K Farms.” (Dkt. #102 at p. 17). As the Court has already stated,
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`Case 4:14-cv-00559-ALM Document 117 Filed 05/12/16 Page 12 of 14 PageID #: 3210
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`the Court finds that whatever defenses the Keeleys might have been capable of
`raising are now waived as they were aware of the default proceedings and
`affirmatively chose not to challenge the default in favor of waiting to assert a
`personal statute of limitations defense. The Court will not award the Keeleys a
`second chance to challenge the default simply because they relied wholly on an
`unmeritorious legal defense.
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`(Dkt. #78 at p. 6).6 Therefore, the Court will certainly not award the Keeleys a third chance to
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`challenge the default simply because they relied wholly on an unmeritorious legal defense.
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`The Keeleys rehash and expand upon several other arguments that they previously
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`presented in support of their initial motion to vacate. The Keeleys again argue that they had
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`good reason not to object to the entry of default judgment against G&K Farms because they
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`faced legitimate questions about their standing to raise the statute of limitations defense on
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`behalf of G&K Farms (Dkt. #102 at pp. 113, 118). The Keeleys maintain that good cause
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`existed “[i]n light of the bankruptcy trustee being the sole person with authority to act on behalf
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`of G&K Farms in this case, and questions regarding a violation of the automatic stay.” (Dkt.
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`#102 at p. 20).7 However, the Court has already stated that the Keeleys had standing, and the
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`Keeleys appear to concede that they had standing despite the trustee.8 Therefore, the Court’s
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`                                                            
`6 The Keeleys assert that “the Court reserved any ruling on the statute of limitations for trial” in its previous order
`(Dkt. #102 at p. 17). The Keeleys point to the Court’s statement that “[t]he Court does not now determine the merit
`of the Keeley’s proposed statute of limitations defense as it relates to G&K Farms.” (Dkt. #78 at p. 6). The Keeleys
`mistakenly state that because the Court concluded the statute of limitations precludes recovery for nearly all of its
`claims at trial, “this Court must recognize that had this Court [not] granted the motion to vacate, CPS’s best case
`scenario would be a judgment in the thousands, not millions, of dollars.” The Keeleys misinterpreted the Court’s
`previous order and the effect of the Court’s findings. The Court did not reserve the issue of application of the statute
`of limitations to the Keeley’s liability as partners for trial. This was not an issue that proceeded to trial (Dkt. #86).
`Furthermore, as previously discussed at length, the Court’s finding that the statute of limitations applied to CPS’s
`suit against John Keeley individually on personal guarantee does not dictate that the Court would have found that
`the same statute of limitations defense would apply to the separate claims brought against the Keeleys derivatively.
`7 CPS states that the Keeleys are now submitting “additional evidence and arguments relating to . . . their perceived
`belief that they did not have standing” (Dkt. #107 at p. 9). CPS argues that the Keeleys were required to raise any
`and all defenses and fully approse CPS and the Court of all the reasons and argument to support setting aside the
`Default Judgment.” (Dkt. #107 at p. 8) (citing E360 Insight v. Spamhaus Project, 500 F.3d 594, 601 (7th Cir. 2007).
`However, the Court agrees with the Keeleys that “[n]either the E360 Insight decision nor any other precedential or
`persuasive authority provides the Keeleys waived the issue by failing to raise it as part of their initial motion to
`vacate the default judgment against G&K Farms.” (Dkt. #111 at p. 3). 
`8 The Keeleys state that “because [they] can be held liable as former general partners . . . [they] do not assert they do
`not have the standing or authority to raise any legal defenses applicable to G&K Farms.” (Dkt. #102 at p. 20).
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`analysis regarding whether or not there was good cause due to the Keeley’s concerns about
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`standing remains the same as in its previous order. See Dkt. #78 at pp. 3-5.
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`The Keeleys also re-assert their argument that they were justified in not objecting to the
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`default because they believed that they had a valid defense. The Keeley’s again argue that
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`“between the time of the Court of Appeals’ decision in American Star on May 14, 2013 and the
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`Texas Supreme Court’s decision on February 27, 2015, the Court of Appeals’ decision was the
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`controlling authority regarding the statute of limitations against partners and partnerships under
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`the Texas Revised Partnership Act.” (Dkt. #102 at p. 22). Therefore, the Keeleys assert that
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`during this window, it was proper for them to believe that they would have been able to assert
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`this defense as to their individual liability. However, the Court has already found that “the
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`Keeleys should have been aware that their assumed defense was at issue before the Supreme
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`Court of Texas and that relevant court decisions suggested that their defense was far from certain
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`to hold up under the application of the TRPA.” (Dkt. #78 at p. 7). The Keeley’s expanded
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`argument concerning their reliance on American Star was unpersuasive and the Court one again
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`finds that “examining the culpability of the Keeleys’ conduct . . . their failure to act was not
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`justified.” (Dkt. #78 at p. 5). The Keeleys’ Renewed Motion does not alter the Court’s analysis
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`of the Keeleys’ culpability or the status of the law at the time that the Motion for Default
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`Judgment was filed. See Dkt. #78 at pp. 5-7.
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`The Keeleys also again assert that CPS would not suffer any prejudice if the judgment
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`was vacated (Dkt. #23). In the Court’s order regarding the Keeley’s First Motion, the Court
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`found that “Plaintiff would suffer some limited prejudice if the default judgment were vacated by
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`being required to further litigate claims against G&K farms” (Dkt. #78 at p. 6-7). The Court’s
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`analysis remains the same. See Dkt. #78 at pp. 6-7.
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`The Keeleys further argue that “the size of the default judgment in favor of Plaintiff
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`weighs heavily in favor of vacating the default judgment” (Dkt. #102 at p. 25). However, the
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`Court previously considered this factor and found that the large amount of money at stake was
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`not a sufficiently persuasive “additional factor” in support of the Keeley’s attempt to show “good
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`cause” to set aside the default judgment (Dkt. #78 at p. 7). The Court’s analysis remains the
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`same. See Dkt. #78. Therefore, the Court still does not find that the Keeleys have shown good
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`cause when it considers the prejudice to CPS, and the waiver of