## Facts

- Choice Hotels International, Inc. sued SBQI, Inc. and several managers/investors, including Anuj Grover, Arjun Grover, and Dharam Punwani, alleging breach of a hotel franchise agreement.
- The defendants did not answer the complaint, and the clerk entered default.
- The Investors asserted they did not know they were named as parties to the franchise agreement and claimed their signatures were forged.
- Defendant Tarranpaul Chawla, an attorney and codefendant, initially represented the others but performed poorly and default ensued.
- Attorney Elton Johnson later appeared, attended a Rule 16 conference, and represented that he was pursuing settlement, but he did not take basic steps to defend the case (including answering, moving to vacate default, conducting discovery on damages, responding to requests for admissions, or opposing the damages motion).
- The district court entered final judgment for Choice Hotels for $430,286.75.
- After learning of the judgment, the Investors retained new counsel and moved to set aside the default judgment more than one year after entry.

## Issues

1. Whether the district court abused its discretion in denying relief from the default judgment under Federal Rule of Civil Procedure 60(b)(6).
2. Whether claimed forged signatures and severely deficient attorney performance, combined with the Investors’ conduct and delay, constituted “extraordinary circumstances” justifying Rule 60(b)(6) relief.

## Decision

- The Seventh Circuit affirmed the denial of the Rule 60(b)(6) motion.
- The court held that the Investors did not demonstrate “extraordinary circumstances” required to reopen a final judgment under Rule 60(b)(6).
- The default judgment for $430,286.75 remained in effect.

## Legal Principles

- Rule 60(b)(6) is a residual ground for relief from judgment and applies only to reasons not covered by Rule 60(b)(1)–(5).
- Relief under Rule 60(b)(6) requires “extraordinary circumstances” and is committed to the district court’s discretion; appellate review is highly deferential.
- Clients generally are bound by their lawyer’s acts and omissions; ordinary attorney negligence typically does not justify Rule 60(b)(6) relief, and Rule 60(b) is not a substitute for malpractice remedies.
- Equitable relief is disfavored when the moving party fails to act diligently; extensive delay weighs strongly against reopening a final judgment.
- Merits defenses (including claims that signatures were forged) ordinarily must be raised through a timely response and litigation of the case, not through a late Rule 60(b)(6) motion after default.

## Conclusion

The Seventh Circuit upheld the finality of the default judgment, concluding that the Investors’ allegations of forged signatures and attorney nonperformance, viewed alongside their prolonged inaction, did not meet the strict “extraordinary circumstances” standard for Rule 60(b)(6) relief.


Choice Hotels Int’l, Inc. v. Grover, 792 F.3d 753 (7th Cir. 2015)